Tipperary Developments Pty Ltd v The State of Western Australia
[2006] WASC 137 (S)
•29 NOVEMBER 2006
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | TIPPERARY DEVELOPMENTS PTY LTD -v- THE STATE OF WESTERN AUSTRALIA [2006] WASC 137 (S) |
| CORAM | : MURRAY ACJ | ||
| HEARD | : 29 NOVEMBER 2006 | ||
| DELIVERED | : 29 NOVEMBER 2006 | ||
| SUPPLEMENTARY | |||
| DECISION | : 15 DECEMBER 2006 | ||
| FILE NO/S |
| ||
| BETWEEN | : TIPPERARY DEVELOPMENTS PTY LTD |
Plaintiff
AND
THE STATE OF WESTERN AUSTRALIA
Defendant
(BY ORIGINAL ACTION)
THE STATE OF WESTERN AUSTRALIA
Plaintiff (By Counterclaim)
AND
TIPPERARY DEVELOPMENTS PTY LTD
Defendant (By Counterclaim)
(BY COUNTERCLAIM)
Catchwords:
Costs - Special orders - Causes of action on which party unsuccessful - Costs of issues - Effect of failure to admit facts on notice - The applicable scale - Certification for second counsel and solicitor attending trial - Generally turns on own facts
Legislation:
Rules of the Supreme Court 1971, O 66 r 1(3), r 2(a), r 3(2)
Result:
Various costs orders made
Category: B
Representation:
Original Action
Counsel:
| Plaintiff Defendant | : | Mr J C Giles |
| : | Mr K M Pettit SC & Mr A J Sefton |
Solicitors:
| Plaintiff Defendant | : | Brennan & Co |
| : | State Solicitor for Western Australia |
Counterclaim
Counsel:
| Plaintiff (By Counterclaim) | : | Mr K M Pettit SC & Mr A J Sefton |
| Defendant (By Counterclaim) | : | Mr J C Giles |
Solicitors:
| Plaintiff (By Counterclaim) | : | State Solicitor for Western Australia |
| Defendant (By Counterclaim) | : Brennan & Co |
[2006] WASC 137 (S)
Case(s) referred to in judgment(s):
Flotilla Nominees Pty Ltd v Western Australian Land Authority (2003) 28 WAR
95
Oshlack v Richmond River Council (1998) 193 CLR 72
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Scott v Handley (1999) 58 ALD 373
Tipperary Developments Pty Ltd v Western Australia (1999) 21 WAR 250
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190
Case(s) also cited:
Consul Developments Pty Ltd v DPC Estate Pty Ltd (1975) 132 CLR 373
Harding v Essey [2005] WASCA 30 (S)
Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599
Kenny v State of South Australia (1987) 46 SASR 268
Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333
Netbush Pty Ltd v Fascine Developments Pty Ltd [2005] WASC 73 (S)
NSW v Bardolph (1934) 52 CLR 455
P & C Cantarella Pty Ltd v Egg Marketing Board (NSW) [1973] 2 NSWLR 366
Pasdonnay Pty Ltd v SDS Corporation Ltd [2005] WASCA 9(S)
Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378
Tipperary Developments Pty Ltd v State of Western Australia [2002] WASC
283
Tipperary Developments Pty Ltd v State of Western Australia [2004] WASCA
15
Tipperary Developments Pty Ltd v Western Autralia [2004] WASC 179
Westgold Resources NL v St George Bank Ltd, unreported; SCt WA; Library
No 980717; 9 December 1998
[2006] WASC 137 (S)
MURRAY ACJ
MURRAY ACJ: These are competing applications in respect of orders for costs. Competing minutes were filed by the plaintiff and defendant. The applications were supported, respectively, by affidavits. For the defendant an affidavit was filed by a solicitor, Ms Sheppard. With two relatively minor exceptions, I permitted that affidavit to be read, as I did the affidavit filed on behalf of the plaintiff. Counsel for the plaintiff wished to cross-examine Ms Sheppard on three specific questions. I took the view that in matters of this kind it would be an exceptional course to permit cross-examination, and I considered the questions which the plaintiff desired to ventilate in that way to be insufficiently material to the applications before me. I refused leave.
2 These supplementary reasons should be read with the reasons
published on 13 July 2006. Reference to those reasons will sufficiently inform the reader about the causes of action pursued by both claim and counterclaim, the issues agitated at trial and the findings and conclusions to which I came and which led to the dismissal of the plaintiff's claim and to my allowing the defendant's counterclaim sufficiently to rectify a deed of release upon which the defendant relied and to order specific performance of the deed.
3 It is convenient, however, at this point to note that originally
Mr Anderson, the principal of the defendant, was a second defendant to the counterclaim made by the State, specifically in relation to a head of claim for the State to be compensated by the defendants to the counterclaim for losses arising out of what has been described as the PICL transaction. I need refer only briefly to the fact that the particular cause of action relied upon in this regard was that the defendants to the counterclaim were implicated in alleged breaches of fiduciary duties.
4 I accept the submission of counsel for the plaintiff and Mr Anderson
that such a claim involves an allegation of wrongful conduct consciously performed. I accept also that the counterclaim was maintained in that form for a long period of time, during which the defendants to the counterclaim might be regarded as being at hazard of the making of an order for the payment of very substantial damages. The substantial delays in progressing the litigation were caused in various ways. I do not think it is possible to sheet home to one party or the other the blame in respect of the inordinate delay which occurred. But it can be said, I think, that primary responsibility for that cannot be attributed solely to the defendant.
5 However that may be, the matter did come to be more actively
pursued by the parties in the final process of preparation for trial during
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the early part of 2005. Final directions were made in May 2005. On 23 May 2005, I granted leave to the defendant to further amend the defence and counterclaim and other subsequent pleadings. One effect of that process of amendment was to abandon the head of claim to which I have referred above. As the pleadings stood, that led to the dismissal of the counterclaim as against Mr Anderson. I so ordered, and awarded him the costs of that counterclaim. In addition, I ordered that the defendant pay the costs of the plaintiff and Mr Anderson thrown away by reason of the amendments made. Mr Anderson foreshadowed an application for indemnity costs. I recall that I was unprepared to grant such an application on the run, so to speak, but would require it to be properly formulated and supported in the ordinary way. I therefore granted Mr Anderson liberty to apply for any special costs orders which he might be advised he should seek. As I say, all of that was done on 23 May 2005, only very shortly before the trial commenced on 18 July 2005.
The costs of the action
6 The defendant moves for an order that the plaintiff pay its costs of
the consolidated actions and the counterclaim, including those costs reserved, to be taxed. The plaintiff submits that the defendant should only have 75 per cent of its costs of the action. Although it seeks a special order in relation to some costs of the counterclaim, it concedes that it should pay the defendant's costs of the counterclaim so far as it succeeded and resulted in an order for rectification of the deed of release and an order for specific performance of the deed.
7 In view of the nature of the argument presented to me, it is as well to
recall the general rule in relation to costs. It is recorded in O 66 r 1(1) of the Rules of the Supreme Court 1971. The award of costs is discretionary, but the court will generally order that the successful party to an action recover its costs. In Oshlack v Richmond River Council (1998) 193 CLR 72, at 97 [67] - [69], McHugh J said:
"The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
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As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.
The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. … "
8 As I understand the plaintiff's submissions, it is that the defendant is
disentitled to 25 per cent of its costs because it was guilty of misconduct in its mode of defence by introducing a number of issues into the litigation upon which it failed, but which unnecessarily protracted the trial and caused costs to be unnecessarily or unreasonably incurred.
9 This qualification to the general rule as to costs is to be found in
O 66 r 1(2) which focuses upon the conduct in the litigation of the successful party. If the court is of the opinion that that conduct, "has resulted in costs being unnecessarily or unreasonably incurred, it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part." The latter point is made directly by O 66 r 1(3), which provides:
"Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs, the Court may order such party to pay the costs of such issue or issues."
10 In my opinion, when O 66 r 1(2) and r 1(3) are read together, it is
plain that the court is not limited to exercising its discretion to award costs to an unsuccessful party only when it appears that the successful party has introduced some issue or issues on which it has failed, so as to increase the costs. The court will examine the conduct of the parties against the background of the nature of the case. It will take a broad overview and will attempt to do substantial justice between the parties, if necessary by penalising a party who has behaved so as to unnecessarily or unreasonably incur costs.
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11 The same approach has been followed in this Court where there is a
mixed outcome, partly successful and partly unsuccessful, in a case which
involves a number of causes of action. O 66 r 2 provides:"In the absence of any special order -
(a) where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought."
12 The intent and purport of the rule is a particular reinforcement of the
general principle that costs will follow the event when a cause of action is litigated either successfully or unsuccessfully. The intent of r 2(a) is not, as may be thought on one reading of it, to make the award of costs automatic in favour of a party successful on a particular cause of action. It is to reinforce a particular application of the general discretion as to the award of costs for which O 66 r 1(1) provides.
The point was made clearly by Anderson J in a case which has often been applied, Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 where, at 574 - 575, his Honour said:
"In my opinion the approach required by the rules of this Court is that, once it is seen that separate causes of action are involved, and that the plaintiff has succeeded on only one or some, the defendant is prima facie entitled to his costs on the other or others. However, in my experience, this Court will not make such an order as of course. The Court will always look at the realities of the case and attempt to do substantial justice. Thus it may be that, although it is strictly correct to say that different causes of action are involved, there may have been only one contest in substance. This will often be so when all causes of action arise out of the one course of dealings, the one transaction or the same facts. Where that is the situation there will usually be one order for the general costs of the action, moulded as necessary to ensure that, however rough and ready it may be, substantial justice is done. Godden v Alford [1960] WAR 235 at 237. However, even in such cases it may be shown that the successful party has in some relevant way
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misconducted himself or that the issues or causes of action on which the successful party has failed were unreasonably raised by that party. This would bring into operation different principles."
14 The relevant principles may be stated as follows. The award of costs
is discretionary. Costs are awarded for the purpose of compensating a successful party. That litigation is pursued at hazard as to costs is thought to be a useful brake on any tendency to resort too readily to litigation where the case is of doubtful merit. So costs will follow the event, generally speaking, in relation to the result of an action or the results of particular causes of action. But a party may be held to have disentitled itself to an award of costs, wholly or in part, although generally successful, if it behaves unreasonably so as to cause costs to be incurred when they need not have been, and in that event such a party may not only be deprived of its costs, but it may be ordered to pay the costs of its opponent.
15 Turning to this case, it should be recalled that the plaintiff's action
was dismissed and the counterclaim allowed, not in its entirety, but so as to order rectification of the deed of release and its specific performance. In pursuing its claim, the plaintiff relied upon numerous causes of action. A principal claim was that a contract was made between plaintiff and defendant in March 1988. I so found, but held the contract to be in the nature of an oral guarantee, unenforceable by the operation of s 4 of the Statute of Frauds 1677 (Imp).
16 The defendant raised a number of other matters by way of defence,
upon which it did not succeed. For example, the defendant denied that the representations or statements alleged by the plaintiff were made. If they were made, it denied that they were made on behalf of the defendant, because the speakers were said to lack actual or ostensible authority in relation to the particular form of commercial agreement alleged. There was, in relation to the facts relative to this part of the case, as in many other areas, a considerable attack on credibility of witnesses on both sides. In the circumstances of the nature of the claims and counterclaim, the long time which had passed since the events occurred and the general lack of contemporary documents to support the accounts witnesses gave, such contest were, in my view, inevitable. Also, the issues of fact raised on both sides related fairly to the contest between the parties as to the various versions of events maintained by them.
[2006] WASC 137 (S)
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17 So far as the defendant is concerned, I am unable to detect, in
relation to this aspect of the case, any issues introduced by the defendant, or any aspects of its conduct in defending the litigation, which ought to be held to be a disentitlement to the defendant's recovery of costs, or a ground upon which it ought, in justice, to be required to pay any portion of the costs incurred by the plaintiff.
18 The same may be said, I think, in relation to the plaintiff's claim for
damages for negligent misrepresentation, an aspect of the case upon which the plaintiff assumed the obligation to prove that the financial position of Rothwells was not as it alleged those speaking for the defendant asserted it to be, and indeed, on the contrary, that at all material times leading up to and while the plaintiff was making its deposit of $50M into Rothwells, the banker was insolvent.
19 Again, the defence that the representations were not made in the
terms alleged did not succeed. Nor did the defence that in the circumstances as the defendant alleged them to be, no duty of care in the terms relied upon by the plaintiff arose. I held that this aspect of the case turned on my conclusion that the duty of care was not breached by the statements made by those acting for the defendant. In the circumstances, it was not necessary in relation to this aspect of the case for me to deal directly with the questions of fact concerning the financial position of Rothwells.
20 A particular issue arose out of the defendant's plea that any
representations made, being oral, were unenforceable as a result of the application of the Statute of Frauds Amendment Act 1828 (Imp) s 6. The matter was the subject of submissions and I gave it consideration, but in the end preferred not to reach a final conclusion. There was, of course, no impropriety in the introduction of this issue. Finally in relation to questions of negligence, I found no breach of a duty of care falling upon those for whose conduct the State would be vicariously liable in, at the material time, failing to advise the plaintiff of matters concerning the financial position of Rothwells which would make it imprudent for the plaintiff to continue the process of making its deposit into Rothwells.
21 Another of the multiple causes of action pursued by the plaintiff
related to a contract allegedly made in October 1988. Again there were various defences raised, but this allegation failed because, on the evidence available, substantially oral, I was unable to find that a contract in the terms alleged had been made, a contract which, I felt, would, as in March
[2006] WASC 137 (S)
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1988, if made, have been in the nature of an oral guarantee, unenforceable
by the operation of the pleaded Statute of Frauds 1677 (Imp), s 4.22 In the circumstances of this case, I can see nothing in the defendant's
conduct in relation to this matter which ought to deprive it of any portion of its costs, much less contribute to circumstances which would justify an order that it ought to pay any portion of the plaintiff's costs. Again, the same may be said in relation to the further pleaded negligence case which failed because I was unable to find the facts in favour of the plaintiff.
23 The plaintiff advanced separate claims in estoppel based on the
representations allegedly made and established to have been made in March 1988, and allegedly made but not established in September and October 1988. I held this claim to be misconceived, and nothing arises relevant to the defendant's capacity to recover costs.
24 The defendant relied on the deed of release and an alleged antecedent
agreement to release, both by way of defence and a counterclaim for the rectification of the deed and its specific performance. It cannot be asserted, in my opinion, that any issues arose in this aspect of the case which were unnecessarily or argumentatively introduced by the defendant and there were a number of contentions raised and relied upon by the plaintiff, both by way of reply and defence to the counterclaim. Of course, as the plaintiff points out, the defendant's further claim for damages for breach of the release agreement did not succeed.
The proof of the financial position of Rothwells
25 For the plaintiff, particular attention is focused upon the fact that the
plaintiff was put to proof on the question of the financial position of Rothwells, which was relevant or potentially relevant in a number of ways. In the first place, of course it was relevant to the formation and breach of a contract in March 1988, and it was relevant to the question of the alleged breach by the defendant of its duty of care and its ongoing duty to advise the plaintiff if the defendant was or ought reasonably to have been aware at any time during the period leading up to and involving the making of the deposit of $50M that the previously put basis upon which the deposit was to be made, relied upon by the plaintiff, was falsified. Further, of course, if any cause of action was made out, the financial position of Rothwells and its alleged insolvency was potentially relevant to the assessment of damages.
26 In advancing its submission the plaintiff that this was an important
issue in respect of which, by the failure of the defendant to respond to a
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notice to admit facts concerning the financial position of Rothwells at various times, particularly during 1988, and the requirement therefore for the plaintiff to prove the facts necessary to its case, the defendant misconducted itself and behaved unreasonably so as to increase the costs incurred by the plaintiff. The result, the plaintiff argues, is that the defendant should not only be deprived of 25 per cent of its costs, but should be ordered to pay the plaintiff's costs of proving the financial position of Rothwells during the period from 22 October 1987 to 3 November 1988, and of the proof of the facts concerning the financial position of Rothwells which the plaintiff called upon the defendant to admit by a notice to admit facts dated 19 August 1999.
27 The plaintiff makes the bold assertion that the financial position of
Rothwells during 1988 was notorious. It was obvious, the plaintiff asserts, that Rothwells was both hopelessly insolvent and suffering a massive deficiency of assets throughout the relevant period and yet, it says, it was put to proof which involved third party discovery and the assembly of expert evidence which was in fact given at trial by the expert witness Mr Smith, mentioned in the principal reasons. The difficulties encountered in the process of non-party discovery are dealt with in the judgment of Parker J in Tipperary Developments Pty Ltd v Western Australia (1999) 21 WAR 250. Those matters need not be canvassed here.
28 The plaintiff argues that the question of Rothwells ' insolvency and
asset deficiency was a discrete issue which it proved and of which it should have the costs. As will already be apparent, in my opinion this was an issue which bore in different ways upon various aspects of the case. The plaintiff argues that for the defendant to put the plaintiff to proof in this regard offends case management principles. It was a decision "calculated to cause delay and substantial expense". It was a decision taken for tactical reasons, the plaintiff asserts, not because the fact was genuinely disputed. That was reprehensible conduct, particularly for this defendant which, being the State of WA, is traditionally regarded by the courts as having the obligation to conduct itself as a model litigant, not given to taking points for tactical advantage, but required to conduct itself, so far as it properly might, to smooth the wheels of the litigation process to achieve a just and proper result: Scott v Handley (1999) 58 ALD 373, a judgment of the Full Court of the Federal Court, particularly at 383 [43] - [45].
29 In any event, the plaintiff argues, the Rules of the Supreme Court reflect that attitude and expectation of all litigants in respect of a notice to
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admit facts. Order 66 r 3(2) provides that if a party on whom a notice to admit facts is served refuses or neglects to admit the facts, "the costs of proving the facts shall be paid by him, unless the Court otherwise orders". Again, in my opinion, this reflects a particular aspect of the discretionary judgment in relation to costs orders which the Court must make. It signals the impropriety of a bare denial maintained solely for tactical purposes, particularly if contrary to the instructions provided to the lawyer. The proper approach to be taken to pleading in such circumstances and the consequences of failure to behave properly in relation to costs were discussed by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190.
30 As I have said, the plaintiff sought to prove the facts upon which it
relied in this regard by calling an expert witness, Mr Smith. The admissibility of aspects of his evidence was challenged. The nature of the challenge need not here be referred to, nor need it be resolved. Mr Smith was extensively cross-examined. It is clear that in doing so, senior counsel for the defendant relied very substantially on matters upon which he was instructed, with the assistance of the expert witness briefed by the defendant, a Mr Bleakley.
31 There is no doubt that Mr Smith made a number of significant
concessions to the effect that aspects of Rothwells ' financial situation at various times might fairly be put differently, particularly in relation to the provision to be made for doubtful debts. It is unnecessary, for present purposes, to discuss those matters at any length. Suffice it to say that, on one view of it, the facts which the defendant was called upon to admit, but which were put in issue, were not necessarily proven. The final outcome of Mr Smith's evidence was that had it become necessary to deal in detail with the matters he discussed, I would have had to have regard to the impact of his cross-examination upon the opinions he proffered.
32 In short, there is nothing to suggest that there was a bare denial of the
facts of which the plaintiff sought admission, maintained solely for tactical purposes, and there was nothing to suggest that the defendant behaved improperly in putting the asserted case in issue and testing it. This is a case, in my opinion, where the order of the Court ought not to be in the form contemplated by O 66 r 3(2).
33 In my opinion, the final outcome of all this discussion is that in
relation to the costs of the action the defendant has not been shown to have exhibited any impropriety or unreasonable behaviour in its conduct of the litigation so as to make it just that it should be deprived of any
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portion of its costs, much less be ordered to pay the plaintiff's costs in relation to the issues of the proof of the facts concerning Rothwells ' financial position generally, and the subject of the notice to admit facts. The defendant did not introduce issues into the trial of the action which resulted in costs being unnecessarily or unreasonably incurred and there is, I think, no reason why the proper exercise of my discretion would not result in an order in favour of the defendant in relation to the costs of the actions.
Costs of the counterclaim
34 These originally, from an early stage in this litigation, involved the
pursuit of three causes of action. I have mentioned them already. The first pursued against the plaintiff was the claim for rectification of the deed of release and its specific performance. As I have noted, that claim succeeded and the parties agree that there is no reason why the defendant should not have its costs. The second cause of action pursued against the plaintiff was for damages for breach of the contract to release. This claim failed. But I think that it did so has no impact on the costs orders which should be made, because the issue effectively added nothing to the time and effort expended in the trial of the counterclaim for rectification of the deed.
35 However, the third cause of action pursued for knowing participation
in breaches of fiduciary duties owed to the defendant in respect of the PICL transaction which, I agree with the plaintiff, must have been potentially capable of sounding in an award of very substantial damages, was that part of the counterclaim abandoned in the course of the amendment of the pleadings made shortly before trial on 23 May 2005. As I have already observed, that led to the dismissal of the counterclaim as against Mr Anderson and a costs order was made in his favour, reserving him liberty to apply for any special costs order.
36 The plaintiff submits that in relation to the cause of action abandoned
upon the amendments made in May 2005, it also should have its costs, in effect on the ground of parity of treatment with Mr Anderson and, as I understand the submission, as an application directly of O 66 r 2(a). An order ought to be made expressly to that effect to expand upon the different content of the order that the defendant should pay the costs of the plaintiff and Mr Anderson thrown away by reason of the amendments made to the reamended defence, the counterclaim, the amended rejoinder to reply, and reply to the defence to the counterclaim. There will be some
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overlap, of course, but the ordinary process of taxation will avoid any
double counting.37 The plaintiff seeks such costs on an indemnity basis. Mr Anderson
makes a similar application, taking up the liberty to apply reserved to him
in the orders made on 23 May 2005.38 Relevant authorities are collected and discussed in relation to the
proper use and formulation of special costs orders and indemnity costs orders in particular, by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority (2003) 28 WAR 95. At 101 [25], his Honour succinctly summarised the position in relation to indemnity costs orders by saying that they:
" … will be appropriate in cases where there has been improper or unreasonable conduct on the part of a party or his legal advisers. An order for indemnity costs is a mark of disapproval on the part of the Court about the improper or unreasonable conduct of litigation, even though there should not be much difference in the costs recovered under such an order compared with recovery under a properly formulated special costs order."
39 Here the plaintiff and Mr Anderson rely upon the propositions that
the nature of the abandoned claim was that it involved some knowing participation in wrongful conduct, an element of moral turpitude. In that form, the counterclaim was pursued, the plaintiff says, for more than a decade, only to be abandoned on the eve of trial, a circumstance which the plaintiff argues demonstrates that the claim was always understood by the defendant to be without merit, but was maintained to embarrass and vex the defendants to the counterclaim for as long as possible.
40 I have already said that this was an action, including claim and
counterclaim, dogged by a history of delay of inordinate character for a variety of causes and in circumstances where the responsibility for the lack of progress over many years cannot be attributed solely to one party or the other. The counterclaim finds its place in the context of the consolidated actions. It may well be said that the counterclaim, to the extent that it was finally abandoned, could have been abandoned much earlier, but in the circumstances of this case I see nothing in the mere passage of time to support the conclusion that the counterclaim in the form abandoned was maintained by the defendant without, over the years, a genuine belief that it was maintainable. In short, I think the mere assertion on the part of the plaintiff and Mr Anderson is insufficient to
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ground a conclusion that there is, in the circumstances, a need for the Court to mark its disapproval of the defendant's conduct in the way impugned by the plaintiff. While I will order that the plaintiff have the costs of the counterclaim to the extent that it was abandoned, I will not order the costs to be taxed on an indemnity basis.
The applicable scale and special orders
41 Under the Legal Practice Act 2003 (WA), s 210, the Legal Costs Committee established under Pt 13 of that Act, makes legal costs determinations, among other things, for the purpose of regulating the remuneration of legal practitioners in respect of what is described as contentious business carried out by the practitioners in or for the purposes of proceedings before various courts, including this Court. The current determination is the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 which came into operation on 1 July 2006.
42 The effect of such a Determination is provided for in s 215 of the
Legal Practice Act. Relevantly to these proceedings, it regulates the taxation of the bills of costs of legal practitioners between party and party, and any other aspect of the remuneration of those lawyers, including the recovery of disbursements made and expenses incurred properly on behalf of the party or by the party who is claiming costs. The 2006 Determination, cl 3(3), makes it clear that the Determination does not apply to the remuneration of practitioners based on costs incurred before 1 July 2006.
43 Of course, the trial was held during July and August 2005, and while
the great bulk of the work involved in getting the matter up would have been done over a period of time immediately before trial, and while a number of tasks such as administering and answering interrogatories, giving discovery and the like could be fixed as work done in defined periods, some of the work would have been done over a period of years before the trial.
The bulk of the work would no doubt have occurred during the period of operation of the costs Determination which preceded the 2006 Determination. This was the 2004 Determination which had effect from 1 July 2004 and did not apply to the remuneration of practitioners based on costs incurred before that date. The difficulty confronting a taxing officer where allowance is to be made for costs incurred during the period of operation of a number of costs determinations is self-evident. An unproductive inquiry would need to be undertaken to separately value the work found to have been performed during the particular period of
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operation of a costs determination. Alive to this difficulty, both counsel would have me make an order or orders directing the taxing officer to have regard to the limits imposed by and the amounts recoverable under the 2004 Costs Determination, as if that scale applied at all material times.
45 I agree that this is a sensible way to resolve the difficulty, and I think
it is a special order as to costs which I may make pursuant to the provisions of s 215(2) of the Legal Practice Act. As I have mentioned, s 215(1) provides that the taxation of bills of costs is regulated by a legal costs determination in force. Section 215(2) provides:
"Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a) order the payment of costs above those fixed by the determination; (b) fix higher limits of costs than those fixed in the determination; (c) remove limits on costs fixed in the determination; (d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or taxed."
46 It is uniformly the case that where, under succeeding scales
established or made operative by succeeding costs determinations, changes to the maximum remuneration available on taxation are made, the rates and maximum amounts provided in the scale of costs are increased to enable reasonable remuneration to continue to be provided as time goes by. It follows, I think, that once a new determination is made and a new scale of costs becomes operative, I may be of the opinion that the amount of costs which would be allowable under an earlier determination applicable to the taxation process is inadequate, having regard to the unusual difficulty, complexity and importance of the matter, if the case before the Court is of that character, as, in my opinion, this case is. Under s 215(2)(d), I may then make any order or give any direction for the purpose of enabling costs above those in the applicable determination to be ordered or taxed. An order in terms sought by the parties, applying the
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2004 Determination to work done before that determination became
operative is an order or direction of the character envisaged by par (d).47 Some relatively minor matters were debated by the parties. Both
agree that I should certify for second counsel for the trial, but not in respect of the numerous interlocutory applications. It is appropriate, I think, that in relation to the recovery of costs by both the parties there should be parity of treatment in this regard. My own view would be that it was appropriate for both parties to brief senior counsel, for the trial although not for the interlocutory applications, and not in respect of the hearing of the applications for costs themselves.
48 A special order is not required in relation to certification for second
counsel because although, under the 2006 Determination, cl 5(1), the requirement for certification of second counsel no longer exists, that requirement was firmly in place in relation to costs of trial under Item 19(b) and (d) of the 2004 scale. As I have indicated, I think it is proper that I certify for two counsel for the duration of the trial.
49 A further special costs order is sought under s 215(2) in addition to
the order which makes the 2004 Costs Determination that applicable overall, so as to remove various limits on costs fixed in the Determination. The particular scale items identified are those relating to the pleading process, discovery, interrogatories, getting up for trial, and counsel fees generally at trial, the item in respect of recovery of a free on brief for senior and junior counsel and refreshers for both. Having regard to the unusual difficulty, complexity and importance of this action, I think it is proper to make the order sought under s 215(2)(c) so as to remove the limits fixed in the 2004 Determination in respect of the matters identified.
Interrogatories
50 No question arises in relation to the costs of the plaintiff's
interrogatories in view of the fact that I declined to order the defendant pay any portion of the plaintiff's costs of the pursuit of its claim. So far as the interrogatories administered by the defendant are concerned, I think it is probably still necessary for me to order their payment if they are to be recovered. I say that because that is the requirement of O 66 r 47, and the taxing officer is not vested with the power to make the order or allowance under cl 4 of the 2004 Costs Determination. The scale deals with what may be allowed for delivery of interrogatories in Item 9(a).
51 In any event, I accept the defendant's argument that the
interrogatories related to issues fairly raised on the pleadings. They were
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not unreasonably wide. Certain of them were tendered at the trial. Many were issued with leave and I can see nothing in the circumstances to suggest that the defendant's conduct in relation to the administration of interrogatories was in any way unreasonable or unnecessarily increased costs.
In passing, I observe that if it is necessary for me to certify for the provision of transcript to the defendant, then I do so.
Attendance of solicitors
53 The defendant seeks an order allowing the costs of two solicitors
attending the trial on a daily basis. The application is opposed. For the plaintiff it is said that on the defendant's side there were, from time to time, as many as four solicitors present and sometimes only one. The defendant relies upon the complexity and the volume of documents to be managed at the trial. The plaintiff says that on its side the presentation of the case was managed without difficulty by senior and junior counsel and an instructing solicitor.
54 The relevant scale of costs, item 19(e), simply provides an allowance
for a "solicitor attending trial". I think the implication is that in the ordinary run of things that is enough in respect of the recovery of costs on a party and party basis, no matter how many solicitors a party may choose to have in attendance. While I do not doubt that I might make a special order of the kind sought, I am not persuaded that there is a reasonable need so as to justify the order sought and I would leave to the taxing officer the exercise of the power to provide a reasonable allowance for a solicitor attending trial in accordance with the scale item.
The qualifying fees of Mr Bleakley
55 I have mentioned that the defendant commissioned an expert report
on financial matters concerning Rothwells and used it extensively in the cross-examination of Mr Smith. Self-evidently, Mr Bleakley was the expert proposed to be called in relation to Rothwells ' financial position, although, in the final analysis, counsel apparently deemed it to be unnecessary to call him, relying instead upon the concessions to which I have referred above made by Mr Smith in cross-examination.
56 It is a matter for the taxing officer, finally, under Item 33(b) of the
scale, to allow disbursements necessarily or reasonably incurred, and I should not, I think, make any order intruding upon the taxing officer's function in that regard. Nonetheless, I may say that it seems to me clear
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that it was reasonable for the defendant to brief Bleakley, to prepare the report if his evidence should be required by the defendant and, in any event, so that counsel might be properly instructed for the cross-examination of the plaintiff's expert, Mr Smith.
Conclusion
I make the following costs orders -
1.
The plaintiff do pay the defendant's costs of the action, including reserved costs, to be taxed.
2.
The plaintiff do pay the defendant's costs of its counterclaim for the rectification and specific performance of the deed dated 30 December 1988, including any reserved costs applicable thereto, to be taxed.
3.
The defendant do pay the plaintiff's costs of the counterclaim otherwise than as provided in cl 2, including any reserved costs applicable thereto, to be taxed.
4.
Except as provided in cl 5 and cl 6 of these orders, the costs shall be taxed in accordance with the limits imposed by and the amounts recoverable pursuant to the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 scale of costs as if that scale applied at all material times.
5.
Clause 4 of these orders is not to limit the discretion of the taxing officer in taxing the parties' bills of costs to consider the costs incurred by reference to:
(a) when the costs were incurred, and (b) the reasonable amounts which would have been charged at the time the costs were incurred. 6. The scale limits imposed by Items 3, 4, 6, 7, 9, 16, 19(a), 19(b) and 19(d) of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 scale be removed.
7. Each party do have a certificate for second counsel.
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8. The defendant do have a certificate for interrogatories.
9. The defendant do have a certificate for transcript.
10. The costs payable by the defendant to the plaintiff be set off against the costs payable by the plaintiff to the defendant.
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