Trafalgar West Investments Pty Ltd as trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [No 13] - [2019] WASC 58

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   TRAFALGAR WEST INVESTMENTS PTY LTD AS TRUSTEE FOR THE TRAFALGAR WEST INVESTMENTS TRUST -v- SUPERIOR LAWNS AUSTRALIA PTY LTD [No 13] [2019] WASC 58
CORAM:   KENNETH MARTIN J
HEARD:   8 FEBRUARY 2019
DELIVERED          :   8 FEBRUARY 2019
PUBLISHED           :   28 FEBRUARY 2019
FILE NO/S:   COR 59 of 2011
BETWEEN:   TRAFALGAR WEST INVESTMENTS PTY LTD AS TRUSTEE FOR THE TRAFALGAR WEST INVESTMENTS TRUST
Plaintiff
AND
SUPERIOR LAWNS AUSTRALIA PTY LTD
First Defendant
KINGSLEY CRAIG FLUGGE
Second Defendant
MARGARET FLUGGE
Third Defendant
JEROME MATTHEW FLUGGE
Fourth Defendant
LINLEY FLUGGE
Fifth Defendant
DAMIEN CRAIG FLUGGE
Sixth Defendant

Catchwords:

Costs orders - Matter dismissed for want of prosecution - Security for costs previously paid into court - Defendants' draft bill substantially exceeds funds in court - Spent costs orders - No requirement for taxation to be concluded if obvious that with an insolvent plaintiff the seized amount will be substantially exceeded by the ultimate taxed amount - Order for payment out to defendants of security for costs

Legislation:

Corporations Act 2001 (Cth)
Legal Profession Act 2008 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

Application granted
Orders for payment out of court of monies paid in as securities for cost in favour of defendant

Category: B

Representation:

Counsel:

Plaintiff	:	Mr P Jebb (By Leave)
First Defendant	:	Mr M Bennett
Second Defendant	:	Mr M Bennett
Third Defendant	:	Mr M Bennett
Fourth Defendant	:	Mr M Bennett
Fifth Defendant	:	Mr M Bennett
Sixth Defendant	:	Mr M Bennett

Solicitors:

Plaintiff	:	Jebb Legal (By Leave)
First Defendant	:	Bennett & Co
Second Defendant	:	Bennett & Co
Third Defendant	:	Bennett & Co
Fourth Defendant	:	Bennett & Co
Fifth Defendant	:	Bennett & Co
Sixth Defendant	:	Bennett & Co

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

Trafalgar West Investments Pty Ltd as Trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [No 3] [2013] WASC 150
Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd [2011] WASC 171
Wright Prospecting v Hancock Prospecting [No 11] [2011] WASC 74

KENNETH MARTIN J:

(This judgment was delivered extemporaneously on 8 February 2019 and has been edited from the transcript.)

I am dealing with a costs application made by the defendants in this action, COR 59 of 2011, which action was terminated by a deemed want of prosecution under the Rules of the Supreme Court 1971 (WA) (RSC) O 4A r 28(1).
The plaintiff in the action is Trafalgar West Investments Pty Ltd (Trafalgar), which entity is in liquidation. In the affidavit of Mr Alexander James Tharby affirmed 10 September 2018 which the defendants read on this application, there is appended an advice (AJT-3 at pages 6 and 7) on behalf of the joint and several liquidators of 7 September 2018. Relevantly, that advice says (at page 7):
Neither the Company nor its liquidators wish to be heard on this application. If in the course of your application you consider it necessary or desirable to hand a copy of this letter to the Court please feel free to do so.
The court was so informed by the appending of that advice to Mr Tharby's affidavit.
The same no submission position of the liquidators was confirmed again late today, under an email from Mr David Thompson, the barrister engaged to advise the liquidators in previous appearances. Mr Thompson advised my Associate, relevantly:
I confirm that the liquidators of Trafalgar West Investments Pty Ltd (in liquidation) do not intend to appear, as they have no claim with regard to the funds paid into court as security for costs, and take no position on the balance of the defendant's application.
Nevertheless, I noted an attendance at court today of Mr Patrick Jebb in person. Mr Jebb sought to be heard to the extent that the defendants' amended minute of proposed orders of 20 December 2018 (proposed orders) as moved today, in the terms lodged, seeks liberty to apply for non-party costs orders and, to that end, to seek orders, it would seem likely, against Mr Jebb. Mr Jebb had also provided a set of written submissions in an attempted response to the defendants' costs application.
I thought it appropriate to hear Mr Jebb to some extent. I also resolved to accept Mr Jebb's written submissions in the sense that I would receive them as a filed court document. That was notwithstanding that they were strongly objected to by the defendants. Those submissions contain much inappropriate material, particularly in relation to the sphere of alleged circumstances under which the action was commenced back in 2011, and the interim relief initially granted to Trafalgar, but subsequently set aside at a full scale inter parte hearing sometime shortly thereafter and which became Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd [2011] WASC 171.
After 2011, there followed a saga of interlocutory decisions in the action. However, there are some components of Mr Jebb's written submissions which, bearing in mind his sole director status and close proximity to Trafalgar in the past, I thought appropriate to be received - in terms of there being a limited contradictor on the cost application brought today. Mr Jebb was content to withdraw personally once informed that his written submissions were received. His expressed opposition to the making of an order (potentially against him) in terms of par 8 of the proposed orders, is noted.
Towards the substance of the present costs application by the defendants, I am of the view, first, having case managed this corporation's action essentially from inception in 2011, in circumstances where it is not opposed by the liquidators of Trafalgar, that the defendants should have leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to seek the costs orders they do as against the plaintiff in liquidation. To my mind, that is appropriate. This, as seen, is reflected under order 1 of the proposed orders.
Bearing in mind the action now stands as dismissed, on the basis of a deemed want of prosecution by the plaintiff, I see no prejudice at all to the liquidation or to the liquidators in allowing leave for the present application to be made and determined. To the contrary, I see considerable utility in finalising all residual matters as far as possible now by definitive costs orders.
Next, as I verbally indicated to counsel for the defendants, Mr Bennett, I am satisfied today that it is appropriate for the usual costs event order to be made, namely, that this plaintiff, Trafalgar, pay the defendants' costs of the action, including all reserved costs - save for where those reserved costs have already been dealt with under previous orders of the court. That is reflected under order 2 of the proposed orders seen at the end of these reasons.
Likewise, as I also indicated today, it is clear that the provisions of s 280 of the Legal Profession Act 2008 (WA) are satisfied, given the demonstrable complexity, scale and undesirable importance of the now dismissed action. Those features justify an order for a lifting of all scale limits otherwise applicable on a taxation, as is reflected as seen, under order 3 of the proposed orders.
Order 4 of the proposed orders is also appropriate, in my view, on the basis that the now terminated action, albeit commenced as an originating application in the Corporations List and which would normally proceed without pleadings, was necessarily required to proceed on the basis of pleadings - given its underlying complexities. That was the case almost from inception under my directions as case manager. No party disagreed with my orders to that end at the time. The matter has proceeded accordingly by pleadings. Its complexity and dimensions warranted that course.
More controversial were orders 5 and 6 of the proposed orders. This arises from circumstances where it is seen that the corporation, Trafalgar, now in liquidation, in circumstances of a significant insolvency - strongly suggests that there is a substantive unlikelihood of these defendants ever receiving anything tangible for costs of this action awarded against Trafalgar in the short, or indeed longer term as creditors in Trafalgar's liquidation.
The court had been previously moved to order for security for costs against the plaintiff, and acceded to that application: see Trafalgar West Investments Pty Ltd as Trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [No 3] [2013] WASC 150. The amount of the ordered security was subsequently topped up, such that currently $160,000 stands in an interest bearing trust account with the Public Trustee as a payment into court, securing these defendants' costs.
Hence, the successful defendants, who are now entitled to their taxed costs, seek a payment out to them of the amount held by the Public Trustee on the interim basis that they contend that their end entitlement to taxed costs, once eventually quantified, will be likely to overwhelmingly exceed the $160,000 security money and any further sum that has accrued as interest on that $160,000 since it was invested.
That quantitative end assessment position is strongly supported by the draft bill of costs filed by the defendants, as amended. Currently, the version that has been filed is of 18 January 2019 and runs to some 45 pages. It is broken down into a claim by the defendants against the plaintiff for $400,015.50 - as seen at the table on page 8. A table on page 8 comprises 12 items, including disbursements of $10,256.25 amounting in aggregate to the $400,015.50 as claimed.
Having now reviewed, at a high level, the diverse items the subject matter of that draft bill, I would conclude that at the end the taxed costs of the defendants in this action are very likely to exceed $160,000. It is obviously a function, in due course, of a taxing officer of this court to work through the defendants' bill, and to allow or disallow as thought fit such items and allowances as they assess as appropriate. The officer would undertake that exercise, however, in light of the fact that I have now ordered, on the present application, in effect, that all scale limits be removed and, further, that allowances be given on the hypothesis that the taxation proceed, in effect, as if it had proceeded as a more typical civil action commenced by a writ - rather than a Corporations Act originating process.
Taking all of that as a given, added to an accumulated eight years of insight by me towards this action over the period from 2011 to 2019, I am of the view that the probabilities are such as that irrespective of how a taxation process eventually unfolds, the defendants are overwhelmingly likely to receive at the end far more than the $160,000 the subject of the payment into court, even allowing for an amount of extra interest to be added to that secured sum.
The more important question then, after having undertaken this high level quantitative level exercise, is whether the court holds the power to order what is, in effect, an interim tranche payment of costs -to the extent of a payment out of court favouring the defendants in respect of the monies paid into court by way of security for costs - given that this may be the only tangible funds available to them in the short or long term.
Whilst the legal precedent for such a partial order for costs looks somewhat sparse, I am of the view the court's inherent jurisdiction, not to mention its statutory jurisdiction to make a just award of costs, taking a bespoken assessment of the position of the particular litigating parties to do justice in the applicable circumstances, provides that jurisdiction. RSC O 66 r 10 provides that costs may be dealt with at any stage of a proceeding, not necessarily at the conclusion. Aligning that consideration with a 21st century need for efficiency and cost minimisation, not to mention the fostering of an overall consideration of proportionality as an abiding case management consideration, only strengthens the position. A court must be able to render justice at all stages of the litigation cycle, even if it remains for a significant amount of work to be undertaken to reach a finalised taxation of a bill, as in this case.
I am satisfied then that although the decision of Murray J to which I was referred from Wright Prospecting v Hancock Prospecting[No 11] [2011] WASC 74 is not precisely on point, the sentiments it expresses would align. A need for a modern civil court to be flexible and proportionate in terms of its approach to 21st century litigation dictates the conclusion that its powers will extend as far as needed to deliver justice in appropriate circumstances. Here, that extends to the power to order the payment out to the defendants out of the security funds that were ordered to be paid in for the very reason they were ordered to be paid in the first place, namely to secure the costs exposure position against Trafalgar of ultimately successful defendants longer term should they be successful - as they are.
I am satisfied I hold the power to make orders 5 and 6 of the proposed orders. It is fully appropriate here then, in the interests of pragmatic justice, for such orders to issue and to issue presently. That being the case, in the circumstances, I will exercise this power, and order a payment of these funds accordingly.
I would make a slight adjustment to order 5 of the proposed orders as moved, but only to the extent of ordering the defendants' costs of the action be fixed and ordered to be paid to the defendants to the extent of the total of the funds referred to in order 6 of the proposed orders, but with the balance of the defendants' entitlement to the costs of this action to be taxed pursuant to s 500(2) of the Corporations Act, if not agreed.
Having made order 5, order 6 of the proposed orders then becomes necessarily correlative. It orders that the funds which have been paid into court, and held in the interest bearing trust account effectively be paid out to the defendants. I have made some minor adjustments to that as well.
Such orders, in my view, are both within the power of the court to order, and appropriate in all the circumstances.
A final order sought as proposed by order 8 is in relation to preserving the ability of the defendants, if thought fit, to seek non-party costs orders. I will order, by way of slight adjustment to the order as sought, that the defendants' rights in that respect, are preserved.
In the end then, orders will issue in the following terms:
1.The defendants have leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to seek a costs order against the plaintiff.
2.The plaintiff pay the defendants' costs of the action, including all reserved costs, other than costs already awarded by order of this Court.
3.The defendants' costs pursuant to order 2 of the orders, be assessed, if not agreed, without regard to the maximum hourly rates and limits imposed by:
(i) item 11 of the Legal Professional (Supreme Court) (Contentious Business) Determination 2010; or
(ii)item 11 of the Legal Professional (Supreme Court) (Contentious Business) Determination 2012; or
(iii)item 11 of the Legal Professional (Supreme Court) (Contentious Business) Determination 2014; or
(iv)item 11 of the Legal Professional (Supreme Court) (Contentious Business) Determination 2016; or
(v)item 11 of the Legal Professional (Supreme and District Courts) (Contentious Business) Determination 2018.
4.The taxing officer is authorised and directed to tax the defendants' costs so as to include allowances for the defendants' reasonable costs of pleadings, discovery, inspection and review of discovered documents, preparing and appearing for directions hearings, interlocutory applications, proofing witnesses, subpoenas, mediations, general work and correspondence.
5.The defendants' costs of the action are hereby partly fixed and ordered to be paid to the defendants to the extent to the total of the funds referred to in order 6 hereof and with the balance of the defendants' entitlement for the costs of this action to be taxed (subject to s 500(2) of the Corporations Act 2001), if not agreed.
6.The sum of $160,000 which was paid into the Supreme Court of Western Australia (for deposit in an interest bearing trust account with the Public Trustee), by way of security for the defendants' costs pursuant to the orders made on 25 June 2013 and varied on 21 November 2014 by the Honourable Justice Kenneth Martin, together with the interest accrued thereon is to be paid out of Court to the defendants forthwith.
7.The defendants' entitlement to any taxed costs of the action against the plaintiff in excess of the secured costs the subject of order 6 above is expressly declared to be without prejudice to the liquidators' power to determine whether and if so which portion of all such costs are provable in the liquidation of the plaintiff.
8.The defendants' rights to apply for liberty to seek non‑party costs orders are expressly preserved under these orders.
9.The defendants have their assessed costs of the present application.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
28 FEBRUARY 2019