| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : WALLACE -v- SHORESCAPE HOLDINGS PTY LTD [2010] WADC 114 (S) CORAM : STAUDE DCJ HEARD : 17 DECEMBER 2010 DELIVERED : 6 AUGUST 2010 SUPPLEMENTARY
DECISION : 13 JANUARY 2011 FILE NO/S : CIV 372 of 2008 BETWEEN : CLINTON JOSEPH CHRISTOPHER WALLACE ROSARIA WALLACE
Plaintiffs
AND
SHORESCAPE HOLDINGS PTY LTD
First Defendant
PARKRIDGE GROUP PTY LTD
Second Defendant
Catchwords: Costs - General rule that successful party entitled to costs - Whether departure from general rule warranted - Turns on own facts
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Legislation: Rules of the Supreme Court 1971 O 66 r 1 Result: Plaintiffs ordered to pay 50% of defendants' costs Representation: Counsel:
Plaintiffs : Mr A Metaxas
First Defendant : Mr A J Musikanth
Second Defendant : Mr C M Slater
Solicitors:
Plaintiffs : Metaxas & Hager
First Defendant : Jackson McDonald
Second Defendant : Wojtowicz Kelly
Case(s) referred to in judgment(s):
Amaca Pty Ltd v Hannell [2007] WASCA 158 (S)
McConnell v Nationwide News Pty Ltd; Prue v Nationwide News Pty Ltd (unreported, WASC, 10 December 1992, Library No 920670)
Townsend & Ors v Collova & Ors [2005] WASC 4 (S)
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1 STAUDE DCJ: On 6 August 2010 I gave judgment for the defendants in this matter, dismissing the plaintiffs' claims for damages pursuant to s 82 of the Trade Practice Act 1974 (Cth), alternatively s 79 of the Fair Trading Act 1987 (WA). I found that the defendants had each engaged in conduct which was misleading or deceptive by representing two residential lots of a subdivision development in Eaton to be duplex.
2 I was not, however, satisfied that the plaintiffs had suffered any loss and damage because there was no proof that any application for approval of a duplex development on the lots would not have been successful or would have so little chance of success as to have no real value. My decision in this respect was based on the evidence of Mr Mark Jones, former principal town planner for the Shire of Dardanup, as to the operation of cl 3.4.1 of Town Planning Scheme 3, described as a density bonus provision, which allowed the council to give discretionary approval of an application for a two dwelling development on land at least 900 sqm in size. 3 The defendants each moved for costs against the plaintiffs. The plaintiffs contend that the defendants should be deprived of 75% of their costs, invoking O 66 r 1(3) of the Rules of the Supreme Court 1971 (RSC) 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. 4 The applicable principle was enunciated by the Court of Appeal in Amaca Pty Ltd v Hannell [2007] WASCA 158 (S) at [7] - [8]: The power to depart from the general rule to the effect that costs follow the event and to instead adjust the costs order to be made by reference to the failure of the generally successful party on specific and particular issues within the litigation is recognised by practice, authority and the express provisions of O 66 r 1(3). However, its application depends upon the identification of discrete and severable issues, the litigation of which has increased the costs of conducting the proceedings. Established practice in this state, and the authorities, suggest that the exercise of this power should be approached broadly, and as a matter of impression, and without an attempt at "mathematical precision" which is likely to prove illusory – see, for example, J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) [No 2] (1993) 46 RR 301. (Page 4)
Accordingly, the power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the costs of the proceedings in a significant and readily discernable way. In a case in which the generally successful party has failed on only a minor issue, which did not add materially to the cost of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the general rule, unless the conduct of the generally successful party in relation to that issue had been unreasonable. In the event of unreasonableness, different considerations may apply. 5 In McConnell v Nationwide News Pty Ltd; Prue v Nationwide News Pty Ltd (unreported, WASC, 10 December 1992, Library No 920670) Owen J stated: Order 66 r 1(3) only applies where the failed issue has increased the costs. The term 'issue' does not mean a precise issue in the technical pleading sense, but any disputed question of fact or issue of law, and a party will not be awarded costs merely because of his success on particular issues: Cretazzo v Lombardi (1975) 13 SASR 4 at 12, 16. Because of court delays and the high cost of litigation, courts should always exercise the discretion to award the costs of issues on which parties fail in such a way that they will come to realise they will not necessarily recover the whole of their costs of raising a discrete issue, and therefore carefully consider what matters they will raise: Commission of Australian Federal Police v Razzi (1991) 101 ALR 425 at 430. 6 Similarly, in Townsend & Ors v Collova & Ors [2005] WASC 4 (S) Le Miere J deprived a successful defendant of the costs of valuation evidence in contradiction of the plaintiff's evidence in that point, having rejected the evidence of the defendant's expert. His Honour found that for the purposes of O 66 r 1(3) 'an issue is introduced where a defendant denies a fact asserted by the plaintiff and leads evidence to support the defendant's contention in relation to that fact'. 7 In Amaca the plaintiff was successful at first instance, but lost on appeal. There were four substantive and discrete issues, namely, foreseeability, duty of care, breach and causation. The Court of Appeal held that the 'factual and evidentiary substratum' to each of these issues was common to all of them. At trial the knowledge of the appellant as to the risk of contracting mesothelioma as a result of the use of materials containing asbestos fibre bore directly upon the issues of foreseeability, duty of care and breach, and was central to the issue of causation. (Page 5)
8 The Court of Appeal concluded that the major part of the time spent at trial was concerned with evidence which spanned all four identified issues and that it was reasonable for the defendant to put the plaintiff to the proof of all of the issues necessary to establish the cause of action. Consequently, there should be no departure from the general rule. A different outcome was reached with respect to the costs of the appeal because a good deal of the argument on appeal was directed to issues upon which the appellant failed. 9 In principle, then, the usual order for costs may be departed from in circumstances where there are discrete and severable issues upon which the generally successful party has failed which have added to the costs of the proceedings in a significant and readily discernible way. In a case where those issues have the same factual and evidential substratum costs would not necessarily be increased. In this context it is appropriate to consider whether it was reasonable for the defendants to put the plaintiffs to proof of all elements of their claim. 10 In this case, a feature of the proceedings identified by the plaintiffs as significant is the joinder of issue with respect to the contribution claims brought by the defendants against each other. These proceedings were redundant as s 87CD of the Trade Practices Act requires the court to apportion liability between defendants, but, effectively, it was the second defendant's contention that the first defendant did not have authority to make the representation complained of, i.e. that the lots in question were duplex, and on the part of the first defendant it was alleged that it was the mere conduit of information provided to it by the second defendant, as the second defendant's agent. These issues were also substantive issues in respect of the plaintiffs' claim. 11 As between the plaintiffs and the defendants, I note firstly that in respect of the plaintiffs' claim against the first defendant it was necessary for the plaintiffs to prove that the first defendant made a representation which was misleading or deceptive and on which the plaintiffs relied in making their decision to purchase the lots. It was also necessary for the plaintiffs to show that they suffered loss or damage as a result of the first defendant's conduct. The statement of claim alleged that the first defendant was the agent of the second defendant and that the first defendant acted within the scope of its actual or apparent authority in making the representations. 12 As against the second defendant, the plaintiffs had to show that as the first defendant's principal, the second defendant was deemed to have (Page 6)
engaged in misleading or deceptive conduct by reason of the conduct of the first defendant. 13 The evidence adduced in support of the plaintiffs' case was that of the plaintiffs themselves which occupied most of the first day of trial and a large number of documentary exhibits which were tendered through the first named plaintiff or by consent. 14 The case of the first defendant consisted of the evidence of Mr Jones, the former town planner for the Shire of Dardanup; Mr Anthony Roelofsen, the agent employed by the first defendant who dealt with Mr Wallace and Mr Gregory Gardiner, a director of the first defendant. The second defendant's case consisted of the evidence of its director, Mr Thurston Saulsman, and Mr Terence Bright, a real estate agent formerly employed by the first defendant. Each case took about one day and addresses took half a day. 15 The plaintiffs' case was very simple. Based on what they were told, they invested in what they thought were two duplex residential lots. The lots were priced as such. When they came to sell the lots, they were advised by the Shire of Dardanup that the lots were not eligible for duplex development as they did not meet the minimum lot area requirement for a two dwelling development. They were able to this extent to prove that the defendants engaged in misleading or deceptive conduct by describing the lots as duplex. 16 The plaintiffs were not told by the Shire of Dardanup that pursuant to cl 3.4.1 of Town Planning Scheme 3 they could apply for discretionary approval for duplex development of the lots. Because no such applications were made and refused, and because no evidence was adduced to show that such applications if made were not likely to succeed, the plaintiffs failed to show that the defendants' conduct was causative of loss. 17 Essentially, as I have observed, the first defendant contended that there was no misrepresentation because the lots at all times had duplex development potential by virtue of the operation of cl 3.4.1 and that, in the alternative, as agent for the second defendant, it was the mere conduit of information received from its client in relation to the lots. By the conduit defence it not only sought to avoid liability to the plaintiffs, but also to claim contribution or indemnity from the second defendant. 18 The second defendant's case was that the lots were not misrepresented by their description as duplex, but if they were, the second (Page 7)
defendant could not be found to have engaged in misleading or deceptive conduct because it did not authorise the first defendant to describe the lots to prospective purchasers as such. 19 Having regard to my finding the lots did in fact have duplex development potential, it was not unreasonable for the defendants to deny the allegation of misleading or deceptive conduct and to put the plaintiffs to proof of their claims. However, the defendants elected to go further by effectively attributing to each other any liability which the plaintiffs might establish. By the introduction of issues as to whether the first defendant was a conduit of information received from the second defendant which it reasonably believed to be correct and whether the first defendant was the second defendant's authorised agent, the costs of the proceedings generally and the length of the trial in particular was increased. 20 I do not consider that this is a case in which, as in Amaca, 'the factual and evidentiary substratum' of the main issues was the same. Rather, I find that the issues upon which the generally successful defendants failed concerned their business relationship and the manner in which the land was marketed. These issues were severable and discrete from the issue upon which the plaintiffs failed and did substantially increase the costs of the proceedings. 21 While recognising that, in the interests of consistency and predictability, a court should be reluctant to depart from the general rule that costs follow the event, I am satisfied that my discretion should be exercised so as to limit the costs recoverable by the defendants to 50% of their costs to be taxed. This apportionment is based on a broad view of the proceedings as a whole. 22 With respect to the reserved costs of the adjournment of the trial in January this year, counsel for the plaintiffs concedes that those costs should follow the event and be awarded in accordance with the principal costs order. 23 So far as the costs of the contribution proceedings are concerned, the defendants are agreed that there should be no order for costs. 24 Accordingly, the orders will be as follows: 1. The plaintiffs do pay 50% of the first and second defendants' costs of the action to be taxed, including reserved costs. (Page 8)
2. The contribution claims as between the first and second defendants be dismissed with no order as to costs.
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