Weston, L.K. v Beaufils, S.W

[1994] FCA 457

vs7 v-

JUDGMENT NO. f -

THE FEDERAL COURT OF AUSTRALIA ) )

m SOUTH p	)	NO NG 455 of 1992
) )

BETWEEN:

-

Applicants

m:

First Respondent

-

Second Respondent

LDELETEDl	Third Respondent
lDELETEDl	Fourth Respondent
lDELETEDl	Fifth Respondent
Sixth Respondent

-

Seventh Respondent

Eighth Respondent

- Ninth Respondent

L!A'rm:  8 JUNE 1994

CREDIT A N O - c PTY

LIMITED

Tenth Respondent

Eleventh Respondent

OVE PTY LIMITED

Twelfth Respondent

mRAM:  HILL J

M: SYDNEY

FOR JUD-

On 18 May 1994 I delivered reasons in this matter, making orders that the matter be adjourned to a date to be fixed with counsel for further argument on the form of orders to be made and as to the question of costs. In accordance therewith both counsel for the Weston interests and counsel for the Beaufils' interests prepared drafts of proposed declarations and orders. Counsel for Mr Brownlee and his interests, consistent with the argument raised, indicated that his client did not propose to make submissions but merely to protect his client's interests in respect of the criminal proceedings which were still pending.

There are three specific matters which arise out of the draft prepared by the Weston interests which require specific attention and to which argument was addressed. There were, as well, a number of matters of a more administrative nature and my attitude to them will be clear from the draft of	orders which I propose to distribute and need not be dealt	with specifically in a judgment.
The three matters of concern relate first to the appropriate orders to make, having regard to the events surrounding the Raby Bay property. The second matter, which is perhaps of a more formal kind, concerns the appropriate order to make in respect of draft orders which relate to
damages. The final matter is the question of the manner in which costs should be dealt with in the orders.
The draft prepared by the Weston interests dealt with the Raby Bay proceeds of sale by providing for damages against Mr Beaufils for a breach by him of the fiduciary duty owed by him to Mr Weston. Counsel for Mr Beaufils, on the other hand, submitted that this was an incorrect treatment and inconsistent with the reasons which I had delivered. The money should, it was submitted, be treated as having been advanced to the Coolangatta Hotel at interest and should therefore not be the subject of orders at all. The resolution of thie question turns upon whether Mr Weston acquiesced in the payment by Mr Beaufils of the proceeds of sale of the Raby Bay property to the Coolangatta Hotel or waived his rights in respect of that payment.
This is a matter in respect of which there are no evidence in order that the matter could be dealt with prior to accordingly I requested counsel to refer me to the appropriate findings of fact in the reasons which I have delivered and
the making of final orders. In my reasons of 18 May 1994 (at
14) I said, inter die, that after the moneys had been paid to
the hotel, Mr Beaufils advised Mr Weston of that fact. I continued:

"When asked why this had been done, Mr Beaufils replied that he thought that was what Mr Weston wanted. He told Mr Weston that the money would be 'safe up there' and that he would be able to get it back later if he wanted it."

That is almost a verbatim summary of the affidavit evidence. I was referred, however, to the subsequent cross- examination by Mr Gray which was permitted as a result of an amendment to the applicant's statement of claim alleging conversion of the money.

I have read the transcript of that cross-examination but would not conclude from it that there was any acquiescence or waiver on the part of Mr Weston.

It is true that Mr Weston's answers are often unclear and, in many respects, unresponsive to the questions which were asked of him. However, as I recall his evidence, and from the transcript which I have read again, it seems to

me that the evidence amounts to no more than a concession by	Mr Weston that after the conversation, which I refer to in the
judgment, he knew that the money had been put in the hotel and he did not demand that Mr Beaufils return it. Mr Weston, in his evidence said that he thought that he would have been able to get the money back from the hotel and expected that he would get interest upon it, but made no agreement to that effect and no demand of Mr Beaufils. I think that that evidence, in the context of the relationship between parties, falls short of that which would be necessary to establish a defence on the part of Mr Beaufils of acquiescence or waiver.
Accordingly, I would find that the moneys representing the proceeds of sale of the Raby Bay property were in a different category to the moneys originally advanced by Mr Weston to the Coolangatta Hotel. Rather, these moneys were dealt with by Mr Beaufils without the authority or acquiescence of Mr Weston and in breach of trust and accordingly that these are moneys which Mr Beaufils is obliged to repay to Mr Weston.
The second matter concerns various orders that were prepared by counsel for Mr Weston in the form that judgment be entered for sums of money payable by way of damages. Counsel
for Mr Beaufils has submitted, and I think correctly, that in
the context of an overall account between the parties in respect of the breaches of trust involved in the present case,
it would be inappropriate, generally speaking, to make orders for damages as sought.
I do have, however, one qualification to that and that is in respect of the Raby Bay moneys. It seems to me that where Mr Beaufils withdrew the moneys, without consent, from his trust account and paid those moneys to a company which is now in liquidation, Mr Weston is entitled to damages for breach of the fiduciary duty of Mr Beaufils to his client and I have so provided in the orders.
The final matter concerns the question of costs. Counsel for Mr Weeton has sought an order for indemnity costs against all but the twelfth respondent. That cost order is opposed by counsel for the Beaufile' interests. As before, counsel for Mr Brownlee offered no assistance.
There is no doubt that the Court has power to order indemnity costs. The Court's power so to do stems from 6.43
of the Eederal of Aus- 1976 (Cth) and perhaps
also 8.23. It is clear, however, from the provisions of 0.62
of the - 1Court Ru-, which deals with costs and relates only to party and party costs, that circumstances out of the ordinary will be necessary before they will warrant an order that one party pay the other party's costs so as to provide a full indemnity.
The power to order indemnity costs and the circumstances in which, under the cases presently decided, indemnity costs may be awarded are dealt with in a very full
judgment of Sheppard J in -live - CQ v -

. .

Llmlted (1993) 118 ALR 248. As his Honour points out, in the

ordinary case, the Court will order the unsuccessful party to pay the costs of a successful party on a party and party basis but, nevertheless, the Court has an absolute and unfettered

jurisdiction in awarding costs, although in exercising that discretion the Court must do so judicially. One formulation

derived from what was said by Brandon LJ in Preston v P -

[l9821 1 All ER 41 at 58 and adopted by Woodward J in Fountain

. .

Selected v P r o m

PtV . . (1988) 81 ALR 397 at 400-1, is that

there must be some special or unusual feature in the case justifying the Court exercising its diecretion in ordering indemnity costs.

The occasions where indemnity costs may be ordered are not, of course, closed and any list of examples of cases where indemnity costs may be ordered is just that, a list of examples rather than an exclusive statement of the circumstances. Thus, indemnity costs may be ordered against a respondent where, for example, there was no merit at all in the respondent's case or, put another way, the case was hopeless. Or again, costs may be awarded on an indemnity

basis where proceedings have been unnecessarily prolonged by the way in which a hopeless case has been conducted.	Of course, where an applicant or a respondent is found to have brought the proceedings, or defended it for some collateral purpose, indemnity costs may be awarded. Woodward
J in Fountain said (at 401):

"I believe that, it is appropriate to

consider awarding 'solicitor and client' or 'indemnity' costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant , proper1 y advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or .because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion. "

The present could hardly be said to be a case where the respondents had no chance of success at all. Clearly, there were substantial legal arguments that could be, and in fact were, put forward.

I was critical during the trial and in the judgment of the time the case took in evidence, having regard to the fact that ultimately there was no dispute as to the facts. Indeed the facts were, if not completely at least very substantially, the same as those which had been initially

objections there was extensive cross-examination of Mr Weston

sworn to on affidavit by Mr Weston. Apart from lengthy

and I have given consideration to whether these circumstances warrant some, at least, order as to costs on an indemnity basis. I think the difficulty of so doing is that although it is easy to say that the facts were substantially the same as in the initial affidavit, it was, nevertheless, necessary for the respondents to ensure that the factual basis of their case for illegality was established in the best possible light and for that reason I do not think that, notwithstanding the various interlocutory proceedings that occurred and the perhaps change of direction that the respondents case took during the proceedings, an award of costs on an indemnity basis is appropriate in all the circumstances.

For these reasons I propose to make the costs on a party and party basis. In fairness to counsel I propose to hand now to each counsel a draft of the orders I propose and adjourn the matter to allow them to read and consider them, a process that may require cross-referencing between the various draft orders which were originally prepared.

I certify that this and the

preceding eight (8) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Mr Justice Hill.

Date: 8 %%p+

Counsel and Solicitors R Bell instructed by

for Applicants:  O'Hara & CO

Counsel and Solicitors	VR Gray instructed by Hughes
for First, Sixth, Seventh,	& Taylor

Eighth, Eleventh Respondents:

Counsel and Solicitors	G Kennedy instructed by
for Second, Ninth, Tenth	Axtens; Watkins, Tapsell &
Respondents:	Nolan
Solicitors for Twelfth	Gye Perkes & Stone

Respondent:

Date of Hearing:	8 June 1994
Date Judgment Delivered:	8 June 1994