Wildbeach Corporation Pty Ltd v Atkins
[2008] WASC 29
•7 MARCH 2008
WILDBEACH CORPORATION PTY LTD -v- ATKINS [2008] WASC 29
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 29 | |
| Case No: | CIV:1295/2007 | 30 JANUARY & 6 FEBRUARY 2008 | |
| Coram: | JOHNSON J | 6/03/08 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Costs awarded to the applicant on indemnity basis | ||
| B | |||
| PDF Version |
| Parties: | WILDBEACH CORPORATION PTY LTD (ACN 089 979 224) COLIN ROSS ATKINS KANAYA HOLDINGS PTY LTD (ACN 098 864 905) |
Catchwords: | Discontinued contempt proceedings Indemnity costs |
Legislation: | Rules of the Supreme Court 1971 (WA) O 26A |
Case References: | Ashfield Municipal Council v Stravitsky [2005] NSWLEC 492 McKinnon v Adams (No 2) [2003] VSC 502 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 Rip Curl International Pty Ltd v Phone Lab Pty Ltd [2004] FCA 1215 Universal City Studios LLLP v Hoey t/as DVD Kingdom [2007] FCA 806 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
COLIN ROSS ATKINS
First Respondent
KANAYA HOLDINGS PTY LTD (ACN 098 864 905)
Second Respondent
Catchwords:
Discontinued contempt proceedings - Indemnity costs
Legislation:
Rules of the Supreme Court 1971 (WA) O 26A
Result:
Costs awarded to the applicant on indemnity basis
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Category: B
Representation:
Counsel:
Applicant : Mr P B O'Neal
First Respondent : Mr R C Ioppolo
Second Respondent : Mr R C Ioppolo
Solicitors:
Applicant : McCallum Donovan Sweeney
First Respondent : Talbot Olivier
Second Respondent : Talbot Olivier
Case(s) referred to in judgment(s):
Ashfield Municipal Council v Stravitsky [2005] NSWLEC 492
McKinnon v Adams (No 2) [2003] VSC 502
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Rip Curl International Pty Ltd v Phone Lab Pty Ltd [2004] FCA 1215
Universal City Studios LLLP v Hoey t/as DVD Kingdom [2007] FCA 806
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1 JOHNSON J: By an amended chambers summons the applicant sought an order that the respondents be punished for contempt in that they failed to comply with an order made by Acting Master Chapman on 20 August 2007. The order required the respondents, within 28 days of the date of service of the order, to file and serve on the applicant's solicitors an affidavit of discovery.
2 The order was made in proceedings commenced by chamber summons under Rules of the Supreme Court 1971 (WA) O 26A for discovery from a potential party, commonly referred to as 'pre-action discovery'. The purpose of the rule is to obtain sufficient information to enable a decision to be made on whether to commence proceedings. Breach of such an order is of considerable significance as it can effectively prevent the applicant from bringing proceedings when to do so would be justified and may be successful.
3 The chamber summons was brought after contempt action was foreshadowed by the applicant's solicitors on five separate occasions. Further, as at the date of filing the chamber summons, there had been no compliance with the order for discovery.
4 After the summons was issued the respondents provided discovery and the applicant elected not to pursue the contempt proceedings. However, the applicant then applied for an award of costs on an indemnity basis. That application is opposed by the respondents.
5 At the conclusion of the hearing of the costs application, I granted the application for costs on an indemnity basis and advised that I would subsequently provide my reasons for that decision and also determine the amount of costs to be awarded to the applicant.
Summary of Facts
6 The starting point of any consideration of the award of costs in the circumstances of this case must be the conduct of the parties with respect to the order for discovery as well as the contempt proceedings.
7 There is dispute between the parties with respect to certain factual issues. Counsel for the respondents submitted that, as the applicant has not made a request to cross-examine, the court is not in a position to determine facts on the basis of the affidavit evidence. I do not accept that proposition.
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8 Matters of this nature are often dealt with based on affidavit evidence and, provided I am able to identify a sound basis for accepting the version contained in the affidavit of one witness over that of another, I believe I am entitled to rely on such facts in the exercise of my discretion to award indemnity costs. I am able to take into account circumstances such as the practice of solicitors of making notes of conversations with others, in particular with unrepresented parties to a proceeding. I am also able to consider more general circumstances such as the time lapse between a conversation and recalling the conversation, including if and when notes were taken. Further, in most instances, the conversation between the applicant’s solicitor and the first respondent was subsequently confirmed in writing. I appreciate that there are limitations on this approach but I will deal more specifically with the issue when it comes to considering specific factual matters.
9 The extracted order was served on the respondents' solicitors on 28 August 2007. A further copy of the extracted order was sent by facsimile to the first respondent on 29 August 2007. In accordance with the order, the affidavit of discovery was to be served by 25 September 2007. Neither the first or second respondent served on the applicant's solicitor by that date any affidavit in compliance with the order.
10 It must be recognized from the outset that all subsequent events, agreements and arrangements fall to be considered in the context of the respondents being in breach of the court's order and the plaintiff requiring the discovery in order to commence proceedings.
11 On 10 October 2007 Ashley Macknay, a director of McCallum Donovan Sweeney, the applicant's solicitors, wrote to Mr Colin Ross Atkins, the first respondent and director of the second respondent. Mr Macknay advised that if, within seven days of the date of the letter, the respondents did not serve the affidavit of discovery in compliance with the order, or did not contact Mr Macknay to request an extension of time, the applicant would be left with no option but to commence proceedings against the respondents for contempt. The letter was sent by facsimile on the same day.
12 On 19 October 2007 Mr Atkins attempted to contact David Gordon Dundas, the solicitor from McCallum Donovan Sweeney with the day to day carriage of the matter. Mr Atkins left a message with a mobile phone number. Having received the message that the first respondent had called, Mr Dundas rang the mobile phone number and spoke with a man who identified himself as Ross Atkins and who advised that he was living in
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- Queensland. During the conversation Mr Atkins stated that he had received the extracted order and confirmed that he had been receiving facsimiles from McCallum Donovan Sweeney that had been sent to his facsimile number in Perth. Mr Atkins requested a 30 day extension of time to comply with the order.
13 Mr Dundas confirmed this conversation in a letter sent to Mr Atkins by facsimile and dated 23 October 2007. The letter also advised Mr Atkins that the applicant was willing to consent to the request for an additional 30 days to provide the required affidavit and inspection of the discovered documents on the condition that, by 12.00 pm WST on Friday 26 October 2007, Mr Atkins sign, date and return the acknowledgment and undertaking at the base of the letter. The undertaking required Mr Atkins to comply with the order by 19 November 2007.
14 The letter further stated that, if Mr Atkins did not return the signed acknowledgment by the stated time, then the solicitors had instructions to commence contempt proceedings. Finally, Mr Atkins was advised that this was the only extension of time to which consent would be given. On receipt of that letter Mr Atkins would have been well aware that a failure to provide the discovery within the terms of the agreement would result in contempt proceedings being initiated.
15 It can be seen that, insofar as there was any agreement not to take any action against the respondents, it was dependent on the undertaking being given by 12.00 pm on 26 October 2007. The undertaking was not provided by that date.
16 On 29 October 2007, Mr Macknay sent a letter to the respondents by facsimile advising that, as the condition had not been complied with by the specified time, or at all, instructions had been provided to commence contempt proceedings. In fact the undertaking was signed on 30 October 2007 and faxed to the applicant’s solicitors on the same day. Consequently the respondents were in breach of the agreement which provided that the applicant would not commence proceedings in relation to the breach of the order for discovery.
17 On 2 November 2007 Mr Macknay again sent a letter to Mr Atkins by facsimile stating that, despite the fact that the acknowledgment and undertaking had not been returned by the date requested, the applicant was prepared 'in this instant to consent based on your undertaking, to this final extension of time'. Mr Atkins was further advised that if he did not
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- fully comply with the order by the agreed time, Mr Macknay was instructed to commence any necessary proceedings for contempt of court.
18 Consequently, on 2 November 2007 there was an agreement between the parties that the foreshadowed contempt proceeding would not be commenced provided that the respondents gave discovery by 19 November 2007. Nevertheless, it remained the case that the respondents were in breach of the court order.
19 On 15 November 2007 Mr Dundas received a further telephone call from Mr Atkins in which he requested that he be sent the format of the affidavit he was expected to swear. Mr Dundas' response was to state that he could not advise him of his legal obligations but would fax to him a copy of the Supreme Court forms required for an affidavit of discovery.
20 On 19 November 2007 the applicant's solicitors received a facsimile from Talbot Olivier, the firm of solicitors who had previously acted for the respondents in the proceedings, advising that, despite no longer having instructions to act, they had been asked by Mr Atkins to contact McCallum Donovan Sweeney to inform them 'that certain documents within the orders made against Mr Atkins' were held on their files and that those documents would be available for inspection at their offices.
21 On 21 November 2007 Mr Dundas sent a letter to Mr Atkins by facsimile stating that, despite undertaking to comply with the order for discovery by 19 November 2007, Mr Atkins had not done so in that the applicant had not been served with an affidavit in compliance with the order. Mr Atkins was advised that the applicant had provided instructions to issue contempt proceedings on inquiry made as to whether he was willing to consent to orders finding him in contempt. Mr Atkins was further advised that the application for contempt would be filed on the following Thursday.
22 On 22 November 2007 Mr Dundas received a further telephone call from Mr Atkins in which he stated, relevantly, that he would not consent to any orders finding him in contempt, that he expected to be in Perth on the weekend of 24 and 25 November 2007 and he would provide the affidavit and inspection on 26 November 2007, and that it wasn’t possible to send the affidavit from Queensland.
23 In his affidavit Mr Atkins states that, by reason of the telephone conversation on 22 November there was an agreement that the applicant would further defer, until after 26 November 2007, applying for orders for committal for contempt. He denies that he was told that the applicant
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- would proceed with preparing the contempt application. Mr Atkins may not have received that advice on 22 November 2007, but he had already received it on 21 November 2007.
24 According to Mr Dundas' affidavit, on 26 November 2007 he received a message that Mr Atkins had called and left a mobile phone number for Mr Dundas to call him back. When Mr Dundas returned the call and spoke to Mr Atkins he was advised that Mr Atkins had been 'held up' in serving the affidavit, and that he was currently in Perth and would deliver the affidavit and the list of documents at 10.00 am on 27 November 2007. Mr Atkins also advised that the documents would be available for inspection at his solicitor's office after that time. Mr Atkins also said that he would call Mr Dundas before 10.00 am on 27 November 2007 if there was any delay that meant he could not serve the affidavit by 10.00 am on that day.
25 In his affidavit of 25 January 2008 Mr Atkins gives a slightly different account of his conversation with Mr Dundas. Mr Atkins states that he advised Mr Dundas that he would be serving the affidavit as early as possible the next day and that the documents would then be available for inspection at the offices of Talbot Olivier.
26 Mr Atkins also asserts that by reason of that conversation there was an agreement that the applicant would further defer applying for contempt orders until after 27 November 2007. He further states that he was not advised that the applicant would proceed to apply for contempt orders before 28 November 2007. I repeat the observation I have made with respect to the conversation on 22 November 2007. It would have been necessary for Mr Dundas to have told Mr Atkins that no action would be taken in order for Mr Atkins to have a reasonable belief that the application would be deferred. No such statement is alleged to have been made.
27 Mr Dundas did not receive a telephone call from Mr Atkins before 10.00 am on 27 November 2007, nor was the affidavit delivered at 10.00 am or thereafter. As at 27 November 2007, the date of the affidavit of Mr Dundas, no affidavit of discovery had been served on McCallum Donovan Sweeney.
28 Following the swearing of Mr Dundas' first affidavit, he arranged for the chamber summons to be filed along with the affidavits in support. Those documents were filed at approximately 11.30 am. At 1.15 pm on the same day, the applicant's solicitors were served with an affidavit of
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- discovery of Colin Ross Atkins sworn 27 November 2007. The copy served was missing a page.
29 On 28 November 2007 Mr Dundas conducted a preliminary inspection of the documents listed in the affidavit of discovery at the offices of Talbot Olivier. On 29 November 2007 Mr Dundas telephoned Mr Hemery at Talbot Olivier and stated that the preliminary inspection of the documents had taken place and that a further inspection would be required. Mr Hemery stated that he was aware that the respondents had been served with an application for contempt and he had been instructed not to provide further access to the documents pending resolution of the contempt application.
30 By facsimile dated 29 November 2007 Mr Atkins advised the applicant's solicitors that the documents would not be available for inspection or photocopying 'at this stage' and that the documents had been removed from the offices of Talbot Olivier. The reason given for this action was that the respondents had been served with the summons for contempt and, until the summons was dealt with, no documents would be available. On 30 November 2007, Mr Dundas received a telephone call from Mr Atkins to the same effect with emphasis on the fact that no documents would be available until the summons had been dealt with. The removal of the documents was subsequently confirmed in a facsimile from Talbot Olivier to McCallum Donovan Sweeney.
31 In his affidavit, Mr Atkins states that he denied the applicant's further access to the documents for inspection because the applicant had breached the agreement to defer applying for contempt orders. That statement is not consistent with the content of the facsimile of 29 November 2007 which, although it refers to resolution of the contempt proceedings, makes no mention of an agreement or a breach of an agreement.
32 By a letter dated 7 December 2007 and sent by facsimile to Mr Atkins, Mr Macknay advised that the applicant considered that Mr Atkins' refusal to allow further and full inspection and photocopying of the documents was in clear contravention of the order and was a contempt of court. Mr Atkins was further advised that the summons would be amended to include a further ground of contempt unless the documents were made available. Finally, Mr Macknay offered on behalf of the applicant to discontinue the summons upon agreement as to costs or with costs being dealt with by the Court.
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33 On 14 December 2007 Mr Dundas received a telephone call from Mr Atkins. Mr Atkins advised that the applicant's offer was rejected and he was still not prepared to provide inspection of the documents. He further stated that, unless the summons was discontinued with no orders as to costs, he would not make the documents available for inspection or photocopying.
34 Mr Atkins deposes to the fact that he subsequently received legal advice about his decision and on 16 January 2008 sent a facsimile to the applicant’s solicitors confirming his oral advice earlier on that day that the documents were again available for inspection without condition.
35 In his facsimile to the applicant’s solicitors Mr Atkins stated that he 'complied with my understanding of the arrangement' and expressed the view that the contempt application was not justified. He makes no reference to an agreement not to proceed with the contempt application.
36 It is apparent from the foregoing that the respondents were served with the order and were aware of the order. It is also the case that the respondents were advised in writing on five separate occasions that an application for contempt may or would be brought. Those occasions were 10 October 2007, 23 October 2007, 29 October 2007, 2 November 2007 and 21 November 2007.
37 The respondents did not comply with the order, or with the undertaking and neither was an affidavit of discovery served at any of the subsequent dates or times on which Mr Atkins advised the applicant's solicitors that he would do so.
38 There is an issue with respect to the final occasion concerning whether Mr Atkins said that he would deliver the affidavit of discovery by 10.00 am on 27 November 2007 or 'as early as possibly' on that date. It is clear from the foregoing account that Mr Dundas, as would be expected from a legal practitioner, at all times took a careful note of his conversations. The accuracy of those notes is supported, in all relevant respects, by the correspondence Mr Dundas sent confirming almost all of the conversations with Mr Atkins. Mr Atkins did not dispute the content of those letters confirming earlier telephone conversations. Further, in circumstances where contempt proceedings were contemplated, as is clear from the correspondence, it would have been paramount to determine with certainty whether the respondents were in breach of any undertaking or agreement in relation to providing discovery. In those circumstances I consider that the importance of identifying a particular time supports the
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- conclusion that a precise time was nominated in accordance with Mr Dundas' version of events. In my view, an assurance that discovery would be provided 'as early as possible' would have been insufficiently precise to satisfy the applicants in all the circumstances which had preceded the date of the conversation.
39 However, even if I were unable to determine the precise facts of this conversation on the affidavit evidence available, for reasons which follow I do not consider that to be a bar to determining the outcome of this application.
Whether costs should be awarded on discontinued contempt proceedings
40 The respondents submit that a court should not make an order for costs where, as in this case, a proceeding is not pursued. This is said to be because the court cannot try a hypothetical action between the parties in order to determine which party would have succeeded. Support for that proposition is said to be found in an extract from Seaman's Civil Procedure of Western Australia [66.10.14] where reference is made to the decision in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. The principle set out in Seaman's Civil Procedure of Western Australia is said to be that the first questions to consider are whether one of the parties acted so unreasonably in bringing or conducting the application that the other party should have the costs of the application and whether one party would almost certainly have succeeded and should have the costs of the application. According to counsel for the respondents, as the contempt proceeding was not pursued, and all relevant circumstances or explanations are not before the court, the court is not in a position to determine the potential outcome and any consequent entitlement to costs.
41 In fact, as counsel for the applicant pointed out, the actual extract puts the two questions or situations in the alternative. In the authority relied upon, Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, the two situations are identified as separate and distinct examples of when an award of costs may properly be made in the absence of a full hearing on the merits. McHugh J stated [624] - [625]:
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action….In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action…in some cases a judge may feel confident that, although both parties have acted reasonably,
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- one party was almost certain to have succeeded if the matter had been fully tried.
42 It was further submitted on behalf of the respondents that, even if the respondents' conduct was considered to be unreasonable, the conduct was not in the course of the proceeding. There are a number of flaws in that submission. The first is that at least some of the unreasonable conduct occurred after proceedings had commenced. As noted above, following service of the summons, Mr Atkins removed the documents from the offices of Talbot Olivier so that they could no longer be inspected. In his facsimile dated 29 November 2007 Mr Atkins expressly stated that he adopted that course because the respondents had been served with the summons for contempt. In his affidavit, Mr Atkins stated that he caused the documents to be removed because, in his opinion, the applicant had breached an agreement to defer applying for contempt orders.
43 The second flaw is that the statement of principle set out by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin does not restrict the principle to unreasonable conduct 'in the course of the action'. Indeed, his Honour includes, by way of further example, administrative law matters where 'it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation.'
44 In this case it is the respondents' failure to comply with the order for discovery (necessary to determine whether an action may be brought), that put the plaintiff in the position of bringing contempt proceeding to enforce the order. I see no real distinction between that situation and the example given by McHugh J with respect to administrative law matters.
45 The remaining flaw in the proposition relied upon by the respondent is that the comparison with an action which has commenced but not proceeded to judgment is not, in my opinion, the appropriate comparison in the circumstances of a contempt proceeding for a breach of pre-action discovery. Where an action is brought against a defendant, every step in the action is one of which the defendant need not have incurred the costs if the action proves to be unsuccessful. In my view, a better comparison is with an interlocutory application which is brought because of non-compliance with an order, or some other form of unreasonable conduct, during the course of litigation. In such circumstances it is open to the court to make an award of costs against a party, irrespective of whether judgment may ultimately be in favour of that party. This is because, in
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- the absence of the unreasonable conduct, the particular interlocutory proceeding would not have been brought and the opposing party would not have incurred the costs.
46 I also have some difficulty with the respondents' proposition that, without a hypothetical hearing of the application, the Court cannot conclude that the application would have almost certainly succeeded. This is said to be particularly so in view of the higher standard of proof which applies in such cases. The court has the advantage of access to the correspondence between the parties during the relevant period, as well as affidavit evidence of what did and did not occur between the making of the order for discovery and the service by the respondents of the affidavit of discovery. Almost all of the central facts are not in dispute. The respondents were at all times in breach of the court's order. There is no suggestion that there has been some mistake or misunderstanding.
47 The only issue raised by the respondents which addresses the substance of a contempt proceeding is that there were two consecutive agreements with the applicant that no action would be taken as a result of failing to comply with the order, conditional on discovery being provided by specified dates. The agreements are erroneously described as agreements to extend time, something which can only be done by the court. Even if such agreements existed, one was breached and the existence of a conditional agreement not to take action does not change the position that the respondents breached a court order, which is the substance of the contempt. Neither is there a reasonable, even plausible, explanation provided to excuse the failure to comply with the terms of the order. The only explanation provided by Mr Atkins was that it was not possible to send the affidavit of discovery from Queensland. I find it unnecessary to consider the merits of such an explanation. It was, in any event, provided only in relation to the failure to comply with the written agreement reached. The only other explanation provided was that Mr Atkins had been 'held up' in serving the affidavit. Again this was provided in relation to complying with the promise made on 26 November 2007 to provide discovery by 27 November 2007. In any event, as an explanation for failure to comply with a legal obligation it is wholly inadequate.
48 Counsel for the respondents submitted that, because the contempt action did not proceed to a hearing, the applicant was not obliged to provide explanations. However, if such an explanation existed one would expect that it would be provided to the applicant in order to avoid the foreshadowed contempt proceedings. Further, where costs are sought
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- arising from the respondent's failure to comply with a court order, it could be expected that the party against whom costs were sought would provide an explanation.
49 In my view, the position remains unchanged by the fact that the affidavit of discovery was ultimately served and access to the documents provided. Purging the contempt does no more than go to penalty. It does not change the nature of the conduct as a contempt. It is also the case that, if an alleged contemnor fails to comply with a court order and that conduct causes the opposing party to incur costs in bringing contempt proceedings, then even if the contemnor subsequently purges its contempt, it is still appropriate for the party bringing the proceedings to be compensated for their costs: see Ashfield Municipal Council v Stravitsky [2005] NSWLEC 492 [6] - [8]. In my view, that proposition is no more than common sense.
Whether costs should be awarded to the applicant
50 In submitting that costs should not be awarded to the applicant, the respondents rely on the agreements said to have been entered into by the parties; a written agreement made on 2 November 2007, an oral agreement made on 26 November 2007 and an oral agreement made on 27 November 2007. The proposition relied upon was that, in view of those agreements, the applicant's solicitors should not have taken any action with respect to contempt proceedings that would incur costs. In fact, the proposition put to the court was that certain costs were incurred in breach of the first oral agreement to defer taking action for contempt and the application was brought in breach of the second oral agreement to defer taking action.
51 According to counsel for the respondents, even if agreements were not reached, Mr Atkins' conduct resulted from a belief that agreements to defer taking action had been reached. The facts are said to show that there was a chain or pattern of conduct where the applicant's solicitors would afford the respondents an opportunity to extend the deferral agreement. In those circumstances, it is submitted, it was unreasonable for the applicant's solicitors to have commenced proceedings without advising Mr Atkins that such was the intention. Therefore, because the applicant's solicitors unreasonably failed to so advise Mr Atkins, the applicant should be deprived of the costs of the application.
52 The first issue for resolution then is whether the agreements existed.
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53 It is clear that the parties entered into a written agreement which provided that the applicant would not commence contempt proceedings conditional on the first respondent returning the signed undertaking by 26 October 2007, and providing discovery by 19 November 2007. It is equally clear that the respondents breached both components of the agreement.
54 As outlined above, the signed undertaking was not returned until 30 October 2007 following receipt of a facsimile from McCallum Donovan Sweeney on the previous day advising that contempt proceedings would be commenced. However, on 2 November 2007 the applicant's solicitors wrote to Mr Atkins advising that, despite the breach of the condition concerning the undertaking, the agreement 'to extend time' would be honoured. Unfortunately, the agreement was not honoured by the respondents.
55 I should note that I find nothing surprising in the applicant's decision. In situations where the recipient of an order for pre-action discovery fails to comply with the court order, it is invariably the primary concern of the litigant to obtain the documents. However, the fact that the applicant decided to focus on obtaining the documents rather than bringing contempt proceedings does not alter the nature of the respondents' conduct.
56 It is significant to note the way in which the solicitors for the applicant and the applicant dealt with this agreement. Clearly they were not prepared to take the first respondent's oral assurance. They required a signed undertaking. Further, although the applicant decided to remain bound by the agreement, despite non-compliance with the condition, it remains the case that there was a written agreement and a signed undertaking. These facts are of particular relevance when considering whether there was a further agreement on 26 November 2007 or whether Mr Atkins could have reasonably believed such an agreement had been reached.
57 On 19 November 2007, the date for compliance under the agreement, the applicant's solicitors received a facsimile from Talbot Olivier (not even at that time solicitors acting for the respondents) to the effect that 'certain documents within the orders' were available for inspection. By no stretch of the imagination could such a statement, or the provision of access to some of the relevant documents, constitute compliance with the order (albeit outside time), or the agreement. As at that date Mr Atkins could have no reasonable belief that action alleging contempt would not
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- be taken. The previous decision to ignore a breach of the condition of the agreement was made in entirely different circumstances
58 Further, as of 21 November 2007 any hope Mr Atkins might have that such proceedings could be avoided was wiped away by the letter of 21 November 2007, sent to him by the applicant's solicitors. He was clearly put on notice, not only of proceedings but of the date on which they were to be instituted. In my view, if Mr Atkins were reasonably to believe that proceedings would not eventuate if he later filed the affidavit of discovery, that information would have to have been expressly stated to him. That is not an allegation that Mr Atkins makes.
59 The conversation of 22 November 2007, even Mr Atkins' version, does not advance his position. Mr Atkins advised Mr Dundas that he would be in Perth over the weekend and would be serving the affidavit on 26 November 2007 and the documents would then be available for inspection. It can be seen from Mr Atkins' account of the conversation that he does not allege that he was advised by Mr Dundas that proceedings would not be commenced in view of the advice that discovery would be provided in full on 26 November 2007.
60 The only difference between Mr Atkins' version and that of Mr Dundas is that, according to Mr Dundas, Mr Atkins also said that he would not consent to any orders finding him in contempt. In view of Mr Atkins' later conduct, I have no difficulty in finding that, if the issue of contempt proceedings were raised, Mr Atkins would have advised that he would not consent to them.
61 Mr Atkins states in his affidavit that Mr Dundas did not tell him that the applicant would, despite his advice, proceed to work to apply for contempt orders. An oral agreement does not arise by one of the people involved in the conversation making an offer and the other failing to advise that the offer is not accepted or failing to advise that an agreement will not be made. From a legal point of view the proposition is untenable.
62 In my view, the undisputed facts do not create an agreement between the parties that no action would be taken provided discovery was provided on 26 November 2007. Indeed, counsel for the respondents conceded that there is no evidence from which a conclusion could be drawn that an agreement was concluded.
63 At best, Mr Atkins may have held a belief that an agreement had been reached. However, in my view, no reasonable person could have reached that conclusion in these circumstances. The only agreement
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- previously reached had been in writing and required a signed undertaking. Although non-compliance with the requirement to provide the signed undertaking within the specified time was waived, it remained the fact that the applicant had been provided with a signed undertaking. There was no prior set of circumstances or 'pattern of conduct' which could have led Mr Atkins to consider that, unless the existence of an agreement was expressly disavowed, an agreement was in place. The uncontested facts do not support such a conclusion. More importantly, Mr Atkins had been advised in writing on 21 November 2007 that contempt proceedings were to go ahead. For Mr Atkins to have held a reasonable belief that the contempt action would not be taken, it would be necessary for him to have been expressly told so by Mr Dundas on 22 November 2007. Mr Atkins does not depose to such a statement being made.
64 A further telephone conversation took place between Mr Atkins and Mr Dundas on 26 November 2007. According to Mr Atkins, he advised Mr Dundas that he would be serving the affidavit as early as possible the next day and the documents would then be available for inspection at the offices of Talbot Olivier. Mr Dundas confirms the conversation but alleges that Mr Atkins also stated that he had been 'held up' in serving the affidavit and would deliver the documents at 10.00 am.
65 No inaccuracy has been identified in Mr Dundas' notes to this point. No letter of confirmation has been alleged to contain inaccurate information. It is also the case that taking a note of a conversation is a standard practice for legal practitioners. However, in my view, there are two compelling reasons for accepting Mr Dundas' account. The first is the fact that there had been a number of breached promises to provide discovery. The applicant's solicitors had made it clear that they had instructions to initiate contempt proceedings, and their past conduct indicates, and common sense dictated, that they would wait to establish whether the documents would be forthcoming. In those circumstances, it is highly improbable that the applicant's solicitors would fail to identify a precise time for compliance or that they would commence the proceedings prior to the date or time promised. Based on Mr Atkins' version of the promise, the morning of 28 November 2007 would be the first available time to commence proceedings without deterring Mr Atkins from complying with his promise to provide discovery. However, the chamber summons initiating the contempt proceedings was filed at approximately 11.30 am on 27 November 2007 and received by Mr Atkins on 29 November 2007.
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66 In the interim, at 1.15 pm on 27 November 2007, the affidavit of discovery required by the order was served on McCallum Donovan Sweeney.
67 Irrespective of whether a precise time was stated, I do not accept that this conversation constituted an agreement that the applicant would defer applying for contempt orders until after 27 November 2007. In this regard, I would repeat the comments I have made with respect to the agreement said to have been concluded during the conversation on the previous day.
68 On behalf of the respondents it is further submitted that, irrespective of whether an agreement was reached, the applicant's solicitors were under an obligation to advise Mr Atkins on each of the conversations of 22 November 2007 and 26 November 2007 that contempt proceedings would be instituted even if discovery were provided. Again, this is said to arise from the 'pattern of conduct' which preceded the conversations.
69 I have already rejected the proposition that there was a pattern of conduct which could have led Mr Atkins to hold a reasonably based belief that no action would be taken against him during any period of time before which he promised to provide discovery. Further, I am unable to accept that any obligation rested on the applicant or its solicitors to advise Mr Atkins of the intention to proceed with an action for contempt, despite his promises to provide discovery. In my view, the suggestion of such an obligation unfairly, and wholly inappropriately, shifts responsibility for Mr Atkins' default to the applicant's solicitors. It was Mr Atkins who was blatantly in breach of an order of this Court and did not comply with the applicant's offer not to take the appropriate action for such conduct if he provided discovery out of time. Mr Atkins could not even comply with his own promises. It is apparent to me that Mr Atkins' intention was to comply with the order when and if it suited him and, in my view, there was no obligation on the applicant's solicitors to advise him of anything.
70 The final submission made on behalf of the respondents was that, if the applicant's solicitors had advised Mr Atkins on 22 November 2007 or 26 November 2007 that proceedings would be commenced irrespective of whether he provided discovery as he promised, Mr Atkins may have taken action which would have prevented the proceedings being issued on 27 November 2007 such as serving the affidavit of discovery on 26 November 2007 or at least seeking legal advice which might have obviated the need to commence proceedings. It was also submitted that, if at the time the summons was served on the respondents, Mr Atkins had
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- been made aware that the summons was being pursued only for the limited purpose of seeking costs, subsequent events may not have occurred.
71 According to counsel for the respondents, it is unnecessary to speculate on Mr Atkins' conduct should he have been so advised. It is the fact that he was deprived of the option to take some other action which is said to be the significant factor when it comes to awarding costs of the action.
72 The short answer to this proposition is the conclusion that I have already reached that there was no obligation on the applicant's solicitors in the circumstances to advise Mr Atkins during the two conversations of their client's intentions. This is particularly so with respect to the issue of proceedings because they had already done so in earlier correspondence.
73 Further, it is not a question of speculating on Mr Atkins' conduct if he had been advised of the applicant's intentions, it is a question of determining whether to do so would have made a difference to his conduct which would have prevented proceedings being commenced. The answer to that question is that, on the available undisputed evidence, there is no reasonable basis to conclude that the outcome would have been any different or that fewer costs would have been incurred.
74 The affidavit of discovery having been served on the applicant's solicitors at 1.15 pm on 27 November 2007, a preliminary inspection of the documents took place on 28 November 2007. Mr Atkins was served with the contempt proceedings on 29 November 2007 as a result of which he instructed Talbot Olivier not to provide further access to the documents and then removed the documents from Talbot Olivier's offices. Clearly, having become aware of the proceedings, Mr Atkins' almost instantaneous reaction was to further subvert the order for discovery. The connection between the commencement of the proceedings and the removal of the documents was expressly stated in correspondence and in telephone communications. In his affidavit Mr Atkins asserts that he denied further access to the documents because the applicant had breached their agreement. In my view, that proposition is untenable, not only because there was no agreement and no reasonable basis for believing that one existed, but also because there is no reference to that explanation in Mr Atkins' explanatory facsimile sent to McCallum Donovan Sweeney at the time.
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75 Neither is there any substance to the proposition that, if Mr Atkins had known that the summons was being pursued only for the purposes of costs, he may have reacted differently. On 7 December 2007 a written offer was made by the applicant to discontinue the proceedings upon agreement as to costs. Mr Atkins' response was to advise that the documents would not be available unless the applicant agreed to discontinue the summons with no order as to costs. In those circumstances, the proposition that Mr Atkins may have adopted a different course of conduct if he were made aware that it was only costs that were in issue, is untenable.
76 No plausible explanation has been provided for why the respondents could not have complied with the order either in its terms or within the extended time period later agreed upon with the applicant. I am satisfied that the respondents have caused the applicant to incur expenditure in bringing these proceedings and that no conduct on the part of the applicant made it necessary to bring the proceedings. As the respondents' failure to comply has resulted in the applicant incurring the costs of bringing this action, it is appropriate that the respondents pay those costs. That conclusion is unaffected by the fact that the respondents have now purged their contempt: Ashfield Municipal Council v Stavitsky [7].
Whether costs should be awarded on an indemnity basis
77 I accept the submission by counsel for the applicant that orders for indemnity costs are commonly made in contempt cases although there is no general principle or rule of law to that effect: Rip Curl International Pty Ltd v Phone Lab Pty Ltd [2004] FCA 1215 [53]; McKinnon v Adams (No 2) [2003] VSC 502 [55]. However, in an application for costs of a contempt proceeding, it is often the quality of the conduct which makes it a punishable contempt which also makes it appropriate to award indemnity costs.
78 In Universal City Studios LLLP v Hoey t/as DVD Kingdom [2007] FCA 806 [102] the court observed that an order for payment of indemnity costs recognizes both the public interest in ensuring that orders of the Court are complied with and the equity in ensuring, so far as is possible, that an applicant required to take the further step of contempt proceedings should be protected by an appropriate costs order.
79 Taking into account the conclusions I have reached and the observations I have made in relation to the respondents' conduct, I am satisfied that it is appropriate in the circumstances of this matter to award costs to the applicant. The respondents at all times showed a blatant
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- disregard for the order of this court. Not only did the respondents breach the order, they breached a written agreement which would have ameliorated, at least to some extent, the effect of the breach of the order. Having breached the written agreement, the first respondents then made a number of unfulfilled promises to provide that which the court had ordered the respondents to provide. Despite ultimately providing discovery at a time convenient only to the respondents, and having been served with the application for contempt, the respondents then prevented access to the discoverable documents in order to force the applicant into an agreement to discontinue the proceedings and meet its own costs. In my view such conduct should attract an order for indemnity costs.
80 The fact that the respondents were unrepresented for some of the relevant period does not dissuade me from making an order for costs on an indemnity basis. It is apparent that the respondents had access to legal advice and no evidence was placed before the court to suggest that the respondents were unable to obtain legal advice if they so chose.
The costs to be awarded
81 With respect to the quantum of costs, counsel for the applicant has drawn my attention to Practice Direction No 5 of 2005 which provides that the court's practice in making costs orders in interlocutory proceedings is to fix the costs and order that they be paid forthwith or by a particular date. I have already indicated that I consider an application of this type to be akin to an interlocutory application. Further, in view of the fact that the applicant has provided affidavit evidence of the work done and the relevant scale rates, I am in a position to fix the costs.
82 I do not propose to itemize the award of costs. I have considered the information provided in the second further supplementary affidavit of Mr Dundas sworn on 5 February 2008 and have concluded that the claims included therein are reasonable in the circumstances. I accept that the costs reasonably incurred amount to $12, 940.00.
83 I have at this stage received no submission that the respondents require extended time to pay the award of costs.
Orders
84 Within 14 days the respondents pay the applicants costs of the application in the sum of $12,940.00.
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