Witcombe v Talbot & Olivier [No 2]
[2009] WASC 173 (S)
•19 JUNE 2009
WITCOMBE -v- TALBOT & OLIVIER [No 2] [2009] WASC 173 (S)
Pending Appeal
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2009] WASC 173 (S) | |
| Case No: | CIV:2485/2004 | 24-27 & 30 MARCH, 1 APRIL 2009 AND ON THE PAPERS | |
| Coram: | BEECH J | 19/06/09 | |
| 27/07/09 | |||
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Costs orders made | ||
| B | |||
| PDF Version |
| Parties: | GLENYS JUNE WITCOMBE as Executrix of the Estate of KEITH MALCOLM WITCOMBE (DEC) TALBOT & OLIVIER |
Catchwords: | Costs Plaintiff awarded nominal damages for breach of contract Negligence claim dismissed Costs of action O 24A offer by defendant Offer not accepted by plaintiff Defendant obtained a better result by judgment after trial Appropriate costs orders Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 (WA) O 24A r 10 |
Case References: | Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Grant v Brewarrina Shire Council [No 3] [2003] NSWLEC 108 Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak [2006] NSWSC 1149 MLW Technology Pty Ltd v May [No 4] [2003] VSC 293 Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926; (Unreported, Full Court, Federal Court, 10 September 1997) Ng v Chong [2005] NSWSC 385 Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569 Stewart v Biodiesel Producers Ltd [2009] WASC 145(S) Talbot & Olivier v Witcombe [2006] WASCA 87; (2006) 32 WAR 179 Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166 Witcombe v Talbot & Olivier [No 2] [2009] WASC 173 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 27 JULY 2009 FILE NO/S : CIV 2485 of 2004 BETWEEN : GLENYS JUNE WITCOMBE as Executrix of the Estate of KEITH MALCOLM WITCOMBE (DEC)
- Plaintiff
AND
TALBOT & OLIVIER
Defendant
Catchwords:
Costs - Plaintiff awarded nominal damages for breach of contract - Negligence claim dismissed - Costs of action - O 24A offer by defendant - Offer not accepted by plaintiff - Defendant obtained a better result by judgment after trial - Appropriate costs orders - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA) O 24A r 10
(Page 2)
Result:
Costs orders made
Category: B
Representation:
Counsel:
Plaintiff : No appearance
Defendant : No appearance
Solicitors:
Plaintiff : GV Lawyers
Defendant : Lavan Legal
Case(s) referred to in judgment(s):
Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394
Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Grant v Brewarrina Shire Council [No 3] [2003] NSWLEC 108
Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak [2006] NSWSC 1149
MLW Technology Pty Ltd v May [No 4] [2003] VSC 293
Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926; (Unreported, Full Court, Federal Court, 10 September 1997)
Ng v Chong [2005] NSWSC 385
Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569
Stewart v Biodiesel Producers Ltd [2009] WASC 145(S)
Talbot & Olivier v Witcombe [2006] WASCA 87; (2006) 32 WAR 179
Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166
Witcombe v Talbot & Olivier [No 2] [2009] WASC 173
(Page 3)
- BEECH J:
Introduction
1 On 19 June 2009 I delivered my reasons on the trial of this action: Witcombe v Talbot & Olivier [No 2] [2009] WASC 173. In summary, I found that:
(a) the defendant breached its retainer and acted negligently in failing to act with reasonable care, skill and diligence in its conduct of Mr Witcombe's personal injuries claim;
(b) the defendant's breach of contract and negligence did not cause Mr Witcombe to suffer any loss or damage; and
(c) consequently, Mrs Witcombe was entitled to nominal damages for the defendant's breach of contract, and had failed to establish the essential element of damage in respect of the negligence claim.
2 On 19 June 2009 I ordered that judgment be entered for the plaintiff in the sum of $10. I also ordered that the parties exchange written submissions on costs and that the question of costs be determined on the papers.
3 The defendant submits that the plaintiff should be ordered to pay its costs on an indemnity basis for the whole of the action, alternatively since the date of the Court of Appeal decision in Talbot & Olivier v Witcombe [2006] WASCA 87; (2006) 32 WAR 179 (the 2006 Court of Appeal decision); or alternatively since the date of the defendant's O 24A offer in December 2008.
4 Mrs Witcombe submits that she was the successful party in the action and is entitled to an order that the defendant pay her costs of the whole action, or alternatively her costs up to and including the date of the defendant's O 24A offer.
5 For the reasons that follow, it seems to me that the appropriate costs orders are to the following effect:
(1) Mrs Witcombe pay one-half of the defendant's costs of the action up to and including the date of the defendant's O 24A offer; and
(2) Mrs Witcombe pay the defendant's costs on an indemnity basis from the date of the O 24A offer.
(Page 4)
The parties' submissions
6 The defendant's primary submission is that Mrs Witcombe's claim for substantial damages was always doomed to fail on the ground that no loss or damage was suffered by Mr Witcombe prior to his death which was caused by any breach on the part of the defendant. That, the submission continues, engages the principle that where a plaintiff, 'properly advised, should have known that he or she had no chance of success, the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of known facts or the clearly established law, and in those circumstances an award of indemnity costs should be considered'. In this regard, the defendant refers to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401.
7 Alternatively, the defendant submits that Mrs Witcombe should be ordered to pay costs on an indemnity basis from the date of the 2006 Court of Appeal decision. That is said to be because the Court of Appeal's decision made it clear that the Mrs Witcombe would not and could not succeed in the case on loss and damage that she ran at trial. Further, the defendant submits, the flaws in Mrs Witcombe's case on damages were pointed out in correspondence from the defendant's solicitors following the decision of the Court of Appeal.
8 In the further alternative, the defendant points to the offer of compromise it made under O 24A of the Rules of the Supreme Court 1971 (WA). On 16 December 2008 the defendant offered to settle the matter in the sum of $150,000. The effect of O 24A r 10(1) is that the sum of $150,000 was exclusive of costs. The defendant submits that Mrs Witcombe's refusal to accept that offer was unreasonable and should lead to an award of indemnity costs.
9 Mrs Witcombe submits that because she succeeded in establishing the defendant's breach of contract she should be viewed as the successful party and should be awarded costs.
10 She submits that it was 'open to [her] to lead evidence and argue the law, notwithstanding the [2006 Court of Appeal decision]'.
11 The plaintiff further submits that:
(a) the defendant's O 24A offer did not admit liability and went only to the quantum of damages; and
(Page 5)
- (b) 'the subject matter and law of this case was without precedent and there was no prior decision to guide [Mrs Witcombe] requiring the matter to be determined by the court'.
General principles
12 The court's costs discretion under s 37 of the Supreme Court Act 1935 (WA) and O 66 of the Rules of the Supreme Court is broad.
13 Order 66 r 1(1) - O 66 r 1(3) are in the following terms:
1. General rules as to costs
(1) Subject to the express provisions of any statute and of these Rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.
(2) If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount 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.
(3) 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.
15 Order 66 r 2(a) 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;
(Page 6)
16 The effect of O 66 r 2(a) is that a defendant is prima facie entitled to its costs on causes of action on which the plaintiff fails. However, such an order is not made as of course. The court looks at the realities of the case and attempts to do justice. Where all causes of action arise out of the one course of dealings with the same facts, there would usually be one order for the general costs of the action moulded as necessary to ensure that substantial justice is done: Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569 574 - 575.
17 In this case, the same questions of breach and damage arose in respect of each of the two causes of action. Mrs Witcombe succeeded on the breach issue and failed on the damages issue.
18 Order 24A r 10(5) provides as follows:
(5) Where an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim up to and including the day the offer was made, taxed on a party and party basis, and the defendant shall be entitled to an order against the plaintiff for his costs in respect of the claim thereafter, taxed on a party and party basis.
19 As to indemnity costs, I repeat the general principles I stated in Stewart v Biodiesel Producers Ltd [2009] WASC 145(S) [6] - [10].
The usual costs order is that the party who succeeds in an action is awarded its costs on a party and party basis. An order for indemnity costs will be made only if there is some special or unusual feature in the case to justify departure from the ordinary practice. The court has power to make an indemnity costs order whenever justice requires it: Unioil International Pty Ltd v Deloitte Touche Tohmatsu(No 2) (1997) 18 WAR 190; Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [8].
The categories of cases in which the discretion to award indemnity costs may be exercised are not closed: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233–234; Unioil International Pty Ltd (191).
Most of the situations in which indemnity costs have been awarded have involved an element of improper or unreasonable conduct on the part of the unsuccessful party or its advisers in the conduct of the case: Flotilla Nominees Pty Ltd [9]; Colgate-Palmolive Co (233–234). In Flotilla Nominees Pty Ltd [9] Pullin J gave some examples:
- Thus, the making of allegations of fraud knowing them to be false, or the commencement of proceedings for some ulterior motive, or in wilful disregard of known facts or the established law, or the making of allegations which ought never to have been made, or the undue prolongation of a case on groundless contentions, and even an unreasonable refusal to accept an offer of compromise, may lead to indemnity costs orders. See Colgate-Palmolive v Cussons (supra) at 233. The creation of false issues by tactical denials or failures to admit the facts may, in the circumstances of particular cases, lead to such an order: Unioil’s case. An action commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success, may lead to such an order because such action might 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. See Fountain Selected Meats (supra).
- Where one party points out to the other, with sufficient particularity, reasons why it is inevitable that the other party’s case must fail, this can be a factor in favour of an award of indemnity costs: NMFM Property Pty Ltd v Citibank Ltd (No 2) [2001] FCA 480; (2001) 109 FCR 77 [87] - [88].
Generally at least, an indemnity costs order will not be made unless it is shown that some part of the costs order will not be covered by an order for party party costs or by a special costs order: Unioil International Pty Ltd (193); Flotilla Nominees Pty Ltd [11], [24]–[26].
20 A rejection of a settlement offer may justify an award of indemnity costs if the rejection was unreasonable in the circumstances at the time the offer was made: Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 [16] - [31].
The proper exercise of the costs discretion
21 I begin with the question of identifying which party was successful at the trial of the action, given the award of nominal damages for breach of contract.
22 Where a party claiming damages for breach of contract succeeds in obtaining an award for nominal damages only, the question of which party (if any) was successful will depend upon all the circumstances of the case: Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, 874; Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 402 - 403; Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166 [9].
(Page 8)
23 A number of cases concerning costs after the award of nominal damages are discussed in Dal Pont GE, Law of Costs (2nd ed, 2009) [8.35].
24 The cases emphasise that there are no hard and fast rules. The modern cases appear to favour the view that, generally speaking, the event will be regarded as going against a party who receives nominal damages only, unless the establishment of a legal right independent of damages was one of the primary purposes of the proceedings; see, for example, Thiess Contractors [9]; Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926; (Unreported, Full Court, Federal Court, 10 September 1997, 12); MLW Technology Pty Ltd v May [No 4] [2003] VSC 293; Ng v Chong [2005] NSWSC 385 [8]; Grant v Brewarrina Shire Council [No 3] [2003] NSWLEC 108 [5]; Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak [2006] NSWSC 1149 [49] - [52].
25 In this case, the only relief claimed in the action was an award of damages. The evident primary, if not sole, object of Mrs Witcombe's claim was an award of very substantial damages. She failed to achieve that object. That seems to me the most significant consideration. Nonetheless, I think that the plaintiff has had some measure of success.
26 Essentially, the subject matter of the action comprised two issues:
(1) Did the defendant breach its duties?; and
(2) If so, did the defendant's breach cause Mr Witcombe to suffer any loss?
27 The case was vigorously defended in respect of the allegations of breach of contract (and breach of the duty of care). A substantial majority of the documentary and witnesses' evidence was concerned with that issue, rather than damages. Given the history between the parties, the findings of breach of contract and breach of a duty of care may have some significance to Mrs Witcombe notwithstanding that they have not resulted in an order for substantial damages.
28 I consider that an order that the plaintiff pay one-half of the defendant's costs (prior to the O 24A offer) reflects the relative success of the parties and the substantial justice of the case.
29 I do not accept the defendant's submission that Mrs Witcombe should pay its costs for the whole of the action on an indemnity basis because the claim for substantial damages was always doomed to fail.
(Page 9)
- The position was not so clear from the start. Further, the subject matter of the action included the breach issue. The circumstances were not such as to call for the exercise of the exceptional power to award indemnity costs.
30 Nor do I accept that Mrs Witcombe should pay the defendant's costs subsequent to the 2006 Court of Appeal decision on an indemnity basis.
31 The decision of the Court of Appeal in Talbot & Olivier v Witcombe was handed down on 26 May 2006. I set out my understanding of the effect of that decision in my reasons at [320] - [331]. I concluded that the 2006 Court of Appeal decision precluded acceptance of Mrs Witcombe's case on loss and damage.
32 Mrs Witcombe submits that she was entitled to 'argue the law' notwithstanding the 2006 Court of Appeal decision. I am not sure that I understand what is meant by that submission. The 2006 Court of Appeal decision is and was binding on me and on the parties to the action. In any event, Mrs Witcombe's submissions at trial did not identify a basis to read the 2006 Court of Appeal decision in a way that was consistent with her contention as to loss and damage.
33 Nevertheless, I would not order indemnity costs from the date of the 2006 Court of Appeal decision. That is because I consider that the subject matter of the litigation is properly viewed as including the substantial issues about whether the defendant breached its duties. The cases about which party was successful when the court awards nominal damages do not control the question of whether indemnity costs should be awarded.
34 However, to my mind, the appropriate costs order is different after the defendant made its O 24A offer on 16 December 2008.
35 It is true, as Mrs Witcombe submits, that the offer did not deal with the question of liability. However, acceptance of the offer would have entitled Mrs Witcombe to apply to the court under O 24A r 3(9) for such judgment or order as she was entitled to. In the circumstances, she would have been entitled to an order that judgment be entered in the sum of $150,000 (together with a costs order).
36 I note that there is no evidence that Mrs Witcombe responded to the offer (apart from acknowledging its receipt). In particular, Mrs Witcombe did not request the addition of any term expressly admitting liability.
37 The effect of O 24A r 10(5) is that, unless the court otherwise orders, the defendant is entitled to an order for costs against the plaintiff in
(Page 10)
- respect of the claim from the date of the offer, taxed on a party and party basis.
38 In this case, I consider that, in the circumstances in December 2008, Mrs Witcombe's rejection of the defendant's O 24A offer was unreasonable and should lead to an award of costs on an indemnity basis from the date of the offer.
39 That is so, in my opinion, primarily because the offer was made against the backdrop of the 2006 Court of Appeal decision.
40 As I have said, in my view the effect of the 2006 Court of Appeal decision was to preclude the acceptance of Mrs Witcombe's contention as to loss and damage. Consequently, I reject Mrs Witcombe's submission that 'there was no prior decision to guide [her], requiring the matter to be determined by the court'. At the trial, Mrs Witcombe did not attempt to run the case which (as I understand their Honour's reasons) the Court of Appeal had identified as arguable; see my reasons [332]. Moreover, the evidence adduced by Mrs Witcombe at trial did not support such a claim. I infer that, as at 16 December 2008, the evidence available to Mrs Witcombe would, similarly, not have supported such a claim.
41 Consequently, in my opinion Mrs Witcombe should have considered the offer of $150,000 plus costs to be substantially better than any result which, in light of the 2006 Court of Appeal decision and the apparently available evidence, she could, at the time of the offer, reasonably have expected to obtain at trial. Her decision not to accept the offer and to proceed to trial of the action was, I find, unreasonable.
Conclusion
42 For these reasons I order that:
1. The plaintiff pay one-half of the defendant's costs of the action, including reserved costs, up to and including 16 December 2008, such costs to be taxed if not agreed; and
2. The plaintiff pay the defendant's costs from and including 17 December 2008, including reserved costs except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to those exceptions, the defendant be completely indemnified by the plaintiff for its costs.
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