Agar v Hyde

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CITATION : SMARGIASSI NOMINEES PTY LTD -v- SHIRE OF COLLIE [2020] WASC 94 (S)

Costs - Indemnity costs - Abuse of process - Special costs order pursuant to s 280 of Legal Profession Act 2008 (WA)

Legal Profession Act 2008 (WA), s 280

Plaintiff pay the defendant's costs of the action to be taxed if not agreed

Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122 (S)

Frigger v Kitay [No 2] [2017] WASCA 139

Glew v City of Greater Geraldton [2012] WASCA 94

Mentha as Receiver and Manager of Westgem Investments Pty Ltd (in liq) v Hughes as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S)

Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)

Smargiassi Nominees Pty Ltd v Shire of Collie [2018] WASCA 118

Smargiassi Nominees Pty Ltd v Shire of Collie [2020] WASC 94

Yara Australia Pty Ltd v Oswal [2012] WASCA 264

1. On 20 March 2020, I published my reasons in Smargiassi Nominees Pty Ltd v Shire of Collie [2020] WASC 94 (reasons). In the reasons, I indicated that I would grant the defendant's application for summary judgment pursuant to O 16 r 1 Rules of the Supreme Court 1971 (WA) (RSC) (including an order for leave to bring that application out of time). I gave the parties an opportunity to file written submissions in relation to final orders and costs (given those orders could not be agreed).
2. The defendant filed a minute of proposed orders dated 24 April 2020 seeking the following orders:
   1. The defendant is granted leave to file an application for summary judgment out of time.
   2. The defendant's application for summary judgment is granted and judgment is entered for the defendant.
   3. In the alternative to order 2, the plaintiff's substituted statement of claim filed 13 November 2019 be struck out and the action dismissed.
   4. The plaintiff pay all the costs, including reserved costs, incurred by the defendant except in so far as they are of an unreasonable amount or have been unreasonably incurred, so that subject to the above exceptions the defendant is completely indemnified by the plaintiff for its costs.
3. The plaintiff filed a minute of proposed orders dated 24 April 2020 seeking the following orders:
   1. The defendant is granted leave to file an application for summary judgment out of time.
   2. The defendant's application for summary judgment is granted and judgment is entered for the defendant.
   3. In the alternative to order 2, the plaintiff's substituted statement of claim filed 13 November 2019 be struck out.
   4. Each party pay their own costs in the matter.
4. The only issue in dispute between the parties is in relation to the costs of the action.

1. The defendant relies upon its outline of submissions dated 24 April 2020 in support of its application for indemnity costs.
2. The defendant submits that an order for indemnity costs is appropriate because:

(a) the plaintiff's claim was found to be an abuse of process;

(b) the fact that the plaintiff had filed three versions of the statement of claim was evidence of the plaintiff's hopeless case;

(c) by letters dated 3 July 2019 and 22 August 2019, the solicitors for the defendant had advised the solicitors for the plaintiff of the reasons why they considered the plaintiff's claim hopeless and of their intention to seek indemnity costs in the event that the plaintiff did not consent to orders for the dismissal of the action[22];

(d) it was unreasonable for the plaintiff to continue to pursue the action in light of those letters;

(e) pursuant to the orders of Registrar Davies made on 29 August 2019, the defendant filed an application for orders for summary judgment or to strike out the statement of claim and dismiss the action on 26 September 2019; and

(f) due to the plaintiff filing a substituted statement of claim on 13 November 2019, the defendant was required to file a defence to the substituted statement of claim and an amended application for summary judgment.

1. The defendant submits that, if I am not minded to make an order that the plaintiff pay all of the defendant's costs on an indemnity basis, then, alternatively, I ought make the following orders:

(a) the plaintiff pay the defendant's costs on an indemnity basis prior to the filing of the plaintiff's substituted statement of claim on 13 November 2019;

(b) the plaintiff pay the defendant's costs, including reserved costs, incurred on or after 13 November 2019; and/or

(c) a special costs order requiring the taxing officer to tax the defendant's costs incurred after 13 November 2019 without regard to the hourly and daily rates allowed under the relevant legal costs determination for senior counsel for the defendant.

1. The plaintiff relies upon its outline of submissions dated 2 June 2020 in support of its application for each party to pay their own costs.
2. The plaintiff submits that the fairest order is that each party pay their own costs for the following reasons:

(a) the plaintiff's claim for relief was reasonable in circumstances where there was a real prospect the plaintiff's business activities would be damaged if it was required to cease activities on the land;

(b) the plaintiff was also at risk of prosecution by the defendant;

(c) the decision of the Court of Appeal in Smargiassi Nominees Pty Ltd v Shire of Collie [2018] WASCA 118 did not lead to the inevitable conclusion that all activities on the land had to cease - there was a very real prospect that the decision related only the cessation of the primary use of storage upon the land; and

(d) the plaintiff's ability to present its argument in the Court of Appeal was compromised by the magistrate's and its former solicitor's misunderstanding as to whom had the onus of proving the non-conforming uses of the land which then affected what evidence was adduced by the plaintiff.

1. The threshold question to be answered is which party, if any, should pay the costs of the action?
2. Order 66 r 1(1) RSC provides that the costs of, and incidental to all proceedings shall be in the discretion of the court, but the court will generally order that the successful party to an action or matter recover his costs.
3. The defendant has been successful on its application for summary judgment. There is no reasons why costs should not follow the event.
4. The plaintiff should pay the defendant's costs of the action.
5. The issue is then whether those costs should be paid on an indemnity basis (and if so, from what date) and/or whether the costs limits in the applicable scale should be removed.

1. An indemnity costs order is only made in exceptional circumstances. In Yara Australia Pty Ltd v Oswal [2012] WASCA 264 [33] Murphy JA (McLure P agreeing) said:

There must be some special or unusual feature of the case to warrant an award of indemnity costs: Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225, 233. The categories of cases in which an indemnity costs order may be made are not closed: Colgate-Palmolive Co v Cussons (233). In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd [1988] FCA 202; (1988) 81 ALR 397, 401, Woodward J said that indemnity costs were appropriate where the action 'has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success'. As Pullin J observed in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [25], an order for indemnity costs may be seen as a 'mark of disapproval on the part of the court about the improper or unreasonable conduct of litigation'. It is sufficient to enliven the discretion to award indemnity costs that, for whatever reasons, a party persists in what should on a proper consideration seem to be a hopeless case: Quancorp Pty Ltd v MacDonald [1999] WASCA 101 [6].

1. In Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122 (S), Pullin J stated:

In this case, the plaintiff submits that there was unreasonable conduct in the running of the defendant's case. [10]

Even if there has been such conduct, an indemnity costs order will not be made if the costs would be covered by an order for party and party costs ... or by a special costs order. [11]

... however, there is still a place for indemnity costs orders. It will be appropriate in cases where there has been improper or unreasonable conduct on the part of a party or his legal advisors. An order for an indemnity costs order is a mark of disapproval on the part of the court about the improper or unreasonable conduct of litigation, even though there should not be much difference in the costs recovered under such an order compared with recovery under a properly formulated special costs order. If the conditions warrant an indemnity costs order, it is likely that the Judge making the order will be more inclined to allow an increase in the hourly rates or an increase in the limits. An order detailing those increases should, in my opinion, be made even where indemnity costs orders are made. [25]

1. In the reasons, I made the following finding, at [49]:

Having found that the plaintiff is prevented from asserting uses of the Land pleaded in par 16 of the Substituted Statement of Claim because they are inconsistent with the findings of the Court of Appeal, it follows that to allow these proceedings to remain on foot would constitute an abuse of process. The plaintiff's use of the land was a key issue in the earlier proceedings. It is unfair and oppressive to the defendant to allow the plaintiff to now assert uses of Land which it did not seek to assert in the earlier proceeding when it had the opportunity to do so.

1. The defendant relies upon the decisions in Frigger v Kitay [No 2] [2017] WASCA 139 and Glew v City of Greater Geraldton [2012] WASCA 94 as authority for the proposition that an indemnity costs order is appropriate where proceedings have been found to constitute an abuse of process. I do not consider that the nature of the abuse of process described in those decisions is equivalent to that described in my reasons. The overarching consideration, in awarding costs to be paid on an indemnity basis, is whether there was conduct on the part of the plaintiff that was unreasonable or improper.
2. In my view, the commencement and continuation of the action by the plaintiff falls short of constituting improper or unreasonable conduct of litigation on the part of the plaintiff. The fact that the defendant foreshadowed, on two occasions, that it would seek indemnity costs in the event that the plaintiff did not discontinue the action does not make the plaintiff's conduct in continuing the action improper. While the prospects of the success of the action were weak, I do not consider that the action was hopeless. These are not circumstances where the court should give a mark of disapproval of the plaintiff's conduct.
3. The defendant submits that, in any event, the plaintiff should pay the defendant's costs on an indemnity basis prior to the filing of the plaintiff's substituted statement of claim on 13 November 2019.
4. An order that the plaintiff pay the entirety of the defendant's costs of the action on an indemnity basis is not appropriate.
5. In accordance with orders made by Registrar Davies on 29 August 2019, the defendant filed and served its application for summary judgment or to strike out the statement of claim and dismiss the action on 26 September 2019 (September application). The plaintiff did not file affidavits in response to the September application, rather it filed a substituted statement of claim on 13 November 2019.
6. The filing of the substituted statement of claim meant that the defendant was required to file a defence and amended application for summary judgment or to strike out the statement of claim by 29 November 2019. The costs of the September application were wasted. However, the conduct of the plaintiff was not improper in amending its statement of claim - O 59 r 9 RSC requires the parties to confer and to amend if considered appropriate following that conferral. The court should not impose a sanction in the nature of indemnity costs on a party whom engages in conferral and amends pleading following that conferral. There is no conduct on the part of the plaintiff that was improper such to warrant the making of an indemnity costs order prior to the filing of the substituted statement of claim. The usual costs order that the amending party pays the other party's costs is sufficient to deal with such a situation.

Special costs order - s 280 of the Legal Profession Act 2008 (WA) (the Act)

1. The defendant submits that, in the event that I am not persuaded to make an order for indemnity costs, I should make a special costs order to tax the defendant's costs incurred after 13 November 2019 without regard to the hourly and daily rates allowed under the relevant legal costs determination for senior counsel for the defendant.
2. Section 280 of the Act provides:
   1. Effect of costs determination

(1) Subject to any costs agreement made in accordance with Division 6 or the corresponding provision of a corresponding law, section 306 and the Legal Aid Commission Act 1976 section 14 -

(b) any other aspect of the costs charged by law practices, is regulated by an applicable costs determination.

(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.

1. In Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) the Court of Appeal said:

... First, the court must form the view that the maximum amount allowable under the relevant scale item is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant cost determination. Secondly, the court must also form the opinion that the inadequacy of the costs allowable under a costs determination arises because of the 'unusual difficulty, complexity or importance of the matter'. Issues of the kind which arise are addressed as matters of impression, rather than as matters of detailed evaluation, precision or science. [12]

For the purposes of exercising the powers conferred by s 280(2) of the Act, it will not ordinarily be necessary for the court to determine what amount should be allowed on taxation, but only whether there is a fairly arguable case that a greater amount should be allowed than that which is allowable under the relevant determination: Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd. [13]

A fairly arguable case to that effect will not be established merely because a party incurred greater costs than those allowable under the relevant determination. However, depending on the particular case and all the circumstances, the fact that a party has applied significantly greater legal resources to each step in the litigation than those for which allowance is made under items of the relevant determinations, when viewed in the context of the difficulty, complexity or importance of the matter, may sustain the conclusion that there is a fairly arguable case that each of the items identified is inadequate (and thereby the amount of costs allowable in respect of the matter is inadequate) because of the unusual difficulty, complexity or importance of the matter. [14]

The word 'unusual' in s 280(2) of the Act qualifies only the 'difficulty' of the matter, and not its 'complexity' or 'importance'. The word 'unusual' in this context means unusual having regard to what one might describe as the usual run of civil cases determined in the court. That essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases: Wainwright v Barrick Gold of Australia Limited. Also, the reference to 'importance' in this context allows the court to have regard to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties, or because of the significance of the issues to other prospective parties, or to the public or community generally: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq). [15] (citations omitted)

1. In forming the requisite opinion, the court may do so as a matter of impression from its knowledge of the circumstances of the case or the party seeking the special costs order may adduce evidence in support of the application.[23] The defendant has sought only to rely upon the costs agreement with senior counsel which demonstrates that the rate charged by senior counsel was higher than the amount provided for in the applicable costs determination.
2. The first issue to be determined is amount of costs allowable under the applicable costs determination is inadequate. Pursuant to item 10 of the costs determination, the maximum amount allowable for the defendant's application for summary judgment (where senior counsel appears) is $20,460. This is based on the senior counsel hourly rate of $682.
3. There is no evidence before me, other than the costs agreement with senior counsel, to establish that the maximum amount is inadequate. Nor does my knowledge of the case and its circumstances cause me to form the opinion that the maximum amount is inadequate. In the absence of forming that opinion, I am not required to consider whether the case was unusually difficult, complex or important. In any event, my view is that there is nothing about this case which causes me to form the opinion that it was unusually difficult, complex or important.
4. Accordingly, I decline to make a special costs order which provides that the defendant's costs be taxed without regard to the hourly and daily rates permitted for senior counsel.

1. I make the following orders:
   1. The defendant is granted leave to file an application for summary judgment out of time.
   2. The defendant's application for summary judgment is granted and judgment is entered for the defendant.
   3. The plaintiff pay the defendant's costs of the action to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Substituted Statement of Claim, par 11.

[2] Substituted Statement of Claim, par 12.

[3] Substituted Statement of Claim, par 13 and 14.

[5] Blurton affidavit par 6 and Annexure DB4.

[6] Blurton affidavit par 7 and Annexure DB5.

[7] Blurton affidavit par 8 and Annexure DB6.

[8] Blurton affidavit par 9 and Annexure DB7.

[9] Barrack Gold of Australia Ltd v F L Smidth Inc [2007] WASC 186.

[12] Fancourt v Mercantile Credits Ltd (1983) HCA 25; (1983) 154 CLR 87, 99; Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598.

[13] Agar v Hyde [2001] HCA 41; (2000) 201 CLR 552 [57].

[14] Westpac Banking Corporation v Anderson [2017] WASC 106 [52].

[15] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, 597; Tomlinson v Ramsay Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 [22].

[16] Blair v Curran [1939] HCA 23; (1939) 62 CLR 462, 531 - 533.

[17] Tomlinson v Ramsay Food Processing Pty Ltd [22].

[18] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93 [11] - [12], [21], [118] - [122], [136].

[19] Westpac Banking Corporation v Anderson [2017] WASC 106 [61]

[20] Bankstown Football Club Ltd v CIC Insurance Ltd (1998) 10 ANZ Ins Cas 61-406 at 74,458

[21] Lawrance v Lord Norreys [1890] UKLawRpAC 14; (1890) 15 App Cas 210, 219.

[22] Affidavit of David Blurton sworn 20 September 2019, Annexures DB11 and DB12.

[23] Mentha as Receiver and Manager of Westgem Investments Pty Ltd (in liq) v Hughes as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S) [5].