Supreme Court of WA|2011-01-14|Before: Allanson J

3 OCEANS WINE COMPANY PTY LTD -v- HEYSHOTT PTY LTD [2011] WASC 12 (14 January 2011)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : 3 OCEANS WINE COMPANY PTY LTD -v- HEYSHOTT PTY LTD [2011] WASC 12

Practice and procedure - Pleadings - Application to strike out - Property law - Leases - Implied surrender by variation of term of lease

Barclay Mowlem Construction Limited v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82

Crosswell v Meriton Pty Ltd [1993] TASSC 114

Jenkin R Lewis & Son Ltd v Kerman [1971] Ch 477

Re Savile Settled Estates [1931] 2 Ch 210

The Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17

1 The first-named second defendant, Mr Anthony Riggall, was the registered proprietor of an area of land (Lot 2109). The second-named second defendant, Marri Downs Pty Ltd (Marri Downs), held the leasehold in another area (Lot 2110). The third-named second defendant, Ms Oriole Riggall, held the leasehold in Lot 2111.

2 Anthony Riggall and Oriole Riggall were also the directors of the first defendant, Heyshott Pty Ltd (Heyshott), and Marri Downs until about 23 December 2005. From then, their son Mr Tom Rigall and his wife Narelle have been the directors of both Heyshott and Marri Downs.

(3) Oriole Riggall sub-leased Lot 2111 to Heyshott.

The lease and sub-leases were all registered on 25 March 2002.

4 Heyshott sub-leased various parts of that land to another company, which has had various names since its incorporation in 1998, but is conveniently known as Palandri for the purpose of these reasons. There were six sub-leases of varying duration: four of them for terms commencing on 30 June 2000 and ending 29 June 2018; one from 30 June 1999 to 29 June 2017; and one from 30 June 1999 to 29 June 2018. All of the sub-leases were registered on 25 March 2002.

5 The sub-leases were all subject to an express term for rent review, calculated by a formula based on changes in the consumer price index.

6 In February 2008, Palandri entered external administration. On 29 June 2008, Palandri, 3 Oceans and Heyshott executed deeds of assignment by which Palandri assigned each of the sub-leases to 3 Oceans . The assignments took effect from on or about 12 June 2008. At the time of the assignments, 3 Oceans had been negotiating with Heyshott with a view to entering into a new lease of all the land the subject of the sub-leases.

7 In 2009, Heyshott commenced two proceedings against 3 Oceans in the Magistrates Court at Busselton in relation to rent.

8 3 Oceans brought the present proceedings in 2010. It claims that the defendants engaged in misleading and deceptive conduct in bringing the proceedings in the Magistrates Court. Alternatively, 3 Oceans claims unjust enrichment and seeks restitution in relation to the rent payment made in 2008/2009, or part of that payment.

9 On 8 March 2010 the plaintiff filed a writ of summons and, separately, a statement of claim.

10 The defendants filed a statement of defence and counterclaim on 23 March 2010. On 12 April 2010, by consent, the two actions brought by the first defendant against the plaintiff in the Magistrates Court were transferred to the Supreme Court.

11 On 17 May 2010, a registrar made orders including that the defendants file and serve any amended defence and counterclaim within 14 days, and the plaintiff file and serve any application to strike out any parts of the defence and counterclaim within 21 days after filing and service of that amended pleading.

12 On 26 May 2010, the defendants filed an amended statement of defence and counterclaim (the May defence). On 16 June 2010 the plaintiff brought a chamber summons for orders striking out part of the May defence. There are 16 grounds in the chamber summons to strike out. It is not necessary to detail them here.

13 On 10 August 2010, the defendants applied for the action to be placed in the CMC List and for leave to further amend their statement of defence in accordance with an attached minute (the re-amended defence). The defendants' application was made after the amendment to O 21 Rules of the Supreme Court 1971 (WA). The defendants did not require leave to amend their pleadings. Both parties, however, have dealt with the matter as an opposed application for leave rather than an application to strike out parts of the re-amended defence.

14 The matter was admitted to the CMC List on 5 October 2010. The plaintiff's application to strike out the May defence, and the defendants' application for leave to re-amend, were heard together on 20 October 2010.

The application to strike out the May defence

15 The proposed re-amended defence and counterclaim makes substantial changes to the May defence. In effect, every paragraph that the plaintiff objected to has been significantly altered or replaced: the substance of par 4 has completely changed; pars 5, 7, 9, 11, 12 and 26 - 29 have been replaced; and the substance of pars 13, 16, 17, 22 and 25 has been altered. Paragraphs 35 - 37 of the counterclaim, while they have not been substantially altered themselves, are altered by the amendments made in the defence and which are repeated in the counterclaim. The only remaining issue on the plaintiff's application is the question of costs.

16 The plaintiff objects to pars 4, 5, 21 - 24, and 29 of the re-amended defence. Before dealing with those objections, I will set out the nature of the issues joined between the parties.

17 3 Oceans pleads (in par 24 of the statement of claim) that before, or at about the time of the assignment of the subleases, and in consideration for entry into the deeds of assignment, the parties made a collateral agreement that:

(1) they would continue to negotiate the Proposed New Lease;

(2) the assignment of the sub-leases was an interim arrangement;

(3) the sub-leases would be surrendered on completion of negotiations, 'irrespective of whether the Proposed New Lease was entered into'.

18 3 Oceans pleads, further or alternatively, that Heyshott or the second defendants made representations in those terms: par 25.

19 It asserts that it did not enter into any agreement to vary the rent under the sub-leases, and pleads its calculation of the rent payable for the 2008/2009 and 2009/2010 years: pars 20, 21. 3 Oceans claims that it was contemplated by the parties during negotiations that the total rent payable under the Proposed New Lease would be about $150,000 more than the total under the sub-leases. It says it voluntarily paid the sum of $345,096.66 in 2008/2009 by way of rent, which was $181,458.72 more than the amount payable under the sub-leases. The latter sum is referred to in the pleading as the excess payment: pars 26 - 27.

20 The parties failed to reach agreement on the Proposed New Lease and negotiations came to an end in mid-2009. No new lease has been entered into. The plaintiff claims the sub-leases were surrendered under the collateral agreement pleaded: par 31.

21 In 2009, Heyshott commenced two proceedings in the Magistrates Court in relation to rent. 3 Oceans pleads that the defendants' conduct, including in bringing those proceedings, was misleading and deceptive conduct in contravention of s 10 of the Fair Trading Act 1987 (WA) and, in the case of the corporate defendants, s 52 of the Trade Practices Act 1974 (Cth).

22 3 Oceans claims loss and damage, including the amount of rent paid in 2008/2009 - either the whole sum or the excess payment - and the legal expenses of defending the proceedings in the Magistrates Court. Alternatively, there is a claim for unjust enrichment and restitution in relation to the payment made in 2008/2009, or the excess payment.

23 The core of the proposed re-amended defence is in pars 21 - 33A. The substance of the defence, as pleaded, is that the sub-leases were varied by either a New Lease Agreement (New Lease Agreement), a Sub-Lease Variation Agreement, or a Rental Agreement. That variation included a variation of the rent payable under the sub-lease, and an agreement that the term of the sub-leases would begin on 1 July 2008 and end on 30 June 2022.

24 Paragraphs 3 - 5 of the proposed re-amended defence are as follows:

The Defendants admit paragraphs 16, 17, 18 and 19 of the Claim, refer to and repeat paragraphs 21 to 33A below and say that the terms of the Deeds of Sub-Lease ('Sub-Leases') were varied by the New Lease Agreement, alternatively the Sub-Lease Variation Agreement, alternatively Rental Agreement ('Sub-Leases as varied').
The Defendants deny paragraph 20 of the Claim, refer to and repeat paragraphs 21 to 33A below and say on a proper construction of the Deeds of Assignment the Increased Rent under the New Lease Agreement, alternatively Sub-Lease Variation Agreement, alternatively Rental Agreement, was a variation of the rent under the Sub-Leases pursuant to the terms of the Deeds of Assignment pleaded in paragraph 19 of the claim.
The Defendants deny paragraph 21 of the Claim, refer to and repeat paragraphs 21 to 33A below and say that the total yearly rental payable under the Sub-Leases as varied by the New Lease Agreement, alternatively the Sub-Lease Variation Agreement, alternatively Rental Agreement, for the period 1 July 2008 to 30 June 2009 was $345,096.68 and for 1 July 2009 to 30 June 2010 was $350,273.12.

25 The Rental Agreement is pleaded in pars 21 and 22, where the defendants contend that on or about 3 June 2008, 3 Oceans and Heyshott entered into an agreement to vary the terms of the sub-leases. The Rental Agreement arises out of:

(1) emails between the solicitor for the first defendant, Mr Jonathan Meyer, and the solicitor for the plaintiff, Mr Greg Mohen, on 21 May 2008, 30 May 2008 (one letter and two emails), and 3 June 2008;

(2) discussions between representatives of the plaintiff and the first defendant on or about 29 May 2008, the substance of which was that the parties agreed, irrespective of whether variations to the sub-leases were contained in a formal written document, that the plaintiff would pay increased rent from 1 July 2008;

(3) further, on or about 29 June 2008, the first defendant entered into deeds of assignment and permitted the plaintiff to enter into possession of the land and the plaintiff entered into possession of the land; the first defendant rendered invoices for the increased rent on or about 19 August 2008, 1 September 2008, 1 December 2008, 1 March 2009, 1 June 2009, 1 September 2009 and 1 December 2009; and the plaintiff paid the increased rent.

26 The Sub-Lease Variation Agreement is pleaded in pars 23 and 24. The defendants plead that on or about 29 June 2008 (the date Heyshott entered into the deeds of assignment and 3 Oceans entered into possession of the land) 3 Oceans and Heyshott entered into an agreement for the assignment and variation of the terms of the sub-leases. Terms of the Sub-Lease Variation Agreement included that 3 Oceans would pay increased rent and that the terms (duration) of the sub-leases would commence on 1 July 2008 and end on 30 June 2022.

27 Finally, the defendants plead in par 27 that 3 Oceans and Heyshott agreed the formal written terms of a New Lease Agreement. The defendants refer to:

(1) emails dated 14 August and 19 August 2008 between the solicitor for the first defendant and an officer of the plaintiff, in which Heyshott offered to enter into a New Lease Agreement on the terms of a draft lease agreement attached to the email;

(2) the acceptance of that offer by 3 Oceans by its conduct in paying invoices rendered by the first defendant on 2 October 2008;

(3) in alternative, an oral offer in a conversation between Anthony Riggall and an officer of the plaintiff on or about 20 January 2009, alternatively an offer during a conversation between Oriole Riggall and an officer of the plaintiff on 24 March 2009.

28 The defendants claim that there were express terms of the New Lease Agreement to the same effect as the terms of the Sub-Lease Variation Agreement, including the increased rent and the alteration of the term of each sub-lease: par 28.

29 The defendants further assert that it was a term of the New Lease Agreement that 3 Oceans and Heyshott would execute a formal written lease in terms of the New Lease Agreement: par 29.

30 In par 30 the defendants plead that Heyshott continued to permit the plaintiff to occupy, use and enjoy the land and the plaintiff continued to occupy, use and enjoy it. Alternative dates are given, that is, the dates where the plaintiff paid invoices (2 October 2008) and the dates of the conversations between the second defendants and officers of the plaintiff.

31 In par 33, the defendants plead that the Rental Agreement, alternatively Sub-Lease Variation Agreement, alternatively the New Lease Agreement, was contained in a memorandum or note in writing signed by the plaintiff's agent and or alternatively was partly performed by Heyshott.

(1) 3 Oceans is estopped from asserting that it is not obliged to pay increased rent and that the term of the sub-leases has not been extended as pleaded; and

(2) Heyshott is entitled to restitution for unjust enrichment arising from 3 Oceans ' occupation, use and enjoyment of the land.

33 Heyshott counterclaims for rent or alternatively damages equivalent to the rent payable, together with a declaration that 3 Oceans breached the terms of the New Lease Agreement.

The plaintiff's submissions on the strike out

34 The plaintiff's application to strike out is confined to pars 4, 5, 21 - 24 and 29 of the re-amended defence. The objections are, to a large extent, connected as pars 4 and 5 expressly relate to the detailed pleadings of the agreements in those later paragraphs.

35 Paragraphs 4 and 5 are confusing. Paragraph 4 pleads that there was a variation of the rent under the sub-leases pursuant to the terms of the Deeds of Assignment, but also pleads that the increased rent was 'under the New Lease Agreement, alternatively the Sub-Lease Variation Agreement, alternatively Rental Agreement'. Paragraph 5 pleads the total yearly rental payable under the sub-leases was 'as varied by the New Lease Agreement, alternatively the Sub-Lease Variation Agreement, alternatively Rental Agreement'.

36 The plaintiff's objection is quite specific. It submits that if there was a New Lease Agreement, as pleaded, that would result in the surrender of the sub-leases by operation of law. The allegation that there was a New Lease Agreement which increases the rent of the existing sub-leases contains mutually exclusive or inconsistent propositions.

37 The defendants submit that they have pleaded alternative bases in fact for the conclusion that the sub-leases have been varied and not terminated and replaced by new agreements. With regard to the Rental Agreement and the Sub-Lease Variation Agreement, I accept that is so (and the plaintiff does not challenge pars 4 and 5 so far as they relates to those two agreements). Having regard to pars 27, 28 and 29 of the re-amended defence, however, it is my opinion that the New Lease Agreement is pleaded to be not merely a variation of an existing agreement, but a new lease. In particular, the New Lease Agreement is pleaded to be for a different term from the sub-leases. Accordingly, I accept the submission on behalf of 3 Oceans that if the defendants' case is that there was a variation of the sub-lease, that case is not consistent with the pleading of a New Lease Agreement entered into by the plaintiff.

38 In my opinion, this is a matter which would significantly affect the preparation and presentation of the case at trial. The plaintiff is entitled to know at this stage whether the defendants' case is confined to a variation of the sub-leases or whether, at least in the alternative, it is that there was a New Lease Agreement.

39 The first complaint regarding these paragraphs is that the re-amended defence pleads a partly written, partly oral and partly implied agreement but does not identify which term or terms of the agreement are written, oral or implied. Second, the plaintiff alleges that the pars 21 to 24 do not state the effect of any document or the purport of any conversation relied on for the alleged Rental Agreement and Sub-Lease Variation Agreement.

40 I accept that the pleading of the agreements may not strictly comply with the pleading rules. But I am not satisfied that would be a sufficient a basis to strike out these paragraphs. The pleading is sufficient to identify the issues, disclose an arguable defence and apprise the plaintiff of the case it is to meet. In the context of the full range of case management techniques and pre-trial directions that will be made, the plaintiff should not be disadvantaged in its preparation for trial: Barclay Mowlem Construction Limited v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [4] - [9]. I would not strike out pars 21 and 22.

41 It is not necessary to arrive at a firm conclusion on the first two objections in relation to pars 23 and 24 because the third, and in my opinion more significant, objection must be upheld. The defendants plead an amendment of the sub-leases to vary both the commencement date and the end date of the lease. The plaintiff submits that an agreement to alter the term (that is, duration) of a lease operates as a surrender and re-grant by operation of law, and does not constitute a mere variation of the lease. The plea that the sub-leases have been varied by agreements extending their term is bad in law.

42 In my opinion, the plaintiff's proposition is supported by the authorities. I accept, as the defendants submit, that it is appropriate that leases should be regulated by the principles of the law of contract: The Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17, 29 (Mason J). But that does not answer the plaintiff's point. The authorities are summarised in Butt P, Land Law (6th ed, 2010) [15 243]:

The key issue is whether the variation would change the nature or extent of the tenant's estate in the land, as distinct from merely changing the obligations of the covenants that 'touch and concern' the land and that are 'imprinted' on that estate. For example, it is not possible to vary the term (duration) of a lease, whether by shortening or lengthening, without a surrender of the existing lease and a regrant for the new duration, because it is not possible 'simply to convert the existing estate in the land into a different estate by adding more years to it' (or deducting years from it); if the parties attempt to do so, then the law will achieve the result they intend by implying a surrender of the existing lease and a grant of a new lease for the varied duration.

43 See Re Savile Settled Estates [1931] 2 Ch 210, 217; Crosswell v Meriton Pty Ltd [1993] TASSC 114; and Jenkin R Lewis & Son Ltd v Kerman [1971] Ch 477, where the Court of Appeal said at 496:

It is not possible simply to convert the existing estate in the land into a different estate by adding more years to it, and even if the parties use words which indicate that this is what they wished to achieve the law will achieve the result at which they are aiming in the only way in which it can, namely by implying a fresh lease for the longer period and a surrender of the old lease.

44 The 'variation' pleaded by the defendants to have been effected by the New Lease Agreement changes the extent of the plaintiff's estate, and may only operate in law as a surrender of the existing sub-leases and the grant of a new lease.

45 The objection is connected with the objection to pars 4 and 5. It is not a technical matter of pleading, but goes to whether the facts asserted by the defendants could, if established, result in the contractual arrangements which they allege.

46 It is not necessary to deal specifically with the objections made to this paragraph. Once it is accepted that the defendants amend as set out above, then par 29 must be correspondingly amended.

47 For these reasons I would strike out pars 4, 5, 23, 24 and 29 of the re-amended defence.

48 The first issue is the costs of the plaintiff's application by chamber summons dated 16 June to strike out the May defence. The plaintiff seeks the costs of the application on the basis that it properly brought its application after attempts to confer with the defendants' solicitors had not resulted in any substantive response to their objections. While the defendants do not concede each of the plaintiff's objections, the amendments made in August have either replaced or amended the substance of each of the paragraphs for which objection was taken.

49 In my opinion, the plaintiff acted reasonably in bringing the application when it did. On 17 May, a registrar made orders permitting the defendants to amend their defence and counterclaim, and which required the plaintiff to file and serve any application to strike out within 21 days after filing and service of that amended pleading. The application was brought at the end of the 21-day period, and following repeated attempts to confer. The plaintiff should have the costs of bringing the application. This is an appropriate case for an order in accordance with O 66 r 10(1) of the Rules of the Supreme Court and cl 4.7.1 of the Consolidated Practice Directions for the costs to be fixed and ordered to be paid forthwith.

50 The plaintiff has also been substantially successful on the defendants' application to re-amend the defence and counterclaim. For the reasons set out above, in my opinion, the re-amended defence was, in significant respects, bad in law. The plaintiff should have its costs, and again those costs should be fixed and paid forthwith.

51 I will hear the parties as to the amount of the costs that should be fixed.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : 3 OCEANS WINE COMPANY PTY LTD -v- HEYSHOTT PTY LTD [2011] WASC 12 (S)

Practice and procedure - Fixed costs - Determination of amount

Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008 (WA)

Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA)

Brookvista Pty Ltd v Meloni [2009] WASCA 180

Laing O'Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd) v Dampier Port Authority [2007] WASC 87

Sambo v Portman Iron Ore Ltd [2009] WASC 86

Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1

1 ALLANSON J: In reasons delivered on 14 January this year, I ordered that pars 4, 5, 23, 24 and 29 of the defendants' re-amended defence be struck out. I further ordered that the defendants pay the plaintiff's costs of both the plaintiff's application and the defendants' application in an amount to be fixed. The amount of costs was held over to give the parties the opportunity to be heard as to that matter.

2 The background to the applications is set out in my earlier decision, and I will not repeat it here save to the extent necessary to explain the present decision.

3 The plaintiff applied by chamber summons dated 16 June 2010 for an order striking out a number of paragraphs of the defendants' amended defence and counterclaim dated 18 May 2010. Following the plaintiff's application and conferral, the defendants applied on about 12 August 2010 for leave to further amend their defence and counterclaim in terms of a minute dated 3 August 2010. On 16 August 2010, Registrar Powell ordered that the two applications be heard together or in sequence at a single special appointment, and that is how they were disposed of.

4 Following the defendants' application, the plaintiffs filed submissions in relation to their application of 16 June 2010. The plaintiff asserted that in applying to amend their defence, the defendants had substantially conceded the plaintiff's objection to their pleading, and those objections had been superseded by the fresh pleading put forward by the plaintiff. As a result, the submissions were largely confined to the question of costs and whether those costs should be paid forthwith.

5 The purpose of fixing costs is to avoid the expense and delay involved in a taxation. The court does not subject the costs to the detailed scrutiny often applied in taxation of costs, but applies a 'broader brush' than would be applied on taxation: Brookvista Pty Ltd v Meloni [2009] WASCA 180 [26] (Newnes JA). His Honour continued at [27]:

But in fixing the amount of the costs, the approach of the court should be 'logical, fair and reasonable': see Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, 123; Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 [8]. And the power to award a fixed sum should only be exercised when the court considers that it can determine the amount of the costs fairly. That means the court must have available to it sufficient material that it is confident it can arrive at an appropriate sum: see Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 [22].

6 I have already determined that the costs should be fixed, and in my opinion that remains the appropriate order. Each party has now filed submissions on what amount should be fixed. The plaintiff has put before me sufficient detailed material that I am satisfied that I can determine the amount that is fair and reasonable.

7 The plaintiff relies on item 10(a) of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008 (WA) for work done before July 2010 and on the Determination of 2010 for work after that date. Item 10(a) is the relevant item in each case. It provides for proceedings in chambers (other than proceedings to which item 11 applies). The plaintiff submits that (for two applications) it is seeking less than twice the maximum amount allowed under item 10(a). The submission does not take into account that the amount under the scale is based on the fee earner being counsel - while most of the time charged in this matter is for work by a junior practitioner. Further, there was one hearing on both applications and that occupied only two hours.

8 In exercising my discretion with respect to the amount of the costs, I have also considered the schedule of standard costs orders for interlocutory applications set out in the Consolidated Practice Directions, but on the basis that it is intended as a guide only, and is not intended to be determinative of the amount to be awarded in any particular case. The amount to be awarded in a particular case should reflect the circumstances of that case, and the amount and complexity of the work done: Sambo v Portman Iron Ore Ltd [2009] WASC 86.

9 Finally, I have had regard to the principle that matters before the court be managed and supervised with the object (among others) of ensuring that the costs of the procedure to the parties and the Sate are proportionate to the value, importance and complexity of the subject matter in dispute: see Rules of the Supreme Court 1971 (WA) O 1 r 4B.

10 In its submissions, the plaintiff has provided a schedule setting out the work done by junior and senior practitioners in relation to each application. The first six items in the schedule apparently relate to work done before any consideration of the amended defence and counterclaim dated 18 May 2010. Indeed, the first five items (for six hours of combined junior and senior practitioner time) relate to work done before that document was even filed. To 16 June 2010, when the chamber summons to strike out part of the amended defence and counterclaim was filed, the plaintiff claims for 21.1 hours. The time for preparing the application itself is 7.4 hours - which includes a chamber summons that is 11 pages long. The chamber summons is longer than the applicant's outline of submissions. In stating the grounds of the application, it largely duplicates the material set out in earlier correspondence on 29 March and 31 May 2010 and is more in the nature of a submission, including the citation of authorities. The memorandum of conferral runs for 10 pages with a further 38 pages of attachments. A further eight hours is claimed for preparing documents (including an outline of submissions) in support of the plaintiff's application, as well as another 2.5 hours 'general preparation' in relation to both applications. That is about three days in preparation for the plaintiff's application. And this is despite the fact that, as the plaintiff submitted, the pleading it was challenging had been superseded by the defendants' proposed re-amended defence of 3 August 2010.

11 Following the filing of the plaintiff's application of 16 June, the plaintiff has claimed for another 10 hours for perusing and considering correspondence and other documents (including proposed minutes of amendment dated 9 July and 15 July) before the defendants applied for leave to amend in terms of a minute dated 3 August 2010. It is not clear to which application that work is said to relate. I assume much of it relates to the response to the defendants' application for leave to amend, as a letter from the applicant's solicitors of 19 July sets out the substance of the arguments in the applicant's later submissions.

12 Another eight hours is itemised for perusing and considering the documents filed by the defendants in support of their application, and preparing the submissions in opposition to it.

13 The plaintiff also claims for attending on the reserve judgment, preparing written submissions on costs and perusing and considering the defendants' written submissions on costs. In this way, the plaintiff has put forward a 27 item schedule in which it seeks costs of $19,000, relating to over 48 hours of junior practitioner's time and over 12 hours for a senior practitioner, for a hearing in relation to a relatively limited pleading dispute which occupied about two hours in court.

14 One matter in contention between the parties is the cost of correspondence between the parties. Many of the items in the plaintiff's schedule relate to, or include, correspondence with the defendants' solicitor or counsel. The defendants submit that the cost of conducting correspondence between the parties in relation to an interlocutory application is not recoverable under item 10 of the scale, and that correspondence is a cost which, if recoverable at all, is recoverable by the party who is ultimately successful. The plaintiff contends that the correspondence is part of the costs of conferral between the parties' solicitors in relation to an interlocutory application, and recoverable as part of the costs of that application. It submits that in conferring with the defendants, it was attempting to resolve the issues between them and meeting its obligation under O 59 r 9 of the Rules of the Supreme Court.

15 I can accept neither submission in its entirety. The costs incurred in respect of the process of conferral may be recoverable: see Laing O'Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd) v Dampier Port Authority [2007] WASC 87 [34]. While those costs may not fall within item 10 of the scale, they would be recoverable under item 23 of the 2008 Determination, and item 24 of the 2010 Determination. In the present case however, the plaintiff claims (apparently as conferral) correspondence by way of letters and emails with the defendants' solicitors. There are several telephone conversations, each by a junior practitioner, in which there was no actual discussion about how to resolve the interlocutory dispute before the court. The correspondence by way of letters and email, which is claimed as conferral, is largely set out in the affidavit of the solicitor for the plaintiff, Ms Tracy Hong, affirmed 31 August 2010. It does not appear from the correspondence that there was ever conferral in the sense described in Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1. The plaintiff provided the defendants with a detailed analysis of the flaws it perceived in the defendants' proposed minutes and invited the defendants to revise their pleading:

(1) on 31 May 2010, in relation to the proposed amended defence of 18 May 2010;

(2) on 13 July 2010, in relation to a minute of proposed re-amended defence dated 9 July 2010; and

(3) on 19 July 2010, in relation to a minute of 15 July. The 19 July letter contains the substance of the submissions that were later filed.

16 The order which I made on 14 January 2011 was that the defendants pay the plaintiff's costs of both the plaintiff's application and the defendants' application in an amount to be fixed. That order in my opinion, did, and was intended to, relate to the costs of the applications by the plaintiff to strike out the amended defence and counterclaim of the defendants, and the defendants' application for leave to amend. It was not, to cite an obvious example, an order for the costs in relation to perusing and considering the defence and counterclaim dated 16 March and corresponding with the defendants in relation to it.

17 Even within matters which clearly relate to the applications, I am not satisfied (on the plaintiff's application of 16 June 2010) that it is reasonable to allow seven hours for considering the pleading and providing a letter setting out objections, another seven hours for preparing the application (including a 48 page memorandum of conferral), and a further eight hours for submissions.

18 Nor am I satisfied that the plaintiff should have costs awarded for all of the time in correspondence in which it sets out its arguments regarding the defendants' pleading, and submissions which largely reproduce that material.

19 In my opinion, the plaintiff is entitled to more than the amount set out in the schedule in the consolidated practice directions - the matter was more complex than the type of case contemplated in that scale. The costs should not include both correspondence before the plaintiff's application, and the full costs of the application which largely reproduces that correspondence. Similarly, they should not include correspondence and submissions which travel the same ground. I have fixed costs on the basis that the defendants should pay the plaintiff's costs of the plaintiff's application to strike out, the submissions on the defendants' application, general preparation, and the directions hearing and the hearing. I have allowed part only of the submissions on the plaintiff's application as it was apparent that the pleading to which they relate would be replaced at the time those submissions were prepared.

Barclay Mowlem Construction Limited v Dampier Port Authority

At a glance

Court

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Before

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Judgment (109 paragraphs)

3 OCEANS WINE COMPANY PTY LTD -v- HEYSHOTT PTY LTD [2011] WASC 12 (14 January 2011)

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Legislation Cited (3)

Cases Cited (5)