Broadlands Finance Ltd v Gisborne Aero Club Inc

Broadlands Finance Ltd v Gisborne Aero Club Inc - [2009] WASC 22 - WASC 2009 case summary — Zoe

[52]

393 A determination of the membership of the Association and of who may be eligible for membership is complicated by the absence of documentation created at the relevant time. In particular, the Association never kept an up to date list of members. However, on one interpretation, the red banner and the marble plaque are membership lists, valid as to the date on which they were created. Tiao produced a document he referred to as the 'baptismal register'. The document is headed 'Baptised List'. This is not a document which has been kept since the Association became incorporated. It would appear from the evidence that this list was created after the 8 February 2005 meeting at which the applications of the members included in the list were accepted. Curiously, the list does not include the place of baptism, although the application forms themselves contain that information in Chinese. The list does identify the name of the master who carried out the baptism. The Baptised List contains the names of a greater number of people than 38 and against a number of names is written 'no application form'. Even excluding those persons who did not submit an application form, and those under 18 years of age, there are still more than 38 people on the list. Tiao maintained that, based on the Baptised List, of the list of contributors on the plaque, only nine were baptised at the temple. The list of nine members baptised at the temple whose names also appear on the plaque includes Tiao and Hui Ping Wang. Consequently, only seven are members other than foundation members. Because of my views on Tiao's credibility and because the Baptised List was not a record of the Association, kept and updated at all relevant times, I am not prepared to accept Tiao's evidence that so few contributors meet the requirements for membership. Further, although at times Tiao referred to baptism at the Association he also referred to baptism at the centre. Consequently, it is unclear whether the membership list includes those contributors who were baptised at the temple at Master Wang's house or at any other place used by the Association prior to the completion of the temple. As I have noted, Mr Hsu's name does not appear on Tiao's list of contributors who are also members, even though he was baptised at the home of Master Wang. Further, one of the witnesses called by the plaintiff indicated that he had been baptised by an IKTA master at Lai's house before the temple was built. The status of any such temple was never addressed in evidence. Despite Tiao's position that seven of those persons included on the marble plaque were members, they were not included in the list of members given notice of the members' meeting called by Tiao after January 2005.

[366]

The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.

Many examples can be found where an indemnity costs order has been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra) at page 233 and the circumstances referred to in Fountain Selected Meats (Sales)Pty Ltd v International Produce Merchants Ltd [1988] FCA 202; (1988) 81 ALR 397 and in Unioil's case. 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 failure 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) [8] - [9].

[579]

The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.

Many examples can be found where an indemnity costs order has been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra) at page 233 and the circumstances referred to in Fountain Selected Meats (Sales)Pty Ltd v International Produce Merchants Ltd [1988] FCA 202; (1988) 81 ALR 397 and in Unioil's case. 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 failure 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) [8] - [9].

[724]

Counsel for the plaintiff advised that the plaintiff filed a challenge to Mr O'Toole's supposed retainer very early in the litigation. The basis of the challenge was that there was no board resolution or other form of authority in existence justifying the engagement by Tiao of Mr O'Toole to act on behalf of the Association. Counsel noted that Mr O'Toole maintained that this was an issue to be determined at trial. However, no board resolution was ever put before the court to justify the retainer and the finding of the Court was that Tiao had no authority to engage a solicitor on behalf of the Association. According to counsel for the plaintiff, Mr O'Toole is now caught by the consequences of his decision not to sight a retainer before acting on behalf of the Association and of seeking a determination of the issue at trial. Counsel further noted that, even on the account given to Mr O'Toole by his client, Mr O'Toole should have known that the proposition that Tiao was authorised couldn't be justified. According to counsel, a prudent solicitor would ask to see the resolution or other form of authority and would not simply take the word of one board member, particularly where that board member's word is hotly contested by another board member [76].

...

In the more usual course of events solicitors must act upon the account given to them by their client. If, before accepting instructions, solicitors were meant to make a subjective judgment about the truthfulness of the client or of the prospects of the action's success, certain people in the community would have little prospect of being represented. It also seems to me that the end result would be an entirely inappropriate impediment to a person enforcing his or her rights because of the likelihood that the solicitors of an unsuccessful party would be required to disgorge the costs paid to them for their work.

However, the preliminary view I have formed is based on the fact that the issue of whether Mr Tiao was authorised to engage solicitors on behalf of the Association was one of the central issues at trial and was the subject of a specific finding that he was not so authorised. At trial no evidence was adduced to suggest that the first defendants were authorised to engage solicitors on behalf of the Association to defend the plaintiff's claim. Neither was there evidence of any authorisation for the first defendants to pay for their legal fees from Association funds.

In circumstances where Mr OToole was on notice with respect to the issue of authorisation it cannot be said that he did not turn his mind to the issue. Clearly, either Mr O'Toole was advised that no such authorisation existed or his client failed to provide such authorisation. It was not a situation where it would have been reasonable to accept the word of either of the first defendants that authorisation existed. Either situation notified Mr O'Toole of the potential risks of continuing to act and accepting Association funds by way of payment [86] - [88].

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (783 paragraphs)

Declaration 4: There was no Board Meeting of the Association held on 8 February 2005.

a. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and

Declaration 7: Conal O'Toole, Solicitor and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.

Order (1): The plaintiff, Yung Sen Chou and the members do have immediate access to the property of the Association including the Temple situated at Lot 42 Warton Road, Canning Vale ('Property') and all financial records of the Association for the period from July 1996 to date.

Order (2): The first defendants be and are permanently restrained from changing any locks at the property.

Order 3: The first Defendants be and are permanently restrained from permitting any persons, other than the members of the Association, to use or access the property.

Order 4: The first defendants do pay the plaintiff's costs of the action, including reserved costs, and such costs:-

a. are to include all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred so that the plaintiff will be completely indemnified by the first defendants for his costs and the amount of such costs to be taxed; and

Order 5: The First Defendants do pay the Plaintiff interest at 8% per annum, since the date of filing the writ of summons herein, on the taxed amount.

Order 6: All monies paid by the Association to Conal O'Toole, Butcher Paull & Calder or Peter McGowan be repaid to the Association by the First Defendants, Conal O'Toole, Butcher Paull & Calder or Peter McGowan, jointly and severally, with interest at 8% per annum from the date of payment.

Order 7: The first defendants and the Association, by themselves, their agents or servants or otherwise, be and are permanently restrained from giving effect to or further proceeding with the contracts.

Order 8: The First Defendants do indemnify the Association from any present or future claims by Level Holdings Pty Ltd against the Association.

Order 10: The First Defendants do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.

Order 11: The Members' register of the Association is to be rectified in accordance with declarations 1 and 2 above.

Order 12: A general meeting of the Association is to be convened to appoint a new board and is to be held within 60 days from the date of this order ('GM')

Order 13: All board positions of the Association are to be declared vacant upon the commencement of the GM.

Order 15: The plaintiff do take all necessary steps under the Association's constitution to convene, organise and chair the GM.

Order 16: No new members shall be admitted between the date of this order and the holding of the GM. For the avoidance of doubt, no persons purportedly admitted by the first defendants as members of the Association between 8 February 2005 and the GM are members.

Order 17: The first defendants be and are permanently restrained from creating any disturbance or acting in any intimidating way, prior to, at or after the GM towards the plaintiff, members of the Association and/or their families.

Order 18: The First Defendants be and are permanently restrained from operating or opening any bank accounts of the Association.

Order 19: Should the first defendants, after the date of this order, fail to obey any of the orders contained herein, the first defendants do stand committed to prison for the period of [_____] for their contempt.

Order 20: The costs of the hearing on 6 March 2009 be included and taxed within order 4.

Order 21: Liberty to apply with 48 hours' notice.