JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CLARK -v- RICHARDS & ANOR [2003] WASC 5

Practice and procedure - Application for leave to discontinue action without liability as to costs - Conditional terms on grant of leave - Turns on own facts

Rules of the Supreme Court 1971 (WA), O 23 r 2(3)

1 Even in ideal circumstances, litigation is an expensive stressful experience for the parties. The circumstances in which this action is being conducted are far from ideal. It has assumed nightmarish proportions. The defendants appear in person. In March 2002 they went on oath as to their impecunious circumstances. Nearly five years after she commenced the action, the plaintiff seeks leave to discontinue it without liability as to costs. The plaintiff also seeks the vacation of an order I made on 7 October 2002 for mediation.

2 The plaintiff's claims in this action are for assault, battery, trespass, libel and slander. The factual backdrop for the dispute is the sport of ice-skating. The plaintiff is or was an ice skating coach who at some time coached one of the defendants' children. The plaintiff alleges that the defendants physically assaulted her in October 1997. The slander allegedly occurred when Mrs Richards said to persons at the Cockburn Ice Rink that the plaintiff had assaulted the defendants, been spreading rumours about another ice skating coach and refused to hand back tapes for which the defendants had paid. The libel claim concerns similar matters published by the defendants in letters to Ice Skating Associations in Western Australia and New South Wales.

3 The plaintiff commenced the action on 13 November 1997 and filed her statement of claim on 30 March 1998. The defendants filed a defence on 31 August 1998 and an amended defence on 25 November 1998. The defence and amended defence were filed by the defendants then solicitors, Mossensons.

4 The action was entered for trial on 9 August 2000. Since May 1999 the defendants have appeared in person save for a three month period in the second half of 2000. In affidavits filed for callovers, the defendants raised issues going to the truth of the matters the subject of the libel claim. However, the defendants had not pleaded truth to that claim.

5 The matter first came before me on 30 July 2001 for directions. The defendants advised the Court of their desire to amend their defence to plead truth to the libel claim. I ordered that within 14 days they file an application for leave to amend the defence, an affidavit in support and a minute of proposed amended defence. The defendants filed a minute of amended defence and supporting affidavits on 10 August 2001. However, as the defendants did not file a formal application to amend, the matter was not listed for hearing.

6 At a callover in December 2001 the defendants were advised of the need for a formal application to amend which was filed on 19 December 2001. The defendants' application for leave was heard by me on 14 February 2002. The application was opposed. I refused leave to amend on the basis that it was not possible to discern from the minute of proposed amended defence what, if any, of the plaintiff's pleaded imputations, or some lesser imputation, the defendants were seeking to justify. I gave the defendants liberty to file a further minute of amended defence. They did so and the application came before me again on 7 March 2002. I again refused leave for the reasons published in Clark v Richards & Anor [2002] WASC 49. On 20 March 2002 I ordered that any further application by the defendants to amend their defence must be filed and served within seven days from that date.

7 On 29 March 2002 the plaintiff's solicitors received from the defendants an affidavit containing a statement of the defendants' assets and liabilities which disclosed net liabilities of approximately $93,000.

8 On 2 April 2002 the plaintiff's solicitors were served with a minute of further amended defence, an affidavit of the defendants explaining their late filing of the minute and a further copy of their affidavit of assets and liabilities. The defendants again failed to file any formal application to amend and did not take steps to have the matter re-listed. On the plaintiff's request, the matter was re-listed for further directions before me on 13 June 2002. At Mrs Richards' request, that hearing was adjourned.

9 In July 2002, the plaintiff's solicitors received two letters from the defendants stating that the plaintiff may have left Australia and enquired as to her whereabouts. It is stated in the defendants' letters that the Rules of the Supreme Court require a party to advise the Court of any intention to exit the jurisdiction. There is no such rule.

10 After enquiring from the defendants as to their unavailable dates for the hearing of their application to amend, the plaintiff's solicitors by letter dated 28 August 2002 to the Court's Listings Co-ordinator requested that the proceedings be re-listed. The letter was copied to the defendants. By letter dated 28 August 2002 from the defendants to the plaintiff's solicitors the defendants stated, inter alia:

"It is pleasing for us to see that your client is still hell bent on further spending tens of thousands of dollars of her money (or her husbands (sic) retirement money) on this trivial matter. Please refer to our affidavit of assets and liabilities filed on 2 April 2002.

It would be amusing if it was not so dismally pathetic, seeing the Plaintiff continuing to waste her and her husbands (sic) money on you and the tax payers (sic) funds funding the court time, as stated above, on such a trivial matter.

Ho, Hum ... see you in September or whenever."

11 The matter was re-listed for directions before me on 7 October 2002. The plaintiff requested a further mediation conference. There had been two prior unsuccessful mediations. In support of the application, the plaintiff's counsel Mr Lemonis referred to a revised estimate of a 10-day trial if the defendants pleaded truth, the defendants' recent affidavit of their assets and liabilities and his assurance that his client was prepared to approach the mediation sensibly and responsibly. The defendants opposed mediation because they said, the plaintiff and her advisers had made no attempt in previous mediations to sensibly resolve the matter. In the course of submissions, Mr Richards said the plaintiff would have to pay compensation to the defendants to settle the action. As the defendants have no counterclaim or any other action for damages against the plaintiff, I formed the view that the parties may benefit from mediation. I ordered that the parties attend a mediation conference and at the same time made programming directions to progress the outstanding interlocutory matters, including the defendants' application to amend.

12 The action came before Scott J on a callover on 6 November 2002. The plaintiff applied to adjourn the proceedings to the next callover. The defendants advised the Court that they wanted the action listed for trial and opposed the adjournment. Scott J adjourned the matter to the next callover.

13 In a letter sent by facsimile transmission on 6 November 2002 addressed to the Chief Justice, Owen and Scott JJ, the Central Office, Civil Listings, the plaintiff's solicitors and myself, Mr Richards advised that unless the mediation was time tabled for a hearing in 2002 he would refuse to attend. He also advised that the defendants had to sell their home to "defend the malicious lies the Plaintiff is using to take this action". He continued:

"Counsel for the Plaintiff has already indicated that the Plaintiff is not required to pay us compensation (for her lies), he stated that as defendants we are not entitled to compensation. Mediation will only succeed IF the Plaintiff is prepared to pay us a large six figure compensation. As Lemonis (counsel for the plaintiff) has stated we are not entitled to compensation, then you can see that mediation will fail.

...

In order to sensibly move this matter on I demand the Supreme Court of Western Australia immediately cancel mediation, timetable the hearing before Justice McLure for the two current applications and expidite (sic) a trial. You have allowed this traversty (sic) of justice to drag on long enough.

When is the court intending to deal with the Plaintiff's false affidavit filed by the Plaintiff on the 10 February 1998 in order to obtain 3rd party discovery and thereby attempting to pervert the course of justice. As the court has been presented with enough evidence proving her lies it must be that the court condones the plaintiff's lies.

Do not for one moment think we will walk away from this uncompensated. I will se (sic) the Plaintiff perjure herself. I will see the Plaintiff go to jail. I am not going away it does not matter how long you drag out this case. The only other option that may occur is that when the plaintiff runs out of money to pay her counsel you may have both parties unrepresented in your court."

14 In a 22 page facsimile transmission forwarded on 7 November 2002 from Mr Richards to the same addressees (most of which pages contained one word) Mr Richards again asked why the Supreme Court was doing nothing about the "false statements" made by the plaintiff in the affidavit referred to in the earlier letter. There is further conduct of Mr Richards in a similar vein.

15 By letter dated 8 November 2002, the plaintiff's solicitors advised Mr Richards that his facsimiles were offensive and threatening and asked him to desist to which he responded:

"It is extremely offensive and threatening for Clark to continue with her action."

16 In a letter dated 11 November 2002, the plaintiff's solicitors advised the defendants that they had been informed by the Court that it was unable to list the proceedings for mediation on any of the available dates for the parties in 2002 and requested their available dates for January, February and March 2003.

17 The defendants' response was annotated on the solicitor's letter of 11 November 2002, and was sent to my Associate, Civil Listings and the plaintiff's solicitors. Mr Richards responded:

"As I have already stated to you - I will NOT attend a mediation after christmas (sic). Mediation will fail - tell your client to sell her home now to have the money for a trial."

18 Mrs Richards' response was in the following terms:

"I have no reason to go to mediation - I am not the one who called an innocent man a paedophile etc etc etc. I wrote a truthful letter to the appropriate bodies - I don't have to 'right' anything - it is the Plaintiff who has done wrong. I don't have anything to mediate about. I am happy to go directly to trial - the outcome of which I couldn't give a toss about - because I know the truth and the law is an ass."

19 In a further letter dated 11 November 2002 to the defendants the plaintiff's solicitors foreshadowed this application. The defendants' response by handwritten annotations on the solicitor's letter was:

"Do what you like! All you are doing is running up your client's bill - ... Nothing from nothing still equals nothing and the truth will always be the truth".

20 On 13 November 2002 Mrs Richards sat outside the Court in Stirling Gardens holding a placard in terms "Chief Justice David Malcolm why did I have to lose my home? I thought the Supreme Court was for truth and justice".

21 From the commencement of my dealings with this action the defendants have in open Court repeatedly asserted that the plaintiff has lied to the Court in an affidavit. The affidavit referred to was sworn by the plaintiff on 10 February 1998 in support of an application for third party discovery in which she refers to "the defamatory and false assertion that I had committed an assault and had been spreading damaging rumours about another ice skating coach". The defendants rely on affidavits of Lorraine Roberts and Wojciech Bankowski in support of their assertion. However, it is no part of this Court's function to resolve conflicts of evidence on affidavits prior to trial or to order that parties be investigated or charged. This Court's function is to determine at trial the legal and factual issues that arise for determination on the pleadings in the action. Insofar as the determination of factual issues is concerned that may (but not must) involve findings on credibility but only after the relevant witnesses have been examined and cross-examined.

22 The defendants do not object to the matter being discontinued subject to the Court making the following orders:

(a) the plaintiff to take no further action against the defendants on this action and related matters;

(b) the plaintiff pay 100 per cent of the defendants' costs;

(c) the assets of the plaintiff be frozen until such time as the defendants make their claim of costs awarded by the court;

(d) that the plaintiff be investigated and charged for - but not limited to -

(i) making perjured affidavits and false amended/statement of claim;

(ii) attempting to, and perverting the course of justice;

(iv) threatening and or attempting to bribe witnesses.

23 As to the claim for 100 per cent of their costs, these are said to include:

(ii) interest upon costs involved in defending this action and all related actions by the plaintiff;

(iii) costs involved in the sale of the family home inclusive but not limited to agent's fees, settlement agent fees and relocation costs;

(iv) losses incurred on the sale price of the home from the date of sale of the home to the date of payment then the difference between the sale price in 1998 and the appreciated value that would otherwise have been realised by the defendants "had they not been forced to sell the home in 1998 to defend this and related actions by the Plaintiff";

(v) the costs to incur interest at 8 per cent from 25 October 1997 until payment.

24 The plaintiff applies under O 23 r 2(3) of the Rules of the Supreme Court 1971 (WA) which provides:

"Save as in this Rule otherwise provided, it shall not be competent for the plaintiff to withdraw the record or discontinue the action without leave of the Court, but the Court may before, or at, or after the hearing or trial, upon such terms as to costs, and as to any other action, and otherwise, as may be just, order the action to be discontinued, or any part of the alleged cause of complaint to be struck out."

25 The Court will be disposed to give leave to discontinue an action because it is not desirable that a plaintiff should be compelled to litigate against his or her will and should grant leave, if it can, without injustice to the defendant, being careful to see that the defendant is not deprived of some advantage which he or she has already gained in the litigation: Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876 at 879.

26 However, there is no principle that leave will never be granted unless the rights of the defendant are completely protected: SCI Operations Pty Ltd v Trade Practices Commission [1984] FCA 52; (1984) 2 FCR 113 at 143, 162 and 185.

27 Discontinuance pursuant to leave granted under O 23 r 2(3) does not attract an automatic award of costs against the discontinuing party. The conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs: O'Neill v Mann [2000] FCA 1680 at [13]. It may be a term of the leave to discontinue that the plaintiff undertake not to enforce orders for costs made in his or her favour in the course of the litigation: O'Neill v Mann (supra) at [20].

28 An order for discontinuance without terms as to future proceedings is not a defence to a subsequent action: Owners of the Cargo of Kronprinz v Owners of the Kronprinz (The Ardandhu) (1887) 12 App Cas 256 at 259 and 262.

29 The plaintiff relies on three overlapping categories of conduct in support of her application to discontinue the action with no liability as to costs. They are the defendants' conduct:

(2) that has a tendency to deter the plaintiff from proceeding with her action;

(3) that has a tendency to interfere with the due administration of justice.

30 The plaintiff relies on the defendants' failure to comply with the order made on 20 March 2002 concerning the filing of any further application to amend their defence and their conduct following the order to attend a mediation conference.

31 As a result of the defendants' failure to file a formal application for leave to amend or to take any steps to bring the matter back before the Court the matter was not listed for a hearing. As a result, the plaintiff's solicitors assumed responsibility for arranging the listing of the matter.

32 At the hearing on 7 October 2002 Mr Richards said the defendants' failure to file a formal application was caused by their lack of understanding of court procedures. However, this was not the first occasion on which the defendants had failed to file a formal application. The defendants filed their first formal application to amend some four months after filing a minute of amended defence and supporting affidavit. A review of the court file shows that prior to the amendment applications, the defendants whilst acting in person, had filed a number of formal applications to the court.

33 Further, as appears from a letter dated 23 October 2002 from both defendants, Mrs Richards refused to apply to have the matter listed. The letter states:

"The court and counsel for the Plaintiff are correct, in that we did not apply to have the matter brought on for a hearing - quite frankly, it was Mrs Richards who refused to, as she well and truly had enough to deal with, and decided her family's health was far more important."

34 I am satisfied that the defendants deliberately refrained from taking steps to re-list their further application to amend. Indeed, the defendants are primarily responsible for the delay in the progress of this action since July 2001. The primary cause of that delay is the defendants' very belated application to plead truth to the libel claim.

35 The evidence also establishes that the defendants refused to attend mediation unless it was conducted in 2002 and the plaintiff agreed to pay them a "large six figure compensation".

36 I do not regard the defendants' failure to comply with directions simpliciter as a ground for acceding to the plaintiff's costs application. As the defendants point out there have been occasions when the plaintiff has failed to comply with Court directions. However, the defendants' conduct is to be considered in the broader context referred to below.

Tendency to Deter the Plaintiff/Interfere with the Due Administration of Justice

37 Conduct that has a tendency or is calculated to deter a party from proceeding with litigation and conduct that has a tendency or is calculated to interfere with the due administration of justice is a contempt of court. The plaintiff relies on the objective tendency of the conduct complained of. She does not say the defendants intended to deter her or to interfere with the due administration of justice.

38 There must be a real risk of a litigant being inhibited in their desire to obtain the adjudication of the Court or of interference with the due administration of justice. The existence of the risk is determined objectively: Willshire-Smith v Votino Bros Pty Ltd [1993] FCA 138; (1993) 41 FCR 496; Attorney-General (UK) v Times Newspapers Ltd [1974] AC 273; Commercial Bank of Australia Ltd v Preston [1981] 2 NSWLR 554; Resolute Ltd & Anor v Warnes [2000] WASCA 359.

39 The conduct on which the plaintiff relies is the defendants':

(a) communication to the plaintiff of a message to the effect that the defendants would obstruct and frustrate the plaintiff's claim so she would incur substantial legal costs which she would not recover because the defendants were impecunious;

(b) communication of a message to the effect that they were watching the plaintiff;

(c) conduct towards the plaintiff's legal advisors;

(d) communication to the Court and its members of prejudicial matters;

(e) allegedly false assertions that they had to sell their home to defend the action.

40 The inference that a reasonable person would draw from the defendants' statements in their letter of 28 August 2002 and their annotations on the letters of 11 November 2002 is of a warning to the plaintiff not to continue with the litigation because by doing so the plaintiff would incur significant legal costs which she would not be able to recover from the defendants.

41 The sentiment in the defendants' written communications is an echo of oral submissions made by the defendants in Court on 14 February 2002 in response to the plaintiff's application that the defendants pay the costs of their unsuccessful application to amend the defence. Mr Richards said:

"My response to [the application for costs] is to add it to the tab. She is not getting a cent anyway, so it doesn't really matter."

"Nothing from nothing equals nothing, so costs really are irrelevant ..."

43 Further, the defendants have stated in correspondence that they do not care what the outcome of the trial is. The defendants in a letter dated 9 October 2002 to the plaintiff's solicitors say they did not see a trial, win or lose, as a negative outcome and that the outcome was of no significance to them. The letter continues:

"... the Plaintiff does not need to spend thousands on mediation - the Plaintiff can resolve this by way of correspondence ... advising her financial offer of settlement to us, for us to consider. In life there is always choices ... - she can financially make a settlement to us OR she can pay for a trial, which the outcome has no consequence to us ..."

44 The letter is marked without prejudice but the contents of the letter do not qualify it as an attempt to settle the action. Mrs Richards annotated response on the first letter of 11 November 2002 from the plaintiff's solicitors was that she was happy to go directly to trial (I infer without amending the defence) and she did not "give a toss" about the outcome.

45 The inference that a reasonable person would draw from the defendants' references to the plaintiff incurring significant legal costs which she would not recover and the defendants' lack of interest in the outcome of the trial is that a purpose of the defendants in defending the action is to financially damage the plaintiff.

46 That one party to an action is legally unrepresented is a misfortune for the unrepresented party, the represented party and the public interest in the efficient administration of justice. The usual consequence of a party being unrepresented is that he or she is afforded greater leniency than represented litigants with the consequence that the legal costs of the represented party are increased. However, it is entirely unacceptable when a purpose of an unrepresented litigant is to financially damage the other party.

47 Further, I am satisfied that the defendants' conduct as a whole after March 2002 to which I have already referred (including the intentional non-compliance with court orders and the effect thereof on the plaintiff) has a tendency or is calculated to convey to the plaintiff the message that the defendants would obstruct and frustrate the plaintiff's claim in order to increase her costs which would be unrecoverable.

48 Another inference that a reasonable person would draw from the defendants' conduct, in particular their repeated public assertions that the plaintiff lied in her affidavit of February 1998, is of a warning or threat to the plaintiff not to continue with the trial because she has and will have to lie under oath and suffer consequential criminal sanctions. The defendants wrongly believe that at the trial of the action the Court must deal with the question of whether the plaintiff lied in her affidavit and that the Court will deal with the defendants' allegations that the plaintiff has committed criminal offences including perjury and attempting to pervert the course of justice.

49 I am satisfied that the defendants' conduct is (objectively) calculated as a threat or warning to the plaintiff not to continue the action otherwise she will be financially and personally ruined. Further, the defendants use the threats to demand what they would not be entitled to as successful defendants in the action. Successful defendants with no counterclaim would be entitled to their legal costs, less any costs orders made against them. Having regard to the limited role played by the solicitors for the defendants in the conduct of the action and the costs orders made against the defendants, the defendants' recoverable legal costs are likely to be relatively small. However, the defendants have repeatedly advised the plaintiff and others that they will not settle the action for anything less than a large six figure sum. It appears the components of the defendants' financial claim are identified in the conditions which the defendants seek for the discontinuance of the action. They include the costs of other actions (including a police prosecution against Mrs Richards and a violence restraining order application) and of the loss occasioned by the sale of the family home. In my opinion the Court does not have the jurisdiction to make the compensation and costs orders sought by the defendants. The court's jurisdiction under O 23 r 2(3) relates to the costs of the action.

50 The plaintiff also relies on Mrs Richards' allegedly abusive behaviour to the plaintiff's legal representatives. According to the affidavit evidence of the plaintiff's counsel, Mr Lemonis, following the hearing on 7 October 2002, to which the defendants brought their three children, Mrs Richards said to him words to the effect:

"Look into the eyes of my children Mr Lemonis so that they can see the person who has taken away their home."

51 Mr Lemonis also swore that Mrs Richards said to him:

"You are scum" and later, "What are you going to do about my last comment Mr Lemonis, sue me?"

52 Mrs Richards denies on oath making the comments attributed to her. I am unable on this interlocutory application to resolve the conflict of evidence in the relevant affidavits. I do not propose to attempt to do so.

53 There is merit in the plaintiff's submission that the defendants' conduct is calculated to convey a message to the plaintiff that the defendants are watching her and her advisers. In a letter to my Associate dated 14 November 2002 the defendants say they have known for five years where the plaintiff and her legal counsel and former legal counsel lived. For what purpose is unclear and unexplained. Further, the defendants' letters of July 2002 stating that the plaintiff may have left the country and enquiring as to her whereabouts suggest the defendants were monitoring the plaintiff's movements.

54 The plaintiff also relies on the communications from the defendants to the Court which they describe as prejudicial. A publication made to a Judge or to the court which seeks to influence the Judge or the court, or introduces inadmissible evidence or impugns the credibility of a witness or otherwise has a tendency to interfere with the administration of justice is a contempt of court: Attorney-General v Soundy, Vimpany & Calvert (1938) 38 Tas LR 143.

55 The defendants were put on notice of the relevant principles relating to contempt of court in a letter dated 22 March 2001 from the plaintiff's solicitors to Mrs Richards.

56 If the sole matter of concern was the fact of communicating with the Court, that would have little bearing on the disposition of this application. However, the defendants' conduct must be considered in the context of its effect or likely effect on a party to the litigation. Mr Richards' facsimile on 6 November 2002 is threatening, abusive and intemperate. The same can be said of the facsimile sent on 7 November 2002 to the same addressees. In my view, the communications have a tendency or are calculated to shame or dissuade the plaintiff from continuing with the action.

57 I am satisfied that the communications to the Court considered in isolation and the cumulative effect of the defendants' other conduct have a tendency or is calculated to dissuade the plaintiff from continuing with the action and is a contempt of court. However, I do not regard proof of contempt as a condition for the grant of relief sought by the plaintiff. Conduct falling short of contempt may also be relevant in considering the terms of the grant of leave to discontinue.

58 I come finally to the question of the defendants' financial circumstances and the cause thereof. This issue is relevant to the question whether the defendants have an explanation which excuses or explains their conduct.

59 The defendants have on a number of occasions suggested that as a result of the action they had to sell their home. In their affidavit sworn on 15 November 2002 in opposition to the application the defendants said:

"We object to the Plaintiff's application to discontinue proceedings without liability as to costs. Through the mischievous conduct of the Plaintiff in this matter our family has lost their home, sold the family car and generally been put through hell."

60 Mrs Richards interjected in the course of Mr Lemonis' submissions on 7 October 2002 to suggest that the action had resulted in her three children losing their home and that they were now without one.

61 In the facsimile transmission of 6 November 2002 to the Court, Mr Richards said:

"We had to sell our home to defend the malicious lies the Plaintiff is using to take this action".

62 In Mr Richards' facsimile transmission to the Court on 8 November 2002 he said:

"Working hard to own a 4 bed and 2 bath home with a pool? Don't worry you don't have to have a mortgage for long - just get sued and screwed in the Supreme Court! CIV 2226/97".

63 Mrs Richards' placard also suggests that the defendants lost their home as a result of the action.

64 At the hearing on 19 November 2002, counsel for the plaintiff submitted that the defendants' quoted statement from their affidavit of 15 November 2002 was knowingly false. In order to make good the submission, the plaintiff's counsel wished to refer to statements made by the defendants in without prejudice communications. He relied on the principle that a court would not allow the privilege to operate so as to mislead the Court: J A McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121 at 134.

65 I permitted the evidence to be referred to on a conditional basis. Of four items of correspondence referred to, only one is sufficiently relevant to override the privilege. It is a letter dated 30 October 2000 from the defendants to the plaintiff's solicitors advising them that they were "minutes away from bankruptcy". The defendants stated:

"As a result of being declared bankrupt you must advise anyone you do business with that you are bankrupt and obviously for us that will include rink owners, coaches and WAISA. We will simply state the fact that we are advising them that we are bankrupt. As we will not discuss our financial details to anyone it is our belief that it may be assumed by the community that this lengthy litigation and or any judgment in favour of your client is the cause of our bankruptcy. Again your clients (sic) own actions will not 'vindicate' her but only act as a catalyst to alienate her. Again this is a natural consequence of the Plaintiffs (sic) own actions."

66 A year later in December 2001 the defendants advised the plaintiff's solicitors in writing that Mrs Richards owed a creditor in Queensland over $200,000 and had received letters from solicitors in relation to this debt.

67 In March 2002 the defendants swore the affidavit as to their assets and liabilities. The affidavit materially provides:

"5 This information is provided for the avoidance of doubt as to the financial position we are in as Defendants, as a direct result of this continued action in the Supreme Court of Western Australia.

Assets

6 Household Goods and Chattels $5000

7 Private Vehicles

7.1 Daihatsu Charade $5,500

7.2 1979 BMW Motorbike $1500

8 Bank Accounts as at 26 March 2002

8.1 NAB Flexi Direct Account $0.32c

8.2 NAB Flexi Direct Account $168.77

9 Total Assets $12,169.09

Liabilities

10 Personal Loan as at 26 March 2002 $91,830.35

11 Credit Card $800.00

12 HECS debt $1137

13 Total liabilities $93,767.35

14 Net Liability $93,767.35

15 Under the Bankruptcy rules the current level of assets are not taken into account.

16 The list of Liabilities may not be exhaustive and the amounts may vary from time to time.

17 This is a complete list of all our assets and liabilities at this time.

18 We do not own or have an interest in any real estate property in any State of Australia (or anywhere), nor do we have any financial investments of any kind."

68 The evidence establishes that a property jointly owned by the defendants at 10 Tudor Avenue, North Shelley was sold for $235,000 and the transfer was registered on 21 May 1998. A discharge of a mortgage to MLC Building Society Ltd was also registered on that date.

69 The evidence also establishes that as at the time of sale of the family home the defendants had entered an appearance in this action and attended one status conference. The defence was filed on 31 August 1998.

70 At the hearing on 19 November 2002, the plaintiff's counsel submitted that the inferences to be drawn from the proven facts was that the legal costs incurred by the defendants up to the date of the sale of the family home in May 1998 did not cause the defendants' perilous financial position necessitating the sale and that the defendants' non-litigation related liabilities were the reason for the sale of the home.

71 As a result of the late notice and service of the financial material on which the plaintiff's submissions were based, I gave the defendants the opportunity to file an affidavit in reply concerning their financial position. The defendants filed an answering affidavit sworn on 26 November 2002. A series of documents were annexed to the affidavit. The documents included an account reminder letter dated 14 April 1998 from the defendants then solicitors, Mossensons concerning an overdue account for $1,449.28. Also enclosed was a letter dated 3 May 2000 from Queensland solicitors to Mrs Richards to the effect that Mrs Richards was indebted to their client for $61,000 and that if the debt was not paid within seven days legal proceedings would be commenced without further notice. The defendants' deleted from the solicitor's letter details that would have disclosed the name of the client purportedly for privacy reasons said to have no bearing on the matter. Also annexed was an acknowledgement of Mrs Richards' indebtedness of $61,000 being a loan to assist her in the purchase of her home which loan was repayable on demand with interest. The identity of the lender was inadvertently disclosed in that document. The lender appears to be a relative of Mrs Richards. By a document dated 25 August 1989 the lender released Mrs Richards from the obligation to pay interest on the loan.

72 The defendants' affidavit of 26 November 2002 does not provide a complete picture of the defendants' financial position at or around the time the family home was sold or at any later date. It appears the purpose of the affidavit was to address the issue of whether the cause of the defendants' financial difficulties and the need to sell the family home was their level of non-litigation related liabilities.

73 Based on the material in the defendants' 26 November affidavit the plaintiff concluded that as at 21 May 1998 when the family home was transferred, the defendants' equity in that property was at least $165,000. At the adjourned hearing on 3 December 2002 Mr Richards submitted to the court that the defendants' equity in their home was irrelevant. He said:

"We could have had $10 equity or $2,000,000 equity and not had the cash to pay legal fees with this and related matters. The fact that they have come up with a figure of $165,000, is close, but we won't dispute it. It's not actually correct."

74 The defendants also filed written submissions dated 26 November 2002. The submissions contain a great deal of factual material which is not verified in the defendants' affidavits. It is said in these submissions that Mrs Richards had wrongly (and she says mistakenly) claimed that she was indebted to a creditor for over $200,000. It also appears that the defendants overstated their liabilities in their affidavit of assets and liabilities. In particular the personal loan of $91,830.35 is overstated. The defendants explain in their written submissions that when they prepared the affidavit of assets and liabilities Mrs Richards did not have a copy of the release dated August 1989. It can also be inferred from the submissions that the lender wants the debt recognised in bankruptcy if ever that were to occur but otherwise would not seek its repayment.

75 There is no reference in the defendants' affidavits or written submissions to the equity they had in their home or what became of it. The financial information supplied by the defendants to the plaintiff and to Court contains errors and is incomplete. On the other hand, there seems to be no dispute that Mr Richards was at all material times until November 2000 a salesman on a modest salary and was the sole source of family income.

76 There is some evidence that the defendants were not in a financial position to satisfy their lawyers' accounts from their cash flow and that they sold their family home to access their significant equity in the property to finance the conduct of the action, at least until they commenced acting for themselves. However, I am not prepared to make factual findings to that effect because of the limited financial and other material before the Court. There are other arguable inferences as to the defendants' purposes in selling their home, particularly having regard to the extent of the equity in their home.

77 Even so, it is not difficult to understand the defendants' conduct. The litigation has had a very negative impact on their lives since it began in 1997. It has taken a significant emotional and financial toll having regard to their modest means. They see the plaintiff as the architect of their suffering. However, in the eyes of the law the plaintiff has not acted improperly in commencing and continuing this action. There is no arguable case of abuse of process. Further, the defendants are not being deprived of an advantage which they have already obtained. A successful defendant with no counterclaim is generally awarded the legal costs of the action. He or she has no entitlement to compensation for any damage suffered as a result of defending the action or the costs of other litigation. Further, it is not for this Court in this action to take steps in relation to the defendants' allegations of criminal conduct.

78 In my view the defendants' conduct has gone beyond what an initiating litigant can reasonably expect from a defendant and is such as to warrant in the exercise of my discretion an order that the plaintiff have leave to discontinue the action with no order as to costs. However, in the circumstances it is appropriate that the proposed costs order be subject to the plaintiff undertaking not to enforce costs orders in her favour and that there be a stay of any further proceedings. In view of the proposed orders it is unnecessary to make any order vacating the mediation.

79 I will hear from the parties on the terms of the proposed orders that:

(2) subject to an undertaking from the plaintiff not to enforce orders for costs made in her favour in the proceedings, there be no order as to the costs of the action;

(3) the plaintiff be permanently stayed from taking further proceedings against the defendants or either of them in relation to the matters the subject of the action.