COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 8] [2015] WASC 166 (8 June 2015)

COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 8] [2015] WASC 166 (8 June 2015) - WASC 2015 case summary — Zoe

[9]

These proceedings have their origin in proceedings in the Local Court. Those proceedings were No 17065 of 2003, commenced by summons on 17 September 2003. Those proceedings were a claim by the plaintiff, and its two directors and shareholders, Hartmut Huber Josef Frigger (Mr Frigger) and Angela Cecilia Theresa Frigger (Mrs Frigger), against the first defendant and against Martin Paul Banning (Mr Banning, now deceased) for loss incurred in the purchase of a property in Armadale (the Armadale property), then leased as a service station and an automotive workshop, as a result of misleading or deceptive conduct. Substituted particulars of claim and amended substituted particulars of claim prepared by solicitors subsequently engaged by the plaintiff were later filed in those proceedings.

On 9 July 2004 an order was made in the Local Court granting leave for Mr and Mrs Frigger to have themselves removed as plaintiffs in the proceedings.

By order of 14 November 2005, the proceedings, in the Perth Magistrates Court as the relevant Local Court had by then become, were transferred into the District Court. The District Court proceedings were initially CIV 332 of 2004 but became CIV 2797 of 2005. A statement of claim was filed in those proceedings.

Still later, by order made by consent on 17 November 2006, following an unsuccessful attempt to have the proceedings transferred into the Federal Court, the District Court proceedings were transferred into this court, to become CIV 2265 of 2006 (the present proceedings).

...

The action as tried was for damages (including aggravated or exemplary damages) in respect of economic loss or damage for representations by the first defendant for which Mr Banning was the maker or in which he was involved. Liability was rested on contraventions of Trade Practices Act 1974 (Cth) s 52 and Fair Trading Act 1987 (WA) s 10, and on negligence and deceit. The economic loss claimed was on the plaintiff's purchase from the first defendant of the Armadale property.

The substantive issues in the trial were the following, as described in Computer Accounting & Tax [Computer Accounting and Tax Pty Ltd v Professional Services of Australia Ltd [2008] WASC 133 (CAT WASC), the reasons for judgment in the trial] [46]:

[11]

There was one further substantive issue, however. It had to do with the capacity in which the plaintiff had acted at certain material times. I reach it shortly.

The decision in [CAT WASC] with respect to the substantive issues save for the further one was as follows.

As to the issue whether representations were made or conduct engaged in capable of being misleading or deceptive, I concluded that, of the representations or forms of conduct relied upon, most, numbered 1 to 5 in the judgment [187], including the principal representations or forms of conduct relied upon by the plaintiff in the action, were established.

As to the issue whether the representations made or forms of conduct engaged in were false or misleading or deceptive, I concluded that, of the five such representations or forms of conduct, all but one were shown to be false or misleading or deceptive.

As to the issue whether there was negligence in relation to the representations or forms of conduct engaged in that were false or misleading or deceptive, I concluded a breach of the duty of care in respect of each of them had been shown.

As to the issue whether there was awareness or recklessness sufficient for the tort of deceit in respect of all four of these representations or forms of conduct, I concluded this was made out in respect of two of the four.

As to the issue who was liable, I concluded both the first defendant and Mr Banning were liable for the four representation[s] or forms of conduct at common law (at least in negligence) and under the Fair Trading Act, and as to the first defendant under the Trade Practices Act, but as to Mr Banning under that statute only in respect of two of the representations made or forms of conduct engaged in.

As to the issue whether there was reliance on the four representations made and forms of conduct engaged in, I concluded there was such reliance in all cases.

As to the issue of whether there was loss or damage, and of what sorts, I concluded I had insufficient evidence to establish loss of investment opportunity to gain higher rental returns, although I also noted the plaintiff did not press that claim in closing submissions; loss on making the acquisition by paying too much for the Armadale property was made out, albeit at an amount arrived at by adjustment of the amount claimed; and loss of an opportunity to make an advantageous capital investment (capital investment opportunity) was also made out, albeit at an amount arrived at by adjustment of the amount claimed.

As to the issue whether aggravated or exemplary damages were recoverable, I concluded they were not.

As to the issue whether interest was recoverable, I concluded that it was.

There was a further substantive issue, however, as I have indicated. It was the subject of significant evidence and argument at trial, and produced an amendment of the plaintiff's statement of claim during the trial. It concerned whether the plaintiff had acted at the material times as trustee for the Frigger Super Fund (the superannuation fund of Mr and Mrs Frigger), in which case the defendants' contention was that the plaintiff had suffered no recoverable loss, but rather any such loss suffered was that of the Frigger Super Fund. The matter of whether there was a factual foundation for this contention occupied some considerable trial time, and was resolved against the defendants. Further, I determined that, even had the resolution of the factual issue been otherwise, the defendants' contention would have failed [8] [11], [26] [39].

[36]

It is trite law that the court has a very wide discretion as to costs, albeit it is a discretion to be exercised judicially. The general rule is that a successful party is entitled to an order for costs: O 66 r 1(1), Rules of the Supreme Court 1971 (WA). There are, however, two well-established exceptions to that rule to which it is necessary to refer.

First, where a party, although generally successful, has failed on some issue or issues which increased the costs of the action, the court may order the party to pay the costs of those issues: O 66 r 1(3). But that is a power to be exercised with caution and not as a matter of course. While parties should be encouraged to litigate only those matters which are properly and reasonably in issue, parties should not be dissuaded by the risks of an adverse costs order from canvassing all issues which might be material to the proper determination of a case: Keet v Ward [[2011] WASCA 139] [18]. Moreover, any practice of determining costs on the basis of a painstaking analysis of which party won on which issue would simply add to the time, costs and uncertainty of litigation: see Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) [6]. Such an approach may also fail to do justice in cases where the issues were intertwined or overlapped, or there was only one substantive issue. The exercise of the power to adjust an order for costs by reference to particular issues upon which an otherwise successful party has failed will ordinarily be appropriate only where the party has failed on discrete and severable issues which have added to the costs of the action in a significant and readily discernible way: Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) [7].

Where the court considers that an order as to costs should reflect the failure of the successful party on some issues in the action, the better approach will often be to award the successful party a proportion of its costs, or to make no order as to costs, rather than attempt to award costs to the respective parties on an issue by issue basis: Phillips Fox (A Firm) v Westgold Resources NL [2000] WASCA 85 [28]. Where a party is awarded only a proportion of its costs, the exercise of discretion involved will inevitably be more a matter of art than science, depending upon matters of impression and evaluation, and mathematical precision will be illusory: Amaca at [6]; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.

Secondly, where a plaintiff pleads two or more causes of action but succeeds on only some of those causes of action, the general rule is that the plaintiff is entitled to costs on the causes of action on which it was successful and the defendant is entitled to costs on the causes of action on which it was successful, as if separate actions had been brought: O 66 r 2(a). Again, and for similar reasons, an order of that kind is not to be made as a matter of course. It is necessary for the court to look at the realities of the case and attempt to do substantial justice in the particular circumstances. In some cases, while it might be strictly correct to say there are different causes of action involved, there may have been only one contest in substance. That will often be so where all causes of action arise out of the one course of dealings, the one transaction, or the same facts, in which case there would usually be one order for the general costs of the action, moulded as necessary to ensure that substantial justice is done: Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569 at 574 575; Keet v Ward [24].

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