INSURANCE COMMISSION OF WESTERN AUSTRALIA -v- ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ) [No 3] [2018] WASC 44 (9 February 2018)

INSURANCE COMMISSION OF WESTERN AUSTRALIA -v- ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ) [No 3] [2018] WASC 44 (9 February 2018) - WASC 2018 case summary — Zoe

[119]

ICWA seeks an order that the requirements of Order 59 rule 9(1) of the RSC be waived, because the Court made orders, to which 'the parties agreed', programming the filing of ICWA's application for special costs orders, and for the filing of submissions by the parties.[48]
BGNV opposes the waiver. Counsel for BGNV submitted that the requirement to confer in O 59 r 9 can only be waived in a case of urgency or for other good reason. He submitted that neither was the case. He also submitted that ICWA's failure to confer is a relevant factor in determining who should pay the costs of the Costs Application.
The requirement in the RSC for conferral before any application in chambers is filed recognises that conferral between parties can avoid unnecessary applications or minimise the scope of any disputes, and thus can avoid unnecessary costs being incurred by the parties, and minimise the use of the Court's resources in hearings which could have been avoided. The requirement to confer is a fundamental component of the principles of modern case management which now underlie the RSC. A failure to confer may warrant complaint in some cases. If it appears to the Court that compliance with the requirement to confer may result in a narrowing of the issues in dispute, the Court may decline to deal with an application until such time as conferral has occurred. Further, where a failure to confer results in costs being incurred by a party where they otherwise could have been avoided, some complaint about the failure to confer, and an application that that failure be reflected in a costs order, may be justified. This is not such a case, for three reasons.
First, the orders I made to programme the filing of any application by ICWA for special costs, and for the filing of evidence and submissions, and for such application to be dealt with on the papers, were made following the publication of the strike out judgment. Counsel for BGNV submitted that ICWA told the Court of its intention to make a special costs application and sought such programming orders 'without prior notice'.[49] Yet during the hearing in which the programming orders were made, counsel for BGNV did not raise any objection to those orders on the basis that there had not been conferral about the intended Costs Application.[50] Those programming orders were later varied by consent to extend the timetable, and to apply to any application for special costs orders in relation to the costs of both Applications.
Secondly, conferral is a two way process. Even after the Costs Application was filed, it was open to BGNV's solicitors to confer with ICWA's solicitors with a view to narrowing the scope of the issues in dispute in respect of the Costs Application.
Finally, it appears unlikely that any conferral would have made any significant difference to the issues in dispute in respect of the Costs Application. BGNV opposed the Costs Application, and sought its own costs orders, which ICWA opposes. While the parties agreed in principle in respect of one issue (namely BGNV's costs which were wasted by virtue of ICWA's abandonment of parts of its amendment application), they do not agree about the nature or terms of the costs order which should be made to deal with that issue.
In these circumstances, the failure to confer is not a basis for the Court to refuse to deal with the Costs Application, nor should the failure to confer sound in the costs order which should be made with respect to the Costs Application itself. There is no need for a formal order waiving the requirement to confer.

[120]

The Court has a broad discretion[51] to award the costs of and incidental to a proceeding. However, that discretion must be exercised judicially.[52] The general rule - recognised expressly in the RSC[53] - is that costs follow the event. The Court will generally order that a successful party recover its costs,[54] unless there is good reason to depart from that approach.
ICWA and BGNV disagree as to who was the successful party on the strike out application.
ICWA says that it was 'almost wholly successful' on the strike out application, because that application succeeded only in respect of one of the 18 PFRs (and the corresponding paragraphs in the SIFC) which were challenged.[55] ICWA therefore submits that a costs order should be made in its favour in respect of the strike out application.
BGNV submits that a costs order should be made in its favour on the strike out application, on the basis that that application 'was partly successful and partly unsuccessful'[56] and that 'on any view, BGNV has had a substantial measure of success on its strike out application'.[57] Counsel for BGNV submitted that 'BGNV's success cannot simply be measured by reference to the [strike out judgment and the amendment application judgment]. '[58] Counsel for BGNV also pointed to what he described as 'the practical reality that ICWA responded to that application by abandoning various claims ... and making substantial amendments to its SFIC to address BGNV's complaints'.[59]
I am unable to accept the tenor of BGNV's submissions, for the following reasons.
First, although BGNV succeeded in persuading the Court to strike out one of the PFRs in the Writ (PFR 12) and the corresponding paragraphs of the SFIC ([513] - [592], save to the extent that they were relevant to any PFR apart from PFR 12), the dimensions of its 'success' need to viewed in perspective. After all, whether a party succeeds in proceedings must be determined by the reality of the circumstances involved.[60] The reality of the outcome of the strike out application is that while BGNV was not completely unsuccessful, it was very largely unsuccessful. BGNV sought to strike out a very significant proportion of the relief sought by ICWA (18 out of the 29 PFRs in the Writ), together with the corresponding paragraphs of the SIFC (over 700 paragraphs) which were said to support the grant of that relief. It advanced numerous arguments in support of its challenge to the PFRs and paragraphs of the SIFC, filed detailed submissions and cited numerous cases. Dealing with its contentions resulted in a lengthy judgment. It succeeded in striking out only one PFR, and the corresponding paragraphs of the SIFC. Furthermore, BGNV's case for striking out PFR 12 cannot be regarded as the primary or dominant issue on the strike out application.
Secondly, while BGNV succeeded in having PFR 12 and the related paragraphs of the SIFC struck out, it did not succeed on all of the bases for its challenge to that part of ICWA's pleading. BGNV advanced a number of arguments to strike out PFR 12, but succeeded only in its contention that that PFR raised a hypothetical question.[61]
Thirdly, BGNV's challenge to PFR 12 cannot be regarded as a discrete or separate part of its strike out application. Its contention that that PFR was hypothetical was echoed in its challenge to a number of other PFRs, and the corresponding paragraphs of the SIFC.
Fourthly, counsel for BGNV sought to support his claim that BGNV was successful on the strike out application by relying on the fact that ICWA sought to amend the Writ by abandoning various claims, and by making amendments to the SIFC to address criticisms BGNV had made. Even if it is assumed that all of those amendments were made in response to BGNV's contentions on the strike out application, in my view that does not render inapt the characterisation of the outcome of the strike out application as largely unsuccessful for BGNV.
Having said all of that, in my view, it is appropriate to make some allowance for the fact that ICWA was not entirely successful in resisting the strike out application, and for the fact that ICWA amended its Writ and SIFC to respond to some of the criticisms made by BGNV. In those circumstances, in my view, the just outcome is to require that BGNV pay 80% of ICWA's costs of the strike out application.

[124]

While ICWA does not dispute the principle that the costs of and occasioned by amendments to pleadings made without leave are ordinarily costs payable by the amending party, it says that BGNV has not sustained any such costs.[64] That submission reflected the fact that at the time of the amendment application, BGNV had not filed a responsive SIFC. BGNV acknowledged that it would not incur costs in making consequential amendments arising from the grant of leave to amend.[65]
Further, BGNV submitted that if ICWA was required to seek leave to amend, 'then the ordinary rule should apply, namely that a party seeking the indulgence of the Court should pay the other party's costs of the application even if the application is successful'.[66] I am unable to accept that submission in the circumstances of this case.
The general position where a party has successfully obtained leave to amend is that as that party is seeking an indulgence of the Court, it will be required to pay the costs of the application, including costs thrown away, and will not normally receive the costs of the application.[67] However, the application of that general rule is subject to the Court's discretion.[68]
In this case, while ICWA's application for leave to amend sought the indulgence of the Court to permit that amendment, the issues in dispute on the amendment application were such that it was more akin to a strike out application brought by BGNV. Had the amendments been able to be made without leave, then it would have been necessary for BGNV to make an application to strike out the amendments.
In my view, the appropriate order is that BGNV pay ICWA's costs of the amendment application. The proposed paragraph of the PFR and proposed paragraphs of the SIFC in respect of which leave was refused occupied only a small part of the overall time and effort involved in dealing with the amendment application. That being the case, I am not persuaded that it is appropriate to reduce the costs payable by BGNV to take account of the fact that ICWA was not entirely successful on the amendment application.
However, ICWA did not pursue some parts of the amendment application, namely proposed PFRs 3, 19(c), 19(d), 21, 22, 30 and 31, together with the corresponding paragraphs of the SIFC (abandoned claims). The abandoned claims were (in the case of PFRs 30 and 31) not pressed in light of the decision of the Court of Appeal in Bell Group NV v Insurance Commission of Western Australia[69] or (in respect of the balance of the abandoned claims) were not pressed on the amendment application, pending further consideration by ICWA. ICWA did not dispute that 'to the extent that any costs can be identified as directly referable to those parts of the application not pressed, they should be excluded from the general costs order' that BGNV pay ICWA's costs of the amendment application.[70] I agree that BGNV should not be required to pay any part of ICWA's costs of the amendment application which concerned the abandoned claims. No doubt ICWA would not seek such costs from BGNV in any event, but for the avoidance of any doubt, I will make that clear in the order which I will make.
However, BGNV goes further. It says that there should be an order that ICWA pay such costs as BGNV incurred in responding to ICWA's application to amend its Writ and SIFC to include the abandoned claims, because ICWA's failure to pursue the abandoned claims meant that BGNV's costs were wholly wasted. The amount of such costs which were wholly wasted appears likely to be very modest indeed. The pursuit of claims for comparatively small amounts of wasted costs is somewhat surprising, in a case where what is at stake is the parties' share in the distribution of the monies of the Bell Group of companies, which currently exceeds $1.7 billion. However, as Mazza JA has observed, the parties 'could be said to have a litigious disposition and appear to have deep pockets, such that legal costs, including the possibility of costs orders, constitute no real restraint'.[71]
Nevertheless, the claim by BGNV that ICWA should pay costs in respect of such of BGNV's costs in relation to the abandoned claims as were wasted, has some merit. The question is how those costs should be determined. I am wary about burdening the taxing officer with the difficult task of identifying which of BGNV's costs were, in fact, wasted. However, BGNV's submissions suggest that it can identify those of its costs which it says were wasted by ICWA's decision not to pursue the abandoned claims. Counsel for BGNV submitted that BGNV 'prepared extensive written submissions' in relation to the abandoned claims. It seems very likely that the primary costs incurred by BGNV in respect of the abandoned claims which were wasted were the costs of the preparation of its written submissions, on those claims alone. (Even then, there may well have been some overlap in the content of the submissions BGNV intended to advance in respect of the abandoned claims, and the submissions it advanced in respect of the balance of the amendment application. However, any such overlap should be ignored, for the sake of minimising further argument about the quantum of the costs.) I will make an order that ICWA pay BGNV's costs of preparing such of its written submissions on the amendment application which concerned the amendment of the Writ to include PFRs 3, 19(c), 19(d), 21, 22, 30 and 31, together with the corresponding paragraphs of the SIFC, on a party and party basis.

[142]

In so far as ICWA seeks an order that its costs be taxed without regard to the limits imposed by item 10(a) of the applicable scale, it says that it is fairly arguable that its bill of costs would be taxed at a higher amount than the maximum allowed under that item of the scale, in view of 'the volume of material which required reading, assimilation and preparation ... by [ICWA] and its counsel, and the materials required to respond to written submissions'.[79]
Although ICWA filed an affidavit in support of the Costs Application, that affidavit did not include a draft bill of costs in respect of either of the Applications, nor did it contain any information about the fees which ICWA may be paying to its solicitors and counsel. While it will ordinarily be the case that an applicant for a special costs order will provide the Court with a draft bill of costs, the failure to do so is not fatal to an application for a special costs order.[80] That is because the determination that the bill of costs will tax at an amount greater than the maximum under the scale is not a conclusion reached as a matter of mathematical precision, but rather will be determined as a matter of impression.[81]
In so far as the application for a special costs order in respect of item 10(a) of the applicable scale is concerned, I am satisfied that it is fairly arguable that the bill which ICWA would present to the taxing officer may properly tax at an amount greater than the limit in item 10(a). I have reached that view as a matter of impression, having regard to the total time likely to have been required in the preparation of each of the Applications. The pleadings, constituted by the Writ and the SIFC, were lengthy and complex. A number of arguments were advanced in each of the challenges to the PFRs and the corresponding paragraphs in the SIFC which were the subject of both Applications. In order to deal with those arguments, counsel inevitably would have to have gained an understanding of the complicated factual background to the action. Furthermore, while the same junior counsel appeared in respect of each application, ICWA briefed different senior counsel for each of the Applications. Very lengthy written submissions were filed. Although each Application was heard in under a day, that hearing time does not adequately reflect the volume of preparatory work which would have been required in order for counsel to adequately deal with the Applications.
I note that counsel for BGNV accepts that it would be appropriate to lift the 2 days' preparation limit, and, therefore, the monetary cap for junior counsel, under item 10(a). That reflects an acceptance that the amount of preparatory work which was required would undoubtedly exceed the 2 days permitted under the scale.
However, ICWA has not established that the limit for the number of days of hearing for each Application (one day for each Application) under item 10(a) should be lifted. The hearing of each Application took less than a full day.
Counsel for BGNV did not dispute that the matter was complex and of importance to the parties, although he did not concede that the matter was unusually difficult.[82]
The Applications were far from the typical strike out or amendment applications argued in this Court. The action itself involves a very lengthy and complicated factual matrix, and many novel questions of statutory and contractual construction. The Applications were made more difficult and complex than usual simply by virtue of that context. However, quite apart from that, the proportion of the pleadings challenged, and the arguments advanced in support of both the strike out application, and of BGNV's objection to the amendment application, meant that those Applications were undoubtedly unusually difficult and complex. There is also no doubt that each of those Applications was of very considerable importance to ICWA. The issues raised by ICWA in this action are directed to supporting orders it seeks to ensure are made for its benefit, pursuant to s 564 of the Corporations Act 2001 (Cth) (or the Corporations Law), in related proceedings (distribution proceedings). Had the strike out application been wholly or largely successful, or had ICWA's amendment application been largely unsuccessful, that could have had a significant impact on its prospects of success in the arguments it wishes to advance in these proceedings and in the distribution proceedings, and on whether an order under s 564 will ultimately be made in its favour. Hundreds of millions of dollars are at stake. I am satisfied that the inadequacy of the maximum amount allowed under item 10(a) of the applicable scale for each of the Applications arises because of the unusual difficulty, or the complexity, or the importance of those Applications, in the context of the action as a whole.
In so far as ICWA's application in relation to item 10(a) might be understood as an application to lift the limits on the hourly and daily rates for counsel, by reference to which the maximum amounts in item 10(a) are calculated, that issue can conveniently be dealt with as part of ICWA's application to lift the limits on the fees in Table A of the Determination. I turn next to that part of ICWA's application for special costs orders.

[145]

ICWA has briefed senior counsel and junior counsel from the interstate bar. Given the amount of money at stake in the distribution proceedings, it is safe to assume that ICWA has briefed senior counsel from among those who are considered to be the very best in the field. I do not think there is any room for doubt that senior counsel of that expertise and eminence will ordinarily charge in excess of $6820 per day. That being the case, I am satisfied, as a matter of impression, that the amount of costs allowable under item 10(a) will also be inadequate as a result of the unusual difficulty, complexity or importance of the strike out application and the amendment application, which warranted ICWA instructing senior counsel of considerable expertise in complex applications such as these.
However, absent some evidence, I am not persuaded that the same conclusion is justified in respect of junior counsel, or in respect of the legal practitioners acting for ICWA who performed legal work in connection with the Applications. There is simply no basis on which the Court could be satisfied that it is inevitable, or at least very likely, that junior counsel, and legal practitioners, with the experience and expertise sufficient to deal with unusually difficult or complex applications of this kind could not be engaged for rates less than the maximum rates in Table A, which underpin item 10(a) of the applicable scale. In short, I am not satisfied that it is fairly arguable that the amount of costs allowed under Table A as they apply in respect of the Applications would be inadequate.
An order removing the limit on item 10(a) of the applicable scale should be made, limited to lifting the limit referable to the time taken in preparation for the hearing of each of the Applications.
In addition, ICWA's costs on each of the Applications should be taxed without regard to the limit on the hourly or daily rates for senior counsel under Table A of the Determination, which underpin item 10(a) of the applicable scale.
The removal of those limits does not carry with it the necessary conclusion that the taxing officer would be persuaded to allow an amount greater than those limits, in respect of the costs of the Applications. It remains for the taxing officer to determine what is reasonable.

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