Civil Judgments Enforcement Act 2004 (WA), Pt 4, Div 2

Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 All ER 533

Allied Collection Agencies Ltd v Wood & Anor [1981] 3 All ER 176

EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59

J T Stratford & Son Ltd v Lindley & Ors (No 2) [1969] 3 All ER 1122

1 MASTER SANDERSON: This application raises a short but important point to do with costs. It arises in this way. On 3 May 2006 I made orders on an interlocutory application. The nature of that application is presently irrelevant. What is important is that par 2 of the order was in the following terms:

"The plaintiffs pay the defendants' costs of the application fixed at $1500."

2 On 25 August 2006 the defendants took out a means inquiry summons under Pt 4, Div 2 of the Civil Judgments Enforcement Act 2004 (WA). On 1 September 2006 the plaintiffs took out a summons seeking to set aside the means inquiry summons. The basis of the application to set aside the means inquiry summons was that the order, by its terms, did not render the plaintiffs liable immediately to pay the defendants' costs. Rather, it was said the form of the order meant that the costs were only payable when the action had been concluded. At issue then is the effect of the form of the order for costs that I made.

3 The starting point in this matter is O 66 r 10. Relevantly, that rule reads as follows:

"10(1) Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings, and any order of the Court for the payment of costs may require the costs to be paid forthwith notwithstanding that the proceedings are not concluded."

4 This rule is in the same form as the English O 62 r 4(1) prior to that rule being amended in 1986. (It is interesting to note that in EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59, Sir Robert Megarry VC castigated this order as "an ungodly jumble". No doubt his Lordship's comments led to amendment of the rule. These comments might well be thought to resonate in this jurisdiction.)

5 Upon a first reading it may be thought that the rule anticipates that if no time for payment of costs is specified, then the costs are to be paid at the conclusion of the action. The rule is in permissive terms. The Court "may require the costs to be paid forthwith".

6 But that is not the way the rule was interpreted in England. The matter was considered by the English Court of Appeal in J T Stratford & Son Ltd v Lindley & Ors (No 2) [1969] 3 All ER 1122. In that case the Court of Appeal was concerned with the effect of an order that costs be "costs in the cause" when the action never came on for trial. In the course of his judgment, Lord Denning MR said (at 1123):

"There is no definition in any law book of the words 'costs in the cause'. But every pupil on his first day in chambers is told what it means. 'Costs in the cause' means that the costs of those interlocutory proceedings are to be awarded according to the final award of costs in the action. If the plaintiff wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the defendant. Vice versa, if the defendant wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the plaintiff. (I may add in parenthesis that 'plaintiff's costs in the cause' means that, if the plaintiff wins, he gets the costs of the interlocutory proceedings; but, if he loses, he does not have to pay the other side's costs of them. 'Plaintiff's costs in any event' means that, no matter who wins or loses when the case is decided, the plaintiff is to have the costs of those interlocutory proceedings. 'Plaintiff's costs' means that the plaintiff is to have the costs of the interlocutory proceedings without waiting for a decision.)"

7 There is no doubt that Lord Denning's comments about the effect of an unqualified costs order were obiter. But they are consistent with the earlier Court of Appeal decision in Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 All ER 533. The facts of that case were as follows. On appeal to the Court of Appeal the defendants were successful and after discussion as to costs the Court ordered, inter alia, that the plaintiff "shall pay to the defendants or their solicitors their costs of this appeal such costs to be taxed by a taxing master". The defendants took the view that this entitled them to have their costs taxed forthwith and paid by the plaintiff. The plaintiff disputed the defendants' right to immediate taxation and payment of their costs. The matter went back to the Court of Appeal. Lord Justice Harman said (at 534):

"As far as I am concerned, I am quite clear what I intended to do. I said in the course of the interlocutory observations 'No immediate taxation'. This was in reply to counsel for the defendants; but, as he rightly points out, it does imply that, if an order is made in this court for payment of costs, the order so made does mean that the successful party has a right to an immediate taxation and payment. I have been under the impression that the court, when it intended that result, would say expressly 'Costs to be taxed and paid forthwith'; but the Supreme Court Practice, 1967(1) shows that I was wrong about that. It is a thing often asked for and I have made the order in that form, notwithstanding that the application was interlocutory, that payment should be made at once if the successful party chose to tax the costs. However that may be, I think it is fair to counsel for the defendants to say that in spite of the fact that he assented to my interlocutory observation, there was this difference (although I did not intend that it should be made) that he applied in a form of words which would carry, if it was assented to, an immediate taxation. That seems to have passed the court by; as far as I am concerned, perhaps by my inadvertence. It did not strike counsel for the plaintiffs, who was unaware of the difference that there is between appeal allowed with costs in any event and appeal allowed with costs, which is something of a nicety. ...

As far as I am concerned, I did not intend that there should be this exceptional order for payment of costs at once, but that costs should be in any event those of the successful appellant. That was the order which I intended to pronounce, and I thought that I had done so. I see, however, that there is some room for mistake owing to the fact that after I had made the observation which showed that I did not intend an immediate taxation, an application was made which could have had that result and was so interpreted by the learned associate. That is a slip which can be amended ... because inadvertently the order as drawn did not express the intention of the court owing to a misunderstanding between the associate and the court which pronounced it."

8 There is one further case that I should mention. In Allied Collection Agencies Ltd v Wood & Anor [1981] 3 All ER 176, Neill J dealt squarely with the question of what was meant by an order for "defendant's costs" or "plaintiff's costs" without further qualification. It was put to the learned Judge during the course of argument that properly construed the English rule did not permit immediate taxation and require immediate payment of the costs unless the order was qualified by making the costs payable forthwith. His Honour said (at 181):

"I see the force of this argument, but I am satisfied that in the course of time the words 'defendant's costs' have acquired a special meaning. The words constitute, as counsel for the plaintiff company put it, a formula. The formula is used where the court or, as in this case, the parties intend or must be deemed to intend that the defendant should be entitled to tax his costs immediately."

9 His Honour then went on to say that he was satisfied that he was bound by the decision in Adam & Harvey Ltd (supra) and that he would not want to differ from what was said by Lord Denning in the J T Stratford & Son Ltd decision (supra).

10 (It is interesting to note that in the 1986 amendment to the English O 62, r 8 dealt specifically with the stage of proceedings at which costs were to be taxed. Rule 8(1) provided that subject to subrule (2) costs in any proceedings were not to be taxed until the conclusion of the cause or matter. Subrule (2) required that if costs were to be taxed at an earlier stage in the proceeding, a specific order was necessary. The authors of Supreme Court Practice note that this rule was introduced to reverse the decision in Allied Collection Agencies Ltd (supra): see the Supreme Court Practice 1991, Vol 1, par 62/8/1.)

11 I should mention two further matters. The first is Practice Direction No 5 of 2005. Paragraph 1 of that Practice Direction is in the following terms:

"The Court has resolved to change its practice in making costs orders in interlocutory proceedings. As a general rule, where an order for costs is to be made against a party, the costs will now be fixed and ordered to be paid forthwith or by a particular date. Likewise as a general rule, where costs are ordered to be in the cause, the quantum will be fixed." [My emphasis]

12 As with O 66 r 10(1), the wording of that paragraph of the Practice Direction may suggest that if there is no order that the costs be paid forthwith, the costs should only be paid at the conclusion of the action. But just as that is not, in my view, the proper way to interpret the rule, it is also not the proper way to interpret the Practice Direction. In this Court there has been a long established tradition that if costs are ordered to be paid by a party without qualification, then the costs can be taxed immediately and become payable as soon as the taxing officer signs the allocatur. In my view, it was not intended that the Practice Direction should alter the situation; and nor did it do so.

13 Secondly, and perhaps most importantly, it was always my intention in this case that the costs should be payable forthwith. In retrospect it may have been better to qualify the order accordingly. There is presently no application to amend the order under the slip rule. In my view amendment is unnecessary. The defendants are entitled to immediate payment of the costs ordered. I would accordingly dismiss the plaintiffs' summons to set aside the means inquiry summons. The defendants are entitled to proceed with the means inquiry. I will hear the parties as to the appropriate orders on these two applications.