McIntosh & Anor as T'ees of the Estate of Camm (A Bankrupt) v Linke Nominees P/L & Anor

SUPREME COURT OF QUEENSLAND

CITATION: McIntosh & Anor as T’ees of the Estate of Camm (A Bankrupt) v Linke Nominees P/L & Anor [2008] QCA 410

PARTIES: LACHLAN MCINTOSH AND JOHN PARK as trustees of the Estate of GARY STIRLING CAMM (A BANKRUPT) (plaintiff/respondents) v LINKE NOMINEES PTY LTD ACN 005 860 944 (first defendant/not a party to the appeal) ROBERT CLIVE LINKE (second defendant/appellant)

FILE NO/S: Appeal No 4043 of 2008 / Appeal No 4629 of 2008 / SC No 4537 of 2007

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal – Further Orders

ORIGINATING COURT: Supreme Court at Brisbane

DELIVERED ON: 16 December 2008

DELIVERED AT: Brisbane

HEARING DATE: Heard on the papers

JUDGES: Muir JA, Cullinane and Douglas JJ / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS: Respondents pay one-half of the appellant's costs at first instance, including reserved costs, if any, and the whole of the appellant's costs of the appeal.

CATCHWORDS: PRACTICE – COSTS – PRACTICE MATTERS – TIME TO MAKE ORDERS – where the respondents’ made an application to vary the costs order of the substantive appeal – where r 667 Uniform Civil Procedure Rules 1999 (Qld) provides the time frame in which an order can be varied or set aside – where r 7(1) Uniform Civil Procedure Rules 1999 (Qld) permits the court to extend a time set under the rules or by order – whether the power to extend time under r 7(1) is restricted by the specific provision under r 667 / PRACTICE – COSTS – GENERAL RULE – COSTS FOLLOW THE EVENT – COSTS OF ISSUES – where the appellant’s appeal was successful – where generally costs follow the event – where a substantial and disproportionate amount of time was consumed on the trial by the advancement by the appellant of unmeritorious issues – whether it is an appropriate case in which the appellant should pay the costs of the respondents in relation to an unmeritorious issue / Uniform Civil Procedure Rules 1999 (Qld), r 7(1), r 388, r 667 / Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; [1932] HCA 9, considered / Attorney-General (NSW); ex rel Franklins Stores Pty Ltd v Lizelle Pty Ltd (1977) 2 NSWLR 955, considered / Cretazzo v Lombardi (1975) 13 SASR 4, cited / Cropper v Smith (1844) 26 Ch D 700, cited / Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40 – 748, cited / Interchase Corporation Limited (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26; [2001] QCA 191, cited / Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, cited / Plunkett v Smith (1911) 14 CLR 76; [1911] HCA 58, applied / Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, cited / Rosniak v GIO (1997) 41 NSWLR 608, cited / Wentworth v NSW Bar Association (1992) 176 CLR 239; [1992] HCA 24, cited / The King v Wallis (1949) 78 CLR 529; [1949] HCA 30, considered

COUNSEL: M P Amerena, for the appellant / G Bigmore QC, with J Ribbands, for the respondents

SOLICITORS: Broadley Rees Hogan for the appellant / McKays Solicitors for the respondents

1. MUIR JA: A legal representative of the respondents was present in court on 12 September 2008 when it was ordered that the appeals be allowed, that orders made at first instance be set aside and that the respondents pay the appellant's costs of the proceedings, including the costs of the appeal. The respondents' legal representative did not request that the respondents be permitted to make submissions on costs. However, on Monday, 15 September 2008, the respondents' solicitors wrote to the solicitors for the appellant, advising of the respondents' intention to make application for a variation of the costs order.

2. The order was taken out and filed on 15 September 2008. On 19 September 2008 the respondents made application to vary the costs order by filing an outline of submissions.

3. The application to vary the costs order is based on r 667, r 388 and r 7(1) of the Uniform Civil Procedure Rules 1999 (Qld). It is opposed by the appellant, whose counsel submits that the Court has no power under r 7(1) to extend time. It is argued in the alternative that no variation of the order is warranted or capable of determination on the material before the Court. The basis for the submission in respect of r 7(1) is that the general power to extend time given by the rule is excluded by the specific provisions of r 667, which provides as follows:

"667 Setting aside

(1)The court may vary or set aside an order before the earlier of the following—

(a)the filing of the order; or

(b)the end of 7 days after the making of the order.

(2)The court may set aside an order at any time if—

(a)the order was made in the absence of a party; or

(b)the order was obtained by fraud; or

(c)the order is for an injunction or the appointment of a receiver; or

(d)the order does not reflect the court’s intention at the time the order was made; or

(e)the party who has the benefit of the order consents; or

(f)for a judgment for specific performance, the court considers it appropriate for reasons that have arisen since the order was made.

(3)This rule does not apply to a default judgment."

4. The point made on behalf of the appellant is that r 667, by making express provision for the time in which an order may be varied or set aside, and by providing specific exceptions conferring power on the Court to set aside an order at any time, allows no scope for the operation of r 7(1).

5. Reliance is placed on the following passage from the reasons of Gavan Duffy CJ and Dixon J in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia:¹

"When the legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power."

6. To that quotation may be added the following observations of Dixon J in The King v Wallis:²

"An enactment in affirmative words appointing a course to be followed usually may be understood as importing a negative, namely, that the same matter is not to be done according to some other course."

[7] The principle expressed in these passages is not open to doubt, but it is no more than an aid to construction. It was equated with the maxim, "expressio unius" in Attorney-General (NSW); ex rel Franklins Stores Pty Ltd v Lizelle Pty Ltd.³ The learned authors of Statutory Interpretation in Australia⁴ refer to its application in Plunkett v Smith⁵ and observe, with respect accurately, that it was there, "Applied as if it were the expressio unius principle*.*" That principle or maxim "is one that should be applied with caution. It can only be applied if the intention it expresses is discoverable upon the face of the instrument."⁶

[8] It is submitted also that, by virtue of the express enabling factors in r 667(2), the "Occasion for [the] proper exercise of the discretion under r 7(1) must be very limited and exceptional." It may be accepted that the time limit imposed in r 667(1) reflects public policy which favours certainty and finality in litigation. Accordingly, where power exists to extend the seven day period prescribed by r 667(1)(b), the power could be expected to be exercised with due caution. There is, however, no good reason to conclude that r 7(1) does not permit a court to extend the seven day period. Rule 7(1) provides: "The court may, at any time, extend a time set under these rules or by order." The power is unqualified and is obviously intended to be availed of where there has been a failure to comply with or observe a requirement of the rules or an order. Rule 667(2*)* lists a number of circumstances in which the Court would have power to set aside an order, or in which it could be expected to set aside an order if it had power to do so. It is confined to the setting aside of an order, whereas sub-rule (1) also accommodates the varying of an order.

[9] Rule 7(1) is a remedial provision in aid of the purpose expressed in r 5 of facilitating the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. The rule confers on a court a broad power to relieve against injustice.⁷ In my view, r 667(2), by listing a number of circumstances in which no time limit applies, does not impinge on the extent of the power conferred by r 7(1), although it may be relevant to the exercise of that power.

[10] The legal representative of the respondents should have raised the question of costs when judgment was handed down. His failure to do so though is not a disqualifying factor. The Court's role is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights.⁸ There is no suggestion that the legal representative's failure to act resulted from any decision on his or her part not to seek to argue the questions of costs.

[11] Counsel for the appellant makes the following points in written submissions:

(a)The respondents were wholly unsuccessful in the proceedings against both defendants and, having totally failed, must make out "a compelling case for a fractional costs order"⁹. All of the defences upon which the defendants failed at first instance were reasonably and properly raised;

(b)The fact that the defences of innocent misrepresentation and unconscionability failed due to the credit finding of Mr Linke does not change that position;

(c)The trial only took five days and "the fact that a substantial portion of the evidence concerned ultimately inconsequential issues upon which the (respondents) succeeded is an insufficiently compelling reason to depart from the general rule … that costs should follow the events.";

(d)If, contrary to the appellant's counsel's submissions a fractional costs order is merited, it would be inappropriate not to give some costs to the appellant, as it was wholly successful in the proceedings;

(e)The respondents' submissions do not condescend to setting out with particularity the time taken in the trial on defences upon which the defendants failed, still less the costs in preparation for the trial which might be attributed to these matters. In the absence of such material, it is difficult to see how the Court can properly make a fractional costs order.

[12] There is substance in the final point made by counsel for the appellant. The respondents' submissions, for the most part, are concerned with arguing the case for an extension of time on one ground, but faintly argued, which succeeded and on other grounds which did not have much to commend them. The submissions quote paragraph [11] of the primary judge's reasons, which sets out the defences raised by the appellant. Paragraph [11] is as follows:

"The defendants responded by denying the enforceability of the deed or the underlying agreement which the deed records ("the underlying agreement"). The basis on which the action was defended may be summarised as follows:

1.Mr Linke lacked authority to bind the company to its obligations under the deed;

2.If the company's liability under the deed is unenforceable Mr Linke's liability on the guarantee is discharged;

3.The deed was ineffective as such because the formalities of execution had not been complied with;

4.Assuming the deed to be invalid, the underlying agreement failed for want of consideration;

5.The execution of the deed and the underlying agreement were procured by misrepresentation;

6.Enforcement of the deed or the underlying agreement against Mr Linke is unconscionable;

7.Mr Linke withdrew his offer to settle the claim prior to acceptance by the trustees."

[13] It is submitted on behalf of the respondents that the appellant succeeded only on the defence numbered one and that Mr Linke, succeeded on the defence numbered two only. It was further submitted that the evidence required to meet the unsuccessful claims, particularly those pertaining to nine separate allegations of misrepresentation, effectively occupied all of the time at trial. Reference was made to adverse findings made of the appellant, Mr Linke, by the primary judge. Presumably, the point of this was to show that the time consumed by his evidence was not of any benefit in the resolution of the issues between the parties. Finally, it was submitted that:

"The substantive claims of misrepresentation made by Mr Linke involve serious allegations against legal practitioners. The evidence involving the attempted proof of those claims and the rebuttal of them, occupied virtually the entirety of the trial time."

[14] The respondents' submissions, as counsel for the appellant points out, are light on relevant detail but he did not see fit to apportion the time spent during the trial to the different issues. The appeal record was under 100 pages. The issues for determination on appeal were largely questions of law and construction. Generally speaking, apart from the question of Mr Linke's authority to bind Linke Nominees, the matters on which the appellant and Mr Linke succeeded at first instance or on appeal, on an assessment generous to the appellant, were unlikely to have consumed more than one-third of the time spent in the evidence. I consider it's likely also that these matters would have been responsible for no more than one-third of the costs of preparation for trial. The matters unsuccessfully raised appear from the reasons, to have been unmeritorious. They were substantive issues and, in my view, it is appropriate to have regard to them in framing the appropriate costs order. As a general rule, a successful litigant is regarded as being entitled to the costs of the litigation.¹⁰ Rule 680 provides that the costs of a proceeding follow the event unless the Court otherwise orders. But in appropriate circumstances a successful party may be deprived of or ordered to pay the costs of a discrete issue.¹¹ In this case the disproportionate amount of time consumed on the trial by unmeritorious issues justifies a departure from the normal order. To order the respondents to pay the whole of the appellant's costs, including the costs of these issues, would be unjust to the respondents and reward unmeritorious conduct.

[15] It is relevant also that Mr Linke, who was responsible for the unnecessary multiplication of issues in the proceedings, was the majority shareholder of Linke Nominees. It may be that if the whole of the record at first instance was before this Court, a more precise apportionment of costs could be made. As it is, it is possible to make only a broad assessment which must ensure that the appellant is not deprived of costs as a result of conjecture and/or speculation. On this basis, for the reasons given, the appropriate order is that the respondents pay one-half of the appellant's costs at first instance, including reserved costs, if any, and the whole of the appellant's costs of the appeal.

[16] CULLINANE J: I agree with the reasons for judgment of Muir JA and the orders proposed by his Honour.

[17] DOUGLAS J: I also agree with the reasons for judgment of Muir JA and the orders proposed by his Honour.

Footnotes

1. (1932) 47 CLR 1 at 7. ↩

2. (1949) 78 CLR 529 at 550. ↩

3. [1977] 2 NSWLR 955 at 962. ↩

4. 5th ed, 2001. ↩

5. (1911) 14 CLR 76. ↩

6. Wentworth v NSW Bar Association (1992) 176 CLR 239 at 250. ↩

7. cf FAI General Insurance Company Limited v Southern Cross Exploration NL (1988) 165 CLR 268 at 283. ↩

8. Cropper v Smith (1884) 26 Ch D 700 at 710 and Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 154. ↩

9. Cretazzo v Lombardi (1975) 13 SASR 4 at 16; Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40 – 748 per Toohey J at 48,134. ↩

10. Oshlack v Richmond River Council (1998) 193 CLR 72 at 96. ↩

11. Rosniak v GIO (1997) 41 NSWLR 608 at 615 and Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26 at 59, 60. ↩