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[2009] WASC 108
plaintiff. By consent the court declared the proper construction of clause 3 of the Unit Holders Agreement to be satisfied by one party requesting the CPA WA President appoint a valuer (order made 16 October...
1 cited instrument linked from this judgment.
The plaintiff sought a declaration about clause 3 of a Unit Holders Agreement concerning how a valuer is appointed to determine unit price. The parties consented to a declaration that clause 3 is triggered when one party requests the CPA WA President appoint a valuer. The court examined solicitor correspondence and found the plaintiff had reasonably and necessarily commenced proceedings because the first defendant never unqualifiedly accepted the plaintiff's proposed request and continued to qualify agreement by linking clause 3 to separate clause 7 issues. Exercising its wide discretion on costs, the court ordered the first defendant to pay the plaintiff's costs of the originating summons.
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1,594 words · generated 14/07/2026
This is an interlocutory-chamber application concerning the construction of clause 3 of a 1996 Unit Holders Agreement (UHA) and, in particular, the costs consequences after the parties reached agreement on the substantive question. The dispute arose between two remaining principals in an accounting practice, the plaintiff (Hamon-Ottema) and the first defendant (Broomhall), following the plaintiff's resignation and deemed sale/redemption of shares and units ([5]). The plaintiff repeatedly sought the first defendant's agreement to a draft joint letter to the President of CPA Australia (Western Australia Division) requesting appointment of a valuer under cl 3.2 to determine the price of the units. The first defendant repeatedly qualified any acceptance, asserting that the valuation under cl 3 could not be separated from issues of compensation under cl 7, and suggesting concurrent or linked valuations ([19]–[29], [40]–[41]).
When the plaintiff filed an originating summons on 6 August 2008 (seeking construction of cl 3), the defendants later consented to the declaration sought. On 16 October 2008 the court (Le Miere J) declared that, on its proper construction, clause 3 is satisfied where one party requests the CPA WA President to appoint a valuer to determine the unit price ([13], [43]). The remaining question was costs. The plaintiff sought costs against the first defendant; the first defendant argued costs should be paid by the plaintiff or reserved until the outcome of separate proceedings commenced by the first defendant concerning clause 7 (the cl 7 action) ([16]–[18], [42]).
Le Miere J examined the correspondence and communications between solicitors in detail, found that the first defendant never unqualifiedly agreed that the plaintiff could make the request under cl 3 and had repeatedly conditioned agreement on cl 7-related matters, and therefore concluded it was reasonable and necessary for the plaintiff to commence proceedings to secure the process under cl 3 rather than unilaterally proceed and risk later challenge. The court ordered the first defendant to pay the plaintiff's costs of the originating summons ([44]–[49]).
Two determinations drove the decision.
Construction of clause 3: The court accepted the plaintiff's position, that cl 3 is satisfied by the act of one party requesting the CPA WA President to appoint a valuer. The declaration was made by consent, so the court recorded the construction and made an order on that basis ([13], [43]).
Costs: The court applied orthodox principles. It began from the general rule that the successful party ordinarily recovers costs, subject to the court's wide discretion and recognised exceptions (misconduct, invitation to litigate, unnecessary commencement, obtaining relief already offered, and similar circumstances) ([14]–[15]). The crucial application was to the parties' pre-litigation conduct, evidenced in detailed solicitor correspondence, and to whether the plaintiff's commencement of proceedings was reasonable and necessary.
Le Miere J focused on whether the first defendant had ever unqualifiedly agreed to the plaintiff's proposed cl 3 letter. The court found he had not. The first defendant had repeatedly qualified any acceptance by linking the cl 3 valuation to cl 7 matters and by proposing concurrent valuations or conditioning payment on cl 7's outcome ([20]–[21], [27], [40]–[41]). Given that state of affairs, it was reasonable for the plaintiff to commence the originating summons rather than proceed unilaterally and risk the appointment of a valuer being challenged later ([45]–[49]). Consequently, the court exercised its discretion in favour of the plaintiff and ordered costs against the first defendant.
The judgment emphasises that costs decisions are fact-sensitive; while the general rule favours the successful party, departures can be justified by misconduct or inappropriate conduct, but the necessary analysis is fact-dependent and judicially exercised ([14]–[15]).
Before this decision: The legal principles applied were already well-established. The court explicitly relied on Naidoo v Williamson [2008] WASCA 179 for the statement that the discretion to order costs is very wide and constrained only by legislation and rules and the judicial exercise of discretion ([14]). The general rule that a successful party recovers costs, subject to exceptions for misconduct or other equitable considerations, is settled ([15]).
After this decision: The decision applies those settled principles to the particular facts of contested pre-litigation communications in a contractual-dispute context. It reinforces that a plaintiff who reasonably brings a construction proceeding where the other party has refused to unqualifiedly consent to the procedural step (here, requesting the CPA President to appoint a valuer) will ordinarily be entitled to costs. There is no change to general doctrine; rather the judgment is an application of existing principles to communications showing qualification of consent and the risks of unilateral action.
In other words, the case is confirmatory: it illustrates how courts will scrutinise pre-action conduct and the substance of correspondence when exercising the costs discretion.
Paragraph 13 (declaration): "Clause 3 ... is satisfied on one of the parties ... requesting that the President of CPA Australia (Western Australia Division) appoint a valuer to determine the price of the units."
Paragraphs 14–15 (costs principles): "The discretion to order costs is very wide ... The general rule is that the successful party to an action recovers her costs. A successful party may properly be deprived of an award of costs if guilty of misconduct ..."
Paragraphs 45–48 (fact findings on pre-action conduct): The court summarised repeated requests by the plaintiff and the lack of unqualified agreement from the first defendant; the first defendant's qualifications created a risk that a unilateral request might later be challenged.
Paragraph 49 (order): "In all the circumstances the appropriate order is that the first defendant pay the plaintiff's costs of the originating summons."
This decision is instructive where:
In such fact patterns, courts are likely to: (a) grant declaratory relief where appropriate; and (b) favour awarding costs to the party who was forced to litigate because the other side would not unqualifiedly agree to the procedural step.
The judgment itself does not record subsequent judicial treatment or appellate consideration of this particular decision. The decision relies on established authority for the principles it applies (Naidoo v Williamson for costs discretion, cited at [14]). Because this is a first-instance decision dealing primarily with facts and costs exercise of discretion, its precedential utility is strongest on analogous fact patterns concerning pre-litigation conduct and the reasonableness of commencing construction proceedings. Practitioners should treat it as a reasoned example of the exercise of costs discretion rather than as a novel statement of law.
Conclusion
Hamon-Ottema v Broomhall is a straightforward application of well-established costs and contract-construction principles. It emphasises the importance of clear, unqualified pre-action agreement where a party seeks to trigger contractually prescribed processes via a neutral third party. Where that clarity is absent and a party reasonably litigates to remove uncertainty, courts will ordinarily award costs to the litigant who obtained the declaratory relief.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : HAMON-OTTEMA -v- BROOMHALL [2009] WASC 108
MATTER : The Unit Holders Agreement by Deed dated 23 August 1996 between Julie Ann Hamon-Ottema, Kevin Leslie Broomhall, B S Newton & Co Pty, GJK Pty Ltd & Ors
Practice and procedure - Costs - Whether costs should be paid by unsuccessful party or reserved until the conclusion of related proceedings - Turns on own facts
Rules of the Supreme Court 1971 (WA), O 66 r 1(1)
The defendant to pay plaintiff's costs of the originating summons
Naidoo v Williamson [2008] WASCA 179
1 LE MIERE J: On 6 August 2008 the plaintiff caused an originating summons to be issued seeking orders declaring the proper construction of cl 3 of a deed made between the plaintiff, the defendants and others on 23 August 1996 and entitled 'Unit Holders Agreement'. The real disputants are the plaintiff and the first defendant. The second and third defendants agreed to abide by the decision of the court. The plaintiff and the first defendant reached an agreement and on 16 October 2008 the court by consent declared the proper construction of cl 3 of the Unit Holders Agreement. The remaining issue is what costs order should be made. The plaintiff submits that the first defendant should pay her costs. The first defendant submits that the plaintiff should pay the first defendant's costs or alternatively the costs of these proceedings should be reserved until the conclusion of proceedings recently commenced by the first defendant concerning the construction and application of cl 7 of the Unit Holders Agreement (the cl 7 action).
2 The Unit Holders Agreement concerned an accounting practice, B S Newton & Co. The plaintiff and the first defendant were principals in the practice. The practice was conducted by the second defendant as trustee for the B S Newton & Co Unit Trust (Practice Unit Trust). The administrative requirements of the practice were provided by the third defendant as trustee for the Broomhall Hamon and Jay Unit Trust (Service Unit Trust). The plaintiff was a unit holder of the Practice Unit Trust and, as trustee for P & J Trust, was a unit holder of the Service Unit Trust. The plaintiff was a shareholder of each of the second and third defendants.
3 By the Unit Holders Agreement the plaintiff, in her personal capacity and as trustee for the P & J Trust, the first defendant, in his personal capacity and as trustee for the K & M Family Trust, the second and third defendants and Graham Morris Jay, in his personal capacity and as trustee for the G M Jay Family Trust, agreed certain matters relating to the Practice Unit Trust and the Service Unit Trust.
4 Jay ceased to be a director of the second and third defendants and a unit holder of the Practice Unit Trust and the Service Unit Trust some years before 28 February 2007. Consequently, on 28 February 2007 the only principals of the practice and unit holders of the Practice Unit Trust and the Service Unit Trust were the plaintiff and the first defendant.
5 On 29 January 2007 the plaintiff wrote to the first defendant stating that effective from 28 February 2007 she intended to resign as a director of the second and third defendants. The plaintiff further stated that effective from 28 February 2007 she would be deemed to have sold her shares in the second and third defendants to the first defendant and to have applied for redemption of her units in the Practice Unit Trust and the Service Unit Trusts. The plaintiff further stated that she considered that the restraint in cl 7 of the Unit Holders Agreement was unenforceable.
7 Clause 1 provides relevantly that if any principal (called the Retiring Principal) ceases to be a director of the second defendant or the third defendant then on and from the date of that event:
(a) the Retiring Principal or any shareholder associated with the Retiring Principal shall be deemed to have sold all shares in the second and third defendants held by them for the purchase price of $1 per share to the other shareholders;
(b) the Retiring Principal or any unit holder associated with the Retiring Principal shall be deemed to have applied for redemption of all units in the Practice Unit Trust and the Service Unit Trust held by them and the second and third defendants shall be deemed to have accepted that application.
8 Clause 3.1 provides that the units in each of the Practice Unit Trust and the Service Unit Trust shall be deemed to have been redeemed in accordance with the provisions of the relevant trust deeds.
9 Clause 3.2 provides that the price of the units shall be determined as follows:
The price of the units shall be such amount as shall be mutually agreed between the parties to the transaction and failing agreement as shall be determined by a valuer appointed by the President of the Australian Society of Certified Practising Accountants (Western Australian Division) which valuer shall be acting as an expert and not as an arbitrator and whose costs shall be borne by the parties to the transaction PROVIDED that the price of the units shall not take into account the value of any insurance policies referred to in clause 5 or the proceeds of those policies.
10 Clause 3.3 provided that the purchase price for the units shall be paid within two months from the transfer date and if not so paid interest is to be paid from one month after the transfer date.
11 Clause 7 restrains the Retiring Principal from soliciting former clients of the Practice Unit Trust or the Service Unit Trust in the following terms:
The Retiring Principal shall not during the period of THIRTY-SIX (36) months from the transfer date, for whatever reason, directly or indirectly induce or solicit or endeavour to induce or solicit any client of the Practice Unit Trust or the Unit Trust as at the date of cessation of appointment to cease from engaging the Practice Unit Trust in any way and in the event of a client or clients of the Practice Unit Trust or the Unit Trust engaging the Retiring Principal then the Retiring Principal shall pay to the Practice Unit Trust or the Unit Trust as the case may be such amount of compensation as shall be mutually agreed between the parties to the transaction and failing agreement as shall be determined by a valuer appointed by the President of the Australian Society of Certified Practising Accountants (Western Australian Division).
12 On 29 August 2008 the court made directions for the hearing of the originating summons. The originating summons was listed for a special appointment to be heard on 16 October 2008. Subsequently the court was informed that the first defendants had agreed to consent to an order in the terms of [2] of the originating summons and that the only matter remaining in dispute between the parties was the question of costs.
13 On 16 October 2008 the court declared that, on its proper construction:
Clause 3 of the Unit Holders Agreement by Deed dated 23 August 1996 (Unit Holders Agreement) is satisfied on one of the parties to the Unit Holders Agreement requesting that the President of CPA Australia (Western Australia Division) (CPA WA President) appoint a valuer to determine the price of the units.
Legal principles in relation to costs orders
14 Subject to the provisions of the Supreme Court Act 1935 (WA) and to the Rules of the Supreme Court 1971 (WA) the costs of, and incidental to, all proceedings in the court are in the discretion of the court. The discretion to order costs is very wide. The 'only fetters are those provided [in the Act and the Rules] ... and the fact that the discretion must be exercised judicially': Naidoo v Williamson [2008] WASCA 179 [39].
15 The general rule is that the successful party to an action recovers her costs. A successful party may properly be deprived of an award of costs if guilty of misconduct relating to the litigation or the circumstances leading up to the litigation. Such circumstances might, in an appropriate case, include where by her conduct the successful party effectively invites the litigation or unnecessarily commences or protracts the proceedings or obtains relief which the unsuccessful party had already offered in settlement or resolution of the dispute.
16 The plaintiff submits that she was successful in obtaining the relief sought by her, or part of it, and in accordance with the general rule as to costs the first defendant should pay her costs of the proceedings: O 66 r 1(1). The plaintiff says that the first defendant carries an effective onus to persuade the court that the plaintiff, as a successful party, ought properly be deprived of an award of costs but that the plaintiff was not guilty of any conduct disentitling her to her costs.
17 The first defendant submits that there was no issue between the plaintiff and the first defendant concerning the construction of cl 3 of the Unit Holders Agreement and the plaintiff should pay the first defendant's costs or alternatively the costs of these proceedings should be reserved until the conclusion of the cl 7 action.
18 In order to evaluate the first defendant's contention that there was no issue between the parties concerning the construction of cl 3 of the Unit Holders Agreement it is necessary to consider the controversy between the parties, how it arose and how it was resolved. That will involve a rather lengthy and tedious examination of the communications between the parties' solicitors.
19 On 11 January 2008 the plaintiff's solicitors wrote to the first defendant's solicitors concerning the price of the units deemed to have been sold by the plaintiff to the first defendant. The plaintiff's solicitors enclosed a draft letter to the President of CPA Australia and requested that the defendant's solicitors inform them whether the terms of the letter were acceptable. The draft letter to the President of CPA Australia requested that the CPA President appoint a valuer to determine the price of the units in accordance with cl 3.2 of the Unit Holders Agreement. The draft letter provided for the letter to be executed by the first defendant as trustee of the K & M Family Trust, the first defendant, the plaintiff as trustee for the P & J Trust, the plaintiff and the second and third defendants.
20 On 21 February 2008 the first defendant's solicitors replied. They stated that, whilst it was agreed that the units had been redeemed, the value of the units could not be determined without reference to the actions by the plaintiff, both before and after her resignation, which had affected the value of the business and therefore the units. The first defendant's solicitors went on to say that the value of the units was not the only matter which must be determined by reference to the President of the CPA and they referred to the assessment of the compensation due to the first defendant pursuant to cl 7 of the Unit Holders Agreement. They stated that that was a separate issue, to be separately determined by someone other than the person appointed to value the units. The letter said that for the valuations to occur it was necessary to reach a mechanism for resolving or identifying the factual disputes between the plaintiff and the first defendant and that without such a mechanism it was difficult to see how the valuation under cl 3.2 of the Unit Holders Agreement could occur. The letter said that it seemed likely that the factual issues would have to be addressed to assess the compensation due to the first defendant pursuant to cl 7. The letter relevantly concluded:
Whether each of the parties wrote a separate letter to the President of CPA Australia requesting the appointment of a valuer, or whether the letter drafted by you was amended to refer, mutatis mutandis, to incorporate a reference to cl 7, we believe that the appointee will not have the power to resolve such disputes given that their appointment is as an expert not arbitrator.
21 On 28 February 2008 the plaintiff's solicitors wrote to the defendants' solicitors. The letter identified the factual disputes raised in earlier correspondence to be the following claims:
The letter attributed to the first defendant the contention that the valuer determining the price under cl 3.2 of the Agreement should take into account a claim of set off for damages and/or compensation for the causes of action or claims outlined above and that there must be some mechanism for the resolution of those claims to enable the determination of a price under cl 3.2 of the Unit Holders Agreement. The letter took issue with that position. The letter stated that:
... unless the matter promptly proceeds in accordance with cl 3.2 of the Unit Holders Agreement, [the plaintiff] intends to institute proceedings in the Supreme Court of Western Australia to ensure that the process under cl 3.2 of the Unit Holders Agreement is carried out.
22 On 14 March 2008 the first defendant's solicitors replied. The letter requested that before any further consideration was given to the valuation of the units and the compensation pursuant to the Unit Holders Agreement, the plaintiff clarify her attitude regarding the validity of cl 7 of the Unit Holders Agreement and, if it was valid, how it should be applied.
23 On 2 April 2008 the plaintiff's solicitors wrote to the defendant's solicitors. The letter stated that the plaintiff acknowledges the Unit Holders Agreement is valid and went on to say that there was no basis for any further delay in the appointment of a valuer pursuant to cl 3.2 of the agreement and requested that the first defendant confirm that the terms of the draft letter to the President of the CPA are acceptable or alternatively specify requested amendments. The letter stated that if a satisfactory response was not received the plaintiff reserved the right to institute proceedings and noted that the issue of compensation under cl 7 was a separate matter from the valuation of the units and should be dealt with separately.
24 On 3 April 2008 the plaintiff's solicitors wrote to the defendant's solicitors concerning the interpretation of cl 7 of the Unit Holders Agreement.
25 On 24 April 2008 the first defendant's solicitors wrote to the plaintiff's solicitors stating that it would be necessary to resolve how cl 7 of the Unit Holders Agreement is to be interpreted. The letter set out the first defendant's interpretation of cl 7 and stated that if the plaintiff did not accept that interpretation it may be appropriate to be resolved under O 58 r 10 of the Rules of the Supreme Court. The letter further suggested that the valuation of the compensation under cl 7 should be carried out contemporaneously with the valuation of the units under cl 3.2 by separate valuers appointed by the President of the CPA.
26 On 5 May 2008 the plaintiff's solicitors wrote to the first defendant's solicitors enclosing a draft letter to the President of the CPA signed by the plaintiff and requesting that the President of the CPA appoint a valuer to determine the price of the units in accordance with cl 3.2 of the Unit Holders Agreement. The plaintiff's solicitors requested that the first defendant sign the letter and said:
If you do not return the letter within [10 days], [the plaintiff] will proceed on the basis that [the first defendant] refuses to join in the appointment of a valuer in accordance with cl 3.2 of the Unit Holders Agreement and will take appropriate action without further notice.
27 On 4 June 2008 the first defendant's solicitors replied. The letter referred to the consequences of the plaintiff's interpretation of cl 3.2 and cl 7 of the Unit Holders Agreement and requested that the plaintiff sign and return an attached draft letter to the President of the CPA. The draft letter to the President of the CPA requested that the President appoint a valuer to determine the price of the units in accordance with cl 3.2 of the agreement and appoint a valuer, independent of the valuer appointed to determine the valuation of the units, to determine the amount of compensation in accordance with cl 7 of the Unit Holders Agreement.
28 On 20 June 2008 the plaintiff's solicitor wrote to the defendant's solicitors. The letter stated that insofar as the first defendant's draft letter to the President of the CPA was concerned, the letter was acceptable to the plaintiff insofar as it sought the appointment of a valuer in accordance with cl 3 of the Unit Holders Agreement but was not acceptable insofar as it sought the appointment of a valuer under cl 7 of the Unit Holders Agreement. The letter stated that there was a dispute as to the interpretation of cl 7 of the Unit Holders Agreement and until that interpretation was determined the appointment of a valuer was premature. The letter stated that on its proper construction cl 3 of the Unit Holders Agreement is satisfied by the plaintiff alone requesting the President of the CPA to appoint a valuer to determine the price of the units but that if that view was incorrect and, on its proper construction, cl 3 requires both parties to make the request to the President, there is an implied term that the parties agree to co-operate to enable each of them to obtain the benefit of the Unit Holders Agreement and that requires the parties to participate in the making of the request. The letter requested that within 14 days the first defendant either:
The letter further stated that failing the first defendant agreeing that the plaintiff can unilaterally request the President of the CPA to appoint a valuer under cl 3 of the Unit Holders Agreement, or alternatively agreeing to participate in the making of such a request, it was the plaintiff's intention to institute proceedings by way of originating summons.
29 On 29 July 2008 the plaintiff's solicitors wrote to the defendants' solicitors stating that they had not received a substantive reply. The plaintiff's solicitors enclosed a draft originating summons and stated that they anticipated it would be filed that week. The letter concluded by requesting that the first defendant's solicitor telephone the plaintiff's solicitor for oral conferral so that all avenues to resolve the matter by agreement could be exhausted before the proceedings were commenced.
30 On 31 July 2008 there was a telephone conversation between Thomas Darbyshire, the first defendant's solicitor, and Ashley Macknay, the plaintiff's solicitor. Elise Croft, a solicitor assisting Mr Darbyshire in the conduct of the matter on behalf of the first defendant, took notes of the conversation. Ms Croft subsequently swore in her affidavit of 13 October 2008 that she remembered Mr Darbyshire:
(a) telling Mr Macknay that it did not make sense for the Plaintiff to lodge a construction summons dealing only with clause 3, when there wasn't a dispute about clause 3 and the real issue was the construction of clause 7;
(b) telling Mr Macknay that we should have a construction summons that addresses both of the clauses, which would then address all of the issues between the parties, or there wasn't any point in having a construction summons at all; and
(c) telling Mr Macknay that if the construction of clause 7 was to be achieved by constructions summons, we would need a list of agreed facts that were in existence at the time of entering into the [Unit Holders Agreement] (otherwise a construction summons wasn't appropriate) [4].
31 Mr Macknay swore in his affidavit of 10 October 2008 that on more than one occasion in telephone conversations with Ms Croft or Mr Darbyshire qualified statements had been made by one or other of them that there was not an issue with the construction of cl 3. Those statements included statements to the effect that the first defendant did not have an issue with cl 3 on the basis that:
7.1 the plaintiff agree to any letter to the CPAWA President requesting the appointment of a valuer under clause 3 of the Unit Holders Agreement also including a request for the appointment of a valuer under clause 7;
7.2 any valuation under clause 3 of the Unit Holders Agreement not take place unless and until a valuation under clause 7 takes place;
7.3 their client not be required to pay any amount pursuant to a valuation under clause 3 until a valuation under clause 7 is carried out; or
7.4 the determination of the issues concerning clause 3 of the Unit Holders Agreement be carried out at the same time as the determination of the construction of clause 7 [7].
Mr Macknay says that at no stage during the telephone conversations did either Ms Croft or Mr Darbyshire state to the effect that the first defendant was prepared to consent to, or did not dispute, the orders sought alternatively in [2] and [3] of the draft originating summons.
32 On 1 August 2008 the defendants' solicitors wrote to the plaintiff's solicitors. The letter referred to the difference between the parties concerning cl 7 of the Unit Holders Agreement and said that if the facts asserted by the first defendant be in dispute then a construction summons was not the appropriate method of proceeding to resolve the construction of the Unit Holders Agreement. The letter said that should the plaintiff seek the construction of only cl 3 of the Unit Holders Agreement then the issues between the parties concerning the effect of cl 7 of the Unit Holders Agreement would remain unresolved. The first defendant's solicitors requested that the plaintiff refrain from filing the originating summons in order that the parties may make an application pursuant to s 92 of the Trustees Act 1962 (WA) and attempt to agree to the facts relevant to the construction of the Unit Holders Agreement.
33 The plaintiff's solicitors replied on 4 August 2008. The letter stated that the plaintiff did not intend to bring proceedings for the interpretation of cl 7 of the Unit Holders Agreement but that the first defendant was at liberty to bring such proceedings and subject to there being no delay in the hearing of the plaintiff's originating summons she would consent to any hearing relating to the interpretation of cl 7 being heard at the same time as the plaintiff's originating summons. The letter stated that the plaintiff intended to file her originating summons the following day.
34 On 5 August there was a telephone conversation between Mr Macknay and Ms Croft. In her affidavit sworn 13 October 2008, Ms Croft says that she remembers telling Mr Macknay that:
(a) We did not think that his client's construction summons was the most appropriate method of progressing the matters between the parties;
(b) It would be better to:
(i) file an originating summons dealing with all of the issues concerning the UHA, by consent, and
(ii) file a list of agreed facts that each party could rely upon in submissions concerning the construction of the UHA;
(c) In order to resolve the issues between the parties, there simply must be a construction of clause 7;
(d) To avoid his client taking proceedings in the future, and to avoid unnecessary costs, that it would be better to deal with all of the issues in one originating summons with agreed facts;
(e) His client should hold off on filing her originating summons so that the parties could discuss progressing the matter in the most efficient manner, failing which we would be relying on this conversation on the issue of costs [6].
35 On 6 August 2008 the plaintiff filed her originating summons.
36 On 29 August 2008 the originating summons came on for a directions hearing. The summons was listed for a special appointment to be heard on 16 October 2008 and directions were made for the first defendant to file and serve any affidavits in reply and for the plaintiff and the first defendant to file and serve an outline of submissions.
37 On 2 September 2008 the first defendant's solicitors sent an email and an attached draft originating summons to the plaintiff's solicitors. The draft originating summons concerned the construction of cl 7 of the Unit Holders Agreement. The email referred to 'an effort to have the two originating summons run together'.
38 On 4 September 2008 the plaintiff's solicitors wrote to the first defendant's solicitors. The letter mostly referred to the draft originating summons concerning the construction of cl 7 of the Unit Holders Agreement. In relation to the originating summons concerning the construction of cl 3, the plaintiff's solicitors requested that the first defendant file and serve any affidavit in reply as soon as possible.
39 On 5 September 2008 the first defendant's solicitors wrote to the plaintiff's solicitors. The letter referred to facts to be agreed in relation to the construction of cl 7. The letter said:
We have already raised with you our view that the matters in contention between our respective clients arise from both clause 3 and clause 7 of the UHA.
The letter expressed the view that the two construction summonses should be heard together.
40 There was further correspondence between the solicitors. On 16 September 2008 the first defendant's solicitors wrote to the plaintiff's solicitors. The letter stated that the correspondence between the solicitors evidenced that there was no issue concerning the form of the draft letter to the CPA in relation to cl 3, except that the first defendant required the letter to be sent with a request for a valuation pursuant to cl 7. The letter further said that during the telephone conversation on 31 July 2008 the first defendant's solicitor had indicated, amongst other things, that there was not an issue with the construction of cl 3 but that there was an issue with the construction of cl 7 and the timeframe during which the valuations should take place. The first defendant's solicitor stated that the first defendant could either:
In relation to the first defendant consenting to certain orders sought in the plaintiff's constructions summons the first defendant's solicitors said that the parties would need to discuss which orders are consented to and whether or not the plaintiff will consent to a stay of execution.
41 On 25 September 2008 the first defendant's solicitors wrote to the plaintiff's solicitors. The letter stated that the first defendant 'cannot meaningfully dispute the need to request a valuation by CPAWA pursuant to clause 3' but that the defendant has consistently maintained that such valuation will need to occur after the dispute concerning cl 7 is determined. The letter further stated:
Accordingly we confirm that order 2, as sought in your client's originating summons, is not in dispute. Consent to this order, however, is qualified to the extent that our client wishes to be responsible for sending the letter to CPAWA. We would appreciate written confirmation as to whether or not your client takes issue with this.
42 The letter referred to the issue of a writ. At the hearing on 16 October 2008 I was informed by counsel for the first defendant that the first defendant had issued a writ concerning the construction and application of cl 7 of the Unit Holders Agreement.
43 On 16 October 2008 the court made the declaration sought by the plaintiff in [2] of her originating summons with the deletion of some words. The first defendant consented to the making of the declaration.
44 The plaintiff has been successful in obtaining a declaration sought by her in her originating summons.
45 It was reasonably necessary for the plaintiff to commence the proceedings and the plaintiff acted reasonably in commencing the proceedings. On a number of occasions beginning on 11 January 2008 the plaintiff's solicitors asked the defendants' solicitors whether the terms of the draft letter to the President of the CPA Australia were acceptable. The first defendant, by his solicitors, did not at any time prior to the commencement of these proceedings state that the letter was acceptable or that the plaintiff was entitled by cl 3 of the Unit Holders Agreement to request the President of the CPA Australia to appoint a valuer. In its letter of 4 June 2008 the first defendant's solicitors did not accept that the proposed letter was satisfactory.
46 On 20 June 2008 the plaintiff's solicitor asked the first defendant to confirm that on its proper construction cl 3 of the Unit Holders Agreement entitled the plaintiff to unilaterally request the President of the CPA to appoint a valuer and stated that failing the first defendant agreeing that the plaintiff can unilaterally request the President of the CPA to appoint a valuer, or alternatively agreeing to participate in the making of such a request, the plaintiff intended to institute proceedings by way of originating summons. At no time before the plaintiff issued her originating summons did the first defendant say that he agreed that the plaintiff was entitled to unilaterally request the President of the CPA to appoint a valuer. In their letter of 16 September 2008 the first defendant's solicitors accepted that the first defendant's acceptance of the proposed letter to the President of the CPA had been qualified by requiring that the letter be sent with a request for a valuation pursuant to cl 7.
47 The plaintiff foreshadowed proceedings on a number of occasions and expressly foreshadowed the proceedings by letters of 20 June 2008 and 29 July 2008. The letter of 29 July 2008 attached a draft of the originating summons. There was oral conferral. At no time did the first defendant unqualifiedly accept that the proposed letter was acceptable or that the plaintiff was entitled to request that the President of the CPA appoint a valuer.
48 It was reasonable for the plaintiff to commence these proceedings rather than to unilaterally request the President of the CPA to appoint a valuer. The first defendant continued to qualify his agreement to any request to the President of the CPA to appoint a valuer and did not say that the plaintiff was entitled to unilaterally request the President of the CPA to appoint a valuer. If the plaintiff had proceeded to do so she would have incurred the risk that the first defendant might at a later time challenge the validity of the appointment of any valuer appointed by the President. The conduct of the first defendant made it reasonable for the plaintiff to commence these proceedings.
49 In all the circumstances the appropriate order is that the first defendant pay the plaintiff's costs of the originating summons.
Naidoo
Williamson
By consent the court declared the proper construction of clause 3 of the Unit Holders Agreement to be satisfied by one party requesting the CPA WA President appoint a valuer (order made 16 October 2008). Costs: the first defendant ordered to pay the plaintiff's costs of the originating summons (decision delivered 30 April 2009, Le Miere J, CIV 1970 of 2008; see [13], [44]–[49]).