Court of Appeal (WA)|2008-09-08|Before: Pullin JA

STAMBULICH -v- EKAMPER [No 4] [2008] WASCA 189 (8 September 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : STAMBULICH -v- EKAMPER [No 4] [2008] WASCA 189

Courts - Order for costs made by Full Court - Order formally recorded and sealed - No power in Full Court to reopen perfected orders - No jurisdiction of Court of Appeal to hear problem - Gross delay in making application

Acts Amendment (Court of Appeal) Act 2004 (WA), s 38(1), s 38(2)

Legal Practitioners (Supreme Court) (Contentious Business) Determination 2002 (WA), cl 6(1)

Rules of the Supreme Court 1971 (WA), O 24A, O 43, O 66 r 10(1), O 66 r 12, O 66 r 32(2), O 66 r 51(1)

First Appellant (First Plaintiff) : Mr R I Viner QC

Second Appellant (Second Plaintiff) : Mr R I Viner QC

Third Appellant (Third Plaintiff) : Mr R I Viner QC

Respondent (Defendant) : Mr D R Williams QC & Mr G A Rabe

First Appellant (First Plaintiff) : Bowen Buchbinder Vilensky

Second Appellant (Second Plaintiff) : Bowen Buchbinder Vilensky

Third Appellant (Third Plaintiff) : Bowen Buchbinder Vilensky

1 PULLIN JA: This is an application by the appellants for indemnity costs or a special costs order in relation to proceedings conducted in the Supreme Court and disposed of in Appeal No FUL 111/1999. The proceedings commenced with the issue of a writ in the Supreme Court in 1992, which after a trial and judgment by Scott J and the appeal before the Full Court, was the subject of orders pronounced by the Full Court on 30 August 2002, including a costs order in relation to the trial and related interlocutory proceedings and in relation to the appeal and a cross-appeal. The orders were drawn up, signed by the registrar and sealed with the seal of the court pursuant to the Rules of the Supreme Court 1971 (WA), O 43 on 27 June 2007.

2 The questions which arise are whether, once the proceedings were finalised, the Full Court had the power to reopen the orders and vary or add to them, and whether the Court of Appeal has any jurisdiction to consider the application. The respondent submits that even if this court has jurisdiction, the gross delay in making the application means that the application should be dismissed. The respondent also submits that there was never any justification for indemnity costs orders or special costs orders.

3 The history of the matter is as follows. In 1992 the appellants brought an action against the respondent who had been their accountant and tax agent since about 1974. The appellants alleged that the respondent had not dealt properly with money they had paid him at different times over the years and that he had used some of their money for his own purposes. The appellants contended that the respondent was a fiduciary and they sought to have him account to them on that basis. The appellants also claimed money said to be owed to them by the respondent. The respondent denied he was a fiduciary. He said he was liable to account as a debtor and that he had done so.

4 At the trial before Scott J, the appellants were partially successful. The trial judge held that the respondent was a fiduciary but he did not order the respondent to account on that basis.

5 The appellant appealed to the Full Court of the Supreme Court and the court published its reasons on 11 September 2001. See Stambulich v Ekamper [2001] WASCA 283. The members of the court were Malcolm CJ, Kennedy and Templeman JJ. Orders were made including an order that the respondent disclose what properties had been purchased with money the appellants had paid to him and that he pay that the appellants' costs of the trial and the appeal. But on 25 June 2002 the Full Court heard an application by the respondent for an order recalling the orders made in September 2001 due to errors alleged to be revealed in the reasons for judgment. By then, Justice Kennedy had retired and the application was heard by Malcolm CJ and Templeman J.

6 One of the errors which the respondent alleged was made was in deciding to make the costs order against the respondent. The respondent contended that costs should not be dealt with until the accounting process had been completed. He submitted that only then would it be known whether the O 24A offer which had been made before trial, should have provided the respondent with protection against the costs order. On 8 August 2002, their Honours delivered reasons for decision correcting an error which the court acknowledged had been made (details of which are irrelevant) and dismissing the respondent's application for a different costs order. The Full Court's reasons for rejecting the respondent's submission was that he had resisted the appellants' claim that he was a fiduciary who must account for his profits. The Full Court held in consequence that the appellants had succeeded on that issue and were entitled to an order for costs, no matter what happened in relation to the process involving the account of profits which was still to take place. The Full Court indicated in its reasons that the respondent was able to protect himself against a costs order in relation to the accounting exercise by making a payment into court, or a fresh O 24A offer. These reasons were published as Stambulich v Ekamper (No 2) [2002] WASCA 212. See [22].

7 On 30 August 2002, the appellants then moved for orders to reflect the reasons for decision of the Full Court and the orders were made requiring the respondent to file an affidavit detailing the relevant transactions. The processes relating to the accounting exercise were spelled out in the order. There was an order requiring the appellants at a certain point to elect to proceed to claim an account of profits or instead to claim compound interest. Other orders required the respondent to pay certain discrete sums of money to the appellants. A costs order was also made. The costs order required the respondent to pay the appellants' costs of the appeal and cross-appeal and certain other interlocutory and other costs. The order for costs which was made was governed by O 66 r 32(2) which provided that where an action or an order of the court directs the payment of any costs, then those costs may be taxed without any order in that behalf being made.

8 Taxation of costs at the time the order was made by the Full Court was regulated by a determination in force under s 58W of the Legal Practitioners Act 1893 (WA). See s 58ZB. That determination stated that, subject to certain exceptions, the costs of and in relation to a party to an action should not exceed the amount set out in the determination. (See cl 6(1) of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2002 (WA)). Section 68ZB(3) of the Legal Practitioners Act 1893 provided that nothing in subs (1) should limit any power of a court to determine in a particular case before that court, the amount of costs allowed. See now s 215 of the Legal Practice Act 2003 (WA).

9 A failure to address on costs may properly be taken by a court as an indication that no special or unusual costs orders are required (Grygiel v Baine (No 2) [2005] NSWCA 434 [11]). There was no application for a special or unusual costs order and so the Full Court was entitled to take it that no such order was sought. The present application is for an order which would vary the substance of the order for costs by increasing the potential liability of the respondent for costs.

10 On 9 October 2002, the respondent, pursuant to the orders of the Full Court, filed an affidavit of discovery concerning property purchased with the appellants' funds and in April 2003, the respondent made an offer pursuant to O 24A to settle the balance of the proceedings by payment of $250,000. On 28 April 2003, the appellants accepted the O 24A offer. That concluded the proceedings.

11 On the same day, the appellants' solicitors wrote to the respondent's solicitors, asking if the respondent would consent to a special costs order under O 66 r 12. The letter by implication was referring to the costs of the trial and the appeal.

12 On 5 June 2003, the respondent's solicitors wrote stating that the Full Court had made final orders disposing of the trial and the appeal, including all orders as to costs and that 'it is now too late to ask for special costs orders'. The letter said that 'in any event you have only made a general assertion concerning special costs orders without providing full particulars of the nature and the extent of the order sought and the quantum claimed'. The letter said that the respondent could not respond substantively to the special costs order issue without more detail.

13 Eight months later by letter dated 5 February 2004, the appellants' solicitors wrote stating:

We have nearly completed the schedules which will form part of our client's application for a special costs order - indemnity costs, or variation of the Supreme Court scale. We are instructed to refer this work to senior counsel to settle.

14 Two and a half years later, on 16 August 2006, the appellants filed at the Court of Appeal registry, an application asking for orders that:

The defendant pay the plaintiff's costs of the action to be taxed on an indemnity basis or alternatively that the costs be taxed without regard to items and limits of any relevant Supreme Court Scale of Costs.
The plaintiff's costs include:

(a) costs incurred prior to issue of the writ;

(b) costs of the proceedings;

(c) costs of the trial of the action;

(d) all reserved and other interlocutory costs;

(e) the costs of appeals; and

(f) certificates for Senior Counsel in respect of (b), (c), (d) and (e).

The defendant pay the plaintiff's costs of this application to be taxed.

15 This application was referred to Templeman J. By then Malcolm CJ had also retired. Templeman J was the only remaining member of the Full Court which had dealt with the matter. Templeman J held that he had no jurisdiction to deal with the matter and referred the application to the Court of Appeal (Stambulich v Ekamper [2007] WASCA 71). No party suggested that his Honour's referral of the matter to the Court of Appeal conferred any jurisdiction on this court. His Honour in his reasons said:

I am firmly of the view that, as a single Judge of the Full Court, I do not have jurisdiction to deal with the question of costs. It is therefore inappropriate for me to express any opinion about the merits or otherwise of this application.

The jurisdictional question is resolved by reference to Pt 5 of the Acts Amendment (Court of Appeal) Act 2004 ('the Amendment Act') which contains transitional provisions as between the Full Court and the Court of Appeal.

Section 38 provides:

(1) If on the commencement of this Act an appeal or an application for leave to appeal is pending before -

(a) the Full Court of the Supreme Court; or

(b) the Court of Criminal Appeal,

the appeal or application is to be taken to have been commenced or made and to be pending before the Court of Appeal.

(2) Despite subsection (1), if on the commencement of this Act an appeal or an application for leave to appeal is part heard by -

(a) the Full Court of the Supreme Court; or

(b) the Court of Criminal Appeal,

then the hearing and determination of the appeal or application may be completed by the Full Court or the Court of Criminal Appeal, as the case requires, as if this Act had not commenced.

It is clear from s 38(2) that the only basis on which the Full Court could remain seized of a matter following the creation of the Court of Appeal Division, was if an appeal or application for leave to appeal was part heard.

In my view, that is not the position here. That is because the appeal concluded with the pronouncement of the orders made on 8 August 2002. That is so, I think, even though no order has yet been extracted.

Although it might have been argued that the matter remained part heard until the respondent had accounted in accordance with the order made by the Full Court, that would no longer have been the case once the appellants accepted the respondent's offer of settlement, thereby concluding the proceedings. [18] - [23]

16 Before considering whether the Court of Appeal has any jurisdiction to entertain the application, the question arises as to whether the Full Court would have had any power to make the orders sought before the creation of the Court of Appeal.

17 In Burrell v The Queen [2008] HCA 34, the court considered the importance of paying attention to the text of a governing statute and any express or implied powers which determines the point at which a court concludes its consideration of a controversy.

18 The Supreme Court is a court created by statute, namely the Supreme Court Act 1935 (WA). When the Full Court exercised its appellate jurisdiction, it exercised jurisdiction conferred by s 58 of the Supreme Court Act 1935. There was nothing in s 58, in the rules of court, or elsewhere which conferred any power on the Full Court to reconsider or recall an order which has been drawn up, signed by the registrar and sealed pursuant to O 43. See Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217 [123] - [124].

Identifying the formal recording of the order of a superior court of record as the point at which that court's power to reconsider the matter is at an end provides a readily ascertainable and easily applied criterion. But more than that, identifying the formal recording of the order as the watershed both marks the end of the litigation in that court, and provides conclusive certainty about what was the end result in that court.

20 In this case the perfecting of the orders made by the Full Court on 30 August 2002 pursuant to O 43 on 27 June 2007, conclusively determined the issue concerning costs.

21 The appellants do not seek to justify the application on the basis that the order did not truly represent what the court pronounced or intended to pronounce as its order. See Burrell [21]. In the absence of any power to reconsider the orders which had been made by the Full Court, the decision concerning costs has been determined and could not, on the appellants' 2006 application, be reopened by the Full Court.

Jurisdiction and power of the Court of Appeal

22 Even if, contrary to the conclusion reached above, the Full Court's power to reconsider the question of costs had not come to an end, then the Court of Appeal had no jurisdiction to entertain the appellants' application or the power to make the orders sought. Section 58(1) of the Supreme Court Act 1935 states that the Court of Appeal shall have, and shall be deemed since the coming into operation of the Supreme Court Act 1935, always to have had, jurisdiction to hear and determine the matters listed in subpar (a) to (m). There is nothing in those subparagraphs which confers jurisdiction on the Court of Appeal to reopen or amend orders of a matter finalised in the Full Court of the Supreme Court of Western Australia. The appellants did not make any submission to the contrary.

23 However, the appellants submitted that the court had jurisdiction to make such orders because of s 38(1) of the Acts Amendment (Court of Appeal) Act 2004 (WA). That section provided that if on the commencement of this Act, an appeal or an application for leave to appeal is 'pending' before the Full Court of the Supreme Court, the appeal or application is to be taken to have been commenced or made and to be pending before the Court of Appeal. It is important to see the context in which this provision occurs. It is followed by s 38(2) which states that 'despite subsection (1)' if, on the commencement of the Act, an appeal or an application for leave to appeal is part heard by the Full Court of the Supreme Court, then the hearing and determination of the appeal or application may be completed by the Full Court as if this Act had not commenced.

24 In Fisher v Minister for Immigration and Citizenship [2007] FCA 591; (2007) 162 FCR 299 Stone J considered s 39 of the Federal Magistrates Act which authorised the Federal Magistrates Court to transfer a proceeding pending in that court to the Federal Court or the Family Court and referred to the Macquarie Dictionary which gives the meaning of 'pending' as including 'remaining undecided, awaiting decision'. This was held to be an appropriate description of the proceeding as it was until the federal magistrate made an order disposing of it. In this case, bearing in mind s 38(2) which deals with a circumstance where the matter is 'part heard', the word 'pending' therefore means 'remaining undecided but not heard'. Clearly, the appeal was not pending before the Full Court. It was heard and orders made in consequence on 30 August 2002. The pending proceedings for an account of profits had been settled in 2003. The appellants submitted that the appeal was then, and is now, still 'pending' because of O 66 r 10(1) which reads:

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 payment of costs may require the costs to be paid forthwith notwithstanding that the proceedings are not concluded.

That rule does not assist the appellants. In this case, the Full Court had already 'dealt with' the question of costs. In addition, that provision does not assist in showing that the Court of Appeal has any jurisdiction to deal with the application (even if the case had been finalised) because the case had been heard, and only proceedings pending before the Full Court and not heard, could be heard by the Court of Appeal.

25 As a result, the Court of Appeal has no jurisdiction or power to make the orders sought.

26 If this court did have jurisdiction to hear the application and make the orders sought, if the proceedings had not been finalised, and it had been necessary to consider the application on its merits, the application would have to be dismissed because of the gross delay in bringing the matter before the court. Judgment, including the order for costs, was pronounced by the court on 30 August 2002. All that there was to know about the complexity of the case and the amount of work involved in conducting the trial and the appeal was known to the appellants on that date. If there had been any foundation for an application for a special costs order, it should have been made on 30 August 2002. Questions of costs are supposed to be dealt with promptly. An indication to this effect appears in the rules. Where orders are pronounced after a hearing, and where the question of costs is not specifically dealt with, there is deemed to be reserved to any party interested, liberty to apply within 30 days for such orders. See O 66 r 51(1). That rule did not apply because on 30 August 2002 an order for costs was made, but it does reflect a policy to deal with costs issues promptly. In this case, it was not until 16 August 2006, nearly four years after judgment, that the appellants' application for a special costs order was made.

27 Even if the appellants' solicitor thought, as he seemed to think, that the issue of costs of the trial and appeal would somehow be affected by the accounting process, that process had been brought to an end by the acceptance by the appellants of the O 24A offer in April 2003. Even if the appellants' solicitors thought that it was still open to the appellants to apply for a special costs order, that belief was challenged by the respondent's solicitor's letter dated 5 June 2003, which asserted that a final order had been made. The appellants then delayed making the application for over three years.

28 Malcolm CJ in Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, dismissed an application for a special costs order made more than three years after a conventional costs order had been made and perfected. The Chief Justice said at 409:

It has been urged upon me by counsel for the defendant that the court should be reluctant to visit upon the litigant the consequences of inadvertence by his solicitors or counsel. So much may be accepted, but there must be in the interests of the administration of justice and finality in litigation some limit to the exercise of that discretion which is by way of an indulgence of the court. If a litigant suffers loss or damage as a result of inadvertence amounting to negligence, he has a remedy.

His Honour concluded that it was not necessary to show delay, coupled with prejudice before the court would decline to exercise its discretion and then said:

In any event, there is an interest in the finality of litigation, and a party is entitled to order its affairs on the basis of a judgment regularly obtained, entered and perfected in the court. That has been the case in this instance for something over three years. If I be wrong in my view and it is necessary to show some degree of prejudice, the fact that, if an order were made, the state of affairs created by the judgment which has been left to stand for so long would itself constitute sufficient prejudice to make it inexpedient or inequitable to make an order.

29 The delay in that case was almost three years and four months between judgment and the motion for the special order for costs. The Chief Justice described that delay as 'extremely gross and extraordinary' (406). The delay in this case is greater and aggravated by the fact that the respondent's solicitors had immediately informed the appellants' solicitors that there was an issue about whether or not such an application could be made at all. Instead of seeking to resolve that issue, the appellants' solicitors chose to spend a considerable amount of time analysing the work that was carried out in the conduct of the trial and the appeals. The gross and extraordinary delay in this case is a factor which weighs heavily in the exercise of any discretionary decision about whether to entertain the application or to dismiss it.

30 It is not necessary to decide in this case whether the Chief Justice was correct to conclude in Esther Investments at 407 that a single judge had inherent jurisdiction to entertain the application after the costs order had been perfected. That question would involve consideration of s 16 of the Supreme Court Act 1935 which confers original jurisdiction on the court. That section is not relevant here.

31 The respondent has sworn an affidavit referring to the distress that he is suffering due to the fact that the proceedings have not been finalised. As he correctly stated in his affidavit, he was powerless to progress the matter. The appellants' counsel on this appeal submitted that this should be rejected as evidence of prejudice. That submission cannot be accepted. As Malcolm CJ said in Esther Investments at 409, a party is entitled to order his affairs on the basis of a judgment obtained and perfected. The fact that the respondent has for years after the settlement of the proceedings and judgment disposing of the matter, had to concern himself with the instructing of solicitors and the incurring of legal expense is evidence of prejudice. The gross and extraordinary delay and the prejudice suffered by the respondent would have resulted in a dismissal of the application had it been necessary to deal with it.

32 This conclusion is further fortified by the fact that the appellants did not have a strong case for an indemnity costs order or a special costs order. The trial judge, Scott J, when commenting on the conduct of the

litigation, noted that the appellants had sought to adduce evidence from other clients of the respondent on a 'similar fact' basis, seeking to establish that the respondent's attitude to the appellants as clients was supported by a similar attitude towards other clients and his incompetence in relation to his dealings with them. That evidence was ruled inadmissible in the course of the trial. His Honour said that many other examples were advanced in the submissions on behalf of the respondent and that those submissions led him to the view that an indemnity costs order against the appellants was not appropriate although it was very close to the borderline. The order for costs itself was set aside and reversed by the Full Court but the observations made by the trial judge about the conduct of the trial remain undisturbed.

33 For all those reasons, and if this court had jurisdiction and if it was possible to reopen the order made by the Full Court, the application would have been dismissed on the merits.

Amendment (Court of Appeal) Act 2004

Practitioners Act 1893

STAMBULICH -v- EKAMPER [No 4] [2008] WASCA 189 (8 September 2008)

At a glance

Court

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Judgment (68 paragraphs)

STAMBULICH -v- EKAMPER [No 4] [2008] WASCA 189 (8 September 2008)

Legislation Cited (4)

Cases Cited (2)