The application to strike out parts of Andrew's FFFAD
[2]
By chamber summons filed on 9 June 2022 and amended chamber summons filed on 23 June 2022, John sought the following orders:
The time for the Plaintiff to make this application be extended to 9 June 2022.
Pursuant to Order 20 Rule 19(1)(a), 19(1)(c) and/or 19(1)(d) Rules of the Supreme Court 1971 (WA), paragraphs 12(b)iv)(A), 12(b)iv)(B), 14B, 14C, 14D and 16 of the Third Defendant's Further Amended Defence dated 7 June 2022 be struck out.
The requirements of Order 59 rule 9(1) be waived in relation to the application to strike out paragraphs 14B and 14D.
The Third Defendant pay the costs of this application, including conferral, to be taxed if not agreed.
The relevant factual and procedural background, the parties' pleaded cases and the basis of the application are set out in the Reasons. It is not necessary for me to repeat the Reasons in detail. What follows is a summary.
In essence, Andrew admits the making of the August 2015 Resolution and says it was validly made by William in his discretion as trustee of the Trust. He says that although John did not receive cash or shares under the August 2015 Resolution, he received a benefit by being released from certain obligations. Andrew denies John is entitled to the relief claimed, or any relief.
The Master accepted John's submissions that paragraph 16 of the FFFAD must be read in the context of paragraph 14C. He did not accept that those paragraphs disclosed no reasonable defence.
By paragraph 16 of the FFFAD, Andrew denies John is entitled to the account sought, but says, in effect, that if he is, it should not be confined to the period pleaded from 6 May 2015 to the date of the account. He says it should take into account all of the advances that may have been made to all beneficiaries, including whether or not certain transactions were effected, or amounts paid.
The transactions Andrew says ought to be included in the account include those pleaded at paragraphs 12(b)(iv)(A), 12(b)(iv)(B) and 14C. Paragraph 12(b)(iv)(A) and 12(b)(iv)(B) (along with other subparagraphs in paragraph 12 of the FFFAD) are pleaded in response to the allegation in paragraph 29 of the statement of claim that Andrew received assets of the Trust knowing the August 2015 Resolution was a breach of trust, or fiduciary duty.
Paragraph 14B pleads the basis of John's alleged acquiescence in the alleged breaches. Paragraphs 14C and 14D each assert that John is barred from equitable relief by reason of laches, for the reasons pleaded, including that because of the passage of time, many of the documents that would confirm or disprove the matters pleaded no longer exist and William, who had first‑hand knowledge of those matters, has died and cannot give evidence.
The submissions made on behalf of John and Andrew are summarised in the Reasons. Ultimately, the Master found that each of the impugned pleas should stand. He observed that to articulate the nature of the dispute between the parties highlights its complexity. He stated that the issues of fact and law are complex and should not be considered in isolation. He accepted that if the FFFAD in its present form stands, the issue of discovery would be complicated. However, that was not a reason to strike out the pleas. Nor did it mean that an equitable limitation defence cannot be raised.
Ultimately, on the basis articulated in the Reasons, the Master accepted the arguments advanced on behalf of Andrew as to why the plea in each case should stand. He stated that the way the matter is pleaded is tolerably clear given the complicated factual background. He declined to strike out the paragraphs the subject of the application stating, in effect, that they were matters appropriately the subject of determination at trial and not an abuse of process.
[3]
The parties each filed an outline of submissions in support of their respective applications for costs on 18 October 2023. Andrew also filed an outline of responsive submissions on 25 October 2023. I do not repeat the parties' submissions. I have given due consideration to them.
[4]
Though John's application to strike out the parts of the FFFAD complained of was unsuccessful, he seeks an order that the costs of the application be costs in the cause. It was submitted on John's behalf that the focus of the application was that there was no reasonable defence raised by the relevant pleas or that the defence pleaded was impermissible. As such, his counsel contended that it is analogous to a defendant's summary judgment application made on the basis that a plaintiff's statement of claim discloses no reasonable cause of action.
Counsel for the plaintiff relied upon two earlier decisions of Master Sanderson in which the costs of a strike out application were ordered to be in the cause: Crage v Wooles[1] and Bowesco Pty Ltd v Read.[2] He also relies on R&I Bank of Western Australia Ltd v Lombardo.[3]
In essence, it was submitted on John's behalf that though the application was unsuccessful, and the Master held that the points complained of ought to be allowed to stand and be determined at trial, John may ultimately be vindicated at trial on those points. It was submitted that, in those circumstances, the appropriate order as to costs of the strike out application is costs in the cause.
[5]
Andrew's position in relation to costs is that the usual course that costs follow the event should apply. The application was unsuccessful and, as the unsuccessful applicant, John should pay Andrew's costs of the application, including conferral.
It was submitted on behalf of Andrew that the application is not analogous to a summary judgment application. John's attack on the relevant parts of the FFFAD was not simply about the pleading not disclosing a reasonable defence.
It was also submitted on Andrew's behalf that the usual course is not to order costs in the cause on an unsuccessful summary judgment application. His position is that will not necessarily be so, referring to the commentary in Civil Procedure Western Australia[4] in relation to the discouragement of interlocutory and pleadings disputes. In any event, it was submitted that there is no usual or special rule relating to the costs of strike out applications, or that such costs be in the cause.
[6]
The principles relating to costs are well established. Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. However, the discretion is not unfettered and must be exercised judicially.[5]
Costs will usually follow the event so that generally the court will order that the successful party to any action or matter recover their costs.[6]
The plaintiff did not make an application for summary judgment. However, given he seeks to characterise his strike out application as analogous to an application for summary judgment, it is necessary to consider whether, as the plaintiff submits, the 'usual rule' in an unsuccessful summary judgment application is that costs be in the cause.
The principles applicable to costs orders where an application for summary judgment is unsuccessful were recently summarised by Hill J in Chalmsbury Nominees Pty Ltd v Alita Resources Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement),[7] as follows:
[7]
[6] The usual order where an application for summary judgment is dismissed is that the costs of the application are in the cause. It is only in exceptional cases that costs will be awarded to the party who successfully opposed the application (Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Full Court, Supreme Court of WA, Lib No 920347, 19 June 1992).
[8]
[7] There has been some discussion as to whether this 'ordinary rule' should be reconsidered given modern case management practices (See Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeney (A Firm) [2011] WASC 167 (S)). In NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd, the Court of Appeal held there was no basis to doubt the correctness of the ordinary rule. However, it was noted that while this is the ordinary rule, it is not fixed or inviolable (NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [113] (Murphy JA, Beech and Vaughan JJA agreeing).
[9]
[8] Where a reasonable party ought to have known it had no reasonable prospects of success of obtaining summary judgment, it may not be just for the applicant, even if successful at trial, to have the costs of the failed interlocutory application (NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [112]).
[10]
It is recognised that the 'usual rule' where an application for summary judgment is dismissed, is that the costs of the application will be in the cause, though it is not a fixed rule. There may be cases where the circumstances warrant a departure from the usual or ordinary rule. However, there is no usual or ordinary rule in relation to strike out applications per se. The cases relied upon in support of John's submissions do not, in my view, demonstrate there is a usual or ordinary rule as to the appropriate orders as to costs in a strike out application.
In Crage v Wooles, the Master characterised the strike out application as being 'really an application for summary judgment on a counterclaim', an application under O 16 of the Rules of the Supreme Court 1971 (WA) (RSC). It was a relatively simple case of adverse possession. He dismissed the plaintiff's strike out application, ordered costs thrown away by the amended defence and counterclaim and made an order that the costs of the application be in the cause.
Bowesco Pty Ltd v Read was primarily a summary judgment application, with a strike out application in the alternative. The orders made in each of those cases and in R&I Bank of Western Australia Ltd v Lombardo do not support the existence of a usual or ordinary rule.
That orders have been made in other cases that costs be in the cause in an unsuccessful strike out application does not mean that will be so in every case. As Whitby J observed in Deidler v Boroweic [No 2],[8] determining costs orders is 'inherently discretionary and each case must be considered on its own merits. The fairest outcome is what the court is aiming to achieve in exercising its discretion'.
As to when costs orders may be made, RSC O 66 r 10(1) provides:
[11]
Costs may be dealt with 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.
[12]
Though costs remain in the discretion of the court, Consolidated Practice Direction (CPD) 4.7.1(7) provides '... the Court will generally order that interlocutory costs ordered to be paid to a party are to be paid forthwith or by a particular date, rather than in any event'.
[13]
The appropriate orders as to costs as between John and Andrew
[14]
As has been noted, whilst there may be examples of strike out applications in which costs have been ordered to be in the cause, each case must be considered on its own circumstances and merits.
The basis upon which John brought his application to strike out parts of the FFFAD was not confined to the impugned paragraphs disclosing no reasonable defence under RSC O 20 r 19(1)(a). He also argued they were an abuse of process (under RSC O 20 r 19(1)(c)) or, if allowed to stand, would prejudice delay or embarrass the fair trial of the action (under RSC O 20 r 19(1)(b)). In oral submissions at the hearing of the application before the Master on 30 August 2022, counsel for the plaintiff stated that the grounds relied upon were not mutually exclusive.
The Master was not satisfied that the points raised in relation to the impugned paragraphs of the FFFAD ought be struck out on the basis they disclosed no arguable defence or as an abuse of process as was submitted, nor on any of the other bases.
I am not satisfied that the issues raised are such that they should be compared to an unsuccessful claim for summary judgment and that the costs of John's unsuccessful application to strike out those parts of the FFFAD ought be in the cause. John did not bring an application for summary judgment and did not seek to strike out the FFFAD as a whole on the basis there is no reasonable or arguable defence.
There is no reason, in my view, in the circumstances of the application why costs should not follow the event in the ordinary course and John should pay Andrew's costs of the application. Such costs should also include the costs of conferral. Conferral is required by RSC O 59 r 9 and in accordance with CPD 4.3.2.
[15]
For these reasons, John is to pay Andrew's costs of the strike out application, including costs of conferral. Such costs are to be taxed if not agreed and shall be payable forthwith in accordance with CPD 4.7.1(7).
The orders sought in John's strike out application included an order that the requirements of RSC O 59 r 9(1) be waived in relation to the application to strike out paragraphs 14B and 14D. I am minded to make that order, subject to any matter either John or Andrew wish to be heard on, as it was not addressed at the hearing before me on 14 March 2024.
I will also hear from counsel for John and Andrew as to the final form of orders as to costs, to give effect to the Reasons and to progress the proceeding. Subject to hearing from them, it seems to me the orders as to costs and to give effect to the Reasons should include:
The plaintiff has leave to bring his application by amended chamber summons filed on 23 June 2023 (Application).
The requirements of O 59 r 9(1) of the Rules of the Supreme Court 1971 (WA) be waived in relation to the application to strike out paragraphs 14B and 14D.
The Application is dismissed.
The plaintiff is to pay the third defendant's costs of the Application, including costs of conferral, to be taxed if not agreed and payable forthwith.
The parties should file a minute of any alternative form of orders contended for by 14 May 2024.
[16]
The application to strike out parts of Simon's FFRAD
[17]
By chamber summons filed on 19 August 2022, John applied to strike out paragraphs 35 ‑ 84 of Simon's FFRAD pursuant to RSC O 20 r 19(1)(a), r 19(1)(c) and r 19(1)(d) (August 2022 Application).
As submitted by John, the August 2022 Application was the culmination of a long series of conferral and amendments to Simon's defence. The FFRAD is the fourth time Simon has amended his defence and the second time John has applied to strike it out.
The first application was made by chamber summons filed on 8 December 2021 (December 2021 Application), by which John applied:
[18]
(a) for further and better particulars of paragraphs 27, 31.6 and 31.7 of Simon's further amended defence dated 2 December 2021 (December 2021 Defence); and
(b) to strike out paragraph 19(b) of the December 2021 Defence.
[19]
The December 2021 Defence was filed following lengthy correspondence between John and Andrew's lawyers about its adequacy between September 2021 and filing of the December 2021 Application.
The December 2021 Application was listed for hearing on 17 February 2022 before Master Sanderson. Before that application was heard, there were further communications between John and Andrew's lawyers, the details of which are referred to in the plaintiff's written submissions and the affidavits referred to in them. The hearing of the December 2021 Application did not proceed. Simon had foreshadowed filing a further amended defence and that he needed further time to do so.
Simon and John each filed submissions and, at the hearing on 17 February 2022, the Master ordered Simon to file a further amended defence by 22 April 2022. Costs were reserved.
The further re‑amended defence was not filed until 20 May 2022. John raised further concerns about the adequacy of that pleading. After further communications between John's and Simon's lawyers, the FFRAD was filed on 25 July 2022. Following further conferral about the adequacy of the FFRAD, John made the August 2022 Application, in which he sought the following orders:
Pursuant to Order 20 Rule 19(1)(a), 19(1)(c) and/or 19(1)(d) of the Rules of the Supreme Court 1971 (WA), paragraphs 35 ‑ 84 of the First and Second Defendants' Further Further Re‑Amended Defence dated 25 July 2022 be struck out.
The First and Second Defendants pay the Plaintiff's costs thrown away by reason of the amendments to the Further Re‑Amended Defence made on 25 July 2022 to be taxed if not agreed.
The First and Second Defendants pay the Plaintiff's costs of the Plaintiff's application dated 8 December 2021 as against the First and Second Defendants, including the costs of conferral, to be taxed if not agreed.
The First and Second Defendants pay the costs of this application, including conferral, to be taxed if not agreed.
At the hearing before me on 14 March 2024, counsel for John and Simon each made submissions in relation to the costs of the August 2022 Application and also in relation to the costs thrown away by reason of the amendments to the further re‑amended defence dated 25 July 2022 and the costs of the December 2021 Application.
[20]
The Reasons in so far as they relate to the impugned paragraphs of the FFRAD, paragraphs 35 to 84, are brief. The Master stated:[9]
The difficulty with the pleading as it stands at the moment is that it is difficult to know where the material facts are (insofar as there are material facts in the various paragraphs). This can be illustrated by reference to the plea of satisfaction. In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th Edition), the learned authors deal with satisfaction in this way (par 32-005):
[21]
'A is under an obligation to B. Intending to satisfy the obligation, A tenders no exact performance but its substantial equivalent. In certain cases, equity says that if B accepts what is tendered, A's obligation is satisfied. In other words, B is not put to an election. B may insist on literal performance of A's obligations, or may accept what A offers in satisfaction. But B may not do both.'
[22]
In relation to acquiescence, presumably the plea is estoppel by acquiescence. If that is the case, the various aspects of estoppel must be pleaded - reliance, detriment and so on. As to laches, it would appear the first and second defendants are relying upon the delay with prejudice. How a defence of satisfaction can run with a defence of acquiescence and laches is an issue raised by John and not satisfactorily answered by Simon. It requires further consideration.
What a party has to plead is material facts. Our system of pleading does not mandate the pleading of causes of action. Here the defence has pulled together certain paragraphs by saying pars (a), (b) and (c) are pleaded as a defence of satisfaction and pars (e), (f), (g) and (h) are pleaded as a defence of laches. This may be one of those cases where the person drafting the defence might simply concentrate on pleading material facts without referencing those facts to particular defences. It may then be the case John, properly advised, admits the facts, confident they cannot establish a defence. That may be a way forward for both parties. But at the moment John has a reasonable complaint - the paragraphs complained of are simply too confusing.
[23]
It was submitted on behalf of John that there is no reason for the court to depart from the usual order that costs follow the event, and Simon should pay the costs of the August 2022 Application, including any reserved costs and costs of conferral, to be taxed if not agreed and paid forthwith in accordance with CPD 4.7.1(7).
John also seeks the costs of the December 2021 Application which were reserved on 17 February 2022, including any reserved costs and costs of conferral, to be taxed if not agreed and paid forthwith. In essence, this is on the basis that (as set out in John's written submissions), the hearing of the December 2021 Application did not proceed because Simon conceded the defence needed to be further amended. Those amendments did not cure the deficiencies and resulted in the successful August 2022 Application. It was not until receiving a letter in January 2022 from Simon's lawyers that John was informed Simon sought to make further amendments to his defence. John submits that it follows that Simon should also pay the plaintiff's costs of the December 2021 Application, including conferral, to be taxed if not agreed and paid forthwith.
John also seeks the costs thrown away by the amendments to the further re‑amended defence dated 25 July 2022, to be taxed if not agreed. That is, the costs he incurred because of the amendments made by Simon to the defence he filed on 20 May 2022, and then superseded by the FFRAD filed on 25 July 2022.
[24]
At the hearing of the August 2022 Application, John's counsel submitted that if paragraphs 35 ‑ 84 of the FFRAD were struck out, paragraphs 19(e) and 23 would also need to be struck out because those paragraphs rely on and repeat paragraphs the subject of the strike out application. That was repeated at the hearing before me on 14 March 2024, but that those paragraphs should be struck out in addition to paragraphs 35 ‑ 84.
[25]
It was submitted on behalf of Simon, in effect, that the cost orders should reflect that the first and second defendants were, in the circumstances of the case, substantially the successful parties. This appears to be based on an erroneous conclusion that the Master did not strike out impugned paragraphs 35 ‑ 84 of the FFRAD. Though the Master did not expressly state in the Reasons that those paragraphs of the FFRAD were struck out, it is clear from the Reasons and from the result stated on the cover page that they were struck out:
[26]
Defence of first and second defendants struck out and defence of third defendant to stand.
[27]
It was also submitted on Simon's behalf that it is neither necessary nor appropriate for orders to be made that Simon (in his capacity as the first and second defendant) pay John's costs thrown away by reason of the amendments to the defence of 25 July 2022. It was said this is because no costs thrown away have been identified, no reply has been filed, no discovery has been requested or taken place, and any costs thrown away are the subject of RSC O 66 r 3(1).
As to the costs of the December 2021 Application, Simon's position is that the further and better particulars sought were not pursued by John and the application to strike out paragraph 19(b) was included in the August 2022 Application. It was initially submitted in the written submissions filed that Simon ought to have the reserved costs of the December 2021 Application '[t]o the extent that the first and second defendants were substantially successful on the [August 2022 Application], including paragraph 68 of the Defence, and given the application for particulars ... was abandoned by [John]'.
It was submitted on Simon's behalf that the appropriate order as to costs is that John pay 75% of Simon's costs of the December 2021 Application and of the August 2022 Application, including costs reserved on 17 February 2022 and 9 August 2022, and the costs of conferral, to be taxed if not agreed.
In oral submissions, Simon's counsel submitted there should be no order as to costs in respect of the December 2021 Application.
[28]
The appropriate orders and costs orders as between John and Simon
[29]
The submissions made on behalf of Simon were largely based on the erroneous understanding that Master Sanderson did not strike out the impugned paragraphs of Simon's FFRAD. As stated earlier in these reasons, it is clear from the Reasons and the 'Result' stated that the Master's decision was to strike out paragraphs 35 ‑ 84 of the FFRAD.
It follows that paragraph 19(e) and the last sentence of paragraph 23 should also be struck out, as was submitted before Master Sanderson and again before me, because they refer to and rely on particulars in paragraphs 43, 44, 45, 55, 56, 57, 58, 59, 60, 66, 67, 68.1 and 68.15, which have been struck out. It was largely accepted by Simon's counsel that the particulars included in those paragraphs be the subject of any further amendment or substitution of Simon's defence.
Counsel for Simon and John both appeared to share the view that any further amendments, given the number of iterations of the defence, would be best dealt with by the filing of a substituted defence. John's counsel submitted it would be appropriate for a marked‑up copy to also be provided to identify the further amendments made. It seems to me, for the sake of clarity, the way forward is for a substituted defence to be filed by Simon, with a marked-up copy being made available to the parties and the court. The parties should confer as to the appropriate form of orders and timing for filing of a substituted defence, noting Simon has already had a significant period of time in which to consider and prepare an amended pleading.
As to the costs sought by John in relation to the December 2021 Application, the particulars sought were of an earlier iteration of the pleading which was subsequently amended, removing the need to press the application for the particulars that had been sought and not provided, and which were overtaken by the further amendments. John was not aware Simon would seek to make further amendments at the time the December 2021 Application was made. John was put to the cost of the application and should have his costs in relation to it. The extent of those costs and accounting for any overlap between applications, is a matter for taxation.
Turning to John's proposed orders that Simon pay John's costs thrown away by reason of the amendments to the further re-amended defence made on 25 July 2022. I accept the submission made on behalf of John, to the effect that to say no costs thrown away have been identified overlooks costs wasted in conferral about and dealing with the previous iteration of Simon's defence, and that the identification of such costs is a matter for taxation. Nor does the fact that RSC O 66 r 3(1) makes provision for costs thrown away by reason of any amendment preclude the making of an order, or make such an order redundant.
John's counsel sought that any orders made in John's favour in relation to the August 2022 Application and the December 2021 Application include 'any reserved costs'. In addition to the costs reserved by Master Sanderson on 17 February 2022 in respect of the December 2021 Application, the costs of the directions hearing on 9 August 2022 concerning the FFRAD were also reserved. It follows those costs should also be John's costs.
[30]
For these reasons, I will make the following orders as between John and Simon:
Paragraphs 19(e), 23, and 35 - 84 of the first and second defendants' further further re-amended defence filed on 25 July 2022 are struck out.
The first and second defendants are to pay the plaintiff's costs of the chamber summons filed on 19 August 2022, including the costs reserved on 9 August 2022 and costs of conferral, to be taxed if not agreed and paid forthwith.
The first and second defendants are to pay the plaintiff's costs of the chamber summons filed on 8 December 2021 as against the first and second defendants, including costs of conferral, to be taxed if not agreed and paid forthwith.
The first and second defendants are to pay any costs of the plaintiff thrown away by reason of the amendments to the further re-amended defence made on 25 July 2022, to be taxed if not agreed.
John's and Simon's lawyers are to confer in relation to the appropriate form of orders to deal with filing and service of a substituted defence, and provision of a marked‑up copy of the amendments, including as to the time by which that is to be done.
[31]
All of the parties should confer as to further directions to progress the proceeding as expeditiously as possible and, if agreement is reached, file a memorandum of consent orders by 14 May 2024. If the parties are unable to agree, they should each file competing minutes of proposed orders by that date, and the matter will be listed for directions.
[32]
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.