WALTER -v- BUCKERIDGE [No 4] [2011] WASC 313 (22 November 2011)

3 The circumstances in which the actions were commenced is as follows. Mr Walter and Mr Buckeridge had been involved in a home building company, JCorp Pty Ltd (JCorp). Mr Buckeridge became involved in JCorp in early 1986 when interests associated with Mr Buckeridge acquired a 50% shareholding in JCorp. Mr Walter and his interests held the other 50% shareholding in JCorp. The relationship between Mr Walter and Mr Buckeridge deteriorated. On 14 June 2002 Mr Buckeridge and his related company Kimpura Pty Ltd (Kimpura) commenced proceeding COR 176 of 2002 in this court against Mr Walter, Julian Walter Holdings Pty Ltd and JCorp seeking an order that JCorp be wound up on the grounds of oppression (the Oppression Action). In the course of the Oppression Action, the plaintiffs in that action made a number of allegations against Mr Walter in relation to JCorp having paid some of Mr Walter's personal expenses. The Oppression Action was settled in mid2003 by way of deeds of settlement and release and completion under those deeds took place on 31 July 2003. One outcome of the settlement was that Mr Walter, in effect, purchased subject to certain accounting adjustments as to price, several of JCorp's housing businesses. On 12 November 2003 Mr Buckeridge, personally and through his related companies JCorp, Kimpura and Esther Investments Pty Ltd, commenced in this court action CIV 2375 of 2003 against Mr Walter and his related companies (the Adjustments Action). In the Adjustments Action Mr Buckeridge and his companies claimed approximately $700,000 arising from the alleged nonpayment of monies owed under the settlement deeds, allegedly pursuant to the adjustment process under those deeds.

4 In December 2003 Mr Buckeridge published an article in the BGC Christmas Bulletin, which is a publication of the second defendant, which is part of the BGC Group, a group of construction and building related companies. This article is the subject of CIV 2549 of 2003. Mr Walter says that he took the article to be calling him a thief and a criminal by accusing him of having committed many acts of stealing from JCorp. Mr Walter says he was angered and hurt about it having been published. Mr Walter says he believed that the article would likely have been published to many building industry participants and that there was a high likelihood that the allegation would be repeated and gossiped about extensively. Mr Walter instructed his solicitors to write to Mr Buckeridge seeking an apology and undertakings to destroy copies of the Bulletin, retrieve distributed copies and not to cause or permit any further publication of the matter complained of. Mr Walter says it was clear to him from the defendants' response that there would be no apology or undertaking not to repeat the defamation. The defendants' solicitors stated that should Mr Walter institute legal proceedings their client would assert justification by way of defence. Mr Walter decided to commence proceedings for defamation. The writ was filed on 18 December 2003.

5 On 18 December 2003 The West Australian newspaper published an article entitled 'Buckeridge, Walter Sling Brickbats'. Mr Walter took what was attributed to Mr Buckeridge in the article to be reaffirming the allegation that Mr Walter was a thief and a criminal and to be saying that he was not paying a debt of approximately $700,000 that was owed to Mr Buckeridge because Mr Walter did not have the money to do so. Mr Walter says he felt this was an attack on his credit worthiness and financial status and his ability to pay his debts. Mr Walter instructed his solicitors to write to Mr Buckeridge's solicitors in relation to the article. From Mr Buckeridge's solicitors' responses it was clear to Mr Walter that there would be no apology or undertaking not to repeat the allegations. Mr Walter instructed his solicitors to commence proceedings against Mr Buckeridge and BGC in relation to the article. CIV 2566 of 2003 was commenced on 19 December 2003.

6 Both actions have been hard fought. There have been numerous interlocutory disputes concerning pleadings and discovery. In CIV 2549 of 2003 the defendants unsuccessfully sought leave to appeal from a decision of the Master dismissing the defendant's application to strike out the statement of claim and allowing the plaintiffs' application to amend the statement of claim. In CIV 2566 of 2003 the defendant brought three separate appeals to the Court of Appeal. The last pleading filed in CIV 2549 of 2003 was a rejoinder filed on 23 November 2010. The pleadings in CIV 2566 of 2003 closed on 28 July 2010.

7 In his affidavit sworn 21 February 2011 Mr Walter sets out his reasons for applying to discontinue these actions. I have set out earlier in these reasons Mr Walter's summary of his reasons. In elaborating upon those matters Mr Walter swore that he believed that any trials of the actions will consume and be a waste of considerable amounts of the court's time and resources, as well as witnesses that will be called at any trials and that the issues in the actions involve in many ways a rehash of disputes and litigation between himself and Mr Buckeridge and their respective interests dating back many years.

I feel that, despite having had very good reasons for commencing and continuing with the Actions (notwithstanding the defences filed by the defendants in the Actions which believe I have answered by way of, inter alia, my pleadings) and even though the publications I sue upon are seriously defamatory of me and are false, the detriment in taking the Actions forward to trial is likely to outweigh any possible benefit to me if successful at trial, and that pressing these matters to trial will involve a waste of the Court's resources and that of other parties, such as witnesses.

I also believe that pressing these matters to trial will be stressful not only to myself, but also my family, who I observed were distressed about the publications when they occurred in 2003 and who I have also observed have been stressed by what has happened in the course of the Actions to date. As I expect any trials of these matters to involve significant publicity, I am concerned about the effect that will have on my family [59] - [60].

9 The defendants consent to Mr Walter discontinuing the actions. In his affidavit sworn 16 March 2011 Mr Buckeridge says that the claims have always been denied and defended in this court and that 'as I have no counterclaims in either proceeding, if Mr Walter now wishes to abandon the claims, that is a matter for him'. The defendants oppose the plaintiff's application in relation to costs and seek orders that the plaintiff pay the defendants' costs. Mr Buckeridge says that Mr Walter's decision to bring these actions and prosecute them for some seven years has put him to considerable expense and inconvenience. Mr Buckeridge says that he has defended these claims because he always firmly believed he would be successful at trial and always firmly believed that it was right to defend the claims. Mr Buckeridge says that Mr Walter has always known the substance of his defence to the actions and the substance of his defence in CIV 2549 of 2003 had been relied upon in the Oppression Proceedings, which were settled without Mr Buckeridge's assertions as to Mr Walter's conduct being tested at trial. Mr Buckeridge says that the substance of his defence in CIV 2566 of 2003 crosses over the issues which were litigated between Mr Walter and himself in the Adjustment Action. Mr Buckeridge says that those proceedings were settled by Mr Walter after he defended them for over three years, and involved a substantial payment of money by Mr Walter.

10 The plaintiff's application for leave to discontinue the actions is not conditional upon an order that there be no order as to costs. Subject to questions of injustice, the court should give leave to discontinue an action because it is not desirable that a plaintiff should be compelled to litigate against his will. In this case the defendants consent to the actions being discontinued and I will so order. The appropriate order under Rules of the Supreme Court 1971 (WA) O 23 r 2(3) is that 'the action be discontinued', not that 'leave be given to discontinue the action'.

11 Order 23 r 2(3) provides that the court may order the action be discontinued upon such terms as to costs as may be just. That is, the court has a discretion.

12 McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, considered the relevant principles for determining costs orders where there has been no hearing on the merits of the case. His Honour stated:

The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. ...

If it appears that both parties had acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings (624 625).

13 In One.tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, Burchett J said:

In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs [6].

14 In ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119 ACN sought leave to discontinue the proceedings with no order as to costs. The basis of ACN's no costs contention was that, in commencing the proceedings, it had acted reasonably and that its conduct had continued to be reasonable until the further prosecution of the litigation became futile.

15 Finn J ordered that ACN be granted leave to discontinue the proceedings but that it pay the defendant's costs. Finn J said:

As I foreshadowed, I am satisfied that an order for costs is appropriate. While it cannot be said that the institution of this proceeding was in any way unreasonable - it was one of a complex of legal manoeuvres in a hostile take over bid it was done in the full knowledge that, consequent upon the decision of Perry ACJ, Coopers would act to alter its constitution to remove Lion Nathan Australia's preemptive rights and exemptions unless either that decision was reversed on appeal or the holding of the necessary extraordinary general meeting could be prevented. Neither of these contingencies eventuated. From its inception this matter contained the seeds of its own futility, yet ACN was prepared to proceed and to put Coopers to its defence. In so doing ACN assumed the risk of the proceedings becoming futile. It cannot escape the consequences of that by the assertion that it nonetheless conducted itself reasonably. It gambled and it lost. It is entirely appropriate that it pay Coopers' costs occasioned by the discontinued claim including reserved costs and its costs of this motion [22].

16 I am satisfied that it is appropriate to order the plaintiff to pay the defendants' costs of the actions. I do not find that the plaintiff acted unreasonably in commencing the actions. The publication complained of in CIV 2549 of 2003 was defamatory of Mr Walter. There is an issue between the parties concerning the imputations to which the article gives rise. That issue has not been resolved. Nevertheless, the defamation is a serious defamation going to Mr Walter's character and his personal and business reputation. Whilst the defamatory statement was not in a mass media publication it was nevertheless in a publication that was, or was likely to have been, widely circulated amongst people involved in the industry and areas of business in which Mr Walter was involved. The publication complained of in CIV 2566 of 2003 was made in The West Australian newspaper. Again, there is an issue between the parties concerning the imputations to which the publication gives rise. Nevertheless, it is a serious matter going to Mr Walter's creditworthiness or his conduct as a businessman.

17 Mr Walter is an experienced and sophisticated businessman. Prior to commencing the actions he was represented by a national firm of solicitors with experience in defamation matters. Mr Walter must be taken to have known when he commenced these actions that defamation actions often involve or give rise to questions of considerable difficulty and the costs of prosecuting such actions are likely to be substantial and may well exceed the quantum of damages likely to be recovered if the plaintiff succeeds. Before the writs were issued, Mr Buckeridge made it clear, through his solicitors, not only that the claims would be resisted but that they would be defended on the ground of justification. Mr Buckeridge has maintained that position throughout the proceedings and continues to maintain that each of the publications complained of are justified. Mr Walter should have expected that prosecuting the actions would involve significant amounts of his time and would be stressful. Mr Walter should have expected that any trial of these matters is likely to involve significant publicity and that would be distressing for his family.

18 The proceedings extended over a much longer time than Mr Walter had expected. They involved greater cost and stress than he had anticipated. He has now arrived at the decision that the benefit to himself of a successful verdict does not outweigh the continued burden upon himself and his family of continuing the actions. Neither that realisation, nor the prolonged nature of the proceedings, amounts to a supervening event of the sort which has caused courts in a number of cases to order that there be no order as to costs of actions concluded without a hearing on the merits of the case. The continued prosecution of the actions is not futile in the sense referred to by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin. The plaintiff might still obtain vindication and an award of damages if he was successful in the actions. A decision that the costs and burden of continuing the actions outweighs the likely benefits of success does not amount to futility in the relevant sense.

19 The question must be looked at from the perspective of the defendant as well as the plaintiff. Mr Buckeridge stated at the outset that he would defend the proceedings and would plead justification. He was willing to continue with the actions to trial. This is not a case like J T Stratford & Son Ltd v Lindley [No 2] (1969) 1 WLR 1547 where Lord Denning MR said:

This action has never come for trial. No costs have ever been awarded in the action. Nobody has lost. Nobody has won. After the decision in the House, there were a few desultory steps. The pleadings were closed in November, 1964. But then the action went to sleep. In 1966 there were discussions as to what was to be done. Negotiations took place but they were of no avail. Neither side wanted to go on. But neither side wanted to pay the costs of the other side (1553).

20 These actions have not gone to sleep. The actions have now reached an advanced stage. Directions have been given for the exchange of witness statements. The defendants have engaged an independent accounting expert to prepare a report for the purposes of trial. The plaintiff has decided not to proceed to trial at a time when a great deal of preparation for trial has been done and costs incurred for that purpose.

21 The plaintiff has, in effect, argued that the delay in the actions coming to trial has been caused by the manner in which the defendant has conducted the litigation. The defendant has taken many pleading points. The defendant has taken four appeals. However, there has been no finding that any of the applications, or appeals, brought by the defendant were frivolous, vexatious or otherwise improper. Furthermore, a review of the chronology of the actions discloses that there have been times during the proceedings when the plaintiff could have prosecuted the actions more expeditiously.

22 There has been no determination that the defendants infringed any right of the plaintiff by publishing the material complained of. The defendants have succeeded in resisting the plaintiff's claims in the sense that no relief has been granted in favour of the plaintiff against the defendants. The defendants were willing to proceed to trial. The plaintiff has chosen not to proceed to trial for the reasons I have set out earlier. It is not appropriate that the defendants should bear their costs of defending the proceedings.

23 I will order that the actions be discontinued and that the plaintiff pay the defendants' costs of the actions.