Delay in applying for security for costs

In Shoreside Pty Ltd v Wroxton Developments Pty Ltd [2023] WADC 112, a provider of construction services sued a property developer for unpaid invoices under a consultancy agreement. Applications for security for costs were made by the defendants just weeks before the trial, despite the case having commenced over 3 years earlier.

Judge Gething of the District Court of Western Australia considered the principles concerning delay in applying for security and the exercise of discretion under Corporations Act 2001 (Cth) s 1335.

His Honour observed that an unexplained delay is a factor against the grant of security for costs, citing the rationale given by Moffitt P in Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 that a company is entitled to know its position early on before substantial sums are spent on litigation. However, Jackson J has noted the discretionary nature of security powers, finding there can be no strict 'entitlement' to early notice (Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques [2016] QSC 2). The position appears best reconciled, as French J put it in Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, by the further the plaintiff has proceeded before a security application, the harder it will be to justify the order as not unfair or oppressive.

Critically, Judge Gething reasoned that fairness dictates security be sought early so a company can make choices about providing security or allowing proceedings to be stayed before too many resources are expended. The unexplained failure of the defendants to apply earlier weighed heavily against exercise of the discretion. Additionally, any order would likely require vacating the looming trial dates, causing prejudice and wasted costs, factors also weighing against security in Attorney-General of Botswana v Aussie Diamond Products Pty Ltd [2009] WASC 299 per Kenneth Martin J. The balance in s 1335 is to avoid injustice to both parties, and vacating dates at this very late stage could not be justified.

Ultimately security was still ordered, but structured to avoid delaying trial. Rather than the full $150,000 sought or payment into court, Judge Gething ordered the plaintiff company's directors to personally undertake to pay up to $50,000 towards any costs ordered against the plaintiff. This middle ground approach avoided fully staying the claim which would prejudice preparations, but still provided some protection to the defendants. The undertaking was mutually exclusive, so together the directors remained liable for $50,000 maximum. This balanced the defendant's interests while preventing trial disruption. The orders demonstrate that even where delay weighs against security, the court retains a discretion to craft solutions mitigating potential injustice to defendants, provided the remedy does not itself cause disproportionate prejudice. Here, a compromised security undertaking maintained the trial dates without imposing an unrealistic financial burden on the individuals behind the plaintiff company.

This case demonstrates that unexplained delay in seeking security until close to trial will be an influential factor against ordering security for costs, given the potential for wasted expenditure and disruption to litigation at an advanced stage. While s 1335 confers a discretionary power, fairness generally mandates bringing security applications promptly so corporate parties can understand their position early on. Delayed applications without adequate explanation risk denial for being oppressive or causing unnecessary prejudice. The underlying policy is to balance protecting defendants from impecunious companies, with avoiding injustice by hampering companies from pursuing their cases.

Extensions of time for special costs orders

A special costs order allows a court to award legal costs above the amount that would normally be ordered under the standard costs determination.

This can occur where the court considers the standard costs award to be 'inadequate' due to the unusual difficulty, complexity or importance of the matter (see s 141(3) Legal Profession Uniform Law Application Act 2022).

Parties normally have 30 days from the date of judgment to apply for special costs (see Rules of Supreme Court O 66 r 51(3)). An extension of time is needed after this.

In Priest v Central Norseman Gold Corporation Pty Ltd [No 2] [2023] WASCA 385, the respondent mining company was successful in defending an appeal relating to the interpretation of mining safety laws. The mining company brought a special costs application over 15 months out of time. The other side, while not 'opposing' an extension per se, took no stance on the application.

The Court refused to grant the extension of time to apply for special costs.

A key reason was the lack of cogent explanation for the 15 month delay by the transnational law firm representing the mining company. The Court expressed understanding for personal issues facing the law firm's counsel, but held the firm should not have waited passively for over 12 months after those issues arose.

The Court outlined several key principles relating to extensions of time for special costs applications:

1. The consent of the parties does not determine the Court's discretion to grant an extension. The Court must still be independently satisfied the extension should be granted (see [13]).

2. Mere assertions without admissible evidence will not generally justify delay (see [14]-[19]).

3. Possible prejudice to the other side is only one relevant factor. The limit also promotes finality and prompt issue resolution (see Bartlett v Roffey [2023] WASC 3 at [46(d)(e)]).

4. The merits of the special costs application itself are relevant to whether an extension should be granted (see [23]).

Applying these principles, the Court refused to grant the extension due to lack of cogent evidence explaining the 15 month delay and lack of merit in the special costs application itself.

The takeaway is that parties should act promptly in seeking special costs and ensure they have solid justification for any delay.

Consent between parties will not make an extension automatic.

When considering an extension request, Courts will look at all factors including strength of evidence explaining delay and prospects of the special costs application itself.

Applications for Security for Costs: Key Principles

In a costs appeal, Frigger v Computer Accounting & Tax Pty Ltd [2023] WASCA 152, the Western Australian Court of Appeal considered principles relating to applications for security for costs in detail.

The case has its origins in a long-running dispute involving the winding up of Computer Accounting & Tax Pty Ltd (CAT) over a decade ago. Mr and Mrs Frigger brought a substantive claim in the original winding up proceedings against CAT's liquidator, Mr Kitay, regarding certain land assets they alleged should have been transferred to their self-managed superannuation fund. They also claimed damages for lost opportunities due to Mr Kitay's delay in transferring the assets.

That substantive claim was very similar to an earlier claim brought by Mrs Frigger alone against Mr Kitay, which was struck out for lack of standing. Importantly, by the time the new claim was filed, the costs order made against Mrs Frigger personally in the earlier proceedings stood at over $28,000 and remained unpaid.

The primary judge made orders staying the new Frigger claim until they paid into court both the unpaid costs from the previous claim, and $30,000 as security for costs in anticipation of Mr Kitay's strike-out application in their latest claim. The Friggers appealed those orders. Mr Kitay and CAT applied to the appeal court for security for their costs of defending the appeal.

Examining the application, the Court of Appeal set out key established principles, referring to George 218 Pty Ltd v Bank of Queensland Limited [2016] WASCA 56 [41]–[48]:

• The discretion to order security for costs serves the interests of justice and is unfettered, provided it is exercised judicially. 'Special circumstances' do not have to be shown.

• An appellant's inability to pay a costs order if their appeal fails will generally favour ordering security. However, if the respondent caused the impecuniosity, that may weigh against requiring security.

• Impecuniosity alone does not necessarily justify ordering security if it would, overall, be contrary to the interests of justice.

• Other relevant factors the court will consider include the strength of the appellant's prospects of success, whether ordering security would effectively shut them out of prosecuting the appeal, and any delay by the respondent in applying for security.

• Each case is dependent on its own particular factual circumstances. The amount of security set for an impecunious appellant should not be more than what is reasonably necessary.

The decision illustrates the wide variety of factors courts may consider with respect to ordering security for costs.

It shows that while a proven inability to pay is significant, the overarching consideration remains serving the interests of justice.

Determining what those interests require in a given case depends very much on the context.

The Principles Relating to the Award of Costs in the State Administrative Tribunal

Section 87(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) gives the State Administrative Tribunal (the Tribunal) a discretion to order one party to pay all or part of the legal costs of another party. This article examines the principles that apply to the exercise of that discretion, with a focus on cases involving disciplinary proceedings against legal practitioners brought by regulatory bodies such as the Legal Services and Complaints Committee.

The Discretion to Award Costs

The starting point is that parties ordinarily bear their own legal costs in proceedings in the Tribunal, unless the Tribunal orders otherwise.[1] However, under s 87(2) of the SAT Act, the Tribunal has a wide discretion to order one party to pay all or part of the legal costs incurred by another party. The rationale for such an order is to compensate or reimburse the party in whose favour the order is made, rather than to punish the unsuccessful party.[2] Even so, an order requiring one party to pay the costs of another remains the exception rather than the rule.[3]

The Onus is on the Party Seeking Costs

As the party seeking the costs order carries the onus, it must persuade the Tribunal that it is fair and reasonable in the particular circumstances to reimburse it for legal costs incurred.[4] However mere identification of some unreasonable conduct by the other party that increased costs will usually be insufficient.[5] The Tribunal generally requires a party seeking costs to show that the other party acted unreasonably in a way that unfairly caused increased costs to be incurred.[6]

A Cautious Approach in Disciplinary Proceedings

In disciplinary proceedings against legal practitioners, if the regulatory body is successful on the substantive application, it is common for the Tribunal to order the practitioner pay all or some of the regulatory body’s costs. This reflects the public policy interest in regulatory bodies performing their disciplinary functions to uphold standards in the legal profession, often with limited resources.[7]

Conversely, if the regulatory body is unsuccessful in a disciplinary proceeding, the practitioner has no entitlement to recover costs from the regulatory body. This reflects the public policy interest in not discouraging regulatory bodies from pursuing disciplinary proceedings where success cannot be guaranteed, but which should be pursued in the public interest.[8]

As summarised by President Barker in Medical Board of Western Australia and Kyi [2009] WASAT 22, the Tribunal’s usual approach is that:

"unless it can be demonstrated that an application made by a vocational regulatory body lacked any reasonable basis or was not made in good faith, costs should not be awarded against [that body] simply because the application was not successful".[9]

The Bases to Award Costs Against A Regulatory Body

The well-established bases on which the Tribunal may award costs against a regulatory body that has unsuccessfully pursued disciplinary action against a legal practitioner are therefore where the proceeding:

• lacked any reasonable basis;

• was not brought in good faith; or

• amounted to an abuse of process in the way it was conducted.[10]

Each of those arguments sets a high threshold. As explained in Legal Services and Complaints Committee and Young [2023] WASAT 108 (Young), in applying those tests the Tribunal is guided by the principles applicable to determining applications for summary dismissal of proceedings under s 47(1) of the SAT Act.[11]

To establish the lack of a reasonable basis, it needs to be apparent that the disciplinary proceeding was manifestly groundless or that the regulatory body's case was so obviously untenable that it had no prospect of success.[12] This sets an extremely high bar. It requires more than merely showing that some aspects of the case lacked substance or were misconceived. Establishing an abuse of process requires clear evidence that continuation of the proceeding would cause unacceptable injustice.[13] Showing an absence of good faith in bringing the proceeding demands compelling evidence to that effect.

Withdrawal of Proceedings and Costs Applications

Where disciplinary proceedings are withdrawn prior to a substantive hearing, it can be difficult for the Tribunal to evaluate arguments that the proceeding lacked a reasonable basis or amounted to an abuse of process. As Young illustrates, in such situations the Tribunal will undertake a broad assessment of the basis for, and conduct of, the proceeding as a whole.[14] However given the exceptional nature of ordering costs against regulatory bodies, the Tribunal's starting point remains that withdrawal of proceedings does not of itself demonstrate they lacked a reasonable basis or were maintained other than in good faith.[15]

Conclusion

In summary, while the Tribunal has a wide discretion to award costs under s 87(2) of the SAT Act, an order that an unsuccessful regulatory body pay costs remains an exceptional course confined to the clearest of cases. As demonstrated in Young, the Tribunal applies caution in evaluating allegations of no reasonable basis, absence of good faith or abuse of process, even where disciplinary proceedings are withdrawn before a substantive hearing. It remains incumbent on the legal practitioner seeking costs to persuade the Tribunal that the high threshold under the governing principles has been met.

Footnote

[1] State Administrative Tribunal Act 2004 (WA) s 87(1)

[2] See Young at [39]; Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 at [51]

[3] Young at [39]

[4] Questdale at [51]; Young at [39]

[5] Medical Board of Western Australia and Kyi [2009] WASAT 22 at [74]

[6] Medical Board of Western Australia and Kyi at [74]

[7] See e.g. Roberman v Medical Board of Western Australia [2005] WASAT 81 at [30]; Young at [41]-[42]

[8] See Motor Vehicle Industry Board and Dawson (2006) 41 SR (WA) 343 at [47]; Young at [42]

[9] Medical Board of Western Australia and Kyi at [73]

[10] See Young at [43]-[44]

[11] Young at [43]-[45]

[12] Young at [45], citing Agar v Hyde [2000] HCA 41 at [57]

[13] Young at [45], citing Medical Board of Australia v Woollard [2017] WASCA 64 at [136], [145]

[14] Young at [57]

[15] Young at [46], citing Medical Board of Western Australia v Roberman at [17]

Qualified Privilege: Understanding the Limits and Role of Malice

Facts

The Karageozis v Sherman [2023] QCA 258 case involved an allegation of defamation based on a statement made by Ms Lamb to a police officer about the behavior of Mr Sherman after the end of their sexual relationship. The trial judge found the statement was defamatory but not protected by qualified privilege due to malice by Ms Lamb. The appeal court set aside the finding of defamation.

The statement Ms Lamb made to the police officer, as outlined in paragraph 6 of the judgment, was:

"Sheldon Sherman and I worked together for the same company. Sheldon worked in the Brisbane office and I worked in the Sydney office. We met at a work event in August 2019 and started an on-again-off-again relationship that lasted 7 months. I ended the relationship in February 2020 after Sheldon stopped listening to me and the line between our work life and our relationship became blurred. After I ended the relationship, Sheldon continued to contact me through various means which, on the whole, I ignored.

On Friday 13 February 2020 I was forced into resigning my job by the CEO of the company after he found that I held shares in and was a stakeholder in a rival company. I believe that Sheldon provided this information to the CEO because they are good mates.

On Friday 13 March, Sheldon sent me a text message saying, Can I call you? I wrote back Not comfortable with this at all. Sheldon then replied saying Can I call you?

Over the following days, Sheldon contacted my family and attempted to arrange a time to drop my belongings back to me. Sheldon told me that he would contact the university I attend and advise them that I had applied for my current course fraudulently unless I responded to his calls and texts.

I do not want to have any further contact with Sheldon and I do not want any my personal belongings which are still in his possession."

The appeal court found that the only imputation conveyed by Ms Lamb's statement to the police was that Mr Sherman was a vengeful person.

Qualified Privilege

The defence of qualified privilege applies when a defamatory statement is published on an occasion where the publisher has a legal, social or moral duty or interest to make it and the recipient has a corresponding duty or interest to receive it (Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 at [9] per Gleeson CJ, Hayne and Heydon JJ). The defence is based on public policy grounds, allowing free communication about matters of shared interest, provided there is no malice (Cush v Dillon (2011) 243 CLR 298 at [22] per French CJ, Crennan and Kiefel JJ).

The occasion must give rise to a "reciprocal duty or interest" between the publisher and recipient for the statement to attract qualified privilege (Karageozis case at [20], citing Bashford). Whether such reciprocity exists depends on the circumstances, including the relationship between the parties, the subject matter, timing and purpose of the communication (Bashford at [64] per McHugh J).

In Karageozis, the court held the trial judge took too narrow a view in finding no qualified privilege attached to Ms Lamb's statement to the police officer. Police have a wider role than just investigating crimes, including keeping the peace and warning people away from conduct which could become criminal (Karageozis at [22]). Ms Lamb had a legitimate interest in reporting concerning behavior to police, even if it did not amount to harassment or other crimes. Police had a corresponding duty to receive the information to assess any risks or need for intervention. The court should not unduly restrict the defence by requiring conduct complained of to be criminal or unlawful (Cush v Dillon at [22]).

Prior cases have found qualified privilege applies to complaints to authorities about matters relevant to their statutory role or operational responsibilities, even regarding unofficial rumors rather than facts (Cush v Dillon). By analogy, people also have a social duty to report genuinely concerning behavior to police to enable them to fulfill their role protecting public safety. Police have an interest in receiving such information before conduct escalates into domestic violence or other crimes. Applying too strict a test would discourage reporting of legitimate concerns.

Malice

Where qualified privilege applies, the defence can still be defeated by proof the defendant was motivated by malice in publishing the statement to the recipient (Karageozis at [26], citing Bashford at [9]).

Malice in this context means the defendant used the occasion to publish the statement for an improper purpose, rather than honestly discharging their duty or pursuing a legitimate interest (Roberts v Bass (2002) 212 CLR 1 at [79] per Gaudron, McHugh and Gummow JJ).

As malice defeats an otherwise valid defence of qualified privilege, malice must relate to the defendant's purpose in publishing the specific statement to which the privilege applies (Roberts v Bass at [8] per Gleeson CJ).

Evidence of malice in other contexts may also be relevant to inferring malice for a specific publication (Karageozis at [29]).

The legal burden of proving malice lies on the plaintiff, requiring cogent evidence the defendant had an improper dominant purpose (Karageozis at [26] and [33]-[34], citing Roberts v Bass at [96]-[97] per Gaudron, McHugh and Gummow JJ and Murray v Raynor [2019] NSWCA 274 at [62]).

Where facts are peculiarly within the defendant's knowledge and the defendant does not give evidence, the court may more readily draw inferences against them (Karageozis at [32], citing Jones v Dunkel (1959) 101 CLR 298). However, honest purpose is still presumed absent proof displacing it (Roberts v Bass at [96]-[97]).

In Karageozis, the trial judge incorrectly focused on Ms Lamb's purpose in contacting the respondent's wife's lawyers rather than her specific purpose in making the statement to police. Her statement to police was the only publication pleaded and found to be defamatory.

The trial judge inferred malice toward the respondent was Ms Lamb's dominant purpose in contacting police based on limited circumstantial evidence ((Karageozis at [31]). This included the timing of her statement shortly after the respondent contacted her de facto partner, her complaint to the lawyers that same day, her inability to produce text messages to police showing harassment and her not complaining earlier to authorities about the respondent's behavior towards his children.

However, the appeal court found multiple available explanations for this evidence, including Ms Lamb wishing to keep her relationship secret and acting irrationally after its dramatic ending. Without hearing directly from Ms Lamb about her actual purpose, the appeals court held the inferences of malice drawn against her were not sufficiently cogent to overcome the presumed honesty of purpose when making the statement to police.

Here are some key take-aways about proving malice to defeat the defence of qualified privilege:

• The burden is on the plaintiff to prove malice to the high standard of cogent evidence (Karageozis at [33]).

• Malice relates to the defendant's purpose in publishing the specific statement to which privilege attaches (Roberts v Bass at [8]).

• Where facts are within the defendant's knowledge, an adverse inference may be drawn from their failure to give evidence (Jones v Dunkel). However, honest purpose is still presumed (Roberts v Bass at [96]).

• Malice requires proof the defendant used the occasion to publish predominately to injure the plaintiff or for another improper purpose (Karageozis at [33]).

• Limited circumstantial evidence may not provide sufficiently cogent proof overriding the presumption of honest purpose (Karageozis at [34]).

• The defendant's purpose for other connected publications may help infer malice but separate purposes could exist for different publications (Karageozis at [29]).

Navigating Fiduciary Duties: Tribunal Directions for Attorneys Regarding Gifts from an Estate

In the case of DH [2020] WASAT 100, the applicant PE sought directions under section 109(2)(b) of the Guardianship and Administration Act 1990 (WA) regarding an enduring power of attorney (EPA) granted to him and his wife DE by his mother DH in January 2015.

DH had dementia and PE had recently begun managing her affairs.

PE proposed using the EPA to advance 50% of the value of bequests made to DH's six grandchildren in her 2016 will, in order to provide the adult grandchildren early access to part of their inheritance.

The issues centered on whether the attorneys could make such gifts under the EPA despite lack of express gifting authority, the impact on DH and other beneficiaries, and consistency with the attorneys' fiduciary obligations towards DH.

The Tribunal declined to provide the requested direction, finding that such affirmation of the gifting proposal would conflict with legislative protective intent and fiduciary duties requiring conservation of the represented person's estate for their welfare.

The attorneys thus retained discretion over whether to proceed, with the gifts' substantive merits distinguished from procedural propriety concerns underlying the dismissal.

Giving Directions to a Donee under an Enduring Power of Attorney

Under section 109(2)(b) of the Guardianship and Administration Act 1990 (WA) (GA Act), the donee of an enduring power of attorney (EPA) may apply to the State Administrative Tribunal (the Tribunal) for directions regarding matters connected with the exercise of the power or the construction of its terms.

Jurisdiction to Give Directions

The Tribunal's jurisdiction to give directions to a donee under an EPA derives from section 109(2)(b) of the GA Act, which states that the donee "may apply to the State Administrative Tribunal...for directions as to matters connected with the exercise of the power or the construction of its terms."

This provision allows a donee to seek clarification and advice when unsure if a proposed course of action falls within the permissible scope of authority granted by the EPA.

For example, in KS [2008] WASAT 29 at [50], Barker J stated that a donee could apply for "directions about how [they] should act in particular circumstances" such as whether the EPA authorises the sale of the donor's property or guidance on how "a condition or restriction in the enduring power of attorney is to be interpreted." Thus, section 109(2)(b) empowers the Tribunal to provide authoritative advice to donees regarding the proper interpretation and limits of an EPA. However, as noted in the decision at [26], the Tribunal's role is supervisory rather than directive. Per KS at [50], the Tribunal "cannot order [the donee] to sell the donor's property" or make other decisions on their behalf. The donee retains ultimate responsibility for exercising their powers appropriately after receiving clarification from the Tribunal.

Protective Intent and Fiduciary Duties

When determining whether to provide directions under section 109(2)(b), the Tribunal must consider the overarching protective intent and purpose of the GA Act as per EM Heenan J in Re The Full Board of the Guardianship and Administration Board [2003] WASCA 268 at [43]-[44].

As quoted at [47] of the decision, the GA Act aims to guard against "unscrupulous or ill advised influence" that could "jeopardise the financial security or interests" of adults with impaired decision-making capacity. The Tribunal articulated concerns that gifting estate assets could contravene this protective purpose "for conserving the property and financial resources of the disabled person" to meet their needs (at [47], citing Re The Full Board at [44]). Thus, directions that sanction depletion of the represented person's estate merit close scrutiny.

Compounding this concern, donees also owe fiduciary duties to donors as their agents, imposing higher standards of loyalty and care than apply to ordinary persons (at [34]). These duties persist after the donor loses capacity (at [36]) given their increased reliance on the donee's integrity. As articulated in Tobin v Broadbent (1947) 75 CLR 378 at 401 (quoted at [37]), powers of attorney should not be interpreted as authorising self-dealing or use of property for the donee's benefit absent explicit permission.

While the GA Act does not prohibit gifting outright (at [39]), section 107(1)(a) mandates donees exercise their powers with "reasonable diligence to protect the interests of the donor." Directing donees to make gifts seemingly in tension with fiduciary obligations merits cautious consideration.

Traditional Powers and Administration Orders Distinguished

Unlike administrators appointed by the Tribunal, EPAs and donees are not subject to section 72(3)(a) of the GA Act, which prohibits gifts absent express authorisation (at [40]). Nonetheless, as articulated in DW and JM [2006] WASAT 366 at [40]-[41] and cited at [39] herein, guidance on appropriate gifting considerations for administrators remain instructive when advising donees.

These factors, set out in section 5.17 of A Guide to Enduring Powers of Attorney in Western Australia, include the donor-beneficiary relationship, gift purpose, estate size, donor needs, donor's presumed wishes if capacitated, and equal treatment of those with similar relationships to the donor (at [26]). While not binding, prudence suggests donees consider these factors.

By contrast, directions under section 74(1) of the GA Act require administrators to comply with Tribunal guidance regarding estate property and management. As noted at [43], section 74 is analogous to the court's powers under section 92(1) of the Trustees Act 1962 (WA) to provide binding directions to trustees. Arguably, the discretionary term "may" in section 109(2) contemplates non-binding guidance. This accords with KS's description of the GA Act as largely protective of incapacitated adults (at [46]).

Considerations in This Application

Turning to the specific circumstances herein, the donees relied principally on the donor's consent in seeking authorisation to advance partial inheritance payments. However, while expressing wishes when capacitated can indicate likely intent, as the decision notes at [55]-[56], the donor's incapacity prevents her from directing the donees.

Nor do statutory powers expand upon incapacity merely due to compliance with execution formalities; rather, only express EPA terms govern donees after donor incapacity per section 105 of the GA Act (see decision at [29]-[30]). As no gifting provision was included, the donees' powers remain constrained by their overarching duties to the donor rather than any presumption of intent.

Lastly, the decision considered at length (at [46]-[48]) whether the proposed gifts properly constitute a "matter connected with the exercise of the power" under section 109(2)(b) as they do not involve power interpretation questions archetypically brought under that provision. Reading subsection (3) in context, which addresses document production and revocation, suggests a supervisory rather than prescriptive jurisdiction. This also accords with the protective motivations noted above.

Conclusion and Reasoning

For these reasons, while the Tribunal accepted that the gifts were unlikely to jeopardise the donor's care (at [52]), were not self-dealing (at [53]), aligned with previous generosity toward beneficiaries (at [54]), and permissive precedent exists (at [39]), nonetheless substantive concerns persisted regarding fidelity to legislative protective intent and fiduciary responsibilities.

The decision concludes at [57] that formally providing the requested authorisation direction conflicted with the GA Act's overarching purpose of conserving resources for protected persons' welfare and security. Moreover, absent an unambiguous gifting power, doubt existed whether donees could priortise beneficiaries' interests without breaching their duty of loyalty to the donor per section 107(1)(a).

While the Tribunal determined the gifts would likely represent no substantive hardship or wrong, procedural propriety and institutional integrity disfavoured sanctioning a course of action in tension with statutory and common law duties. Instead, at [58] the Tribunal advised donees to carefully weigh their obligations to the donor when deciding whether to proceed, emphasising this assessment as their own fiduciary responsibility rather than an endorsement. Substantive merits were distinguished from procedural concerns.

The protective conservation of resources and property for represented persons, secured through both legislative frameworks and equitable oversight mechanisms, thus represent guiding priorities when determining whether to formally provide directions endorsing acts with any potential for abuse or disproportionate dissipation. Absent unambiguous authority, donees' duties of loyalty militate against affirmative Tribunal authorisation of proposed self-dealing or preferential distribution conflicting with the donor's privileged interests. While necessity might justify certain acts if clearly proven, imperatives of transparency and accountability warrant conservative exercise of judicial and statutory discretion.

Navigating Section 109 of the Guardianship and Administration Act: Orders for Records, Accounts and Audits

Introduction to the Facts

In OR [2024] WASAT 2, heard before Ms R Bunney at the State Administrative Tribunal of Western Australia, a dispute arose under the Guardianship and Administration Act 1990 (WA) (GA Act), particularly focusing on the interpretation and application of section 109. The case involved OR, the donor, and VR, the donee, engaged in a series of financial transactions under an enduring power of attorney (EPA). OR, while retaining the capacity to make decisions, alleged that VR conducted significant financial transactions without his consent or knowledge, which were deemed against his interests.

Legal Framework under the GA Act

The GA Act, particularly section 109, governs the conduct and obligations of donees of enduring powers of attorney. This case hinges on the interpretation of section 109(1), which stipulates conditions under which a person may seek orders from the Tribunal regarding the actions of a donee. Key issues include whether the transactions were made ‘in connection with the power’ and whether OR, as the donor, had a ‘proper interest’ in the matter.

Examination of Specific Transactions

The Tribunal scrutinized four significant transactions conducted by VR. These included the transfer of funds, changes in the control of a family trust, and alterations to the beneficiary status within the trust. The critical analysis focused on whether these actions were in the best interests of OR and complied with the fiduciary duties expected under the GA Act.

Tribunal’s Findings

1. Proper Interest and Transactions In Connection with the Power: The Tribunal found OR had a proper interest under s 109(1), as he was the donor affected by transactions he was unaware of (BFO & ORS and KPW [2014] WASAT 68). The First and Second Transactions were directly connected to the EPA, as VR utilized it to affect these transactions. The Third and Fourth Transactions, although more complex, were also linked to the power granted under the EPA.

2. Duty of a Donee: The Tribunal highlighted the fiduciary nature of the donor-donee relationship, underscoring the duty to act in the donor’s best interests and avoid conflicts of interest (Dal Pont, Powers of Attorney; Butterworths, Australian Legal Dictionary). The donee’s actions must adhere to the 'conflict rule' and the 'profit rule', ensuring no personal gain at the expense of the donor (DW and JM [2006] WASAT 366).

3. VR's Compliance with Duties: The Tribunal concluded that VR’s actions did not align with the duty of protecting the donor’s interests. The transactions conducted were found to be against OR’s interests, thus failing to comply with section 107(1)(a) of the GA Act. This finding was pivotal in considering the application of section 109(1).

Tribunal’s Discretion under Section 109(1)

Despite the above findings, the Tribunal chose not to exercise its discretion under s 109(1)(a) and (b) to require VR to file and audit accounts of her transactions. This decision was based on the fact that OR had eventually received all necessary information through the Family Court proceedings, thus rendering the specific remedy sought under the GA Act redundant (EW [2010] WASAT 91; PT [2020] WASAT 147). The Tribunal’s decision underscores the importance of the Tribunal’s role in supervising the conduct of donees, while also recognizing the limitations of its jurisdiction when parallel legal proceedings provide sufficient remedies.

Applicable law

Section 109 of the Guardianship and Administration Act 1990 (GA Act) allows a person with "proper interest" to apply to the State Administrative Tribunal (Tribunal) for orders regarding an enduring power of attorney (EPA). This includes requiring the attorney (donee) to provide records and accounts of dealings made under the EPA and requiring an audit of those records [s109(1)(a)-(b)].

The Tribunal has supervisory jurisdiction over EPAs to ensure attorneys fulfil their legal obligations, even if the donor has capacity [para 5]. Attorneys owe fiduciary obligations to donors as the relationship is agential and fiduciary in nature [para 9, 14].

Key duties are to:

• Exercise powers under the EPA with reasonable diligence to protect the donor's interests [s107(1)(a), para 15]. Failing this exposes the attorney to liability for loss [s107(1)(a)].

• Avoid conflicts of interest and act in the donor's best interests, not the attorney's own interests [para 14, 17, 91]. This includes not profiting from transactions without the donor's fully informed consent [para 11, 17].

• Keep accurate records and accounts of dealings under the EPA [s107(1)(b)].

Breach of these duties constitutes grounds for Tribunal scrutiny and intervention [para 13, 71-75]. However, mere suspicion of breach is insufficient [para 7, 8].

The Tribunal has power to order attorneys to file all records and accounts regarding EPA dealings [s109(1)(a), para 18] and can appoint an auditor [s109(1)(b)]. However, these orders only compel production of existing records rather than creation of new records [para 19]. Any further remedies for breaches must be pursued in other jurisdictions [para 19].

In determining whether to order production of records or an audit, the Tribunal will consider if:

• The applicant has "proper interest" in the matter [para 20-21]. This usually requires a genuine concern regarding an attorney's compliance with duties [para 14, 20].

• The dealings were "in connection with" the EPA [para 22-25]. Even indirect connections can enliven Tribunal scrutiny where earlier connected dealings enabled the later dealings [para 23-25].

• There are grounds for suspecting breach of duties under the EPA [para 7-8, 13, 71-75]. Suspicion alone is insufficient [para 8].

If such factors are present, the Tribunal has discretion whether or not to make orders under s109(1)(a)-(b) based on the circumstances [para 87-90].

Other remedies may also be available in other jurisdictions [para 19, 89].

Key cases cited as authority:

• EW [2010] WASAT 91 at [94], [101]: mere suspicion of breach insufficient for Tribunal intervention

• KS [2008] WASAT 29 at [26], [47]-[59]: Tribunal has supervisory role regarding EPAs even if donor has capacity

• PT [2020] WASAT 147 at [33]: mere suspicion insufficient

• SMM [2020] WASAT 85: Tribunal will scrutinise dealings suggesting breach of attorney duties

• DW and JM [2006] WASAT 366 at [5], [40]: attorney's key duty to avoid conflicts of interest

• BFO & ORS and KPW [2014] WASAT 68 at [28]: applicant must have proper interest

Key legislation:

• GA Act s107(1)(a)-(b): attorney duties

• GA Act s109(1)(a)-(b): Tribunal powers re: records, accounts and audits

Straightforward Applications, Convoluted Costs: Lessons on Service Out from ANZ v Defendant

The case of Australia and New Zealand Banking Group Ltd v Defendant [2023] WASC 428 concerned an application by ANZ for leave to serve a writ on a defendant outside of Australia. Justice Howard initially refused the application as ANZ had not included a draft writ, making it impossible to assess if the requirements for leave were met. After several further hearings and amended applications, Justice Howard granted leave, but expressed concern about the convoluted process for what should have been a straightforward application.

Justice Howard held that without a draft writ, the Court cannot assess if the plaintiff has shown its action falls within the required heads of jurisdiction under Order 10 Rule 1(1) of the Rules of the Supreme Court 1971 (WA) (paragraph 26).

His Honour emphasised that each cause of action must fall within the head of jurisdiction relied upon in the ex parte application (paragraphs 24, 25, 76 from Micon Mining and Construction Products GMBH & Co KG v MacMahon Mining Services Pty Ltd [2022] WASCA 56). Justice Howard also held the plaintiff must identify the precise rule under which leave is sought, and the proposed method of service (paragraph 22).

On costs, Justice Howard was concerned the defendant may be prejudiced by the plaintiff's failure to prosecute its application properly from the beginning (paragraphs 41, 67). His Honour considered it inappropriate for the actual costs of the convoluted process to be visited upon the defendant, whether by court order or contractually (paragraphs 68, 69). Justice Howard fixed the plaintiff's costs at $1,600 inclusive of filing fees, on condition the plaintiff provide an undertaking not to seek to recover more than this from the defendant (paragraphs 70, 71).

The case demonstrates courts may consider potential prejudice to defendants from a convoluted process when making costs orders. Applicants must prosecute such applications properly from the outset to avoid adverse costs consequences.

Establishing Publication of Online Material in Defamation Cases

Introduction

The decision of Poland v Fairfax Digital Australia & New Zealand Pty Ltd [2023] WASC 383 provides useful guidance on the principles applicable to establishing publication in defamation cases involving online content.

Facts

In Poland v Fairfax, the plaintiff Mr Poland sued the defendant Fairfax over comments posted by third parties on the defendant's Facebook page under links to two articles about the plaintiff.

The comments were posted in February 2019 but Mr Poland only commenced proceedings in September 2021. Due to the 1 year limitation period, Mr Poland was confined to suing for publication of the comments between 10 September 2020 and 10 September 2021.

The defendant applied to strike out the publication pleas on the basis that the facts pleaded could not establish publication in that period.

Tottle J dismissed the strike out application but raised the possibility of determining publication as a preliminary issue.

What is 'publication' in defamation?

The High Court has held that for online material, publication occurs at the place where the material is downloaded onto a person's computer in comprehensible form:

"In the case of material on the world wide web it is not available in comprehensible form until downloaded onto the computer of a person who has used a web browser to pull the material from the web server. It is where that person downloads the material that the damage to reputation may be done. Ordinarily then that will be the place where the tort of defamation is committed." (Dow Jones & Co Inc v Gutnick [2002] HCA 56 at [44] per Gleeson CJ, McHugh, Gummow and Hayne JJ)

Therefore, it is not sufficient merely to show that material was posted online and was available to be viewed.

There must be actual downloading and comprehension of the material.

No inference from mere availability online

An inference of publication will not be drawn solely from the fact that material was posted online and could have been viewed:

"Because of the vast number of internet sites, and the vast number of web pages accessible through those internet sites, in the absence of evidence it cannot be inferred that one or more persons has undertaken the steps required to identify and access any particular web page available through the internet merely from the fact that material has been posted on an internet site." (Sims v Jooste [No 2] [2016] WASCA 83 at [18] per Martin CJ).

Platform of facts can support inference

However, publication may be established by pleading and proving a platform of facts from which an inference of downloading and comprehension can properly be drawn:

"Although publication will not be inferred from the mere fact that material complained of has been posted on a website, an inference that the material has been downloaded by someone might be drawn from a combination of facts such as the number of 'hits' on the relevant website and the period of time over which the material was posted on the internet." (Lorbek v King [2022] VSC 218 at [46] per McDonald J)

"This has been recognised in the cases to which I will now refer. In England, it has been consistently held that a plaintiff claiming to have been defamed in material posted on the internet cannot rely upon an inference of publication analogous to that customarily drawn in cases involving publication via the mass media of print or broadcast in order to establish that there has been substantial publication within the jurisdiction. Rather, the plaintiff must plead and prove that the material of which complaint is made has been accessed and downloaded. The English cases recognise however that publication, in the legal sense, may be established by pleading and proving a platform of facts from which an inference of download can properly be drawn." (Sims v Jooste [No 2] [2016] WASCA 83 at [18] per Martin CJ).

Examples of platform of facts

In Stoltenberg v Bolton [2020] NSWCA 45, the platform of facts comprised:

• Evidence of number of views/hits on website and Facebook page where material posted

• Period of time material remained available

• Facebook posts by defendant about wide readership

• Witnesses speaking of reading material

This is as per:

"The 'platform of facts' from which his Honour drew an inference that the five matters complained of were downloaded by somebody have been referred to above at [33]. Taken together, the admissions by Mr Stoltenberg as to the number of 'hits' on the Narri Leaks site - 9,800 in the first week and 21,000 in the first 10 days, that the estimated number of readers in the period June 2015 to January 2016 depending on the story varied between 5,000 and up to 35,000, that Narri Leaks was being watched all over the State, that $400 was spent 'boosting' posts all over the State for all of the second week of publication in June 2015, that on 2 July 2015 719 'locals' out of a 'total reach' of 2,414 hit the 'Like' button; the inferences drawn from the Facebook records as to 'reach' of the posts; and the evidence of Mrs Bolton and Mr Webb of readership of the Narri Leaks website by persons outside the Narribri Shire, amply support his Honour's findings that the matters complained of were published by Mr Stoltenberg." (Stoltenberg v Bolton at [113] per Gleeson JA)

In Lorbek v King [2022] VSC 218 at [46], McDonald J gave the example of screenshots demonstrating 'likes' or responses to material as potentially supporting an inference of publication.

Policy behind requiring evidence of actual downloading

The requirement to prove downloading, as opposed to mere availability online, reflects the policy behind the law of defamation - that damage to reputation occurs at the place where material is read in comprehensible form:

“In defamation, the same considerations that require rejection of locating the tort by reference only to the publisher’s conduct, lead to the conclusion that, ordinarily, defamation is to be located at the place where the damage to reputation occurs. Ordinarily that will be where the material which is alleged to be defamatory is available in comprehensible form assuming, of course, that the person defamed has in that place a reputation which is thereby damaged." (Dow Jones & Co Inc v Gutnick [2002] HCA 56 at [44] per Gleeson CJ, McHugh, Gummow and Hayne JJ)

Need to plead where publication occurred

A plaintiff must plead sufficient facts to establish not only that publication occurred, but also where it occurred. This is because choice of law rules require the substantive law to be applied based on where publication took place:

"At the moment it is clear that the plaintiff is simply unable to indicate who, if anyone, downloaded those publications and if they have there is then no specificity as to which jurisdiction they have been downloaded in. That level of detail is vital both in terms of determining the elements of the cause of action, but also in fairness to the defendant by way of indicating what, if any, defences might be available depending upon the jurisdiction in which it can ultimately be proved such publication took place." (Newman v Whittington [2022] NSWSC 249 at [19] per Sackar J)

Application to Poland v Fairfax

In Poland v Fairfax, Tottle J considered that while the plaintiff's pleading may have been sufficient to avoid strike out, pleading publication in 'Australia' was too wide and should be confined to Western Australia.

Some doubts were expressed about the strength of the plaintiff's plea:

"In my view there is force in the defendant's contentions, however, the issue of publication is a factual one. The defendant's contentions about the way in which elements of its online presence work together and the manner in which members of the public engage with its Facebook page rely, to a certain extent at least, on assertion." (Poland v Fairfax at [25] per Tottle J)

However, Tottle J was reluctant to strike out the pleading entirely as being reasonably arguable.

Conclusion

The case law establishes that to prove publication of online material, a plaintiff must show the material was downloaded and comprehended by a third party. Mere availability online is not enough. However, a platform of facts may allow the court to infer downloading and comprehension occurred. Care must be taken to confine the place of publication appropriately. The facts in each case will determine whether an inference of publication is available.

Discretion to Set Aside Irregular Default Judgments

Setting Aside Irregular Default Judgments

This blog examines the principles applicable to setting aside a default judgment where the entry of default judgment was irregular.

It discusses the relevant legislative provisions and procedural rules, and cites the recent decision in Cicirello v Carter [2023] WADC 130 (Cicirello) as an illustrative example.

The Facts

The facts in Cicirello, as outlined at [4]-[30], were that the plaintiffs commenced an action against the defendant builder seeking damages for overcharging under a 'costs plus' building contract.

The defendant sought to enter an appearance after the time for doing so had expired under the rules, by emailing it to the court. However, this went to the court's 'junk mail' and was not entered on the court file.

Default judgment was later entered against the defendant. Some months later, after the plaintiffs had taken steps to enforce the judgment, it came to light that the defendant had attempted to enter an appearance.

The court then brought the matter on of its own motion to consider whether the default judgment had been irregularly entered and if so, whether it should be set aside.

Irregularity in Entry of Default Judgment

Pursuant to Order 2 rule 1 of the Rules of the Supreme Court 1971 (WA), any failure to comply with court rules is an irregularity: Cicirello at [32]. Relevantly, under Order 13 rule 1(2), default judgment may only be entered if the defendant 'does not enter an appearance within the time limited for appearing'.

In Cicirello, the defendant had in fact sent an appearance to the court by email before default judgment was entered, so the entry of default judgment was irregular: see [35]-[44]. The rules enable a defendant to enter an appearance after the specified time, unless judgment has already been entered: Order 12 rule 5, cited at [41] of Cicirello.

Setting Aside Irregular Judgment

An irregular judgment is not a nullity, but may be varied or set aside pursuant to Order 2 rule 1, which gives the court a broad discretion to make appropriate orders: Cicirello at [45]. The defendant or plaintiff may apply to set aside an irregular judgment within a reasonable time of discovering the irregularity, under Order 2 rule 2: Cicirello at 46.

Additionally, for default judgments specifically, Order 13 rule 12 requires the judgment to notify the defendant's right to apply to set it aside, while Order 13 rule 14 empowers the court to set aside or vary a default judgment at its discretion: Cicirello at [47].

In Cicirello, although the defendant had not made a formal application to set aside as contemplated by Order 2 rule 2, the court considered it had inherent powers to deal with the irregularity on its own motion, to regulate its processes and prevent abuse: see [53].

Exercise of Discretion

The discretion to set aside an irregular default judgment is expressed in the broadest terms and not limited by any qualifiers: see Cicirello at [55] citing Hall v Hall [2007] WASC 198 at [63].

However, while irregular judgments will usually be set aside, not every irregularity will justify this: Cicirello at [55] citing ACN 076 676 438 Pty Ltd (in liq) v A-Comms Teledata Pty Ltd [2000] WASC 214 at [17]-[19].

The discretion must be exercised to 'do justice between the parties, having regard to the particular circumstances': Cicirello at [55] citing Hall v Hall at [63]. Relevant factors include the length of any delay in applying to set aside the judgment, and the defendant's explanation: Cicirello at [56] citing Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382 at [11].

In Cicirello, the court refused to set aside the irregular default judgment. The defendant had not explained his failure to engage with the court's orders affording him opportunities to apply to set aside the default judgment and advance his position: see [57]-[59]. He also failed to identify any substantive defence he wished to run if the judgment was set aside: [59(d)].

Meanwhile, the plaintiffs had taken steps in reliance on the judgment, following procedures under the Civil Judgments Enforcement Act 2004 (WA) to enforce it: [59(f)].

In line with Starrs v Retravision (WA) Ltd [2012] WASCA 67 and Scott v Baring [2019] WASC 278, the court determined it was not in interests of justice to set aside the judgment given the defendant's disengagement, nor to further delay resolving the matter: Cicirello at [59]-[61]. As stated in Scott at [51], a defendant 'must bear the consequences' of failing to participate in the proceedings: Cicirello at [62].

Conclusion

In summary, while irregular default judgments will ordinarily be set aside, the court retains a discretion to refuse this if the interests of justice do not require it. Defendants who fail to engage with opportunities to advance their position may not have irregular judgments set aside to their benefit, especially if the plaintiff has acted in reliance on the judgment. When exercising its discretion, the court will look at the particular circumstances holistically. Relevant considerations include delay in applying, the defendant's explanation, whether the plaintiff has taken steps in reliance which may cause prejudice if the judgment is set aside, and any indication of the defendant's substantive case.