Allen v Wilson (No 2)
[2023] ACTSC 102
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | Allen v Wilson (No 2) |
| Citation: | [2023] ACTSC 102 |
| Hearing Date: | On the papers |
| Decision Date: | 5 May 2023 |
| Before: | McWilliam J |
| Decision: | Order 7 of the orders made on 27 January 2023 is varied to read: |
| (7) The defendants are to pay 75 percent of the plaintiffs’ costs |
of the proceedings.
Catchwords: | COSTS – where costs follow the event – where plaintiffs enjoyed mixed success on multiple causes of action – where part of the plaintiffs’ success involved a grant of equitable relief that was not |
| pleaded – proportionate costs awarded | |
| Legislation Cited: | Court Procedures Rules 2006 (ACT) r 1721 |
| Cases Cited: | Allen v Wilson [2023] ACTSC 10 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Clarkson Williams Partners Pty Ltd v Vaughan (No 2) [2016] ACTCA 8 Cooper v Singh [2017] ACTCA 21 |
| EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty | |
| Ltd [2011] FCAFC 92 GJ v AS (No 4) [2017] ACTCA 7 Latoudis v Casey (1990) 170 CLR 534 Mareva Building Consultants v Zevon (No 2) [2012] ACTSC 24 McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306 O’Neil v Williams (costs) [2007] NSWSC 51 | |
| Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Priestley v Priestley (No 2) [2016] NSWSC 1259 Reid, Hewitt & Co v Joseph [1918] AC 717 Summers v Repatriation Commission (No 2) [2015] FCAFC 64 | |
| Parties: | John Thomas Allen (First Plaintiff) |
| Allegro Financial Pty Ltd (Second Plaintiff) Allegro Beach Pty Ltd (Third Plaintiff) | |
| Kevin Wilson (First Defendant) | |
| Justin Wilson (Second Defendant) | |
| Burra Unity Pty Ltd (Third Defendant) | |
| Representation: | Counsel |
| WDB Buckland (Defendants) | |
| Solicitors | |
| HWL Ebsworth (Plaintiffs) | |
| Gabbedy Milson Lee (Defendants) | |
| File Number: | SC 459 of 2018 |
| McWilliam J: |
1. The parties to this proceeding were involved in a disputed joint venture which had failed,
a disputed loan agreement, and a claimed right of contribution under a guarantee. On
27 January 2023, judgment was delivered: Allen v Wilson [2023] ACTSC 10. The Court
found, in favour of the plaintiffs, that there was a joint venture which resulted in an
equitable entitlement to adjustment on its failure, that there was an equitable entitlement
to contribution by co-guarantors under a guarantee and that there was also an
entitlement to be paid moneys under a separate loan agreement, although in an amount
significantly less than what was claimed.
2. The parties are now disputing the question of costs. The plaintiffs seek an order that the
defendants pay their costs on the ordinary basis. The defendants seek an order that
they pay 40 percent of the plaintiffs’ costs of the proceedings.
3. For reasons that follow, I have decided the appropriate order is that the defendants pay
75 percent of the plaintiffs’ costs of the proceedings.
Applicable principles
4. The following principles are those that have some significance for the arguments made
by the parties. No party sought indemnity costs or relied on any offer of compromise.
The parties agreed that because of the equitable element of part of the relief sought, the
proceeding was appropriately one brought in the Supreme Court. The dispute was
primarily around whether the plaintiff should receive all or only a portion of their costs.
5. First, costs are in the discretion of the Court: r 1721(1) of the Court Procedures Rules
2006 (ACT). The discretion is a very wide one, though it must be exercised judicially, in
accordance with established principle and the statutory context: Oshlack v Richmond
River Council [1998] HCA 11; 193 CLR 72 (Oshlack) at [35], [65].
6. Second, the fundamental purpose of the discretion is to compensate the successful
party, not to punish the unsuccessful party: EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9]. A party who is substantially successful is
entitled to recover its costs from the opposing party because costs are compensatory –
that is, it is just and reasonable that the party who has caused the other party to incur
costs should reimburse that party for the liability incurred: Oshlack at [35]; Latoudis v
Casey (1990) 170 CLR 534 at 543 per Mason CJ, at 562-563 per Toohey J, at 566-567
per McHugh J (Latoudis).
7. Third, in the absence of special features warranting a different order, costs ordinarily
follow the event: Oshlack at [67]; GJ v AS (No 4) [2017] ACTCA 7 at [25]-[27].
8. In Priestley v Priestley (No 2) [2016] NSWSC 1259 at [10]-[49], White J (as his Honour
then was) gave detailed consideration as to what the phrase “costs follow the event”
means. His Honour drew attention to the history of the law and practice in relation to
costs, including referring at [22]-[23] to Reid, Hewitt & Co v Joseph [1918] AC 717 and
extracting a passage from the judgment of Lord Finlay LC at 724-5:
The expression “costs shall follow the event” had a definite meaning and imported that the
costs of the several issues went to the party who succeeded upon them respectively, while the general costs went to him who on the whole succeeded in the action. If the proviso ... were read as providing that the costs were to follow the event in the sense of giving the costs of all the issues to the party who had recovered something in the action while he had failed upon most of the issues, it would have introduced a startling novelty while its object was to keep up the old practice as to costs. Such an alteration would, moreover, in its working have been inequitable. ... It is not to the purpose to argue that the injustice which would arise under the order so construed might be corrected by the exercise of the special power to order otherwise for good cause conferred upon the judge of the Court.
9. White J went on to say at [32]:
I think the background to the expression “costs follow the event” is material to an
understanding of when a party should be held to be the successful party in the proceedings, accepting that the event might now be considered, at least primarily, as relating to the determination of the proceedings as a whole.
10. Fourth, it may be appropriate to depart from the usual order where a successful party
has propounded a substantially exaggerated claim, succeeds only to a limited extent,
and the exaggeration has resulted in the incurring of additional costs: O’Neil v Williams
(costs) [2007] NSWSC 51 at [5] per Brereton J, as his Honour then was, cited
in Summers v Repatriation Commission (No 2) [2015] FCAFC 64 at [30] (among others).
11. Here, there were multiple causes of action and therefore multiple issues in the
proceedings. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik),
the Court of Appeal (Beazley, Ipp and Basten JJA) dealt with the principles guiding such
circumstances at [38] (emphasis added):
The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this court in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows:
• Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on
which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July
1994, unreported).• In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which
that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.
• If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • A separable issue can relate to ‘any disputed question of fact or law’ before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].
• Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.
12. Ultimately, the question is not what is the appropriate starting point, but what should be
regarded as a fair and just outcome in ordering costs: McLaughlin v Dungowan Manly
Pty Ltd [2010] NSWSC 306 per Ward J (as the President then was) at [22] and [24], cited
in Priestley at [51]. Statements in this Court are to similar effect. In Clarkson Williams
Partners Pty Ltd v Vaughan (No 2) [2016] ACTCA 8, the Court of Appeal stated (at [12])
that ultimately, the Court is required to determine the appropriate order in the interests
of justice.
13. Thus, fairness dictates how the discretion as to costs should be exercised. If an issue-
by-issue approach produces a result that is fairer than giving the successful party all of his or her costs notwithstanding his or her failure on particular issues, then the issue-by-
issue approach should be adopted: Bowen Investments v Tabcorp Holdings (No 2)
[2008] FCAFC 107 at [5].
The arguments of the parties
14. The defendants argued that the plaintiffs had very mixed success and that as a result, it
was appropriate that the plaintiffs not receive the whole of their costs of the proceedings.
The defendants pointed to the two claims advanced at trial, being the claim for
contribution and a claim under a written loan agreement. The plaintiff denied the
existence of a joint venture (which the defendant then had to prove) and pleaded no
alternative relief in relation to monies advanced in the event that such a venture was
found to exist.
15. The defendants accepted that the plaintiffs would be entitled to their full costs on the
ordinary basis in respect of the claim for contribution in equity under the guarantee.
However, they argued that in the claim under the written loan agreement, the plaintiffs
failed in substance, obtaining an order for the payment of $2,354 under the agreement,
in circumstances where $265,000 had been sought. That equates to a nominal sum.
16. On a wholistic approach, the defendants argued the plaintiffs had success on one cause
of action but failed in substance on the other. On that premise, the defendant then
submitted that the result would be that the defendants were liable to pay 50 percent of
the plaintiffs’ costs, relying on a similar approach taken by Katzmann J in Mareva Building
Consultants v Zevon (No 2) [2012] ACTSC 24 (Mareva). To the extent that equitable
compensation was awarded, that success was not attributable to any submissions or
assistance given by the plaintiffs because it did not plead or argue the basis for that
success. The defendants therefore argued that provided for a further reduction in
apportionment of 10 percent. Through the lens that the plaintiffs were successful on one
claim but in effect, unsuccessful on the other, the end result for which the defendants
contended was a 40 percent apportionment.
17. The plaintiffs argued that any order for apportionment would not be an order that reflects
the fair and just result, citing Cooper v Singh [2017] ACTCA 21 at [14]. They accepted
that a departure from the general rule may be appropriate where a litigant succeeded
upon only a portion of the claim but emphasised by reference to various authorities that
the totality of the principle included the proposition that the circumstances must make it
reasonable to bear the expense of litigating the portion upon which the litigant failed.
Merely because a plaintiff succeeded only in relation to part of its claims, or recovered less (even significant less) than what was claimed, does not of itself justify a departure
from the ordinary rule that costs follow the event.
The plaintiffs took issue with the defendants’ attempt to characterise the success of the
plaintiffs on the claim under the loan agreement as a failure and then to use that failure
to argue that there were two causes of action, one which failed and therefore the plaintiffs
should only receive 50 percent of their costs in line with Mareva. The plaintiffs properly
drew attention to the other features that fed into the Court’s discretion to award 50
percent in that case, including the estimated hearing time and the fact that much of the
hearing was spent on proving the cause of action on which the plaintiff failed, which
caused unnecessary expense.
19. The plaintiffs further pointed to the defence pleaded, which included an allegation of a
joint venture raised by the defendants in answer to the claim for contribution under the
guarantee. The plaintiffs argued this was important, because this was a case where the
causes of action overlapped in fact. The issues were inseparable.
20. What I understood from that submission was that it was too simplistic to
compartmentalise the issues in the proceedings, find that the defendants were
successful in proving the joint venture and then deprive the plaintiffs of a portion of their
costs. The issue was an inseparable part of those the Court was already called upon to
determine.
21. The plaintiffs also took issue with the idea that their recovery under the agreement was
“nominal”. The plaintiffs said that the fact that what was recovered was significantly less
than what was claimed does not equate to a nominal success. This is not a case where
the plaintiffs received an award of damages in name only, or where it may be said that
the plaintiffs did not succeed on any issue. The circumstances here do not make it
reasonable to bear the expense of litigating the portion upon which they failed.
The approach to be taken in this case
22. All of this detailed argument between the parties – dissecting issues and pleadings, and
attempts to reflect success or failure on each issue in a mathematical percentage –
indicate that this is not a case where an issue-by-issue approach to the exercise of the
discretion is appropriate.
23. The outcome of the case is that the plaintiffs collectively were found to be entitled to an
amount totalling $138,129.52. That is not nominal success. The plaintiffs did have mixed
success on the issues and the plaintiffs did fail quite significantly to recover as much as
the amount they had claimed by reference to the cause of action solely directed to the
loan agreement. But overall, they were successful, and they should have their costs.
24. Fairness, however, dictates that some account be taken of one of the key matters
disputed in the proceeding. Although not separable, the existence or otherwise of the
joint venture between the parties was a dominant issue at trial. Further, part of the
plaintiffs’ success was due to an equitable adjustment consequent upon the joint venture
being established, which I accept the plaintiffs did not really address. The plaintiffs also
only succeeded on the full value of their claim for contribution under the guarantee after
a late breaking amendment to name the correct parties. Because costs are
compensatory, those circumstances mean that it would not be a fair and just outcome
for the defendants to compensate the plaintiffs for the entirety of their costs. In the totality
of the case, a reduction of 25 percent is appropriate.
Conclusion
25. Order 7 of the orders made on 27 January 2023 is varied to read:
(7) The defendants are to pay 75 percent of the plaintiffs’ costs of the proceedings.
I certify that the preceding twenty-five [25] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice McWilliam.
Associate:
Date: 5 May 2023
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