Andrews v Kocalidis (No. 3)

[2010] VCC 1801

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL

GENERAL DIVISION

Case No. CI-08-05458

JOHN ANDREWS	Plaintiff
v
ANDREW KOCALIDIS (aka KAY)	Defendant
and
ANDREW KOCALIDIS (aka KAY)	Plaintiff by Counterclaim
v
JOHN ANDREWS	Defendant by Counterclaim

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	2 December 2010
DATE OF JUDGMENT:	15 December 2010
CASE MAY BE CITED AS:	Andrews v Kocalidis (No. 3)
MEDIUM NEUTRAL CITATION:	[2010] VCC 1801

REASONS FOR JUDGMENT

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Catchwords: CONTRACT – joint venture – costs – effect of amendments allowed to the Statement of Claim – parties failing on a number of issues – plaintiff entitled to part of costs – interest on judgment sum – whether an order adjusting property interests – additional expenses incurred by registered proprietor since close of evidence: Supreme Court Act 1958, s.60.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R L Moore	McNab, McNab & Starke
For the Defendant	Mr J J Isles	George M Livaditis
HIS HONOUR:

1          There remains for decision in this proceeding the question of costs and interest, together with some additional matters raised by Counsel for Mr Kay on 2 December 2010.

Submissions as to Costs

2          Mr Andrew’s Counsel submitted that costs should follow the event and that his client had to bring the proceedings to obtain the judgment that he did. He submitted that he had always claimed that a joint venture existed. The hearing time related to his client’s claim had been brief, only taking a day-and- a-half. After the amendment to the Statement of Claim allowed on 11 September 2009, which introduced a claim for restitutionary relief, he pleaded no new facts, and no extra time was taken up in his case.

3          So far as Mr Kay’s counterclaim was concerned, Mr Andrews submitted that he had conceded on the first day of the trial that the sum of $15,000 was owing and that Mr Kay had failed on all other aspects of the counterclaim, so that costs should follow the event in respect of it.

4          Mr Andrews submitted that the fact that he had only received a comparatively small share of the equity was not determinative. The bulk of the trial was taken up by Mr Kay’s case. He submitted that the costs of the further 3-day hearing in October should follow the event.

5          Mr Kay submitted that the cause of action on which Mr Andrews had originally sued, namely breach of contract, had failed and that therefore the costs of the first seven days of the trial, prior to leave being granted to amend the Statement of Claim, should be awarded against him. Without the amendment, Mr Andrews’ claim would have failed.

6          Counsel for Mr Kay referred to various authorities in support of the proposition that the conduct in the litigation of a party who is ultimately successful, may disentitle the party to costs, or justify the award of some costs against that party.[1] He submitted that Mr Andrews should pay Mr Kay’s costs, or only recover its costs after the date of his amendment, or that no costs should be awarded.

[1]             Verna Trading Pty Ltd v New India Assurance Co. Ltd [1991] 1 VR 129 and A Team Diamond Headquarters Pty Ltd v Main Road Property Group Pty Ltd [2009] VSCA 208 at paragraph [64]; Re Locktronic Systems Pty Ltd (in Liq) (recs apptd) (No 2) [2009] VSC 523 at paragraphs [37]-[42]; Lollis v Loulatzis (No. 2) [2008] VSC 35

7          Mr Kay also submitted that the conduct of Mr Andrews in proceeding only with the contract claim for the first seven days of the trial misled him as to the risk he faced in the litigation. It also prevented him making an effective offer of compromise after the amendment to the Statement of Claim. By that time he had incurred seven days’ costs in the running of the trial and taken time with cross-examination as to the terms of the contract between the parties. These matters would not have been relevant had the claim only related to the claims for restitution.

Conclusion on Costs Issue

8          Mr Andrews is entitled to some part of his costs of the proceeding. I take into account the significance of the substantial amendment made after day six of the trial and the effect that it had on the proceeding generally and the utility of the evidence led before that amendment. I also take into account the failure of Mr Kay on many of the issues raised in the counterclaim.

9          An appropriate outcome is to make a total costs order in respect of all issues raised. Mr Andrews did have to bring proceedings to Court to obtain a judgment. It is true, however, that the amendment significantly affected the utility of earlier evidence called and the general conduct of the trial.

10        One costs order should be made in respect of the claim and the counterclaim because, in all but the claim for the $15,000, they are interwoven[2]. There were a number of defences raised, which were also relied on as part of the counterclaim, including claims under the Fair Trading Act 1999, breach of fiduciary duties and claims that Mr Andrews had repudiated the contract. These claims failed. The claim for the $15,000 occupied little time. The order I make is therefore intended to cover whatever additional costs are attributable to the counterclaim. If I had been awarding costs in respect of the counterclaim, I would not have accepted Mr Kay’s submission that I should only allow scale costs, as there were significant issues raised by it although they were interwoven with the defences raised. However, I have decided that this is a case where one costs order should be made.

[2]             See Williams Civil Procedure Victoria Vol 1 pp 2703- 2704

11        Mr Andrews is entitled to 50 per cent of the costs of the proceeding, on a party-party basis, to be taxed on Scale D in default of agreement. This is a substantial reduction in costs. I have reached this conclusion taking into account the substantial time occupied in the trial before the amendment to the Statement of Claim occurred and the fact that Mr Andrews succeeded in recovering a comparatively small part of the net equity in the property. I also have taken into account that Mr Andrews failed on some issues, including the Canterbury Trust argument and claims made under the Fair Trading Act 1999. I have taken into account that Mr Kay succeeded on his counterclaim for $15,000, but Mr Andrews conceded that claim on the first day of trial and that issue thereafter occupied very little additional time.

12        I accept that the amendment of the statement of claim may have caused forensic disadvantage to Mr Kay. However, many of the arguments that his counsel foreshadowed in the first seven days of the trial were still put in final submissions and therefore were not wasted, e.g. the argument that no contract in the nature of a joint venture had been made or, alternatively, the uncertainty of contract argument.

13        I propose to certify for Counsels’ fees in the sum of $2,750 per day with three days’ preparation. I consider that the costs of the three days of the hearing in October should be part of the general costs awarded to Mr Andrews.

Interest

14 I do not consider that any interest should be added to the sum awarded to Mr Andrews. I do not consider that s.60 of the Supreme Court Act applies or, if it does, I consider there is good cause to the contrary justifying a decision not to award interest. Mr Andrews did not sue for a debt owing in respect of his contributions in the sum of $24,473.31for the joint venture, although I have decided that he is entitled to repayment of it. The effect of the Court of Appeal decision in Giller v Procopets (No 2)[3] is that by ordering that Mr Andrews receive an amount representing his share in the net equity in the property, I have not made an order by which Mr Andrews has recovered a “debt or sum certain” within s.58(1) of the Supreme Court Act or “a debt or damages” within s.60(1).

[3] (2009) 24 VR 1 at p.125 -126

15 In any event, I have determined the extent of Mr Andrews’ entitlement based on the present value of the property. That circumstance provides good cause to the contrary, within the meaning of s.58(1) and s.60(1) of the Supreme Court Act.[4]

[4]             Peet Ltd v Richmond (No. 2) [2009] VSC 585

Additional Issues Raised by Counsel for Mr Kay

16        Counsel for Mr Kay submitted that I should include in the judgment the costs of selling the property for the price of $1,100,000. Costs of agent’s fees and advertising would amount to $42,350 which, so it was submitted, I should deduct from the amount available to be distributed to the parties. I do not consider that I should follow that course. I did not order that the property be sold. It is for Mr Kay to determine whether or not he wishes to sell or hold the property. The joint venture has ended.

17        Mr Kay also submitted that I should include in the capital contributions brought into account before the net equity in the property is determined, interest payments made in October and November and a water bill for the property. In addition, it was argued that I should take into account the costs of complying with Notices to Comply issued by the City of Whitehorse on 21 October 2010 for a failure to remove existing debris and grass from the property. Further, Mr Kay argued that at least 60 days’ interest, that he would be required to pay on loans referrable to the property as at 30 December 2010 and 30 January 2011, should be allowed.

18        I set out in my Reasons for Judgment of 24 November 2010,[5] the amounts of contributions by the parties, including interest that I would allow in determining the net equity in the property available for distribution. I included in my Judgment the orders that I proposed to make and provided the parties with the opportunity to check the arithmetical calculations. I formulated the orders that I set out in the judgment based of the evidence presented to me in the October hearing days. My Judgment, although given in November, reflected my conclusions, including on the value of the property, on the evidence led in October. If I revisited those figures, I may have to allow further evidence on any change in the value of the property, because of market alterations, since October. There was no concession made by Mr Andrews about these additional payments claimed by Mr Kay, so I would have required evidence about them. I do not consider that that should be permitted at this stage of protracted litigation.

[5]             Andrews v Kocalidis (No. 2) [2011] VCC 1616

19        Even if it had been appropriate to consider further submissions about the parties’ contributions I would not have taken into account the costs associated with the Notice to Comply, as Mr Kay is the registered proprietor of the property and therefore had authority to maintain it. I also would not have taken into account the interest payments due in December and January as I will make final orders this day that enable Mr Kay within the period of 60 days to make the required payment to extinguish Mr Andrews’ interest in the property. The result of my Judgment is that Mr Kay is entitled to retain the property and is liable for the outstanding debts, subject to paying the required sum to Mr Andrews.

Offer of Compromise

20        On 21 October 2009, Mr Kay made an offer of compromise, which involved agreeing to set aside the costs order made on 11 September 2009, when leave was given to Mr Andrews to amend his Statement of Claim. The costs so ordered against Mr Andrews, although not taxed, were said to amount to $6,136.33. Mr Kay argued that Mr Andrews did not consider the genuine offer to settle the proceeding and should pay the costs after the offer on an indemnity basis. I do not accept that submission. Mr Andrews has obtained a judgment more favourable than that offer of compromise.

Conclusion

21        I therefore will make orders to give effect to the following:

(1) The defendant pay the plaintiff the sum of $94,293.51 by 14 February
2011.

(2) The plaintiff pay the defendant the sum of $15,000 plus interest of

$8,468.04.

(3) The defendant pay 50 per cent of the plaintiff’s costs of the proceeding to
be taxed on Scale D in default of agreement.

22        I certify for plaintiff’s Counsel’s brief fee in the sum of $2,750 for each day of trial with the exception of 11 September 2009, which is the subject of a separate Court Order, and 11 October 2009. I consider that each party should bear his own costs of 11 October 2009. The days of the trial to which this certificate relates are 19-21 and 24-25 August, 1-4 and 7-8 December 2009 and 11, 13 and 15 October 2010.

23        I certify for plaintiff’s Counsel’s brief fee to appear on 2 December 2010 in the sum of $1,350.

24        I certify for plaintiff’s Counsel’s brief fee to attend to hear judgment on 4 August and 24 November 2010 on both days in the sum of $600.

25        I certify for plaintiff’s Counsel’s fees for preparation for three days at the rate of $2,750 per day.

26        I certify for transcript and the costs of the Plaintiff’s Court Book, one copy at Scale and any further necessary copies at a commercial rate to be determined in default of agreement by the Costs Court.

27        I reserve liberty to apply in the event that the amount ordered to be paid by Mr Kay to Mr Andrews is not paid by 14 February 2011. That liberty is to enable Mr Andrews to apply for the sale of the property if the sum awarded to him is not paid.

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