Ballantyne Suites Pty Ltd v Ballantyne Chambers Pty Ltd (In liq)
[2014] VSCA 223
•15 September 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2014 0043 | |
| BALLANTYNE SUITES PTY LTD | Applicants |
| v | |
| BALLANTYNE CHAMBERS PTY LTD | Respondents |
JUDGES: | ASHLEY, PRIEST and SANTAMARIA JJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 22 July 2014 | |
DATE OF JUDGMENT: | 15 September 2014 | |
MEDIUM NEUTRAL CITATION: | [2014] VSCA 223 | |
JUDGMENT APPEALED FROM: | [2014] VSC 147 (Hargrave J) | |
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PRACTICE AND PROCEDURE – COSTS – Non-party costs order – Costs order made against directors of insolvent plaintiff corporation – Application for leave to appeal costs order against non-party – House v The King (1936) 55 CLR 499 – No error of principle – Application refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr M NC Harvey with Ms C F Gobbo | Piper Alderman |
| For the Respondents | Mr T P Mitchell | Foster Nicholson Jones |
ASHLEY JA:
PRIEST JA:
SANTAMARIA JA:
Introduction
On 9 February 2005, Ballantyne Property Suite 1 Unit Trust and Ballantyne Property Suite 2 Unit Trust (‘the Unit Trusts’) were established. Mr Henry Mischel (‘Mr Mischel’) was the unit holder of the units in both of the Unit Trusts. Ballantyne Chambers Pty Ltd (‘Chambers‘) was appointed trustee. As trustee of both of the Unit Trusts, Chambers purchased properties in Ballantyne Street, South Melbourne on 17 February 2005.
In the proceeding below, the plaintiff contended that, on 6 June 2006, Mr Mischel had transferred the units in the Unit Trusts to the trustees of two discretionary trusts — Kelly Mischel Discretionary Trust[1] and Bradley Mischel Discretionary Trust[2] — which he had, on that day, established for the benefit of his children.
[1]Commerce Consulting Group Pty Ltd was appointed trustee which was owned and controlled by Mr Mischel. In August 2011, the corporate trustee was removed and replaced by Bradley Mischel as trustee. In October 2011, Bradley Mischel was removed as trustee and replaced by Babinda Pty Ltd, which was owned and controlled by Kelly Mischel.
[2]Mischel Investments Pty Ltd, was appointed as the trustee which was owned and controlled by Mr Mischel. In August 2011, the corporate trustee was removed and replaced by Kelly Mischel as trustee. In October 2011, Kelly Mischel was removed as trustee and replaced by Glenapp Pty Ltd, which was controlled and owned by Bradley Mischel.
Mr Mischel was declared a bankrupt on 25 October 2011.
On 31 October 2011, by deed dated 2 August 2011, Ballantyne Suites Pty Ltd (‘Ballantyne Suites’) purported to replace Chambers as trustee of the Unit Trusts.
On 2 February 2012, Chambers was placed in liquidation. Ballantyne Suites then requested the liquidator of Chambers to execute a transfer of the properties held by it on behalf of each of the Unit Trusts to it, as the new trustee of the Unit Trusts.
The liquidator refused on the principal ground that he was not satisfied that transfers purportedly made of the units in the Unit Trusts on 6 June 2006 to the trustees of two discretionary trusts, that Mr Mischel deposed to having established for his children on that same day, were valid transfers.
On 14 December 2012, Ballantyne Suites commenced a proceeding against Chambers and its liquidator. It contended that Mr Mischel had validly transferred his units in each of the Unit Trusts to the trustees of the two discretionary trusts and sought a declaration that Chambers held its interests in the properties held by each of the Unit Trusts on trust for Ballantyne Suites, as trustee of those Unit Trusts. It also sought an order that Chambers do all things necessary to effect a transfer of those properties.
Chambers and its liquidator denied the validity of the transfer of the units in the Unit Trusts. It contended at trial that Mr Mischel, aware of his impending bankruptcy fraudulently backdated a series of documents for the purpose of avoiding the operation of the five year relation-back period under s 120 of the Bankruptcy Act 1966 (Cth).
On 10 September 2013, a judge in the trial division handed down judgment.[3] He held that Mr Mischel had concocted and backdated certain trust documents in or about July or August 2011. Accordingly, Ballantyne Suites’ claim to have been appointed trustee of the Unit Trusts was not maintainable. The question of costs was deferred for later consideration.
[3]Ballantyne Suites Pty Ltd v Ballantyne Chambers Pty Ltd (in liq) [2013] VSC 482 (‘Principal Reasons’).
On 9 December 2013, the defendants gave notice that, pursuant to s 24 of the Supreme Court Act 1986 (‘the Act’), they would seek a non-party costs order pursuant to which Bradley Mischel and Kelly Mischel be ordered to pay some or all of their costs.
On 1 April 2014, the judge formally dismissed the claims of Ballantyne Suites[4] (order 1) and ordered that it, together with Bradley Mischel and Kelly Mischel pay Chambers’ and the liquidator’s costs of the proceeding, including reserved costs, but excluding those costs of the hearings on 5, 12, 18 and 19 June 2013 (order 2). Chambers and the liquidator were to pay the costs of Ballantyne Suites relating to the hearings on 5, 12, 18 and 19 June 2013 to be set off against the liability of Ballantyne Suites (order 3).
[4]Ballantyne Suites Pty Ltd v Ballantyne Chambers Pty Ltd (in liq) (No 2) [2014] VSC 147 (‘Costs Reasons’).
‘Non-party costs’ order: Reasons of the trial judge
In considering the factors set out in the authorities for the exercise of the discretion pursuant to s 24 of the Act, the trial judge referred to Knight v FP Special Assets Limited.[5] In that case, Mason CJ and Deane J said:
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.[6]
[5](1992) 174 CLR 178 (‘Knight’).
[6]Ibid 192-3.
The trial judge identified three considerations as emerging from Knight v FP Special Assets Limited: (a) that the plaintiff company is insolvent; (b) whether the non-party played an active role in the conduct of the litigation; and (c) whether the non-party has an interest in the litigation. He found that Ballantyne Suites was insolvent; it was conceded that that Bradley Mischel and Kelly Mischel had authorised and taken an active role in the conduct of the litigation through an insolvent company; and that they had a sufficient interest in the subject of the litigation standing to benefit personally in the instance Ballantyne Suites had succeeded in its claim.
In these circumstances, the trial judge considered it would be unjust if Chambers and the liquidator could not recover their costs against Bradley Mischel and Kelly Mischel on the basis that they were not formally parties to the proceeding. The substance of his reasons is as follows:
[19]Addressing the interests of justice, Bradley and Kelly contend that the Court should have regard to particular factors. First, the fact that no order for security for costs was ever sought. Second, the fact that no warning was given to them that a non-party costs order may be sought against them in the event that the plaintiff's claim was dismissed. Instead of these steps being taken, in earlier proceedings between the parties, the liquidator:
(1)unsuccessfully opposed leave being granted to the plaintiff under s 471B of the Corporations Act 2001 to bring this proceeding, unless conditions were imposed securing his costs of opposing the proceeding; and
(2)unsuccessfully sought to be appointed a receiver of the defendant's assets, so as to secure his fees and expenses.[7]
[7]See Ballantyne Suites Pty Ltd v Ballantyne Chambers Pty Ltd [2013] VSC 66 (Ferguson J).
These matters are obviously relevant and must be taken into account in the discretionary mix.
[20]Counsel for Bradley and Kelly next contended that there is no suggestion that they were complicit in or knew of their father's fraud, as found by the Court. The Court should infer that they brought and prosecuted the proceeding in good faith and in the belief that their father was telling the truth. In short, that the sins of their father should not be visited upon them; and that this was especially so in circumstances where they were not cross-examined at trial to the effect that they were knowingly concerned in their father's fraud.
[21]Other factors were relied upon by Bradley and Kelly, but they do not in my view influence the exercise of discretion in any meaningful way.
[22]Taking all of the relevant factors into account, in my opinion this case is sufficiently exceptional to justify the making of a non-party costs order. Although an application for security for costs, or an express warning, would have given Bradley and Kelly an opportunity to consider whether or not to continue relying upon their father's word and to proceed with this case, there is no reason to infer that they would not have proceeded if such a warning had been given. They have had an ample opportunity to put on evidence to that effect if they wanted to, as the submissions in support of the non-party costs orders were served as long ago as 9 December 2013.
[23]Further, counsel for the defendants was, in my view, justified in not cross-examining at trial as to their knowledge of their father’s fraud, as they gave uncontroversial evidence in their written statements and Bradley’s evidence about the context of the purported change in trustees of the unit trusts was not only not disputed but relied on by the defendants.
[24]The fact remains that the litigation fits within the scope of the cases recognised by the High Court in Knight for the making of a non-party costs order if the interests of justice require it. As I have stated, I am satisfied that the litigation was determined upon and pursued by Bradley and Kelly through an insolvent company and for their principal benefit. They played an active part in the litigation by determining to accept the word of their father and prosecute a case which depended upon his word being accepted by the Court. This was in circumstances where they knew of their father’s chequered history, involving fraud on his clients, and had no personal knowledge of the contemporaneous facts surrounding preparation and execution of the critical documents. It was not until August 2013 that they were told by their father of the critical documents, and then only in the context of his impending bankruptcy and of his express desire to take steps to ensure that the equity in the properties did not form part of his bankrupt estate. This was expressly for their benefit. Bradley was open about this in his evidence, as noted in paragraph 62 of the principal reasons, and in paragraphs 9 and 13 of his witness statement. In the highly unusual circumstances of this case, I find that Bradley and Kelly, while hiding behind corporate and trust veils, took the significant risk that the Court would believe their father. The Court did not, and the litigation was lost because of a finding that their father practised an elaborate fraud. It would be unjust if the successful defendants were unable to recover their costs in these circumstances.
[25]Further, as stated in the Court's principal reasons, neither Bradley nor Kelly, nor their respective trusts, gave any consideration for the purported transfers of units in the unit trusts from their father to the children's trusts.
[26]In all the circumstances I am of the opinion that the interests of justice justify making a non-party costs order and I will make such an order.[8]
[8]Costs Reasons.
Present Application
On 2 May 2014, Ballantyne Suites and Bradley Mischel and Kelly Mischel filed a summons seeking orders:
(a) pursuant to O 64 of the Supreme Court (General Civil Procedure) Rules 2005 (‘the Rules’), for leave out of time to appeal against the order of the trial judge of 1 April 2014.
(b) pursuant to s 17A(1) of the Act, for leave to appeal against order 2 of the order of the trial judge of 1 April 2014.[9]
(c) such orders as the Court deems fit.
[9]Section 17A(1)(b) of the Supreme Court Act 1986 provides that an order made by the Trial Division constituted by a Judge of the Court ‘as to costs which are in the discretion of the Trial Division’ is not subject to appeal to the Court of Appeal except by leave of the Court of Appeal or the Judge who made the order.
Draft notice of appeal
In the draft notice of appeal, Ballantyne Suites, Bradley Mischel and Kelly Mischel (‘the applicants’) seek the following orders:
(a) Order 2 of the orders of 1 April 2014 be set aside.
(b) Ballantyne Suites pay the respondents’ costs of the proceeding, including reserved costs, but excluding their costs of the hearings on 5, 12, 18 and 19 June 2013.
(c) The respondents pay the costs of Bradley Mischel and Kelly Mischel of the application before the trial judge on 1 April 2014.
(d) The respondents pay the costs of Bradley Mischel and Kelly Mischel of the appeal.
In the draft notice of appeal, the applicants give notice that, if given leave, they will contend on the hearing of any appeal that the trial judge erred in the exercise of his discretion in that he gave no or insufficient weight to the facts that (a) the respondents had not made a security for costs application, (b) the respondents had not given notice before judgment on the substantial matter that they would be seeking a non-party order as to costs, (c) the respondents’ counsel did not cross-examine Bradley Mischel and Kelly Mischel as to whether they had any knowledge of their father’s fraud and, finally that the judge had erred in deciding to pierce the corporate veil when there was no evidence or finding of fraud on the part of Bradley Mischel and Kelly Mischel.
Application for an Extension of Time
The applicants seek an extension of time to make an application for leave to appeal pursuant to r 64.03(3) of the Rules. As the trial judge made the relevant order on 1 April 2014, and the summons was filed 2 May 2014, the applicants are 17 days out of time.
Under r 64.20(1) of the Rules, the Court of Appeal has the discretion to extend time. Jackamarra v Krakouer[10] provides factors relevant to the exercise of this discretion, including the length and reasons for delay (such as whether the delay was caused by ‘a bona fide mistake or blunder’ or a failing of ‘the litigant’s lawyers, with which litigants should not be saddled’),[11] the existence of an arguable case on appeal and the extent of any prejudice to the respondent if an extension were granted.[12]
[10](1998) 195 CLR 516.
[11]Ibid 543.
[12]Ibid.
The applicants submit that the delay was short, that the respondents have suffered no prejudice and that the mistake was wholly the responsibility of the applicants’ lawyers. The respondents do not make any submissions regarding the extension of time.
The application to extend time should be granted. It was not opposed; the delay was quite brief; and the application for leave invites consideration of matters of real significance, particularly to the applicants.
Parties’ Submissions
The parties agree that the applicants require leave to appeal the costs judgment, pursuant to s 17A(1)(b) of the Act. The applicants must establish that there is sufficient doubt attending the decision; and that there is a risk of substantial injustice if the decision were allowed to stand.[13] The question of ‘substantial injustice’ will have rare application in the case of a final order such as the present.[14]
[13]Niemann v Electronic Industries Ltd [1978] VR 431.
[14]Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375, [143] (Ashley, Priest and Santamaria JJA), citing Department of Premier and Cabinet v Hulls [1999] 3 VR 331, 335 [10], 336 [12]-[13], 336-7 [15].
The parties also agree that the applicants must show that the trial judge ‘failed to exercise his … discretion on reasonable grounds or has applied the wrong principle or taken a manifestly erroneous view of the facts’.[15]
[15]Peet Ltd v Richmond [2010] VSCA 71, [4] (Nettle JA, Neave JA agreeing). See also A Team Diamond Headquarters Pty Ltd v Main Property Group Pty Ltd (2009) 25 VR 189, 191-2 [8] (Redlich JA and Beach AJA).
The respondents submit that an appellate court should not overturn the exercise of the discretion on costs ‘unless the failure to give adequate weight to relevant considerations really amounts to a failure to exercise the discretion …’[16] or the decision on costs ‘was so unreasonable or unjust as to require [the] court to substitute its own decision’.[17]
[16]Lovell v Lovell (1950) 81 CLR 513, 519.
[17]Apostolidis v Kalenik (No 2) (2011) 35 VR 563, 611 [55].
Although the applicants concede that it is ‘extraordinarily difficult’ to establish that the court below erred in the exercise of its discretion with respect to costs,[18] they submit that the exercise of discretion against non-parties is ‘not conventional’, it is ‘exceptional’[19] and should only be exercised ‘sparingly’.[20]
[18]Transport Accident Commission v O’Reilly [1999] 2 VR 436, 457 [46] (Ormiston JA).
[19]JGM Nominees Pty Ltd v Tulip Investments Pty Ltd [2013] VSCA 125, [41] (Neave JA, Kyrou AJA agreeing); Guss v Geelong Building Society (in liq) [2001] VSC 288, [7] (Ashley J); Kebaro Pty Ltd v Saunders [2003] FCAFC 5, [103] (Beaumont, Sundberg and Hely JJ).
[20]Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406, 413 [34] (Callinan J).
The parties agree that the trial judge correctly followed the approach laid down in Knight[21] for non-party costs orders and correctly found that the pre-conditions for enlivening a court’s discretion set out in Knight were present in this case.[22]
[21](1992) 174 CLR 178.
[22]Of course, the parties agreement cannot affect the discretionary nature of the jurisdiction.
The parties also agree that it was appropriate for the trial judge to consider the failure of the respondents to make an application for security for costs and their failure to warn the applicants that they were seeking non-party costs, as well as considering whether the directors of Ballantyne Suites were complicit in, or had knowledge of, a fraud perpetrated by their father.
Failure to Warn and Failure to Apply for Security for Costs
However, the applicants submit that the trial judge failed to give sufficient weight to the respondents’ failure to make an application for security for costs and failure to warn the applicants.
The applicants submit that the trial judge treated the pre-trial actions of the liquidator, Samuel Richwol (‘the liquidator’), to secure his costs, including the liquidator’s unsuccessful opposition to an earlier application by Ballantyne Suites for leave, and the liquidator’s unsuccessful application to be appointed a receiver of Ballantyne Suites’ assets, as relevant to whether the applicants had been given warning. The applicants submit that this was in error because neither action put the directors of Ballantyne Suites on notice that costs would be sought from them personally.
The respondents submit that there is no requirement for express warning or application for security, and that these are merely relevant factors for consideration.
The applicants submit that the trial judge’s finding that there was no reason to infer that the directors of Ballantyne Suites would have discontinued the proceeding if the warning had been given is not founded on any authority, is speculation, and overlooks the rationale of the consideration of this factor — to ensure that a non-party be given ample opportunity to minimise their exposure to costs.
The respondents submit that the trial judge did not speculate, and did nothing more than observe that there was no evidence that the directors of Ballantyne Suites would have acted differently if warning had been given.
Directors’ Knowledge of Fraud
The applicants submit that there must be something ‘exceptional’ or ‘out of the ordinary’ in a director’s conduct influencing a corporation to bring a proceeding before it will be appropriate to order costs against them directly. They say that the only ‘exceptional’ aspect of this proceeding was the finding that the father of the directors of Ballantyne Suites had engaged in fraud.
At common law, a court will pierce the corporate veil where a corporate structure is used to perpetrate fraud. The applicants submit that the trial judge’s exercise of discretion should have been informed by this principle. The applicants submit that there was no basis in fact for finding that it was in the interests of justice for the directors to pay the respondents’ costs given that (a) there had been no finding that the directors of Ballantyne Suites, themselves, engaged in fraud, and (b) there was no evidence that they were ‘hiding behind corporate veils and trusts’, or that Ballantyne Suites itself was a ‘sham’ intended to shield the directors.
Further, the applicants submit that if they had been warned that costs would be sought against them personally, the respondents could have cross-examined them regarding their knowledge of their father’s fraud. They say that the trial judge’s approach to the failure to cross-examine constitutes an error as he gave no weight to the absence of evidence on this matter.
The respondents submit that, although the trial judge did not find that the directors of Ballantyne Suites had direct knowledge of the fraud, he did suggest that the circumstances should have put the directors of Ballantyne Suites on notice and had regard to those circumstances in his reasons.
Further, the respondents submit that the trial judge was not required to have regard to the common law principle regarding the piercing of the corporate veil as the practical consequence of Bradley Mischel and Kelly Mischel’s positions as directors of Ballantyne Suites was that they enjoyed control over the relevant discretionary trusts and stood to benefit if the applicants had succeeded at trial. The respondents submit that, in ordering non-party costs, the trial judge considered Bradley Mischel and Kelly Mischel in their role as beneficiaries to the trusts, not directors, and therefore the fact that the directors of Ballantyne Suites become personally liable as a result of the non-party costs order was ‘collateral’. The respondents submit that the trial judge’s exercise of discretion was correct, as it ensured that the parties who stood to ultimately benefit from the litigation did not escape the costs consequences by ‘hiding behind corporate trusts and veils’.
Analysis
The applicants properly concede that the trial judge had jurisdiction to make the order that he did and that, in so far as the question of costs was in his discretion, they can only succeed on an appeal if they show that, in the exercise of his discretion, there was some error. Unless there is some such error, it is not open to this Court to determine how it would have exercised the same discretion in the same or similar circumstances.
In Norbis v Norbis[23] Mason and Deane JJ emphasised the limitation on appellate intervention with respect to a discretionary decision in these terms:
The principles enunciated in House v The King were fashioned with a close eye on the characteristics of a discretionary order in the sense which we have outlined. If the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance. In conformity with the dictates of principled decision-making, it would be wrong to determine the parties’ rights by reference to a mere preference for a different result over that favoured by the judge at first instance, in the absence of error on his part. According to our conception of the appellate process, the existence of an error, whether of law or fact, on the part of the court at first instance is an indispensable condition of a successful appeal.[24]
[23](1986) 161 CLR 513.
[24]Ibid 518-519 (citation omitted).
In Mischel Holdings Pty Ltd (in liq) v Mischel,[25] this Court considered the difficulties that face any party that is seeking to impeach a discretionary judgment on costs. In doing so, it referred to Wentworth v Rogers (No3),[26] Etna and Anor v Arif and Ors,[27] TAC v O’Reilly,[28] and Spotless Group Ltd v Premier Building & Consulting Pty Ltd and Anor[29]. In Peet Limited v Richmond[30] Nettle JA (with whom Neave JA agreed) observed:
More generally, an appellate court will not overturn a judge's decisions on costs unless the judge is seen to have failed to exercise his or her discretion on reasonable grounds or has applied wrong principle or taken a manifestly erroneous view of the facts.[31]
[25][2013] VSCA 375 (Ashley, Priest and Santamaria JJA).
[26](1986) 6 NSWLR 642, 644, cited by Batt JA in Etna and Anor v Arif and Ors [1999] 2 VR 353, 378 [67].
[27][1999] 2 VR 353.
[28][1999] 2 VR 436.
[29][2008] VSCA 115.
[30][2010] VSCA 71.
[31]Ibid [4] (citation omitted); see also McFadzean v Construction Forestry Mining and Energy Union (2007) 20 VR 250, 289 [150].
In Mischel Holdings Pty Ltd (in liq) v Mischel,[32] the Court also referred to what JD Phillips JA said in Department of Premier and Cabinet v Hulls[33] as to the points of distinction between the situation of final and interim[34] orders.
[32][2013] VSCA 375.
[33][1999] 3 VR 331.
[34]Which should be understood, the judge said, as ‘interlocutory’.
In oral submissions, counsel for the applicants said that, before a non-party costs order could be made, there had to be something exceptional about the case. He said that the only exceptional feature of the present case was the fraud of Mr Mischel. And, he said there was no evidence that the applicants were complicit in or even knew of their father’s fraud. In his principal judgment, the trial judge had identified fifteen matters that provided a basis for him to decide that Mr Mischel had behaved fraudulently. Whereas a few of these matters may have been known to his children, there was simply no evidence that they knew of most of them. For that reason, it was not open to the judge to find exceptional circumstances. The applicants also said that an associate justice had given Ballantyne Suites leave to proceed under s 471B of the Corporations Act 2001 (Cth) and that a judge of the Court had dismissed an appeal from that decision. Having been granted leave, the applicants thereafter, in prosecution of the proceeding, did nothing that could be classed as ‘exceptional’. The applicants developed their written submission that, because, at law, the ‘corporate veil’ can be pierced only in the case of fraud, a non-party costs order should only be made against directors of an insolvent corporation where it could be shown that the directors had been involved, or in some way complicit, in fraud.
In our opinion, the applicants have framed the issue of ‘exceptional circumstances’ too narrowly. In effect, they have contended that it was not open to the trial judge to hold that the case was ‘exceptional’ unless he found that the applicants knew of or were complicit in their father’s fraud. But, there were several other features of the case that meant that it was open to the judge to find that the case was exceptional. In the present case, the applicants must have known of their father’s convictions for serious fraud. They knew that they had given no consideration for the transfer of the units to them. They also knew that the transfer had taken place on the insolvency of their father. After they had authorised Ballantyne Suites to commence the proceeding, they were served with the defence that had been filed. In that pleading, Chambers and the liquidator had particularized the basis upon which they denied the allegation in the statement of claim that Ballantyne Suites had, since 31 October 2011, acted in its own right and in its capacity as trustee of the Unit Trusts. Most of those matters were established in the proceeding and were relied upon by the trial judge. It simply is implausible to contend that the applicants were unaware of the risk that they were running in choosing to pursue the proceeding. They were not deterred from doing so; they played an active part in the proceeding, one in respect of which they stood to benefit.
The applicants also contend that the judge gave insufficient weight to the circumstances (a) that the respondents had not given notice before trial that, in the event they were successful they would seek an order that the applicants pay their costs and (b) that the respondents had not made an application for security for costs. But, it is undeniable that the judge had regard to each of these considerations. He mentioned both of them. The fact that they did not prevail in his reasoning cannot mean that he gave them insufficient weight. It was for him to decide what weight should be given to them and the present case exemplifies the cogency of the observation of Callaway JA in Hanlon v Brookes[35] that ‘[i]t is almost invariably the case that the judge at first instance is better placed to deal with the costs after a long trial and counsel seeking leave ordinarily has a difficult task.’[36]
[35](1997) 15 ACLR 1626.
[36]Ibid 1632, cited by Redlich JA (with whom Dodds-Streeton JA agreed) in Spotless Group Ltd v Premier Building & Consulting Pty Ltd and Anor [2008] VSCA 115, [10].
Finally, the applicants contended that the trial judge had reversed the onus of proof in finding that the applicants had had ample opportunity to put on evidence that they would not have continued with the proceeding if they had been warned that an application for non-party costs would be made or if there had been an application for security. This matter can be dealt with briefly. There is no onus of proof in an application for the exercise of a discretion such as that in the present case. The trial judge delivered his reasons in the main proceeding on 10 September 2013. As indicated above, the successful respondents gave notice of their application for non-party costs on 9 December 2013. That application was heard on 1 April 2014 by which time the parties had had the opportunity to put on any material they considered probative and make written submissions. Given the findings that the trial judge had made in the main proceeding, it was plain what issues would weigh in the application for non-party costs. If the applicants wanted to make good some proposition that they would not have continued with the proceeding if they had been put on notice, there was every opportunity for them to have done so.
This is an application for leave to appeal. Because the order made was a final order, it can be accepted that, if there is sufficient doubt attending the decision, there will be a risk of substantial injustice if the decision were allowed to stand.[37] However, the applicants have not shown any error in the reasons of the trial judge; nor have they shown that his decision was so unreasonable as to bespeak error. The application for leave to appeal should be dismissed.
- - -
[37]Department of Premier and Cabinet v Hulls [1999] 3 VR 331, 335 [10], 336 [12]-[13], 336-7 [15].
SCHEDULE OF PARTIES
| BETWEEN | |
| BALLANTYNE SUITES PTY LTD (ACN 153 866 098) IN ITS OWN RIGHT AND AS TRUSTEE OF THE BALLANTYNE PROPERTY SUITE 1 UNIT TRUST AND BALLANTYNE PROPERTY SUITE 2 UNIT TRUST | First Applicant |
| BRADLEY JAKE MISCHEL | Second Applicant |
| KELLY MISCHEL | Third Applicant |
| And | |
| BALLANTYNE CHAMBERS PTY LTD (ACN 112 873 088)(IN LIQUIDATION) | First Respondent |
| SAMUEL RICHWOL IN HIS CAPACITY AS LIQUIDATOR OF BALLANTYNE CHAMBERS PTY LTD (ACN 112 873 088) (IN LIQUIDATION) | Second Respondent |
5
15
0