Blong Ume Nominees Pty Ltd v Semweb Nominees Pty Ltd (No 2) - [2017] SASC 178

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BLONG UME NOMINEES PTY LTD & ORS v SEMWEB NOMINEES PTY LTD & ORS (No 2)
[2017] SASC 178
Judgment of The Honourable Justice Parker
29 November 2017
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - ORDER FOR COSTS ON INDEMNITY BASIS
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - CO-DEFENDANTS
This is an application by successful defendants for the costs of the trial on an indemnity basis. The plaintiffs oppose an order for costs on an indemnity basis and contend that any costs order in favour of the third and fifth defendants should be determined on the basis that they had common legal representation, pursuant to r 269 of the Supreme Court Civil Rules 2006 (SA).
Held, per Parker J:
1.       The first defendant is entitled to its costs fixed in the sum of $13,200.
2.       The third and fifth defendants are each entitled to one half of their costs on a party/party basis.
3.       The second and fourth defendants are each entitled to their costs on a party/party basis, including for the period in which they were represented by Ouwens Lawyers.
Supreme Court Civil Rules 2006 (SA) r 269, referred to.
Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175, [1993] FCA 72; Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225, [1993] FCA 801; Marnham v Grice (1896) 22 VLR 108; Acquista Investments Pty Ltd v The Urban Renewal Authority (No 2) [2015] SASCFC 117; Statham v Shephard (No 2) (1974) 23 FLR 244, discussed.

BLONG UME NOMINEES PTY LTD & ORS v SEMWEB NOMINEES PTY LTD & ORS (No 2)
[2017] SASC 178
Civil

PARKER J: On 25 September 2017, I dismissed an application by the plaintiffs, Blong Ume Nominees Pty Ltd, Orfanos Nominees Pty Ltd and Mr Nicholas Orfanos, for relief on multiple grounds arising from a dispute between three professional men[1] and their associated corporate entities about the management and operation of a joint venture.[2] The joint venture was established to purchase and manage a building used to provide office accommodation for their respective professional practices (‘the Property’).
[1] Nicholas Orfanos, Willem Ouwens and Michael Michaels.
[2] [2017] SASC 137.
The plaintiffs’ primary goals were to realise their interest in the Property and to recoup an alleged underpayment of rent. They sought to achieve those ends through a wide range of remedies. These included a declaration, an order for winding up under the Corporations Act 2001 (Cth), orders for termination of a trust, the sale of land and the distribution of proceeds, orders regulating the affairs of a company, an order for the dissolution of a partnership, equitable compensation for breach of fiduciary duty, orders for the taking of an account or an enquiry as to profits and payment of money said to be owed due to an underpayment of rent. I found for the defendants on all grounds.
The first defendant, Semweb Nominees Pty Ltd, is the corporate entity used to carry the joint venture into effect.[3] While Semweb filed a defence and was involved in the pre-trial proceedings, its solicitor gave an undertaking at the commencement of the trial to abide the decision of the Court. Thereafter, Semweb took no part in the proceedings. The plaintiffs consent to the making of an order for payment of the costs incurred by Semweb as a lump sum of $13,200. I will make an order to that effect.
[3] Semweb is the registered proprietor of the Property. It holds the Property on trust for the private companies that serve as the trustees of the family trusts that are respectively associated with Messrs Orfanos, Ouwens and Michaels. These three men are the only directors of Semweb and also its only shareholders.
The fifth defendant, Willem Ouwens, is a legal practitioner. The third defendant is Ouwens Corporate Services Pty Ltd (OCS). The directors and shareholders of OCS comprise Mr Ouwens, his wife and two adult children. The company is also the trustee of the OCS Trust, of which Mr Ouwens and his wife are the specified beneficiaries. Their children and other relatives are included among the class of general beneficiaries. OCS is a party to the relevant joint venture.
During the early stages of the proceedings Mr Ouwens’ firm, Ouwens Lawyers, acted for the second defendant, Melrob Investments Pty Ltd, the third defendant, OCS, and also the fourth defendant, Michael Michaels (a chartered accountant). Melrob is effectively the corporate arm of Mr Michaels. In a judgment published on 15 November 2013, Judge Dart ordered that in the interests of justice Ouwens Lawyers be restrained from continuing to act for the second and third defendants, i.e. Melrob and OCS.[4] The basis for that finding by Judge Dart was that ‘a fair minded and reasonably informed observer would think that the independence and objectivity of Mr Ouwens and the firm would be compromised by their interest in the outcome of the litigation.’[5]
[4] Blong Ume Nominees & Anor v Semweb Nominees and Ors [2013] SASC 180.
[5] Ibid [57].
Following the making of the orders by Judge Dart restraining Ouwens Lawyers from acting for the second and third defendants, Mr Michaels represented Melrob and also himself. OCS and Mr Ouwens were each separately represented by solicitors and counsel.
The plaintiffs accept that as they failed entirely in the proceedings, an order should be made for the costs incurred by the defendants. While the plaintiffs initially contended otherwise, they now consent to the making of an order for the costs incurred by Melrob and OCS in instructing Ouwens Lawyers prior to the making of the order by Judge Dart.
Following that concession, two issues remain in contention. The first issue is the claim by the defendants that costs be awarded on an indemnity basis rather than a party/party basis. The second issue is the contention by the plaintiffs that the Court should exercise its powers under r 269 of the Supreme Court Civil Rules 2006 (SA) to order that any costs order in favour of Mr Ouwens and OCS should be determined on the basis that they had common legal representation. In other words, the Court should frame its costs order on the basis that Mr Ouwens and OCS did not require separate representation.
The claim for indemnity costs
The defendants advanced three grounds in support of their claim for indemnity costs. Each of the grounds referred to by the defendants are identified in the frequently cited judgments of Davies J in Ragata Developments Pty Ltd v Westpac Banking Corporation[6] and of Sheppard J in Colgate-Palmolive Co & Anor v Cussons Pty Ltd.[7]
[6] (1993) 217 ALR 175; [1993] FCA 72.
[7] (1993) 46 FCR 225; [1993] FCA 801.
Those grounds are that the plaintiffs:
a.   Did not institute the proceedings for a bone fide purpose of protecting and enforcing a legal right;
b.   Made and pursued groundless allegations; and
c.   Imprudently refused an offer to compromise.
I will deal with those grounds in turn.
Mr Michaels, who appeared for himself and Melrob, adopted the submissions made by counsel for OCS and Mr Ouwens.
Proceedings for an improper purpose
The defendants contend that the proceedings were not instituted by the plaintiffs for a bone fide purpose. Instead, the plaintiffs sought to use the proceedings to compel realisation of their interest in the Property contrary to the express terms of the joint venture agreement. In support of that contention the defendants point to the observation I made at paragraph [469] of the judgment:
The limited efforts made by Mr Orfanos to sell his interest lend considerable force to the submission by the defendants that he has sought the intervention of the Court because he is dissatisfied with the bargain he made in 2002.
I have no doubt that Mr Orfanos is dissatisfied with the outcome of the bargain he made in 2002 and his purpose in embarking on these proceedings was to realise his interest. Nevertheless, the contentions that Mr Orfanos advanced in support of the various claims for relief were not baseless, albeit that I found against him in respect of each matter. His contentions as to the meaning and effect of the joint venture agreement, the alleged underpayment of rent, the alleged breaches of duty and related matters were all arguable. These contentions had some support in the evidence and in the terms of the contractual arrangements made by the parties.
I found that Mr Orfanos had made little effort to realise his interest under the process established by the terms of the joint venture agreement. Nevertheless, if he had been able to substantiate the alleged underpayment of rent, it would have added much force to his claims that there had been breaches of fiduciary and statutory duties. If he had succeeded on those points, the fact that he had taken little action to realise his interest would not have been significant.
I do not consider that Mr Orfanos was motivated by any improper or collateral purpose in instituting these proceedings. His purpose was to enforce what he regarded as his contractual and equitable rights so as to realise his investment and to redress what he believed (based on expert evidence) to be an underpayment of rent. As I have said, the various contentions that he advanced were not baseless, albeit that they failed.
For these reasons, I consider that this was not a situation where, to borrow the words of Davies J in Ragata Developments, ‘unsuccessful proceedings have been brought and prosecuted, not for the bona fide purpose of protecting and enforcing a legal right, but to achieve an ulterior or extraneous purpose’.[8]
[8] (1993) 217 ALR 175 at [177] and see also Alexander v Australian Community Pharmacy Authority (No 3) [2010] FCA 506 at [36]-[41], Bromberg J.
Pursuing groundless allegations
I also do not accept the contention by the defendants that the plaintiffs made and pursued groundless allegations. As I have already indicated, the multiple allegations made by the plaintiffs were not groundless. They had some substance, despite the fact they were not ultimately made out.
Imprudent refusal of an offer to compromise
The basis for the defendants’ assertion that the plaintiffs imprudently refused an offer to compromise lies in the failure of Mr Orfanos to accept an offer made to the plaintiffs by OCS and Mr Ouwens in an open letter dated 22 July 2015 (the ‘offer’).
Only Mr Ouwens and OCS joined in the offer. Mr Michaels and Melrob were not party to the offer. Thus, they cannot rely on the offer in support of their claim for indemnity or solicitor/client costs.
The settlement offer required the plaintiffs to relinquish their interest in the joint venture and the Property and to discontinue the proceedings in consideration of payment of the sum of $385,433 within 30 days of the execution of a deed of settlement. Each party was to bear their own costs. The offer remained open for acceptance for 30 days, i.e. until 21 August 2015. The trial commenced on 7 September 2015. The settlement offer was rejected by the plaintiffs in a letter sent by their solicitors on 21 August 2015.
The basis upon which the settlement sum of $385,433 had been calculated was set out at length in the offer. In essence, the starting point of the calculation was the mid-point between two different valuations of the market value of the Property. Deductions were then made to reflect the costs of sale and the outstanding balance of the loan secured by mortgage over the Property. A further deduction was made in accordance with the advice of a valuer that the sale of a minority interest would require a discount of between 15% and 30% from the sale price in order to attract a buyer.[9] The discount was fixed at the mid-point of 22.5%. The sum of $343,000 then held on deposit by Semweb was treated as an addition in the calculation. Of course, the plaintiffs were only entitled to a one third interest in that sum. The end result, after the several deductions and the one addition, was the proposed settlement sum of $385,433.
[9] I found at [338] in the judgment that a discount would be required to attract a buyer for a partial interest. My finding was consistent with the opinion of the valuer called at trial by the plaintiffs, Mr Alex Smithson.
The offer also noted that the initial contribution of $239,503 made by Mr Orfanos towards the purchase of the Property had been followed by a return of capital in the sum of $152,800, leaving a balance of $86,703. The plaintiffs had also received the benefit of depreciation allowances of some $120,340 which would have amounted to an effective tax benefit of, perhaps, $36,102.
OCS and Mr Ouwens also advanced a series of contentions as to why they considered that the plaintiffs would not succeed at trial. Those contentions were substantially, but not entirely, consistent with the eventual findings of the Court.
If the offer were accepted, it was proposed that the interest in the Property relinquished by the plaintiffs would be shared equally between the two remaining joint venturers.
The offer noted that Mr Ouwens, OCS, Mr Michaels and Melrob denied any liability in respect of the claim for underpayment of rent. Mr Ouwens and OCS stated expressly their willingness to allow the plaintiffs to reserve their rights in respect of the rental claim on the basis that if they persisted in that claim they should institute separate proceedings in either the Magistrates Court or the District Court.
Mr Ouwens and OCS submit that the settlement offer was genuine and reasonable. It was made some six weeks before trial at a time when the parties were fully aware of their respective cases, but before the significant costs of the trial were incurred. By that time it should have been apparent to the plaintiffs that the defendants had good prospects for success at trial. Sufficient time (i.e. 30 days) was allowed so as to permit proper consideration of the offer. The offer did not seek a discount for the legal costs already incurred and each party was to bear their own costs. Only a modest discount was applied for the purchase of the plaintiffs’ minority interest in the joint venture. Mr Ouwens and OCS made clear that they would pursue indemnity costs if the offer was refused, i.e. it was an informal or Calderbank offer.
If viewed in isolation, the preceding submissions by Mr Ouwens and OCS would have very considerable force. However, in determining the reasonableness of the settlement offer, it is also necessary to consider the outcome the plaintiffs sought in the proceedings. In essence, the multiple causes of action pursued by the plaintiffs were directed towards achieving two objects. The first object was to realise the plaintiffs’ interest in the Property. The second object was to secure compensation for an underpayment of rent that had allegedly been permitted to occur to the benefit of the defendants (other than Semweb) and to the detriment of the plaintiffs.
Importantly, the joint venture agreement included a pre-emptive rights clause that required Mr Orfanos to make an offer to sell his interest to the other participants before he became entitled to sell to a third party. Earlier offers made by Mr Orfanos to sell his interest to the other participants had been rejected. Accordingly, the practical effect of the offer was simply a belated acceptance of earlier offers to sell made by Mr Orfanos in the exercise of his contractual rights. Nevertheless, acceptance of the offer would have achieved the plaintiffs’ first goal of realising their interest in the Property.
However, acceptance of the offer would not have resolved the dispute with respect to the plaintiffs’ second object. The offer specifically excluded the claim for underpayment of rent. While the plaintiffs ultimately failed to prove the rent claim, the expert valuation reports provided by Mr Smithson indicated that their case was properly arguable. Nevertheless, the settlement failed to propose any compromise, let alone a reasonable compromise, of the rent claim and left that to be litigated elsewhere. In those circumstances, I do not consider that the decision of the plaintiffs to reject the settlement proposal dated 22 July 2015 was an imprudent refusal of an offer to compromise. For these reasons it is unnecessary to consider whether the proposed purchase price of $385,433 was reasonable.
As I have found that none of the three grounds advanced by the defendants in support of their claim for indemnity costs has been made out, I reject that application. For the same reasons, I also find no basis to award costs on a solicitor/client basis. The costs must be assessed on a party/party basis.
Separate representation
I turn to the contention by the plaintiffs that the Court should exercise its discretion to award costs to Mr Ouwens and OCS on the basis that they should not have been separately represented. The plaintiffs submit that Mr Ouwens and OCS should be awarded one half of the costs to which they otherwise may be entitled.
Rule 269 provides:
269—Over-representation of parties with common interest
If two or more parties have identical or similar interests but are separately represented and, in the Court's opinion, unnecessarily so, the Court may exercise either or both of the following powers—
(a)the Court may order that costs to which the parties are entitled be determined on a basis that would be appropriate if they had common legal representation;
(b)the Court may order the over-represented parties to compensate other parties to the action for additional costs incurred by them as a result of the over-representation.
The operation of r 269 was considered by the Full Court in Acquista Investments Pty Ltd v The Urban Renewal Authority (No 2).[10] In a joint judgment Vanstone and Lovell JJ made the following observations concerning the application of r 269:
·A court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases.
·Each case must be decided on its own facts.
·Even where parties are united in their opposition to a plaintiff their relationship to each other might be such that they would be acting reasonably in remaining at arms’ length during the general course of litigation.
·Courts must consider the fiduciary rule that lawyers must not concurrently represent clients with potentially conflicting interests.
·Conflicting commercial considerations may also be relevant.
·While not decisive, the appropriate time to raise an objection to multiple representation is in advance of, or at, the time of the hearing.
·The onus of establishing that r 269 should applies lies on the party that will be liable for the costs order.
[10] [2015] SASCFC 117.
Debelle AJ delivered a dissenting judgment on the costs question in Acquista. His Honour expressed concern that the cost of litigation is a real impediment to access to justice. Thus, the Court ‘should examine with real care claims for costs where parties have identical or similar interests.’ In his Honour’s view, the interests of the respondents were so identical that separate representation was not justified. His Honour would have made an order for payment of one half of the costs of the respective respondents.
The plaintiffs rely on the observation by Debelle AJ in Acquista that the exercise of the discretion of the Court is not dependent upon a party objecting before the hearing that their opponents should not be separately represented because they have identical or similar interests. His Honour observed that a party may improve their position if they object before the hearing but to impose a requirement that they must do so would alter the terms of the rule.

I agree with Debelle AJ that the imposition of a requirement that objection should be taken before trial would impermissibly alter the terms of r 269. While Vanstone and Lovell JJ may have been expressing an obiter view, I respectfully agree with their Honours’ observation that while it is not a decisive matter, the appropriate time to raise an objection is in advance of, or at, the time of the hearing. Their Honours’ observation is not inconsistent with the view expressed by Debelle AJ.
Counsel for the plaintiffs drew attention to the separate representation issue at the commencement of the trial in the following terms:
Your Honour would note that Mr Michaels has been given permission to appear on behalf of his corporate entity. In terms of Mr Ouwens, he has retained separate counsel for the third defendant and him in person, the fifth defendant. Obviously if he perceives a conflict, it’s a matter for him. We expect there to be due economy in terms of the third and fifth defendant and not to be two sets of cross-examination of my client and furthermore, we reserve our position in relation to the costs in the event that we are unsuccessful and my friend should be on notice that we’d take some persuading before we consent to two orders of costs in the event that we are unsuccessful.
The plaintiffs submit that counsel had not waived their right to seek an order under r 269. He was simply indicating that it was a subjective question for Mr Ouwens to determine whether he thought that he and OCS required separate representation. The plaintiffs also made clear that they would oppose the Court awarding two sets of costs. I accept the correctness of the plaintiffs’ submission.
Mr Ouwens and OCS rely upon the decision of Madden CJ in Marnham v Grice in support of their submission that the onus of proving that defendants have a common interest and ought not to be separately represented lies upon the person asserting the existence of that common interest.[11]
[11] (1896) 22 VLR 108.
The plaintiffs submit that it is putting the matter too high to suggest that they carried the onus of persuading the Court that its discretion under r 269 should be exercised in their favour. They submit that prima facie the defendants are entitled to their costs. It is then within the discretion of the Court as to whether OCS and Mr Ouwens should be deprived of any part of their costs. In that sense the plaintiffs suggest that there is probably a practical onus on the plaintiffs to draw to the Court’s attention the matters that might lead to such a conclusion. However, this could not be equated to a legal onus as it was no more than the taking into account of factors in the exercise of a discretion.
The observation made by the majority of the Full Court in Acquista that a party asserting that r 269 should be applied carries the onus may have been obiter. Even if that is the case, the observation is highly persuasive. However, in my view, questions of onus do not take the matter very far. That is because r 269 may only be applied if the Court has formed the opinion that two or more parties have identical or similar interests and that separate representation was unnecessary in all the circumstances. For that reason, as the plaintiffs acknowledge, there is clearly a practical onus on them to draw to the attention of the Court matters that might lead to an exercise of the discretion in their favour. I am satisfied that the plaintiffs have discharged that practical or evidentiary onus.
The plaintiffs accept that, at trial, the defendants acted in accordance with their exhortation that there should be due economy and no overlapping of cross‑examination. In essence, the defence counsel divided the issues between themselves. In this light, Mr Ouwens and OCS contend that their separate representation did not increase the length of the trial. I consider that contention to be correct. However, it is the case that because two counsel were engaged by Mr Ouwens and OCS, rather than one counsel, significant additional costs were incurred.
Counsel for Mr Ouwens also observes that due to the complexity of the issues and the length of the trial (eight days) it would have been appropriate for the defendants to be represented by senior and junior counsel. Thus, the fact that OCS and Mr Ouwens were separately represented by junior counsel did not increase the costs that might reasonably have been incurred. However, I must consider the application of r 269 in accordance with what actually occurred, rather than what might have happened.
The defendants also submit that separate representation was required because of the allegations that Mr Ouwens had breached the fiduciary duties that he owed in his capacity as a director of Semweb to Orfanos Nominees and the further assertion that he had breached the statutory and fiduciary duties that he owed to Semweb. It was also alleged that the joint venture had been carried on by Semweb for the benefit of Ouwens Lawyers, of which Mr Ouwens was the principal, to the detriment and at the expense of the plaintiffs. Additionally, it was alleged that Mr Ouwens, and also Mr Michaels, had conducted the affairs of Semweb contrary to the terms of the joint venture deed and in breach of the fiduciary duties owed by Semweb to Orfanos Nominees. It was also alleged that Mr Ouwens and Mr Michaels had acted so that they secured a benefit by paying less than the market rent to the detriment of Orfanos Nominees and in breach of the duties owed by Semweb as trustee. These matters were said to involve a conflict of interest and duty and were coupled with claims that Mr Ouwens had not acted in good faith and in the best interest of the joint venture and had not exercised his powers for a proper purpose. He was said to have gained an advantage for himself and Ouwens Lawyers at the expense of the joint venture and to the detriment of the plaintiffs.
In this light, Mr Ouwens and OCS submit that allegations of actual or potential conflict were made against both OCS and Mr Ouwens personally. In fact, it was submitted that if the pleadings were made good, there would be a finding that Mr Ouwens had acted so as to interfere with the interests of the plaintiffs and also those of OCS. There was a potential for Mr Ouwens and OCS to blame each other at trial for the alleged breaches of duty. The likelihood of that risk arising could not be resolved before trial because the issues may have changed as the evidence unfolded at trial. That made it necessary for Mr Ouwens and OCS to be separately represented at trial.
Mr Ouwens and OCS also rely upon Marnham v Grice in support of their contention that whether or not there is a conflict of interest between parties cannot be determined until the trial has been conducted. In that case, company directors were alleged to have published a false prospectus. One solicitor had acted for the several defendants, their defences were identical and a copy of the signed brief was delivered to each counsel. Nevertheless, Madden CJ stated that the defendants were entitled to protect themselves by briefing separate counsel, as it was possible that an individual director might seek to implicate another fellow director. In those circumstances there may be a need for cross-examination by separate counsel.
The plaintiffs drew support for the application of r 269 from passages in Dal Pont, Law of Costs (3^rd edition, 2003). The learned author noted that ‘the court will not normally allow more than one set of costs to successful litigants where there is no possible conflict of interest between them in the presentation of their cases’.[12] That passage was based upon observations made by Woodward J in Statham v Shephard (No 2)[13] and by White J in Foti v Foti.[14]
[12] Dal Pont, Law of Costs (3^rd edition, 2003) at p 339.
[13] (1974) 23 FLR 244 at 246.
[14] [2009] SASC 177 at [30].
The plaintiffs also referred to the following passage by Dal Pont in relation to the question of conflict of interest:
To determine whether to allow costs of separate representation, the court must consider the fiduciary rule that lawyers must not concurrently represent clients with conflicting interests. Courts are disinclined to make a single set of costs orders unless there is clearly no such ‘duty–duty’ conflict. Otherwise successful parties would be penalised for electing to be separately represented in circumstances where concurrent representation may place the lawyer in breach of fiduciary duty to each such party. Also, because duty‑duty conflicts may arise after the suit has commenced, a court is not binded by hindsight in exercising its cost discretion in such cases. Courts that are slow to assume, particularly at a pre-trial stage, that there should be joint representation… Yet if a conflict of interest appears possible but unlikely, defendants should acquire from the plaintiff as to the way in which the plaintiff’s case is to be put to see if this may resolve the possibility of conflict between the defendants. A failure to so inquire where it is evident that it would have quelled any fear of conflict may incline the court to order only one set of costs should the defendants be successful.[15]
(footnotes omitted)
[15] Dal Pont, Law of Costs (3^rd edition, 2003) at p 340.
The last of the observations made by Dal Pont refers to the judgment of Woodward J in Statham at 246.
The question is whether there was a realistic likelihood that a conflict would arise between the interests of Mr Ouwens and OCS such as to require them to be separately represented. The only relevant conflicts are those that arose, or may have arisen, between the interests of Mr Ouwens and those of OCS.
OCS has its own legal personality and is a separate entity from Mr Ouwens. OCS has three other directors in addition to Mr Ouwens. As a director of OCS, he owes fiduciary duties to the company. OCS also owes fiduciary duties in its capacity as trustee of the OCS Trust. Thus, it is clear that, in principle, there could be conflicts of interest between Mr Ouwens and OCS. That is acknowledged by the plaintiffs.
While conflicts of interest could have arisen between Mr Ouwens and OCS so as to require separate representation, this was not the reality of the proceedings. While OCS, rather than Mr Ouwens, was the participant in the joint venture, there was no suggestion in the pleadings or in the course of the trial by any party that OCS, but not Mr Ouwens, was responsible for any of the alleged breaches of duty. There was also no attempt in the pleadings or at trial to exculpate OCS and implicate Mr Ouwens.
There was nothing whatsoever in the proceedings, whether prior to or during the trial, to suggest that Mr Ouwens and OCS did not act in lock step in advancing the interests of Mr Ouwens, his professional practice and his family (as beneficiaries of the OCS Trust) in relation to the joint venture. Moreover, the proceedings were, at all times, effectively a contest between, on the one hand, Mr Ouwens and Mr Michaels and the corporate entities associated with them, and on the other hand, Mr Orfanos and his associated entities.
In those circumstances I do not consider that there was any need for Mr Ouwens and OCS to be separately represented. Moreover, as Woodward J noted in Statham at 246, enquiries could have been made with the plaintiffs to determine whether there was any prospect that the proceedings might be conducted in a fashion that gave rise to a realistic possibility of a conflict of interest arising between Mr Ouwens and OCS. No such inquiry was made.
While the interests of Mr Ouwens and OCS in the proceedings were not identical, it is apparent from the observations I have made at [52] and [53] that they were clearly extremely similar. For that reason I consider that it was unnecessary for OCS and Mr Ouwens to be separately represented. I find that the requirements of r 269 are satisfied. The further question is how the discretionary powers conferred by r 269 should be exercised.
The plaintiffs submit that OCS and Mr Ouwens should be awarded one half of the costs that might otherwise be awarded to them as successful parties in these proceedings. I consider that, under r 269, Mr Ouwens and OCS should each be awarded one half of their costs on a party/party basis. Mr Michaels and Melrob are entitled to their costs on a party/party basis, including for the period in which they were represented by Ouwens Lawyers. Semweb is entitled to lump sum costs of $13,200. I will make orders to that effect.