Boman Irani Pty Ltd & Ors v St George Bank Limited (No 2)

[2009] VSCA 1

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 3758 of 2008

BOMAN IRANI PTY LTD (ACN 006 569 044) & ORS
	Appellants
v
ST GEORGE BANK LIMITED (ACN 055 513 070) (NO. 2)	Respondent

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JUDGES:	WARREN CJ, NEAVE JA and HARGRAVE AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	4 December 2008 (final written submissions on costs received 16 December 2008)
DATE OF JUDGMENT:	5 February 2009
MEDIUM NEUTRAL CITATION:	[2009] VSCA 1

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COSTS – Appeal dismissed – Whether costs should follow the event – Whether conduct of successful respondent should deprive it of whole or part of its costs – Conduct of respondent contrary to public policy – Costs to follow the event.

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APPEARANCES:	Counsel	Solicitors
Appellants	Dr C L Pannam QC with Mr S D Hay	Comlaw Barristers & Solicitors
Respondent	Mr R M Garratt QC with Mr D L Bailey	Herbert Geer

WARREN CJ:

1. I agree with the reasons expressed and orders proposed by Hargrave AJA.

NEAVE JA:

1. I agree with Hargrave AJA that, for the reasons given by his Honour, the appellants should be ordered to pay the respondent’s costs of the appeal, such costs to be taxed on a party and party basis in default of agreement.

HARGRAVE AJA:

1. The Court delivered its reasons for judgment in this matter on 4 December 2008.[1]  The parties were invited to file written submissions as to costs.  On the basis of the written submissions as filed, I would order that the appellants pay the respondent’s costs of the appeal on a party and party basis.  My reasons follow.

   [1]Boman Irani Pty Ltd v St George Bank Ltd [2008] VSCA 246.

1. Although costs are always in the discretion of the Court, the usual rule is that costs follow the event.[2]  It is accepted that the Court has a discretion to order that a successful party pay the unsuccessful party’s costs of a proceeding or appeal.[3]  In considering whether that exceptional jurisdiction should be exercised, the conduct of the successful party in relation to the conduct of the litigation is a relevant factor.[4] 

   [2]Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394, 408; Flinn v Flinn [1999] 3 VR 712, [171].

   [3]For example, Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129.

   [4]Ibid 140 per Beach J at first instance; 156 per Kaye J (McGarvie J agreeing); cf 174 - 5 per Ormiston J.

1. It was submitted on behalf of the appellants that, even though they were unsuccessful in their appeal, the Court should nevertheless order that the respondent pay their costs of the appeal or, in the alternative, that there should be no order as to the costs of the appeal.  It was submitted on behalf of the respondent that the usual order should follow, and that the unsuccessful appellants should pay its costs of the appeal. 

1. The submission made on behalf of the appellants was based upon statements made in the Court’s reasons for determining the substantive matters on appeal.  These statements were to the effect that the respondent had, by its claim in the proceeding, sought to wrongfully exact excessive legal costs from the appellants and that such conduct on the part of the respondent was against public policy.[5]

   [5]Boman Irani Pty Ltd v St George Bank Ltd [2008] VSCA 246, [2] per Neave JA; [56] – [60] per Hargrave AJA.

1. It was submitted on behalf of the appellants that the respondent’s conduct in this regard ought be condemned by an order that it pay their costs of the appeal.  Reliance was placed upon the fact that the respondent persisted on appeal in its contention, which was rejected by the Court, that it was entitled to claim the whole of the costs incurred by it, without any adjustment being made for the rebates received from its solicitors.  

1. The submissions made on behalf of the appellants should be rejected.  The respondent’s attempts to exact excessive legal costs were unsuccessful at first instance.  Although the trial judge rejected the argument based upon public policy, the trial judge did not allow the respondent’s claim in respect of the excessive costs.  The trial judge rejected the claim for the excessive portion of the costs on contractual principles, because the only entitlement of the respondent was to an indemnity in respect of the costs actually incurred by it.  In this respect, the respondent was ordered to pay the costs of that issue before the trial judge.[6]  The costs orders made by the trial judge were not challenged on appeal. 

   [6]Ibid [55].

1. The respondent did not cross‑appeal in respect of the trial judge’s order that its recovery be limited to the net costs liability incurred by it, after taking account of the volume rebates repaid by its solicitors.  On appeal, the appellants contended that the respondent’s claim should fail altogether, and not just in respect of the excessive legal costs.  A number of alternative grounds were relied upon.  All were rejected.  The appellants were wholly unsuccessful and the appeal was dismissed.  In these circumstances, I would not order any departure from the usual rule that the costs should follow the event.  The costs order of the trial judge gives adequate recognition to the respondent’s conduct in unsuccessfully seeking to exact excessive costs from the appellants.

1. In all the circumstances of the case and having regard to the Court’s criticisms of the respondent’s conduct, the respondent did not seek to enforce its contractual indemnity to be paid indemnity costs in respect of the appeal.  It sought party and party costs only.  That concession was entirely proper in all the circumstances.  Accordingly, I would order that the appellants pay the respondent’s costs of the appeal, such costs to be taxed on a party and party basis in default of agreement.