Cam and Bear Pty Ltd v McGoldrick (No 2) - [2017] NSWSC 789

Supreme Court

New South Wales

Medium Neutral Citation: Cam & Bear Pty Ltd v McGoldrick (No 2) [2017] NSWSC 789
Hearing dates: Written Submissions
Date of orders: 19 June 2017
Decision date: 19 June 2017
Jurisdiction: Common Law
Before: Rothman J
Decision:
(1) Vacate Order 2 of the Orders issued on 3 May 2017;
(2) In lieu thereof, the Court orders:
(a) Each party shall bear its or his own costs.
Catchwords: COSTS – ordinary rule that costs follow the event – discretion to be exercised judicially – defendant was auditor – exceptional circumstances – defendant successful on causation only – defendant found to have breached duty of care and to have issued misleading and deceptive statements by virtue of audit – defence that no relevant duty not reasonably available – also defence of no breach where Court determined significant and serious breach – causation an insignificant aspect of proceedings – no order as to costs.
Legislation Cited: Civil Liability Act 2002
Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005
Cases Cited: Cam & Bear Pty Ltd v McGoldrick [2016] NSWSC 1894
Calderbank v Calderbank [1975] 3 All ER 333
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120
Category: Costs
Parties: Cam & Bear Pty Ltd ACN 139 844 741 (Plaintiff)
John McGoldrick (Defendant)
Representation:
Counsel:
G Drew / C Lee(Plaintiff)
P A Horvath / N Oreb (Defendant)
Solicitors:
Licardy & Company Lawyers (Plaintiff)
Esplin Solicitors (Defendant)

File Number(s): 2013/40165

Judgment

On 3 May 2017, the Court issued judgment in the substantive matter (Cam & Bear Pty Ltd v McGoldrick [2016] NSWSC 1894 [the “judgment on liability”]) and provided the parties with liberty to apply for any special or different order as to costs. By application of 9 May 2017, the plaintiff applies for such a different or special order. On 10 May 2017, the defendant also sought that the Court exercise the reservation by making an order of a different kind as to costs. This judgment deals with each such application. The issue has been determined on the papers.
The plaintiff’s application is by way of submission (as the previous order of the Court required) filed 9 May 2017. The defendant’s application, likewise, involves submissions filed 10 May 2017. Each of the applications are the subject of submissions in reply filed 15 May 2017 and 16 May 2017 respectively. The defendant relies upon an Affidavit of Hamish Esplin of 9 May 2017, which is formal in nature, in that it recites the timing of the service of expert reports and encloses an offer to resolve the proceedings, without prejudice save as to costs, said to amount to a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333).
The terms of the letter propose that the plaintiff resolve the proceedings on the following basis (in full and final settlement of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 789
Decision Date: 19 June 2017

CaseChat Overview and Summary

The case of Cam and Bear Pty Ltd v McGoldrick (No 2) involved a dispute between the plaintiff, a company, and the defendant, an auditor. The plaintiff alleged that the defendant had breached a duty of care and issued misleading and deceptive statements through the audit of the company's financial statements. The defendant raised several defences, including that no relevant duty was reasonably available and that there was no breach, particularly in light of the serious and significant breach that had already been determined by the Court. The matter was heard in the Supreme Court of New South Wales.

The primary legal issue before the Court was whether the ordinary rule that costs follow the event should be departed from, in light of the exceptional circumstances present in the case. The Court had to determine whether the discretion to award costs should be exercised judicially, considering the defendant's success on only one aspect of the proceedings - causation - while still being found to have breached a duty of care and issued misleading and deceptive statements.

The Court found that the ordinary rule that costs follow the event should not be departed from in this case. The Court held that causation was an insignificant aspect of the proceedings, given the serious and significant breach already established. The Court noted that the defence of no relevant duty was not reasonably available and that the defence of no breach was also unsuccessful. The Court exercised its discretion judicially, taking into account the exceptional circumstances of the case, and determined that no order as to costs should be made.

No further orders were made in relation to the costs in this case. The Court's decision highlights the importance of considering exceptional circumstances when exercising discretion in awarding costs, particularly in cases where the defendant is successful only on a minor aspect of the proceedings.

Orders