Dual Homes Pty Ltd v Moores Legal Pty Ltd (Costs Ruling)

[2016] VSC 113

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2012 7079

DUAL HOMES VICTORIA PTY LTD & ORS	Plaintiffs
v
MOORES LEGAL PTY LTD and PILLEY McKELLAR PTY LTD	Defendants

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JUDGE:	JOHN DIXON  J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	21 MARCH 2016
DATE OF RULING:	24 MARCH 2016
CASE MAY BE CITED AS:	DUAL HOMES PTY LTD v MOORES LEGAL PTY LTD & ANOR (COSTS RULING)
MEDIUM NEUTRAL CITATION:	[2016] VSC 113

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COSTS – Costs of proceeding following trial – Defendants successful on some discrete issues – Discretionary considerations – Plaintiffs recover 70% of costs – No new point of principle – Chen & Ors v Chan & Ors [2009] VSCA 233 applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M.A. Robins QC with Mr S. Warne	Roy Jaffit, Rochman & Co
For the Defendants	Mr D.A. Klempfner	Lander & Rogers

HIS HONOUR:

1. The plaintiffs apply for an order for their costs of the proceeding.  There are several issues.  The plaintiffs seek their costs of the proceeding on a party/party basis or a standard basis (from 1 April 2013) and their costs on the issues on which they have succeeded on an indemnity basis. 

1. The defendants contend that the plaintiffs were unsuccessful on significant discrete issues, namely particular items of the quantum claim. The defendants submit that their liability to pay costs should not be on an indemnity basis and should be restricted to what I describe as the non-property losses. Further, the plaintiffs should pay the defendants’ costs incurred in the proceeding in respect of the property losses.  Alternatively, there should be no order as to the costs of the proceeding.  Alternatively, the defendants should pay the plaintiffs’ costs in respect of the plaintiffs’ non-property losses but there should be no order as to the costs of either party in respect of the plaintiffs’ property losses.  Finally, the defendants suggest that a costs order in favour of the plaintiffs should be restricted to a percentage of their total costs, with the suggested percentage of 42%.

1. In Chen & Ors v Chan & Ors[1] the Court of Appeal with particular reference to Ritter v Godfrey,[2] Oshlack v Richmond River Council,[3] and a number of its own earlier decisions, distilled the relevant principles to be as follows:[4]

   [1][2009] VSCA 233.

   [2][1920] 2 KB 47.

   [3](1998) 193 CLR 72, 97-98, 124.

   [4][2009] VSCA 233, [10] (citations omitted).

(1)The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.

(2)The Rules of Court permit significant flexibility in determining questions of costs.  In particular, the Court is entitled to examine the realities of the case and will attempt to do ‘substantial justice’ as between the parties on matters of costs.

(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis.  Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.

(4)A Court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.

(5)Where a Court determines to make an order apportioning costs, then it does so primarily as ‘a matter of impression and evaluation,’ rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.

(6)Where a number of parties have had the same representation,  there is a ‘rule of thumb’ as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf.  The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted.

(7)Usually, an order for costs will be made on a party/party basis.  But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated, for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding.  Special circumstances may also include the making of an allegation of fraud which is not proved.

In applying these principles in the present case, a number of observations can be made.

1. First, the plaintiffs succeeded in the proceeding. For present purposes, the judgments in favour of the first plaintiff against each defendant may be considered collectively.  The first plaintiff recovered, inclusive of interest, $585,084.52. That is the primary event which costs should follow.

1. Secondly, the first plaintiff’s judgment was more favourable to it than the settlement offer that it received prior to trial that was disclosed by the parties.

1. Thirdly, the various items of loss that made up the damages claim are set out in the judgment.[5]  The items of loss conveniently categorised as the ‘property losses’ are items of loss 6, 7, 8 and 9 and items 1-5 inclusive and 10-20 inclusive are the ‘non-property losses’.  The first plaintiff succeeded in its claim to the non-property losses but failed to establish its claim to the property losses.

   [5]Dual Homes Pty Ltd v Moores Legal Pty Ltd & Anor [2016] VSC 86, [273].

1. Fourthly, the evidence and submissions in respect of the property losses were discrete. The property losses were in the nature of loss of opportunity claims that followed from it being put into liquidation and losing control of its affairs. All of the expert evidence that was called related exclusively to the property loss claim and although there was some separate cross-examination of the Roiniotis witnesses in relation to these property losses, for the purposes of costs that overlap should be disregarded and considered to be a minuscule part of the costs incurred in establishing liability and causation (on which the plaintiffs succeeded).

1. Fifthly, although the defendants persuaded me that they were immune from suit in respect of part of their negligence, for costs purposes it is not appropriate to break down the liability and causation issues that arose in the proceeding into sub-issues.

1. Sixthly, four experts gave evidence in respect of the property losses and following direction from the court they met in a conclave and produced a joint report.  That process benefitted the parties in that concessions were made including abandonment by the plaintiffs of item 7 of their particulars of loss.  The process advantaged both the parties and the court.

1. Seventhly, I was critical of the experts, in particular Mr Cations, called by the defendants in respect of compliance with the Expert Code of Conduct.[6] Failure to comply with the Expert Code may be an influential consideration in the costs discretion in respect of an issue.

   [6]Ibid, [280].

1. Eighthly, I accept the defendants’ submission that the quantification of the property losses was a sufficiently discrete issue to permit the conclusion that the defendants succeeded on that issue although they lost on all other issues.

1. Ninthly, I reject the plaintiffs’ submission that the plaintiffs should have their costs of the issues on which they succeeded on an indemnity basis because, contrary to s 18(d) of the Civil Procedure Act 2010 (Vic), the defendants did not have a proper foundation for the factual and legal positions that were advanced at trial. That conclusion does not follow from the defendants’ failure to succeed on those issues. For the reasons discussed in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5),[7] I was not persuaded that there was breach of the relevant overarching obligation in the sense contended for by the plaintiffs. It is inappropriate to reason, with the benefit of hindsight flowing from the court’s findings in a judgment, that a defence to a claim lacked a proper foundation at the relevant time, usually when it was pleaded or certified.  Further, without more, a failure to succeed at trial on an issue does not require the conclusion that a party was guilty of conduct that was sufficiently egregious to warrant a punitive costs order. 

   [7][2014] VSC 400, [80]-[89].

1. Tenthly, an analysis undertaken by the defendants’ solicitor of the transcript suggested that approximately one third of the trial time was spent in relation to the property losses.  I do not accept that the second sitting day of the trial was largely lost by reference to the expert conclave procedure.

1. As a matter of impression and evaluation, having considered the significance of the issues upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, I am satisfied that substantial justice will be achieved between the parties on matters of costs if I ordered that the plaintiffs recover 70% of their costs.

1. The Court will order that the defendants pay 70% of the plaintiffs’ costs of the proceeding, including reserved costs, on a party party basis to 1 April 2013 and thereafter on a standard basis.

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