Elizabeth Grove Shopping Centre P/L v Commonwealth Bank of Australia

[1994] FCA 464

ELIZABETH GROVE SHOPPING CENTRE PTY LTD AND JAMES GEORGE CACAS v.
COMMONWEALTH BANK OF AUSTRALIA
No. SG21 of 1993
FED No. 464/94
Number of pages - 3
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
HEEREY J

CATCHWORDS

Practice And Procedure - costs - partial success by both parties - defensive proceedings - amount of reduction

Federal Court Rules O.62 r.36A

Cretazzo v Lombardi (1975) 13 SASR 4
Interwest Ltd v Tricontinental Corporation Ltd (1991) 9 ACLC 1218
Sydmar Pty Ltd v Statewide Development Pty Ltd (1987) 11 ACLR 616
Wiley v Synan (1935) 54 CLR 175

HEARING

ADELAIDE, 15 July 1994
#DATE 15:7:1994, MELBOURNE

Counsel for the applicant: R Kendall and D Johnson

Solicitor for the applicant: David Johnson

Counsel for the respondent: D G W Howard

Solicitor for the respondent: Neville P Anderson

ORDER

The Court Orders: 1. The respondent pay 80 per cent of the applicants' costs, including

reserved costs.

2. The applicants pay the costs thrown away by reason of the

amendments to the statement of claim and reply made during the course of the trial.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the

Federal Court Rules

JUDGE1

HEEREY J I have considered the written submissions that both sides have made pursuant to leave reserved when judgment was delivered on 22 June 1994.

1. The applicants' contention was that they had been substantially successful in their claims, that the Bank had failed completely in its cross-claim and therefore they should have all their costs. Alternatively, if there was to be an apportionment in regard to the applicants' failure on the valuation issue, they contended that should result in the Bank not obtaining more than one-fifth of the total cost of the proceeding.

2. The Bank's contention was that it should have its costs on the claim and the applicants their costs on the cross-claim. In the alternative, it was submitted that there should be no order as to the costs in relation to the issues of liability on the claim and cross-claim but that the Bank should have its costs in relation to all issues relating to the quantum of the applicants' claim.

3. In my opinion, looking at the substance of the dispute, the applicants were in reality not the instigators of this litigation. The proceedings, although commenced by the applicants, were essentially defensive in response to the action taken by the respondent in terminating the MOF agreement, calling up the overdraft and selling EGSC's shopping centre. As to having regard to the true nature of the litigation, see Wiley v Synan (1935) 54 CLR 175 at 180, 185 and 186, Sydmar Pty Ltd v Statewide Development Pty Ltd (1987) 11 ACLR 616 at 626, Interwest Ltd v Tricontinental Corporation Ltd (1991) 9 ACLC 1218 at 1228.

4. That action of the Bank I have held to be wrongful. Accordingly the applicants should have their costs, subject to reduction of appropriate. I do not think O.62 r.36A should be applied. That rule provides for a reduction of one-third where a party is awarded judgment for less than $100,000, unless the Court or a Judge otherwise orders. The substance of the matter was not merely that the applicants obtained a judgment for $1; they were successful in resisting the Bank's cross-claim for an amount well in excess of the $100,000 mentioned in the rule because they succeeded on the issues raised by their own claim.

5. Turning to the question of reduction, I accept that, as the applicants contend, it can be undesirable in some circumstances for the Court to undertake a separate examination of various issues in a case in order to apportion costs: see Cretazzo v Lombardi (1975) 13 SASR 4 at 16 per Jacobs J. For example, in the present case, I think it would be wrong (not that the Bank has suggested I do this) to apportion costs on the basis that the applicants failed on the issues as to the construction of the contract and the provision of financial statements and only succeeded on the election point. However, it does seem to me that the question of the valuation of the Centre and the inextricably linked question of the appropriateness of the conduct of the sale did raise questions of fact and law quite distinct from those arising out of the relationship of banker and customer on which the applicants succeeded. The applicants had an alternative claim; they argued that in the alternative the Bank breached its duty as mortgagee. There was a substantial amount of evidence and argument on this discrete issue on which the applicants failed. Put another way, the applicants could have accepted at the outset that (as I have found) the sale was properly conducted and the price realised reflected the true value of the Centre. They could still have pursued the claim on which they succeeded.

6. I think therefore that the appropriate course is to reduce the applicants' costs. An apportionment of this kind has to be done on a broad basis. The reduction I make is 20 per cent. This figure is not determined solely by an arithmetical assessment of the portion of the hearing that was taken up with the valuation issue. I also take into account the reality that there are costs incurred in a substantial case like the present one - for example, conferences, preparation, travelling expenses and the like - which either cannot realistically be apportioned as between different issues or would have been incurred in any event. I also think the appropriate and most convenient course is a reduction of the applicants' costs rather than making a separate order in favour of the Bank with a reduction of 80 per cent.

7. Therefore there will be an order that the Bank pays 80 per cent of the applicants' costs, including reserved costs. It was not disputed that there should also be an order that the applicants pay the costs thrown away by reason of the amendments to the statement of claim and reply made during the course of the trial.

8. The Rules of Court do not provide for certificates for two counsel. That will be a decision for the taxing officer. However, I note the concession of the Bank that this was properly a case for the engagement of two counsel, and I would record my agreement with that.