Gladstone Park Shopping Centre Pty Ltd v Ross Wills

[1984] FCA 448

c

448 CATCHWORDS

Costs - costs of. successful third party against respondent on

cross claim with right of respondent to recover from

applicant - whether -applicant should be ordered to pay -

directly third party's costs - discretion to award costs

pursuant to 9.43 Federal Court	of Australia Act - appeal from
discretion of trial judge.

Federal Court of Australia Act 1976 5.43

CLADSTONE PARK SHOPPING CENTRE PTY. LTD. and

HERSFIELD DEVELOPMENTS CORPORATION PTY. LTD.

V.

ROSS WILLS and ROSS WILLS	& ASSOCIATES PTY. LTD.
and ROSETTA ARISTOTITE
V. No. G. 210 of 1984

Northrop. Danes and Beaumont JJ.

Melbourne

18 December 1984

I N THE FEDERAL COURT OF AUSTRALIA	)
)
VICTORIA DISTRICT REGISTRY	) V. No. G 210 of 1984
1
GENERAL DIVISION	)

ON APPEAL F R O M THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

GLADSTONE PARK SHOPPING CENTRE PTY. LTD. and

HERSFIELD DEVELOPMENTS CORPORATION PTY. LTD. Appellants

and

ROSS WILLS First Respondent

and

ROSS WILLS & ASSOCIATES PTY. LTD. Second Respondent

and

ROSETTA ARISTOTITE! Third Respondent

CORAM: Northrop. Davies and Beaumont JJ.

DATE: 18 December 1984

PLACE: Melbourne

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2 . The appellants pay the costs of the first and second respondents of the appeal.

IN THE FEDERAL COURT OF AUSTRALIA )

VICTORIA DISTRICT REGISTRY	) V. No. G 210 of 1984
)

GENERAL DIVISION - )

ON APPEAL F R O M THE FEDERAL COURT OF AUSTRALIA

GLADSTONE PARK SHOPPING CENTFtE FTY. LTD. and

HERSFIELD DEVELOPMENTS CORPORATION FTY. LTD. Appellants

and

Respondent ROSS WILLS First

and

ROSS WILLS & ASSOCIATES PTY. LTD. Second Respondent

and

ROSEITA AR STOTITE Thlrd Respondent

CORAM: Northrop, Davies and Beaumont JJ.

DATE: 18 December 1984

PLACE: Melbourne

REASONS FOR JUIXMENT

NORTHROP J:	I would dismiss the appeal with costs for	the
reasons given	by Beaumont J.

IN THE FEDERAL COURT OF AUSTRAtIA 1

)

VICTORIAN DISTRICT REGISTRY . . . No. VG.210 of 1984

)

GENERAL DIVISION )

ON APPEAL F k O M A SINGLE JUDGE OF THE

FED- COURT OF AUSTRALIA

B!Z!XEEN : GLADSTONE PARK SHOPPING

CENTRE PTY LTII and

HERSFIELD DEVELOPMENTS

CORPORATION PTY LTD

Appellants

AND WILLS ROSS

First named Respondent

AND

ROSS WILLS Ei ASSOCIATES

PTY LTD

Second named Respondent

AND ROSFITA ARISTOTITE

Third named Respondent

REASONS FOR JUDGMENT

CORAM : Northrop, Daviee and Beaumont JJ

18 December 1984

DAVIES J : I have had the opportunity of reading the reasons prepared by nr Justice Beaumont. .I ,agree with them, but would

add a few words of my own.

Section 43 of the federal Court of Australia Act 1976 (Cth)

provide8 :

2.

"43.(1) The Court or a Judge has jurisdiction to

award costs in all proceedings before the Court

(including proceedings dismissed for want of

jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded.

( 2 ) Except as prcivided by any other -Act, the .

award of costs is in the discretion of the Court

or Judge. 'I

"he discretion conferred by this section is wide. Attempts

to specify narrow criteria for its exercise have not been

successful. In the exercise of the discretion, each case must be

considered on its own particular facts. Nevertheless,	the
discretion is to be exercised judicially.

An award of costs does not arise only occasionally and in

special circumstances. It is a question which arises in almost

every case. In such circumstances, justice demands consistency

of approach. Necessarily, rules of practice or guidelines for the exercise of the discretion have evolved. One such rule is

that, ordinarily, costs hould follow the event. As Lord

Sterndale, MR, said in Ritter v Godfrev C19203 2 KB 47 at 52-3,

"...there is ... a settled practice of the Courts

that in the absence of. special circumstances a

successful litigant should receive his costs, that

it is necessary to show some ground for exercising

a discretion by refusing an order which would give

them to him. "he discretion must be judicially

exercised, and therefore there must be some

grounds for its exercise, for a discretion .I,

exercised on no grounds cannot be judicial. ...

At p.54, Atkin.LJ,said.:

' I . . . Costs are to be in the discretion of the Court

or judge. If this discretion is absolute the

appellant must fai-l; if the discretion is

limited, then &he .appellant must show that the

cxerciae of the discretion in this case exceeded

the proper limits. I think that it will appear

from the authoritlea to be mentioned that the

3 .

discretion of the Court or a judge is not an absolute discretion, but must be exercised subject to certain governing princlplw which in this appeal it seems to me necessary to ascertain."

His Lordship went on to review "...cases where costs follow the

event, unless .-'kW judge thinks there ts, good -cause;" ,-*and then, . -I

after reviewing other authorities, said at p.60 :

' I . . . In the case of a wholly successful defendant, in my opinion the judge must give the defendant

his costs unless there is evidence that the defendant (l.) brought about the litigation, or ( 2 . ) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or ( 3 . ) has done some wrongful act in the course of the transaction of which the plaintiff complains.

...

It is not necessary for me to review the authorities

further, for the principles	governing the award of costs are	well
understood.

In the present case, an application had been brought in the Federal Court of Australia based upon ss.52 and 53A of the Trade

Practices Act 1974 (Cth) alleging that the first named respondent in the appeal, Ross Wills, and his company, the second named respondent, Ross Wills & Associates Pty Ltd, had engaged in conduct that was misleading and deceptive and had done so as

agents for the appellants, Gladstone Park Shopping Centre Pty Ltd

and Hersfield Developments Corporation Pty Ltd. In addition to

defending themselves, the appellants joined Ross Wills and Rosa

Wills €i Associates Pty Ltd in the action and sought indemnity '

from them should the applicant's claims succeed. In the result, the applicant failed and, consequentially, the proceedings for indemnity between the appellants and the respondents, Ross Wills

5.

His Honour recognised that there was an "unfettered judicial

discretion" bbt I - ncvertheIess there 'wan a ''way in which the

unfettered judicial discretion as to costs is exercised when no

circumstance appeaxs.Co .- juatlfy any other -order.. 'l . His -Honour

took into account the impecuniosity of the applicant and the fact

that this impecuniosity gave "practical importance" to the manner

in which costs were awarded. In my view, his Honour was correct

in doing so. I do not find in his Honour's judgment any

misstatement of fact. There was no relevant fact which his

Honour failed to take into account and no irrelevant matter to

which his Honour gave weight.

The main crux of the appellants' case on the appeal was

that the conduct which had led to the litigation was conduct of Ross Wills and of Ross Wills & Associates Pty Ltd. It was their

conduct which gave rise to the litigation, not conduct of the

appellants, and therefore, it was submitted, it was not proper to

award costs against the appellants, who were the innocent parties

in the affair. That was the substance of the matter, though the

argument was put in more elegant terms.

It would I think have been open to the learned trial Judge

to accept that view. Conduct which gives rise to litigation can

provide a ground for refusal of costa. - Bee Harnett v m -4-1880) -

5 R D 307, Bostock v pamsev Urban District Council C19003 2 QB

616 and Y Tavlor C19673 3 All ER 253. But his Honour was

. the judge of the facts and had a discretion to exercise, He came ...

to the view that the conduct prior to the litigation- of Rosa

Wills and of Ross Wills XI Associates Pty Ltd was not such as to

6 .

justify deprivation of the costs to which, as successful parties,

they would OrdiMriZy ' be mtitled. The argument put on .the .

I

appeal did not persuade me that his Honour's conclusion in this

respect was erxm-eaun;-. : :. - -. I I

I would therefore dismiss the appeal with costs.

.e1 #Ity that thls and the (9)

preceding pages are a true copy of the

reasons for judgment herein of The Honour-

able Mr. Justlce T.P 9 f l w ~

G 4 k 4 -

k l a t e

Dated

1 9 4 1 at*

JN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIAN REGISTRY	)
)
GENERAL DIVISION	) No. VG 210 of 1984

ON APPEAL from the Federal Court

of Australia

BEIWEEN:	GLADSTONE PARK SHOPPING CENTRE PTY. LIMITED and HERSFIELD DEVELOPMENTS CORPORATION PTY. LIMITED
Appellants

AND : ROSS WILLS First Respondent

m:

ROSS WILLS & ASSOCIATES PTY. LIMITED

Second Respondent

R O S W A ARISTOTITE

Third Respondent

C B : Northrop, Davies and Beaumont. JJ.

D=: 18 December 1984.

REASONS FOR JUDGMENT

2 .

BEAUMONT. J.: T h l s is an appeal from part of the judgment

of a sinole judge of the Court (Jenkinson, J.) in

proceedings brouqht by the third respondent against the

appellants clalminq, first. damages pursuant to 53 .52 . 53A

and 82 of the Xrade Practices Act, 1974; and -secondly, a

declaration that certain leases were void. In the

proceedings. the appellants brouqht a cross-claim aqainst the third respondent for monies alleged to be due by her

under one of the leases and for damaaes for breach of the

aureement for that lease. The appellants also brought	a
cross-claim against the first and second respondents for

indemnity or contribution in respect of the claims of the

third respondent. For reasons he then gave. after notlna an

undertaking uiven by the first appellant. the learned ludge

dismissed the claims of the third respondent. and dismissed

the appellants' cross-claim auainst the first and second

respondents. The third respondent was ordered to pay the

appellants' costs of the proceedings and the costs of the

appellants arising from their cross-claim auainst the flrst

and second respondents. The appellants were also ordered to

pay the costs of the first and second respondents of the

cross-claim auainst them. Further, althouuh (for reasons

which will appear) there is only a slight prospect of

recoverv on this account, the third respondent was ordered

to pay to the appellants the amount of the costs of the

first and	sewnd	respondents ordered to be paid by the
appellants.

3 .

The appeal is broucrht against the order that the

appellants pay the costs of the first and second respondents

of the unsuccessful crosl-claim against them: the

appellants contend that the learned judge should have

ordered that these costs be paid by the third respondent. .

In essence, the case sought to be made at the trial

by the third respondent against the appellants was that she

was induced to enter into a lease of premises in a shopplnq

centre being developed by the appellants by misleading

conduct of a number of persons. A director of the

appellants. the first respondent and other unidentifled

aqents of the second respondents were implicated. The

second respondent was retained by the appellants as their

leasinu agents. The first respondent was the manaqinq

director of the second respondent.

Most of the evidence at the hearinu was directed at

allegations auainst the first respondent. In the factual

contest which developed. the learned judge accepted the

evidence of the flrst respondent and relected the third

respondent’s case. In the result, both the claim and the

cross-claim were dismissed. Althouah. in the circumstances,

the ultimate burden fo r the costs of the whole proceedings

was thrown upon the third.respondent. she has not sought to

appeal from any part of the judgment. She did not appear on

this appeal. If she were in a financial position to

4 .

discharqe this burden in its entirety. it is probable that

this appeal would not have been brought. But. since it

appears that she is in no’ such position havinq. as his

Honour said. very little in the way of property or income. it is unlikely that the appellants will obtaln satisfaction of the order made in their favour by way of reimbursement.

as it were, for the costs which they are liable to pay the

first and second respondents on their cross-claim.

As has been said, it is the appellants‘ contention

that. in the circumstances. the proper order to be made	on
the costs of the cross-claim is that the third respondent

should pa:J the costs of the first and second respondents to

the exclusion of the appellants. In support of this

contention. the appellants submit that the discretion with

respect to costs conferred by 9 . 4 3 of the Federal Court of

Australia Act. 1976 is an unfettered discretion: that,

althouuh this discretion must be exercised judicially, there

is no rule that costs must follow the event. Rather. they

argue. costs should be awarded as the justice of the case

requires. Here, they say, the dlctates of justlce require

that the first and second respondents should alone carry the

ultimate burden of the costs of the cross-claim. since the fate of the litiuation turned on the outcome of a number of discussions between the third respondent and the first

respondent acting as the appellants’ agent- for that purpose.

In that sense, the appellants aruue. it may be said that the

5.

first respondent caused the proceedings to be brouuht in the

first place. The appellants submit that, if it be needed.

precedent for an order that an unsuccessful plaintiff pay

the costs of a successful third party may be found in two

Enulish cases 1Edsinton v. Clark C19643 1 Q.B: 367: Thomas

v. Times Book Co.’Limited C19663 2 All E.R. 241) and in an

unreported decision Kape, of J. Devon in Down

(Administrators) Pty. Limited v. Theodoropoulos (Supreme

Court of Victoria. 7 April 1982). In those cases, as here.

the aruument runs, it was thouuht appropriate to visit the

third party with costs because the real contest lay between

the plaintiff and the third party.

It is common uround that since the award of costs

is a matter within the discretion of the trial judue. the

appellants must demonstrate an error in the exercise of that

discretion of the kind which would justify the intervention

of an appellate court in accordance with the well

established principles (see H o u s e v. R_. (1936) 55 C.L.R. 499

at pp.504-5: Adam P. Brown Male Fashions Ptv. Limited v.

Philip Morris Incorporated (1981) 35 A.L.R. 625 at p.628).

In my view. the learned judge, in the course of his

careful consideration of the question of the allocation of

the burden of the. costs of the - cross-claim. correctly

applied the judicial discretion he was called upon to

exercise.

6.

It is suugested on behalf of the appellants that

the learned judue fell into error by applyinu certain

Enulish authorities In this area. In particular. It is

submitted that those English cases which hold that, as a

general rule. . costs hould follow the event. are

distinguishable here because. unlike 5.43 of the Federal

Court of Australia Act. the English provision explicity refers to costs followinu the event. The appellants also

attack his Honour's reliance upon the reasoninu of the Court

of Appeal in Johnson v. Ribbins C19773 1 W.L.R. 1458.

In that case, the defendant mortqagee. aqalnst whom

the plaintitf mortgagor claimed damaqes for an alleged sale

of the mortaaged property at an undervalue. joined as third

parties the real estate agent and the solicltor who had

arranued and conducted the sale on the defendant's behalf.

The plaintiff's statement of claim included alleuations of

conduct b:J those agents which would, if proved, have

justified his claim for damages. The allegations were not

were dismissed. The plaintiff was impecunious and the thlrd

parties sought orders that the defendant pay their costs.

sustained and the action and the third party proceedings further order that the costs of the third parties be paid by

7 .

the plaintiff to himself, there should be a single order for

payment of those costs by the plaintiff to the third

parties. The Court of Appeal rejected the suagestion saying (at p.1463). in a passage cited by Jenkinson. J.:

'I... the court should be uuided by the

principle that normally costs follow the

event as is expressly provided by R.S.C..

Ord.62 r.3(2) and should. therefore. normally

order the defendant. though successful in the

action. to pay the costs of the third party

if he also be successful. Then if in the

circumstances of the case these costs ought

fairly to be borne by the plaintiff the court

will further order that they be added to the

defendants' costs of the action as against

the plaintif f .

Mr. Balcombe argued that one cannot apply

Ord.62 r.3(2) to third party proceedings,

because the only relevant event is the

outcome of the proceedings as a whole. One

cannot, so he submitted. look at the third

party proceedings separately. We cannot

accept that view as a general proposition and

certainly not as applicable to this case.

thouuh it might be true in particular cases.

Generally. we think it will be found, and

certainly so in this case. that the defendant

and the third party stand in relation to one

another as if the defendant had brouaht a

separate action auainst he third party ...

Thus.. the question resolves Itself in our

view into this, namely, is there on the facts

of this case an:?thing which should lead the

court in exercisinu its discretion to depart

from the normal principle that costs follow

the event? We can see nothinu. On the

contrary, in our judqment, the facts call

stronsly for it to be observed.

Apart from the impact of legal aid the

consideration of which, as we have already

observed. is excluded by the Act itself, we

can see nothing which the defendants can call

in aid except the impecuniosity of the

plaintiff. but it cannot be right to deprive

a third party of an order for costs to which

8.

he is otherwise entitled auainst the

defendant. because the defendant when looking

to the plaintiff for reimbursement finds a

person not worth powder and shot."

In my opinion. the learned judge was correct in his

application of this reasoning in the present case,

recognising. as he put it, that "the general scheme of third

party procedure in this Court and the aeneral practice as to

costs in this Court are sufflciently similar to the

procedure and practice in the Hiuh Court in England that,

notwithstandinq differences between rules and statutory

provisions, I think I should allow Johnson v. Ribbins and

L.E. Cattan Ltd. v. A. Michaelides .S Co. (a decision of

Diplock. J. - see C19583 1 W.L.R. 717 at p.720) a

substantial persuasive influence".

In anv event, whilst s.43 of the Federal Court of

Australia Act may not use the same lanuuage as the English

Rule of Court, the judicial discretion aranted by s.43

should, I think, be exercised in accordance with similar

principles and, ordinarily, costs in this Court should

follow the event (cf. M m v. Attornev-General for the

State of Tasmania (1956) 95 C.L.R. 460: Trade Practices

Commission v. Nicholas Enterprises Ptv. Limited (1979) 28

A.L.R. 201 at pp.206-7: The Dow Chemical Company v. Smith

(Commissioner of Patents) and Imperial Chemical Industries

P S . . unreported.	Northrop. J.. 20 November	1984 at
pp.4-5).

9.

The learned judue was of the view, correctly I

think. that. because the appellants, as principals, had

brought suit against their agents. and the first and second

respondents had failed in their suit. they should pay the costs in the absence of any sufficient reason to displace the ordinary rule in the event of such failure. In mg

opinion, this was a proper exercise of the ludicial

discretion in the events which happened.

The appellants urge that. instead of costs

following the event, his Honour should have made orders of

the kind made in Edainton v. W, supra, and Thomas v.

Times Book Co. Limited, supra. Neither case. in my view.

provides any useful analoqy here. In Edsinton v. Clark. the

plaintiff occupied a vacant bombed site as a squatter from

1947 until September. 1961. when the defendants entered on

the site as weekly tenants of the freeholders and

dispossessed him. He brought an action auainst them for

trespass. claimina that he had acquired a title to the site

by virtue of his adverse possession for over 12 years (which

was uncontested). In 1954, however, the plaintiff had

written two letters to the aaent of the freeholders offering

to purchase the site. and the defendants, who Joined the

freeholders as third parties. submitted that these letters

10.

amounted to an acknowledqment of the freeholders' title so

as to bar the acquisition by the plaintiff of a title to the

site by adverse possession. Upjohn. L.J.. deliverinm the

judgment of the Court of Appeal, said tat p.384):

"The High Court still has. in our view. full and ample power to make such orders as to

costs a s between plaintiffs, defendants and

third and subsequent parties as the justice

of the case may require, and so ex concessis

has the county court. As the county court

judge held that he had no ]urisdiction to

exercise any discretion, it falls to this

court to do so. In the circumstances of this

case it is abundantly clear that the real and

onlv fiqht was between the plaintlff as the

allecred owner bv adverse possession and the

true owners, the third parties. and,

accordingly. we should have been prepared to

order that the plaintlff should pay thelr

costs directly." (emphasis added)

This approach was adopted. for the same reason, in

Thomas' Case. supra. But. In the present proceedlngs. to

borrow the lanuuage of Upjohn. L.J.. the real fight was

between the third respondent and the appellants. It was

their lease that the third respondent was attackinu in the

litiuation. The conduct of the flrst and second respondents

was relevant only as acts done as the auents of the

appellants for which they were vicariously liable. On the

other hand. in both Edsinton v. Clark and Thomas' Case, it

was proper to treat the defendants as little more than

nominal parties.

11.

Nor, in my view, does the decision in Devon Down

(Administrators) Ptv. Limited v. Theodoropoulos, supra.

assist the appellants. For one thin?. Kaye. J. there

declined to make any order for judgment in respect of the

third party proceedings. For another, Kaye, J. approached

the question of costs by enquiring whether the conduct of the defendants in joininu the third party was reasonable.

No doubt such an enquiry is relevant in an application f r a

Bullock order (see v. Vasselas, Full Hiuh Court.

unreported, 6 November 1984). But the makinu of such an

order clearly involves different considerations to the

question now arising.

In the present case, the decision of the appellants

to launch the cross-claim auainst the first and second

respondents may be seen as somethinu done with a view to

advancina their own interests b.- seeking to secure immedlste

indemnity or contribution from the first and second

respondents in the event that the third respondent should

succeed in her claim. In those circumstances. it is only

just that the appellants, rather than the first and second

respondents. should bear the costs of the attempt to secure

such an advantaue for their own benefit.

I would dismiss the appeal with costs-

I certify that this and the /O preceding pages are a true copy of the reasons for judgment herein of The Honourable

Mr Justice Beaumont.