Hancock v Rinehart (Costs)

[2016] NSWSC 11

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Hancock v Rinehart (Costs) [2016] NSWSC 11
Hearing dates:	Written submissions, closed 30 July 2015
Date of orders:	02 February 2016
Decision date:	02 February 2016
Jurisdiction:	Equity
Before:	Brereton J
Decision:	Except insofar as any extant costs order otherwise provides, first defendant (Mrs Rinehart) to pay two-thirds of plaintiffs’ costs of the proceedings, and not to be entitled to indemnity from the trust assets in respect of those costs, or her own costs of the proceedings.
Catchwords:	COSTS – apportionment of costs between issues – where successful plaintiffs fail on a significant issue – whether severable – overall allocation of responsibility for costs of proceedings – tools for apportionment – indemnity costs – whether plaintiffs put to costs wantonly or recklessly.
Legislation Cited:	(NSW) Civil Procedure Act 2005, s 101(4), (NSW) Uniform Civil Procedure Rules 2005, r 36.7 (WA) Trustees Act 1962, s 15
Cases Cited:	Attorney-General (UK) v Murdoch (1856) 2 K&J 571; 69 ER 910 Commonwealth of Australia v Gretton [2008] NSWCA 117 Cretazzo v Lombardi (1975) 13 SASR 4 Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 346; (1993) 26 IPR 261 Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 Hughes v Western Australia Cricket Association Inc (1986) ATPR ¶40-748 James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 Killen v Leigo (NSWSC, Young J, 10 March 1997, unreported, BC9700736) Mobile Innovations Limited v Vodafone Pacific Limited [2003] NSWSC 423 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 NRMA Ltd v Morgan (No. 3) [1999] NSWSC 768 Palairet v Carew (1863) 32 Beav 564; 55 ER 222 Re Buckton [1907] 2 Ch 406 Re the Palermo Unit Trust; Ex parte Philip Milton Rundell (as trustee for various trusts) [2014] WASC 69 Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 Rockdale City Council v Micro Developments Pty Ltd [2008] NSWCA 128 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) [1979] FCA 143; (1979) 28 ALR 201; 42 FLR 213 Turkmani v Visvalingam (No 2) [2009] NSWCA 279 Waterman v Gerling (Costs) [2005] NSWSC 1111 Waters v P C Henderson (Aust) Pty Ltd (NSWCA, 6 July 1994, unreported)
Category:	Costs
Parties:	John Langley Hancock (first plaintiff) Bianca Hope Rinehart (second plaintiff) Gina Hope Rinehart (first defendant) Ginia Hope Frances Rinehart (second defendant) Hope Rinehart Welker (third defendant) Hancock Prospecting Pty Ltd (fourth defendant) Hope Downs Iron Ore Pty Ltd (fifth defendant)
Representation:	Counsel: C Withers w A Hochroth (plaintiffs) B R McClintock SC w S A Lawrance (first defendant) R G McHugh SC w P W Flynn (second defendant) M Deutsch (solicitor) (third defendant) D B Studdy SC w C Colquhoun (fourth and fifth defendants)   Solicitors: Yeldham Price O’Brien Lusk (plaintiffs) Corrs Chambers Westgarth (first, fourth and fifth defendants) Gadens Lawyers (second defendants) Deutsch Miller (third defendant)
File Number(s):	2011/285907

Judgment

1. Following Mrs Rinehart’s announcement shortly before the commencement of the final hearing in October 2013 that she sought to be discharged as trustee, her removal as trustee ceased to be a live issue in the proceedings (“the removal issue”). There remained in the substantive proceedings the following four main issues, which were the subject of the hearings on 8 – 14 October 2013 (“the October hearing”) and 24 – 27 June 2014 (“the June hearing”), and of the substantive judgment delivered on 28 May 2015: [1]

   1. Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207.

1. Whether amendments made in 2006 to the constitution of HPPL should be declared ineffective insofar as they relate to the shares held by Mrs Rinehart as trustee of the Trust, on the footing that Mrs Rinehart’s consent to them was a fraud on a power (“the 2006 amendments issue”);

2. The appointment of a new trustee in place of Mrs Rinehart (“the replacement trustee issue”);

3. Relief ancillary to the replacement of Mrs Rinehart in the nature of access to trust documents and the taking of accounts (”the ancillary relief issue”); and

4. Costs, including whether Mrs Rinehart was entitled to be indemnified out of the trust property (“the costs issue”).

2. The costs issue was resolved, at least in part, on 9 October 2014, when an order was made by consent that Mrs Rinehart pay the plaintiffs’ costs of the proceedings for her removal on the indemnity basis (and not be entitled to indemnity from the trust in respect of those costs or her costs of the proceedings in relation to that issue), which order has since been the subject of a gross sum costs order. [2] The balance of the October hearing addressed the 2006 amendments issue and the ancillary relief issue, and preliminary aspects of the replacement trustee issue. The June hearing was concerned only with the replacement trustee issue.

   2. Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640.

3. The plaintiffs failed on the 2006 amendments issue. In particular, they failed to establish that, in consenting on behalf of the Trust to the 2006 amendments, Mrs Rinehart acted in breach of trust or for an improper or extraneous purpose. The plaintiffs succeeded on the replacement trustee issue. The proposal for appointment of custodian and managing trustees under (WA) Trustees Act 1962, s 15, which was propounded by Ginia but effectively supported by all the defendants, failed at multiple levels. On the ancillary issues, the plaintiffs succeeded in obtaining an account in common form from the date of the Hope Downs Deed (though not before then), and an order for delivery up of all trust documents of whatsoever date.

4. There remain for consideration the costs of the remainder of the proceedings.

Submissions

5. The plaintiffs submitted that they should have their costs of the whole of the proceedings (aside from the costs already dealt with by the order of 9 October 2014) paid by the first defendant, on the indemnity basis; or in the alternative by the first and second defendants; or in the further alternative by the first, second, fourth and fifth defendants; that there should be an order under (NSW) Civil Procedure Act 2005, s 101(4), that such costs bear interest from the date that they were paid by the plaintiffs to their lawyers; that there should be no order as to costs for or against the third defendant; and that the first and/or second defendants should not be entitled to any indemnity from the fourth or fifth defendants in respect of costs they may be ordered to pay.

6. Mrs Rinehart submitted that the plaintiffs should pay the first, second, third and fifth defendants’ costs of the October hearing (other than the first day), and be entitled to be reimbursed their costs of the remainder of the proceedings from the Trust on an indemnity basis. Mrs Rinehart accepted that the case was a proper one for an order for interest on costs under s 101(4). Ginia did not seek costs from any party, and submitted that she should not be ordered to pay any party’s costs. Hope submitted that no costs order should be made against her, and sought no order against any other party. HPPL and HDIO submitted that the plaintiffs should pay their costs of the 2006 amendments issue, or alternatively not be entitled to their costs of that issue; that HPPL and HDIO should not be ordered to pay the plaintiffs’ costs of the whole of the proceedings, and not on the indemnity basis; and they otherwise adopted the submissions of the other defendants.

Costs of severable issues

7. In considering liability for costs as between parties to litigation, although the “ordinary rule” is that a successful plaintiff is entitled to its costs, a successful plaintiff who has failed on certain issues may be deprived of costs in respect of those issues, or even ordered to pay the defendant’s costs of them. [3] This is particularly so where a clearly definable and severable issue on which the otherwise successful party failed has occupied a significant part of the trial. [4] The following propositions, of particular relevance in the present context, were stated by Toohey J in Hughes v Western Australian Cricket Association, [5] and have been repeatedly cited with approval: [6]

1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order.

2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.

3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. (references omitted).

3. Hughes v Western Australia Cricket Association Inc (1986) ATPR ¶40-748, 48,136.

4. See Mobile Innovations Limited v Vodafone Pacific Limited [2003] NSWSC 423, [4] (Einstein J); Cretazzo v Lombardi (1975) 13 SASR 4, 16; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 346; (1993) 26 IPR 261; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) [1979] FCA 143; (1979) 28 ALR 201; 42 FLR 213; Waters v P C Henderson (Aust) Pty Ltd (NSWCA, 6 July 1994, unreported); NRMA Ltd v Morgan (No. 3) [1999] NSWSC 768; Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 at [17]; Waterman v Gerling (Costs) [2005] NSWSC 1111, [10] (Brereton J); Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[65] (Campbell JA); Rockdale City Council v Micro Developments Pty Ltd [2008] NSWCA 128 at [115] (Giles JA); Turkmani v Visvalingam (No 2) [2009] NSWCA 279 at [9]-[13] (Hodgson JA); James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 at [31]-[33]; Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [16] (Hodgson JA).

5. (1986) ATPR ¶40-748, 48,136

6. Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 at [17]; James v Surf Road Nominees (No 2) [2005] NSWCA 296 at [33]; Turkmani v Visvalingam (No 2) [2009] NSWCA 279 at [9] (Hodgson JA); Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [16] (Hodgson JA); see also Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[65] (Campbell JA); Rockdale City Council v Micro Developments Pty Ltd [2008] NSWCA 128 at [115] (Giles JA).

8. Contrary to what was assumed in the plaintiffs’ submissions, this approach is not limited to cases in which it was unreasonable for the successful party to raise the issue on which it failed, although the propositions serve only to identify cases in which it may be appropriate to depart from the ordinary rule, as opposed to cases in which the court must do so. [7] Whether a departure from the “ordinary rule” is justified is informed by the underlying objective, which is to achieve an outcome in which costs are borne in a way that is fair, having regard to what the Court considers to be the relative responsibility of each party for the incurring of the costs, [8] as Hodgson JA has explained: [9]

[121] In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach.

7. Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D (Mason P); James v Surf Road Nominees (No 2) [2005] NSWCA 296 at [34]-[36]; Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [18] (Hodgson JA).

8. Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] (Hodgson JA); Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [13] (Hodgson JA).

9. Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] (Hodgson JA).

The 2006 amendments issue

9. The 2006 amendments issue, on which the plaintiffs failed, occupied a substantial proportion of the October hearing, though it was by no means the only issue at that hearing. Mrs Rinehart and HPPL submitted that the 2006 amendments issue was, for the purposes of costs, a discrete severable issue which occupied a substantial part of the proceedings, on which the plaintiffs failed, and in respect of which they should pay the defendants’ costs, or at least not recover their own costs. The plaintiffs argued that the issue was not discrete and severable and they should have the costs of it as part of the costs of the proceedings as a whole in which they claimed to have been substantially successful.

10. The plaintiffs submitted that the 2006 amendments issue was part of, and not separable from, the broader issue of whether the 2006 amendments had the effect of precluding the appointment of an independent trustee, on which the plaintiffs were successful, as the defendants ultimately conceded in the course of the hearing on 11 October 2013 that the 2006 amendments did not have the effect of prohibiting an independent trustee taking a transmission of HPPL shares by court order; and that the plaintiffs raised the validity of the 2006 amendments defensively – originally in reply to Mrs Rinehart’s pleading that the appointment of an independent trustee could not be effected by reason of the provisions of the HPPL constitution, though subsequently they were required to amend the statement of claim to plead those allegations in chief so that the defendants could respond by way of a Defence, partly because the allegations necessitated the joinder of HPPL and HDIO as they did not accept that they would be required to register a transmission of shares to an independent trustee.

11. On the one hand, it is correct that the 2006 amendments issue was first raised defensively, in reply to Mrs Rinehart’s contention that the HPPL constitution had the effect of precluding the appointment of an independent trustee, and that the defendants ultimately conceded, in the course of the October hearing, that it did not do so. However, that does not make Mrs Rinehart responsible for the raising of the issue. Her ultimate concession that the HPPL constitution did not preclude a transfer or transmission to an independent trustee did not arise from or depend on any question as to the validity of the 2006 amendments. While the plaintiffs raised the 2006 amendments issue initially in reply to Mrs Rinehart’s argument that an independent trustee could not be appointed, they also deployed it in aid of the removal of Mrs Rinehart. And they pursued the 2006 amendments issue after and notwithstanding the concession to which I have referred, although much of the argument had been advanced before then. The discrete nature of the issue is illustrated by the circumstances that it continued to be argued after the removal issue had fallen away, it was argued separately from the replacement trustee issue, and it was addressed separately and independently in the substantive judgment. It cannot reasonably be said that the plaintiffs were in substance defendants in respect of this issue, as it was they who raised and pressed it. Moreover, it was the raising of this issue that occasioned the joinder of HPPL and HDIO. And even if the plaintiffs were regarded as defendants in respect of the issue, they still failed on it. It accounted for a significant portion of the costs of the October hearing. In principle, the plaintiffs should be seen as responsible for the associated costs, it being an issue that they raised, unsuccessfully. Their success on the anterior question whether the “fraud on a power case” was within the pleadings does not materially mitigate their ultimate failure on the issue.

12. The parties in suit in respect of the 2006 amendments issue were the plaintiffs on the one hand, and Mrs Rinehart and HPPL on the other. Ginia submits that she was a necessary party to that dispute, but although I am not sure that is so, it matters little where she does not seek costs. Mrs Rinehart bore the brunt of the argument, but given the identity of interest between her, HPPL and HDIO, that too matters little; those defendants should be entitled to only one set of costs.

The ancillary issues

13. The ancillary issues arose directly out of the removal application. The relief sought – the delivery up of trust documents and the taking of accounts – was incidental to and consequential upon the replacement of Mrs Rinehart as trustee. While the plaintiffs did not achieve all they sought in this respect – in particular, they failed to obtain an order for the taking of accounts prior to the date of the Hope Downs Deed – that does not materially detract from their substantial success on these issues.

14. Mrs Rinehart should be seen as responsible for the costs associated with the ancillary issues.

The replacement trustee issue

15. The defendants submitted that after the announcement that Mrs Rinehart sought to be discharged, the nature of the proceedings changed so that the proceedings were no longer a contentious suit for her removal as trustee, but in the nature of an application for the benefit of the trust – given that a new trustee had to be appointed – in respect of which the defendants’ proposal, primarily advanced by Ginia, was a well-thought out and genuine one, with the consequence that the starting point was that each of the beneficiaries should have their costs out of the trust estate, [10] although that was modified by the position of Ginia and Hope in not seeking costs. As the plaintiffs submitted, this would have the practical result that they would bear half of their costs (from their beneficial interests in the trust), and Ginia and Hope the other half. Mrs Rinehart further submitted that her participation in the June hearing was in a minor role, and did not materially increase the plaintiffs’ costs. Alternatively, it was submitted that if a costs order were to be made in respect of the June hearing it should be against the defendants collectively, other than Hope, and not against Mrs Rinehart alone.

    10. Cf Re Buckton [1907] 2 Ch 406; Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 at [35] (Buss JA); Re the Palermo Unit Trust; Ex parte Philip Milton Rundell (as trustee for various trusts) [2014] WASC 69 at [8] (Chaney J).

16. In my view, it is quite artificial to see the dispute about the replacement trustee as a mere non-hostile dispute between beneficiaries over who should be appointed to replace a trustee who wished to retire. While it is correct that I have not accepted that, in propounding the defendants’ proposal, Ginia was a mere cypher of Mrs Rinehart, Mrs Rinehart was plainly materially involved in developing and propounding it. Her co-operation was essential to its implementation, and she was involved in sourcing a number of the proposed appointees. Her counsel took a significant role in (unsuccessfully) advocating the position that it would not trigger the HDJVA right of pre-emption.

15. But that is not the main reason for rejecting the defendants’ submissions in this respect. Where a trustee unsuccessfully resists removal – even in the absence of proven misconduct – the trustee may be ordered to pay the costs of any proceedings required to secure the removal and consequent upon it. [11] It is correct that it was unnecessary in the substantive proceedings to characterise Mrs Rinehart as a defaulting trustee; that question ceased to be relevant as a substantive issue by reason of her ultimate voluntary decision to seek to be discharged. However, in circumstances where she did so at the eleventh hour, in the face of an application to remove her on account of her conduct in September 2011, at a time when she had adduced no evidence to explain it, and consented to an order that she pay the costs of the proceedings for her removal on an indemnity basis, it is right to conclude that her resignation represented a recognition and acceptance on her part that the proceedings for her removal would otherwise have succeeded. In turn, that imports that she was responsible for the incurring of the costs of those proceedings; that consequence cannot be escaped by the strategy of removing the issue of breach of trust by a last minute resignation and consent to a costs order. While her admission did not extend so far, in my view it is a necessary incident that she is also responsible for the incurring of the costs of the proceedings to decide who should be her replacement – a view that does not depend on, but is fortified, by her active participation in those proceedings, as described in the substantive judgment. [12]

    11. Attorney-General (UK) v Murdoch (1856) 2 K&J 571; 69 ER 910; Palairet v Carew (1863) 32 Beav 564; 55 ER 222; Killen v Leigo (NSWSC, Young J, 10 March 1997, unreported, BC9700736).

    12. See Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 at [223]-[233].

16. Mrs Rinehart should be seen as responsible for the costs associated with the replacement trustee issue; she should bear those costs, and not be entitled to indemnity out of the trust in respect of them.

Indemnity costs

19. The plaintiffs submitted that Mrs Rinehart should pay their costs on the indemnity basis.

20. Costs on the party/party basis are intended to be the measure of the reasonable costs incurred by a party in bringing or defending an action. Costs on the indemnity basis recompense a party on a more generous basis – they include all costs incurred by that party which were not unreasonably incurred, and the paying party bears the onus of demonstrating unreasonableness. The fundamental rationale for awarding indemnity costs is that the party ordered to pay costs has caused costs to be incurred intentionally, recklessly or wantonly – for example by running issues that were doomed to fail, by not complying with orders of the court, or by refusing to accept a reasonable offer of compromise.

21. In general, the litigation of the replacement trustee issue involved evaluation of the respective merits of the alternative proposals. As observed in the substantive judgment, the defendants’ proposal was comprehensive and carefully thought out. [13] Although I did not prefer it, it could not for a moment be suggested that it represented an unreasonable position. While I have made adverse observations about aspects of Mrs Rinehart’s conduct in connection with these proceedings – including subsequent to her announcement that she wished to be discharged, in connection with the replacement trustee issue [14] – most of that conduct did not materially increase the costs of the proceedings, although it no doubt severely vexed the plaintiffs.

    13. Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 at [130].

    14. Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 at [225]-[229].

22. The raising by HPPL of objections to Bianca’s fitness, which were ultimately abandoned, is in a different category; the propounding of those serious objections would necessarily have inflicted on the plaintiffs the additional costs of preparing to answer them, and that they were not considered worthy of being pressed is a strong indication that in this respect the plaintiffs were recklessly or wantonly put to additional costs. Given that Mrs Rinehart is the controlling mind of HPPL, I accept that responsibility for those allegations, and the associated costs, can comfortably be attributed to her. However, in the overall scheme of this litigation, the costs of preparing to respond to the HPPL objections would have been a distinctly minority fraction of the costs of the replacement trustee issue.

23. To use an award of indemnity costs to express disapproval of Mrs Rinehart’s conduct in the proceedings would be to misuse what remains a compensatory remedy as a punitive one. To award indemnity costs in respect of the replacement trustee issue generally would go well beyond compensating for the additional costs occasioned by the raising of the later abandoned HPPL objections. In principle, Mrs Rinehart’s responsibility for the costs of the replacement trustee issue should be on an indemnity basis only in respect of the costs of HPPL’s objections to Bianca.

Apportionment

24. The relative time occupied at the hearing by the various issues is a crude instrument for measuring the costs incurred in respect of them, but in the type of broad-brush evaluation involved it provides at least an objective evidentiary starting point.

25. The replacement trustee issue, in respect of which Mrs Rinehart is to be regarded responsible, alone occupied the four days of the June hearing. It also occupied – though not very productively - a portion of the October hearing, during which each party unsuccessfully sought to nominate replacement trustees, and the defendants’ proposal was formulated and evolved.

26. The ancillary issues also occupied a portion of the October hearing.

27. The 2006 amendments issue, on which the plaintiffs failed, occupied a substantial part of the five days of the October hearing. I do not accept the plaintiffs’ submission that the 2006 amendments issue occupied only a “small part” of the October hearing. According to the plaintiffs’ submissions in reply, which I accept in this respect, they account for about 70 of the 200 pages of transcript of the October hearing; and while that is a crude measure it is the best available. That represents about 20% of the June and October hearings combined. Another measure is the substantive judgment, in which 65 paragraphs ([53] to [117]) address the 2006 amendments issue; 219 paragraphs ([118] to [336]) address the replacement trustee issue; and 32 paragraphs ([337] – [368]) address the ancillary issues; again, that produces a result of about 20% attributable to the 2006 amendments issue. While both measures are crude, they provide a sufficient objective basis for present purposes to conclude that about 20% of the case after 8 October 2013 was attributable to the 2006 amendments issue.

28. Accordingly, in principle, and subject to what follows, Mrs Rinehart should be regarded as responsible for 80% of the costs incurred by the plaintiffs, and the plaintiffs should be regarded as responsible for 20% of the costs incurred by Mrs Rinehart and her companies. Setting off those positions, Mrs Rinehart would be responsible for 60% of the plaintiffs’ costs.

29. However, that result does not allow for Mrs Rinehart’s additional responsibility on an indemnity basis for a portion of the costs of the replacement trustee issue. Nor does it give any weight to the plaintiffs’ overall success in the proceedings. Factoring in those matters, and bearing in mind the broad discretionary and impressionistic judgment involved in attributing between the parties responsibility for the costs of the proceedings, in my judgment the proper order is that, except insofar as any extant costs order otherwise provides, Mrs Rinehart should pay two-thirds of the plaintiffs’ costs of the proceedings, on the ordinary basis.

Interest

30. The first defendant accepted that the case was a proper one for an order under (NSW) Civil Procedure Act 2005, s 101(4), for interest on costs insofar as the plaintiffs had been out of pocket by paying costs in the course of the proceedings.

Conclusion

31. My conclusions may be summarised as follows.

32. In principle, the plaintiffs are responsible for one set of defendants’ costs of the 2006 amendments issue; and Mrs Rinehart is responsible for the plaintiffs’ costs of the replacement trustee issue and the ancillary issues. In respect only of HPPL’s abandoned objections to Bianca, her liability should be on an indemnity basis.

33. The 2006 amendments issue accounted for about 20% of the costs of the proceedings after 8 October 2013. While that implies that, setting off their respective responsibilities, Mrs Rinehart should pay 60% of the plaintiffs’ costs, a further adjustment is required to reflect her liability on an indemnity basis in respect of the HPPL objections, and the overall success of the plaintiffs. Factoring in those matters, and bearing in mind the broad discretionary and impressionistic judgment involved in attributing between the parties responsibility for the costs of the proceedings, in my judgment the proper order is that, except insofar as any extant costs order otherwise provides, Mrs Rinehart should pay two-thirds of the plaintiffs’ costs of the proceedings, on the ordinary basis.

34. The Court therefore orders that:

1. Except insofar as any other extant costs order provides, the first defendant pay two-thirds of the plaintiffs’ costs of the proceedings, assessed on the ordinary basis, and not be entitled to indemnity from the trust assets in respect thereof, or in respect of her own costs of the proceedings.

2. Interest be payable, at the rates provided for by (NSW) Uniform Civil Procedure Rules 2005, r 36.7, for interest on unpaid judgment debts, on the Allowed Percentage of each amount of costs and disbursements actually paid by the plaintiffs, from the date of payment by the plaintiffs of each such amount until they are reimbursed pursuant to order (1), where:

1. the allowed percentage = Y/X;

2. Y = the total amount allowed on assessment to the plaintiffs under order (1);

3. X = the total amount of costs and disbursements incurred by the plaintiffs with their legal advisers in connection with those parts of these proceedings that are covered by order (1).

3. There be liberty to apply in the event of any difficulty in working out interest under order (2).

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Endnotes

Amendments

05 February 2016 - Typographical errors, paras [5], [16], [27] and [33]

Decision last updated: 05 February 2016