Hannebery v Domain Capital Pty Ltd (No.3)

[2009] VCC 167

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST

EXPEDITED CASES DIVISION

Case No. CI-08-04037

RICHARD HANNEBERY and ANOTHER	Plaintiffs
v
DOMAIN CAPITAL PTY LTD and OTHERS	Defendants

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	11 March 2009
DATE OF JUDGMENT:	11 March 2009
CASE MAY BE CITED AS:	Hannebery v Domain Capital Pty Ltd (No.3)
MEDIUM NEUTRAL CITATION:	[2009] VCC 0167

REASONS FOR JUDGMENT

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Catchwords:  Costs – Plaintiff’s unsuccessful on primary claim – Whether costs
should be apportioned – Whether “Calderbank” offer not more
generous that orders proposed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M.A. Robins	Nathan Kuperholz
For the Defendants	Mr M.J. Galvin	Maddocks
HIS HONOUR:

1     The following costs issues must now be determined:

a.	whether the costs should be apportioned because of the plaintiff’s lack of success upon a substantial part of the claim;
b.	the effect of the offer of compromise contained in a letter from the defendants’ solicitors to the plaintiffs’ solicitors dated 7 January 2009;
c.	whether a costs order should be made in favour of the second and third defendant as no order has been made on the claims against them;
d.	the order for costs to be made on the counterclaim;
e.	by whom the costs of the further hearing on 4 and 11 March 2009 should be borne.

2     In this proceeding, the essential dispute was between Mr Hannebery on the one hand and Mr Ristrom and Mr Horne on the other. The claims made in the statement of claim included Mr Hannebery’s company as a plaintiff and the claims were made against Domain Capital

Pty Ltd which was and is essentially a vehicle through which Mr Ristrom and Mr Hannebery conduct business, although they also involve their private companies. The close association between the individuals and other entities was demonstrated in relation to the counterclaim. It was necessary for there to be a late amendment to the counterclaim so that the second

and third defendants were substituted as the claimants in place of the first defendant. This
underlies the fact that the litigation was in large part a dispute between the individuals I have
referred to.

3     Mr Hannebery gave evidence on behalf of the plaintiff and the principal witnesses for the defendant were Mr Horne and Mr Ristrom. Mr Galvin, the defendants’ counsel, has submitted that the plaintiffs’ claim in respect of the alleged agreement for the transfer of shares should result in an apportionment of costs because the plaintiff did not succeed on this claim. He submitted that as a substantial amount of the hearing time was devoted to this issue, three quarters of the costs of the proceeding should be paid by the plaintiffs to the defendants.

4     In my view it is not appropriate in this case to compartmentalise the issues in this way. The court needed to hear the whole of the evidence covering the period of the parties’ relationship from early 2006 to mid 2007 in order to determine the three live issues involving, the alleged transfer of shares agreement, the $75,00 retainer and the counterclaim for the transfer of shares and options. The plaintiff was not successful on the first issue. It was not successful because the parties did not reduce the agreement they had reached to writing and I did not hear oral evidence which was sufficiently clear to be satisfied of the arrangement reached.

5     There was however evidence of documents prepared by Mr Ristrom and by Mr Horne which provided a significant indication that the parties had under consideration the possibility of Mr Hannebery acquiring an “equity” interest in Domain Capital and having an obligation to

contribute “capital” to the company. However, because of the absence of written or clear oral evidence of an agreement, I was forced to determine this matter upon an examination of the circumstantial evidence and in the end I was not satisfied that the plaintiff had established

the agreement which it alleged and that much of the evidence was consistent with the
alternate agreement contended for by the defendants, i.e. an agreement to share profits.

6     In this matter the plaintiffs have been successful as to part of their claim. I have rejected the evidence of Mr Horne and Mr Ristrom in relation to the retainer claim. The evidence given by both Mr Horne and Mr Ristrom was generally argumentative and unhelpful and in my view it would be unfair to deprive the plaintiffs of any costs notwithstanding the fact that the plaintiffs

have been unable to satisfy the Court on the more substantial claim based upon the alleged
agreement for the transfer of shares.

7     Mr Galvin sought an order for costs in favour of Mr Ristrom and Mr Horne. No relief was granted against them and he submitted “no serious attempt was made to prove” the claims against them. In my view it would be unrealistic to seek to separate the costs that relate to Mr Horne and Mr Ristrom as against the costs which relate to the first defendant. Mr Galvin effectively conceded that this was so and he framed his submission on the basis that Mr Horne and Mr Ristrom should get indemnity costs whereas the apportioned part of the costs relating to the unsuccessful claim against the first defendant would simply be party-party costs.

8     This may be a convenient way of making some distinction between the costs of the defendants who were jointly represented throughout the proceeding but in my view it is an unrealistic approach. In any event, for the reasons I have already expressed, I consider that the defendants have a commonality of interest and there is no basis for disallowing the costs of a plaintiff who has been successful to a significant extent in two out of the three issues litigated before me.

9     There was no argument that the costs of the counterclaim should be awarded to the first plaintiff on a party-party basis or that those costs should be paid by all the defendants because of the late amendment made during the hearing.

10 After I gave judgment on 25 February 2009, the plaintiffs foreshadowed an application for

leave to amend their claim. I dealt with that matter in a further hearing on 4 March 2009 and
have given judgment today. The plaintiff was unsuccessful. As a result of that application
being unresolved, the costs disputes could not be heard on 25 February 2009 or 4 March
2009. It is appropriate that the plaintiff should not receive its costs of the hearing on 4 March
2009 but I consider the plaintiff should receive the costs of hearing judgment on 25 February

and a modest fee for the hearing today.

11 I have certified the plaintiffs’ counsel’s brief fee on a daily basis and in an amount which

reflects the difficulty of the issues involved in this proceeding and the seniority of counsel
which justified his solicitors briefing at the fee and on the basis that I have allowed.

12 As a result of the decisions I have reached in relation to each of the matters, the offer made by the defendants’ solicitors on 7 January 2009 to pay the total amount of $80,000 “all in” in full settlement of the claims and counterclaim is not more generous than the amount for

which the plaintiffs will be successful. In those circumstances, I do not need to consider the

consequences that would follow if it had been.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour

Judge Anderson delivered on 11 March 2009.

Dated: 11 March 2009.

Julien Lowy

Associate to His Honour Judge Anderson