Heperu Pty Ltd & Ors v Morgan Brooks Pty Ltd & Ors (No 2)

[2008] NSWSC 80

CITATION:	Heperu Pty Ltd & Ors v Morgan Brooks Pty Ltd & Ors (No 2) [2008] NSWSC 80
HEARING DATE(S):	12 February 2008
JUDGMENT DATE :	12 February 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
EX TEMPORE JUDGMENT DATE:	12 February 2008
DECISION:	Orders as in Short Minutes; no additional costs order against First Defendant.
CATCHWORDS:	COSTS – LITIGANT IN PERSON – Whether self represented litigant should pay costs occasioned to other parties by reason of litigant’s lack of legal training rather than by reason of unreasonable conduct.
CATEGORY:	Consequential orders
CASES CITED:	Gould v Vaggelas (1983) 157 CLR 215
PARTIES:	Heperu Pty Ltd – First Plaintiff Kirisi Holdings Pty Ltd – Second Plaintiff Barry Samuel Landa – Third Plaintiff / Cross Defendant Drummoyne Administrative Services Pty Ltd – Fourth Plaintiff Morgan Brooks Pty Ltd – First Defendant Dominic Cincotta – Second Defendant ACN 067 567 702 Pty Ltd (In liq) – Third Defendant – Dismissed Patrice Ann Cincotta (now Patrice Belle) – Fourth Defendant Perpetual Trustees Australia Ltd – Fifth Defendant / Cross Claimant
FILE NUMBER(S):	SC 6165/03
COUNSEL:	G.K. Burton SC, Ms C.L. Cochrane – Plaintiffs / Cross Defendant Mention by Plaintiffs – Fourth Defendant Mention by Plaintiffs – Fifth Defendant / Cross Claimant
SOLICITORS:	Thomas Bray – Plaintiffs / Cross Defendant Hardings Lawyers – Fourth Defendant Tress Cocks – Fifth Defendant / Cross Claimant

6165/03 Heperu Pty Ltd & Ors v Morgan Brooks Pty Ltd & Ors (No 2)

JUDGMENT – Ex tempore
12 February, 2008

1    In this matter I gave judgment on 12 December 2007. I directed the parties to bring in Short Minutes. There was some discussion between the parties about the form of Short Minutes and some calculations had to be made by the Plaintiffs and the Fifth Defendant. The matter is now before the Court for finalisation of the orders. The Plaintiffs and the Fifth Defendant have agreed and the orders affecting the Fourth Defendant, Ms Belle, were resolved on a previous occasion.

2    The First Defendant, Morgan Brooks, does not appear today but it has been notified of the form of the orders which the Plaintiffs seek and has proposed a form of orders which it wishes to be made in respect of the orders affecting it.

3    I do not think that I can make an order against Morgan Brooks in terms of the Plaintiffs’ proposed paragraph 10 of its Short Minutes. In that order the Plaintiffs seek judgment for certain sums of money against Morgan Brooks. Those sums are based upon calculations founded upon material not all of which is in evidence.

4    Morgan Brooks disputed throughout the trial the calculation of the damages sought against it; Morgan Brooks does not consent to the calculation of damages to be awarded against it, as formulated in paragraph 10 of the Plaintiffs’ Short Minutes. In those circumstances, it seems to me that I cannot make an order against Morgan Brooks quantifying the damages against it without all of the material upon which the Plaintiffs rely being admitted in evidence and without Morgan Brooks having had the opportunity of contesting that evidence.

5    If judgment against Morgan Brooks is to be pursued, then there would have to be either a reference to determine the quantum of damages or an agreement between the parties as to the quantum. Accordingly, I will amend the order in paragraph 10 of the Plaintiffs’ Short Minutes in accordance with the request of Morgan Brooks. That paragraph will then read: "Judgment for the Plaintiffs against the First Defendant for damages and interest to be agreed or, failing agreement, as assessed."

6    The next issue is as to whether Morgan Brooks should be ordered to pay any part of the costs which the Plaintiffs have to pay to Ms Belle, who was successful in her defence. The Plaintiffs seek a Bullock order but only to the extent of 20% of the costs which they would have to pay to Ms Belle. The principle upon which Mr Burton SC for the Plaintiffs relies is set out in Gould v Vaggelas (1983) 157 CLR 215 in the judgment of Gibbs CJ at 229ff:

“In my respectful opinion, however, the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff's error or overcaution.

The ground on which a Bullock order may be made is, in my opinion, more accurately stated in a passage in Sanderson v Blyth Theatre Co at p.539, which was cited with approval in Bullock v. London General Omnibus Co , at p.272 and Hong v. A. & R. Brown , at p.522, viz., that the costs which the plaintiff has been ordered to pay to the defendant who succeeded, and which the plaintiff recovers from the defendant who has failed ‘are ordered to be paid by the unsuccessful defendant, on the ground that … those costs have been reasonably and properly incurred by the plaintiff as between him and the [unsuccessful] defendant’. In Johnsons Tyne Foundry Pty. Ltd. v. Maffra Corporation , Williams J. stated the principle in a similar way and Starke and Dixon JJ., in giving their reasons for making a Bullock order, both relied on the circumstance that the attitude adopted by the successful defendant had induced the plaintiff to join the other defendant. In my respectful opinion the true position was clearly stated by Blackburn C.J. in Steppke v. National Capital Development Commission , at pp. 30-31, when he said that ‘there is a condition for the making of a Bullock order, in addition to the question whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant’.”

7    The first question is whether the unsuccessful defendant, that is Morgan Brooks, has said or done something which has led the Plaintiffs to sue the successful defendant, that is, Ms Belle. Mr Burton says that Morgan Brooks was in some way responsible for the Plaintiffs suing Ms Belle in that Morgan Brooks had the benefit of a Licence Agreement to which Ms Belle was a party and it took the benefit of her joinder as a party to that Licence Agreement.

8    Ms Belle happened to be Mr Cincotta's wife at the time that the frauds were practised by Mr Cincotta, and she also was the holder of an account into which Mr Cincotta paid the proceeds of his fraud. However, Morgan Brooks was not in any way responsible for either of these circumstances. I have found that Ms Belle knew nothing about Mr Cincotta’s frauds.

9    I do not think that the fact that Ms Belle was a signatory to one of the Licence Agreements with Morgan Brooks was in itself a circumstance whereby Morgan Brooks did or said something which led the Plaintiffs to regard Ms Belle as a party to the frauds, answerable in some way for the frauds of Mr Cincotta, or accountable in law to them for the proceeds.

10    The uncontested evidence is that it was Mr Cincotta himself who asked Ms Belle to sign the Coffs Harbour Licence Agreement because he thought that if anything happened to him during the currency of the arrangement between himself and Morgan Brooks Ms Belle herself would be entitled, as a party to the Agreement, to whatever commissions were payable to Mr Cincotta. The evidence does not suggest that it was Morgan Brooks which sought Ms Belle's joinder as a signatory to the Coffs Harbour Licence Agreement.

11    It is material that the Plaintiffs joined Ms Belle as a defendant some time prior to Morgan Brooks filing a Cross Claim against her. It seems to me that the decision by the Plaintiffs to join Ms Belle was one for which they were entirely responsible and depended upon their own assessment of the strength of their case against her, not upon the way in which Morgan Brooks was conducting its defence. I cannot see that there is any circumstance which would require the Court to make a Bullock order against Morgan Brooks in respect of Ms Belle's costs, as the Plaintiffs seek.

12    The Plaintiffs seek an order that Morgan Brooks pays 20% of the costs which they will be required to pay Ms Belle on an additional ground. They say that the time of the trial was unduly protracted, and therefore the costs which the Plaintiffs must pay to Ms Belle unduly increased, by reason of the fact that Morgan Brooks appeared by its director, Mr Aulsebrook, who is not a lawyer. The Plaintiffs draw attention to Mr Aulsebrook's general unfamiliarity with Court proceedings, but particularly to the fact that he was often in difficulty in the management of documentary evidence tendered by the other parties and the documentary evidence which he himself wished to tender. Mr Aulsebrook frequently conceded his difficulties during the course of the trial.

13    The Plaintiffs have, in their written submissions, prepared an estimate of the additional time taken in the trial because of Mr Aulsebrook’s difficulties. It shows that the time of trial was probably increased by some 24%. I think that that estimate is, by and large, correct.

14    Mr Burton submits that it would be unfair to require the Plaintiffs, and indeed the other parties who were represented by counsel and solicitors, to bear the costs burden occasioned by the unnecessary protraction of proceedings due to Mr Aulsebrook's inexperience.

15    This submission raises an important question of principle. Should a litigant in person face the consequence that even if he or she is successful in the ultimate result, he or she may be liable to other legally represented parties in costs if his or her inexperience in litigation has unduly prolonged the trial? In other words, is the conduct of a trial by a litigant in person to be judged, for the purpose of a costs order, by the standards that would be expected of a competent legal practitioner?

16    I suspect that the answer to this question depends more on the facts of each particular case than upon any general principle or policy of the law. The Court acknowledges that it must afford a degree of tolerance and assistance to litigants in person which it would not afford to a legal practitioner. When a litigant in person, even with the benefit of such tolerance and assistance, conducts a trial unreasonably by ordinary standards of common sense and practicality, or with perverse resistance to proper procedure, so that the trial is unduly prolonged, it may be proper to order the costs of that prolongation against him or her, even if he or she ultimately succeeds in obtaining a favourable judgment.

17    The present case is not one in which I could fairly say that the trial was protracted by unreasonable conduct or perverse resistance to procedure on the part of Mr Aulsebrook. On the contrary, I think it proper to say that Mr Aulsebrook was, in my opinion, doing his best to assist in the orderly and efficient conduct of the trial. It was entirely due to his inexperience in litigation that the time taken was longer than should have been the case had the trial been conducted on Morgan Brooks 's part by competent legal representatives.

18    Mr Burton has not been able to refer me to any authority in support of the order which he seeks. If Mr Burton seeks to establish a general principle that self represented litigants should be responsible in costs for the prolongation of a trial which results solely from their lack of legal knowledge and experience, then it is, I think, for the Court of Appeal to establish such a principle rather than a trial judge. Such a principle, if established, directly affects the entitlement of litigants in person to approach the Court and conduct their own cases without fear of automatic exposure to an adverse costs order. On the facts of this particular case, I do not think that I should make the order which the Plaintiffs seek against Morgan Brooks in respect of the Fourth Defendant's costs.

19    In accordance with the reasons enunciated, I make orders in terms of Short Minutes of Order as amended, initialled by me, dated today and placed with the papers.

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