J P Morgan Trust Australia Limited v Siahos (No 2)

[2009] NSWSC 1168

CITATION:	J P Morgan Trust Australia Limited v Siahos (No 2) [2009] NSWSC 1168
HEARING DATE(S):	2 October 2009
JUDGMENT DATE :	4 November 2009
JUDGMENT OF:	Harrison J
DECISION:	The plaintiff pay the defendants' costs of the hearing before me, including the costs of the present argument.
CATCHWORDS:	COSTS – successful appeal to the Court of Appeal – costs of hearing at first instance to be determined by trial judge – no matter of principle – plaintiff to pay the defendants' costs
LEGISLATION CITED:	Powers of Attorney Act 2003
CATEGORY:	Consequential orders
CASES CITED:	J P Morgan Trust Australia Limited v Siahos [2008] NSWSC 207 Siahos v J P Morgan Trust Australia Limited [2009] NSWCA 20
PARTIES:	J P Morgan Trust Australia Limited (Plaintiff) Peter Siahos (First Defendant) Prokopios Siahos (Second Defendant) Chrisoula Siahos (Third Defendant)
FILE NUMBER(S):	SC 12244/2006
COUNSEL:	P T Newton (Plaintiff) J A Jobson (Second and Third Defendants)
SOLICITORS:	Kemp Strang (Plaintiff) Andresakis & Associates (Second and Third Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
POSSESSION LIST

HARRISON J

4 November 2009

12244/2006 J P Morgan Trust Australia Limited v Peter Siahos, Prokopios Siahos and Chrisoula Siahos (No 2)

JUDGMENT

1 HIS HONOUR: On 13 March 2008 I decided the principal proceedings: see J P Morgan Trust Australia Limited v Siahos [2008] NSWSC 207. The defendants successfully appealed to the Court of Appeal: see Siahos v J P Morgan Trust Australia Limited [2009] NSWCA 20. At [37] of the Court of Appeal judgment Macfarlan JA said the following:

"[37] The appellants are entitled to their costs of the appeal as they succeeded upon the only point which was at issue. It does not appear that the primary judge made an order for costs of the proceedings at first instance. As the issues before his Honour were much broader than they came to be on appeal, there is room for different views about what, if any, orders should be made in respect of costs at first instance following determination of this appeal. His Honour is best placed to form a view about that and the proceedings should be remitted to him to consider and determine any applications for costs that are made to him in respect of the proceedings at first instance."

2 The matter came back before me on 2 October 2009 for argument on costs in the light of the reasoning and decision of the Court of Appeal. This judgment deals with that single issue. The reasons that follow assume familiarity with my earlier decision and the decision of the Court of Appeal.

Consideration

3 At the plaintiff's request I made no order for costs of the original trial. This was presumably for the reason that the plaintiff was content to rely upon the terms of its security and its contractual entitlement to include the costs of recovery in the sum secured.

4 The plaintiff argued that its loss in the Court of Appeal followed upon an argument raised in that Court by the defendants that was not raised at the hearing before me. In those circumstances the plaintiff contended in effect that the costs of the proceedings before me were wasted or thrown away to the extent that the issue that succeeded in the Court of Appeal could and should have been raised by the defendants in the first place.

5 The defendants contended that the issue upon which they succeeded in the Court of Appeal was in fact the same argument that was run before me, even if it was to some extent refined by the time it was considered there. In those circumstances the proceedings before me should have resulted in a judgment in favour of the plaintiff limited to the admitted sum of $510,892.43 that the defendants conceded was used to discharge a prior registered mortgage held by a third party secured over their property. The balance of $181,682.82 owing to the plaintiff was the only amount in dispute, which the Court of Appeal held was not secured by the plaintiff's mortgage for reasons associated with its execution pursuant to a power of attorney in breach of s 12 of the Powers of Attorney Act 2003 ("the Act"). The defendants submitted that the same result before me would or should have led to an order that the plaintiff pay their costs.

6 The judgment of Macfarlan JA in the Court of Appeal identified the difference in approach taken by the defendants as appellants in that Court. His Honour's judgment includes the following paragraphs:

" The Issues on Appeal

[16] The appellants' case as originally formulated at first instance challenged the giving of the mortgage on their behalf and the validity of the Powers of Attorney. Reliance was placed inter alia on the Contracts Review Act 1980 and on the principles as to unconscionable transactions discussed in The Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447. These issues were either not pursued or determined unfavourably to the appellants at first instance.

[17] Whilst the appellants' notice of appeal was somewhat broader, the sole matter put in issue in the appellants' written submissions on appeal was the following question which appeared as the heading to the substantive part of the written submissions: ‘Did the Power of Attorney allow the respondent to direct $181,682.82 to Peter Siahos’.

[18] During the hearing of the appeal, counsel for the appellants sought leave to put a broader case but this application was rejected, essentially upon the basis that it departed from the way in which the proceedings had been conducted at first instance. The reasons for this decision are to be found in a separate judgment delivered by this Court on 9 February 2009. The appellants were nevertheless given leave, without objection by the respondent, to amend their notice of appeal to seek the following declaration to give effect to the argument contained in their written submissions:

‘declaration that the respondent is not entitled to (a) recover from the appellants or (b) retain from the proceeds of sale of the subject property the amount of $181,682.82 plus interest’.


Did the Powers of Attorney authorise the respondent to direct $181,682.82 to Peter Siahos?

[19] The issue to be determined upon this appeal is thus a narrow one. The validity of the Powers of Attorney and mortgage are to be assumed. The issue is whether the loan moneys agreed to be provided by the respondent to the three borrowers were, as to the amount of $181,682.82, in fact advanced to them by being paid with their authority to the ANZ Bank on behalf of one of them, namely, Peter Siahos. If that portion of the loan moneys was not in fact advanced to them, it could not form part of the "Secured Money" referred to in the mortgage. The appellants' argument thus involves no challenge to the mortgage as such. It focuses upon the amount of the loan moneys secured by it. Similarly, it does not challenge the Powers of Attorney but focuses upon the ambit of the authority conferred by them.

[20] The contentions of the appellants are, first, that the Powers of Attorney did not authorise the Attorney, Peter Siahos, to do an act which was for his own benefit rather than that of his parents, secondly, that it should be concluded that Mr Karefylakis' only possible authority from the appellants to direct payment of part of the loan funds to the ANZ Bank was from a purported exercise by Peter Siahos of authority granted by the Powers of Attorney and, thirdly, that Peter's instruction to Mr Karefylakis to direct payment of $181,682.82 to the ANZ Bank was an act for Peter's benefit and not that of his parents."

7 The argument upon which the defendants succeeded on appeal was thus a refinement, or on another view an elaboration, of the original argument based on s 12 of the Act. That argument as originally configured was the significant issue before me. However, the proceedings before me were not limited to that issue. The defendants lost on some of the issues that remained in contention and abandoned others before the hearing had proceeded very far.

8 In considering the question of who should pay the costs of the original hearing I think that I should do so by first asking myself what costs order I would have made if the defendants had succeeded before me on the power of attorney/authority point that they successfully ran in the Court of Appeal having regard to the fact that they did not proceed with or succeed upon all of the issues that were in contest at the start of the hearing. Approaching the matter in that way I consider that I would have ordered the plaintiff to pay the defendants' costs of the whole of the proceedings before me. This is for the following reasons.

9 First, it is not possible obviously or conveniently to delineate or divide the time taken before me in a way that accurately corresponds to the various issues that were argued. The hearing did not extend to three days merely because the defendants persisted with issues upon which they ultimately lost thereby demonstrating or suggesting that only a small or particular fraction of the hearing time was devoted to the dispute concerning the power of attorney. The evidence of the witnesses who were called and cross-examined was more generally important than that and gave contextual assistance to my determination of the issue.

10 Secondly, the fact that the defendants did not succeed on all issues should not mean that they are necessarily to be deprived of costs apart from those related to the issue upon which they should have succeeded. In other words, the plaintiff never gave any indication that it was or would have been prepared to forego its claim for the $181,682.82 and on the Court of Appeal's analysis it should have done so. The defendants were required to contest the plaintiff's claim for that amount even if they also relied upon other arguments that were not successful. The plaintiff's claim to recover possession of the defendants' property included a claim to be entitled to that sum as part of the sum secured by the mortgage. Adjudication of that dispute was always part of the proceedings.

11 The only basis for the making of any different order is the plaintiff's contention that the point upon which the defendants succeeded in the Court of Appeal was a different point to any that was run at first instance and that the defendants are for that reason disqualified from a costs order for those proceedings now. That argument, however, seems to suggest without saying so that the plaintiff would have conceded the point if argued at first instance. That suggestion, if it is made, suffers from doubt that the reconstituted or augmented or reframed power of attorney argument run in the Court of Appeal would have promoted a different response from the plaintiff if it had been run in the hearing before me. The answer to that proposition seems to me to be found in the fact that the point was not conceded by the plaintiff in the Court of Appeal and would presumably not have been conceded below.

12 In these circumstances I consider that if the defendants had succeeded before me, there would have been no reason why the usual order that costs follow the event would not have been made. That is the order that I now consider should be made.

Order

13 I order that the plaintiff pay the defendants' costs of the hearing before me, including the costs of the present argument.

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