Macks v Viscariello (No 2)
[2018] SASCFC 106
•17 October 2018
Supreme Court of South Australia
(Full Court)
MACKS v VISCARIELLO (No 2)
[2018] SASCFC 106
Judgment of The Full Court
(The Honourable Justice Lovell, The Honourable Auxiliary Justice Corboy and The Honourable Auxiliary Justice Slattery)
17 October 2018
PROCEDURE - COSTS - JURISDICTION - GENERAL
Whether the Full Court has the power to determine the costs of the trial as well as the costs of the appeal without an order having been made for trial costs by the Primary Judge – Whether the matter should be remitted to the Primary Judge for consideration of the question of the trial costs - Whether the Court should depart from the usual rule that costs follow the event.
Held by the Court:
1. The Full Court has the power to determine trial costs without an order for costs having been made by the Primary Judge;
2. The matter should not be remitted to the Primary Judge for determination of the question of the costs of the trial;
3. It is appropriate in the circumstances for the Court to depart from the usual rule when exercising its discretion as to costs.
Supreme Court Act 1935 s 40; Supreme Court (Civil) Rules 2006 ss 263, 264, 286, referred to.
Macks v Viscariello (2017) 130 SASR 1; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (No 2) (2013) 209 FCR 464; Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204; Lesses v Maras (No 3) [2017] SASCFC 154, considered.
MACKS v VISCARIELLO (No 2)
[2018] SASCFC 106Full Court: Lovell J, Corboy AJ and Slattery AJ
THE COURT:
Background
The Court delivered judgement in this matter on 22 December 2017.[1] The parties were given leave to file and serve submissions on the question of costs by 14 February 2018. As a result of receiving those submissions the Court became aware that despite having heard submissions on costs in June 2015 the Primary Judge had not to date delivered his decision. Mr Macks sought an order that the Full Court decide the issue of the trial costs and the costs of the appeal. Mr Viscariello sought an order that the question of the costs of trial be remitted to the Primary Judge for his decision.
[1] Macks v Viscariello (2017) 130 SASR 1.
The Court ordered further submissions from the parties on the question of whether the Full Court had the power to order costs of a trial as opposed to modifying an existing costs order made by a trial judge. Submissions were received from the parties in April 2018.
Power of the Court to order costs generally
The power of the Court to order costs is found in s 40 of the Supreme Court Act 1935 (SA) (the Act) which states relevantly:
(1) Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
“Court” is defined in s 5(1) of the Act as the Supreme Court of South Australia and “Full Court” as meaning relevantly the Supreme Court consisting of not less than three judges. The Full Court is the Supreme Court of South Australia constituted in a specific way.
Thus the power of the Full Court to award costs is found in s 40 of the Act. This power is unfettered. It is a discretion which must be exercised judicially.[2]
[2] Copping v ANZ McCaughan (1995) 63 SASR 523 at 527; Excelsior Land Holdings Pty Ltd v Alan Sheppard Constructions Pty Ltd [2012] SASCFC 119 at [7].
Rules of Court
Rule 286 of the Supreme Court (Civil) Rules 2006 (SCR) governs the hearing of an appeal to the Supreme Court. It states relevantly:
Rule 286
(1) An appeal is to be by way of rehearing (unless the law under which the appeal is brought provides to the contrary).
(2) Subject to any limitation on its powers arising apart from these Rules, the Court may determine an appeal as the justice of the case requires despite the failure of parties to the appeal to raise relevant grounds of appeal, or to state grounds of appeal appropriately, in the notice of appeal.
(3) Subject to any limitation on its powers arising apart from these Rules, the Court may—
(a) draw inferences of fact from evidence taken at the original hearing and, in its discretion, hear further evidence on a question of fact;
(b) amend or set aside the judgment subject to the appeal and give any judgment that the justice of the case requires;
(c) remit the case or part of the case for rehearing or reconsideration;
(d) make orders for the costs of the appeal.
“Court” is defined in SCR 4 as “the Supreme Court of South Australia”. No definition of Full Court is found in the Rules. In the Act the Full Court means the Supreme Court of South Australia consisting of not less than three judges. That definition must apply to the Rules of Court. Therefore SCR 286 applies to Full Court appeals as well as appeals to a single judge of the Supreme Court.
Power of the Full Court to determine costs
The question arises as to whether the Full Court can decide trial costs rather than modifying an existing order relating to the trial costs made by a trial judge. Both parties agree that there is no decided authority on this point. In N, A-B v V, AM (No 2)[3] the Full Court made such an order but the point was not argued; the power to do so was assumed.
[3] N, A-B v V, AM (No 2) [2017] SASCFC 174.
Mr Viscariello submitted that SCR 286(3)(d) clearly refers only to a power in relation to the “costs of the appeal” not the trial. He submitted that the Rules do not contemplate that the Full Court, in dealing with an appeal, should decide, as opposed to modify, trial costs.
We reject that submission. The power of the Full Court in relation to costs is not limited to that specified in subparagraph (d). If it was so constrained, unless any costs order from the trial was a ground of appeal, the Full Court could not adjust or amend an existing costs order even though it amended or overturned the judgment given at trial. The power to do so is found in SCR 286(3)(b). Once the Full Court has “amended or set aside the judgment subject to the appeal” it can make any judgment the “justice of the case requires”. SCR 4 defines “judgment” as including “an order or direction”. We note the definition is an inclusionary one.
Not only does SCR 286(3)(b) enable the Full Court to amend an existing cost order not the subject of an appeal, it is in our view wide enough, if the justice of the case requires, to make an award of costs on appeal that includes the trial costs. This is so even if no order has been made by the trial judge.
That the Rules should be given a wide and beneficial interpretation is supported by SCR 3 which states:
3—Objects
The objects of these Rules are—
(a) to establish orderly procedures for the just resolution of civil disputes; and
(b) to facilitate and encourage the resolution of civil disputes by agreement between the parties; and
(c) to avoid all unnecessary delay in the resolution of civil disputes; and
(d) to promote efficiency in dispute resolution so far as that object is consistent with the paramount claims of justice; and
(e) to minimise the cost of civil litigation to the litigants and to the State.
In any event the discretion to award costs pursuant to s 40 of the Act is very wide. The legislative intention is to confer on courts and judges an unfettered discretion as to costs. To adopt the argument of Mr Viscariello would be to construe a Rule of Court such that it negated or severely restricted the statutory provision. We do not accept that interpretation of SCR 286. A general provision in a Rule of Court which substitutes a different rule “across the board” for that prescribed by the statute may be invalid as repugnant to the statute.[4] If SCR 286 is to be construed as suggested by Mr Viscariello it is arguably invalid.
[4] Copping v ANZ McCaughan Ltd (1995) 63 SASR 523 at 527.
In our view either by the operation of SCR 286 or s 40 of the Act the Full Court has the power to determine the trial costs without an order having been made by the trial judge.
The Full Court has the power to remit the matter back to the trial judge for him to determine the question of costs.
Should the Full Court remit the question of trial costs to the Primary Judge?
While this Full Court has the power to determine the trial costs, the question arises as to whether it should exercise its discretion to do so or whether it should remit the matter to the Primary Judge to determine the question. The discretion must be exercised judicially.
Mr Viscariello relied on the decision in Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (No 2)[5] as providing an example of the Full Court of the Federal Court, in the exercise of its discretion, remitting the matter back to the primary judge to make a decision on costs. That case involved two Acts of the Commonwealth Parliament under which the matter in the proceedings arose against the background of a “common substratum” of facts but with different legislative sources of claimed liability. The Acts had markedly different cost regimes. There appears to have been no dispute on the facts in that case. The Court balanced the factors relevant to its discretion accordingly.
[5] Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (No 2) (2013) 209 FCR 464.
There are competing factors here. Arguably the Primary Judge would be in the better position to analyse more accurately how much time the various contested issues consumed at trial. However the judgment of this court set aside some of his findings and amended others. It would be a difficult task for the Primary Judge to make a judgment on costs knowing that a number of his findings no longer stand.
The subject matter of the trial arose in 2006. The trial began in 2012 and finished in 2013. The Primary Judge delivered his decision in December 2014. Submissions on costs were made in June 2015. The Primary Judge reserved his decision. If the matter was remitted it is likely that further submissions before the Primary Judge would be required. An order having been made, further submissions would have to be made before this Court as to how the orders should be varied (assuming there was no appeal from the decision).
If the matter was to be remitted to the Primary Judge for “cost orders” to be made the question arises as to how he would go about that task. Would he make costs orders as if the Full Court judgment had not occurred, only for the matter to then have to come back to the Full Court to be modified? Or would he make the costs orders on the basis of the Full Court judgment rather than the facts as he found them? Neither process would appear to be satisfactory.
In the ordinary course this matter would have been remitted for a retrial on some issues. The Court declined to make that order. Factors that were taken into account in the exercise of that discretion are relevant to this matter. In our view to remit the matter back to the Primary Judge in all of the circumstances would place him in an untenable position. Significant costs would also be incurred if that course was followed.
We decline to remit the matter to the Primary Judge for consideration of the question of costs.
The procedure to be adopted
Mr Viscariello submitted that this Court should adopt the following process:
1First, examine the considerably wider and more complex issues relating to how trial costs should be awarded and reach a determination as to those costs in isolation, having regard to the existing trial costs written submissions (as a prior step to considering appeal costs);
2Secondly, then consider the costs of the appeal, separately from, but in the light of the fixed trial costs position so as to determine the manner in which the conduct of the appeal and the appeal reasons may affect the trial costs if at all.
We cannot accept that submission in its entirety. To follow the submission of Mr Viscariello would require this Court to make an order anticipating what order the Primary Judge may have made and, having made that order, potentially vary our own order having regard to how our reasons on appeal may affect our own order. We are unable to see any benefit in adopting such an approach.
However, in exercising the discretion, we accept that we should have regard to the submissions made before the Primary Judge on the question of costs. The discussion in those submissions about the conduct of the trial and the complex issues involved will assist the Court in the proper exercise of the discretion on costs of both the trial and the appeal.
The proper approach for this Court to take is to make a final order as to the costs of the trial and the appeal having regard to the submissions made by the parties to the Primary Judge and our assessment of the trial, the Primary Judge’s reasons and how the judgment of this Court has interfered with the Primary Judge’s findings and his decision.
Legal principles
Section 40 of the Act provides that the “costs of and incidental to all proceedings in the court… shall be in the discretion of the court…”. Rule 263 of the Supreme Court (Civil) Rules 2006 provides (subject to various identified exceptions) that, as a general rule, costs follow the event. SCR 264 provides that the Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate. It is clear that the courts and judges have an unfettered discretion as to costs but it must be exercised judicially.[6]
[6] See generally Copping v ANZ McCaughan (1995) 63 SASR 523 at 527; Gwinnett v Day (No 2) [2012] SASC 61; Ridgway v Sporting Shooters’ Association of Australia Hunting & Conservation Branch (SA) Inc (No2) [2015] SASC 56; Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204.
In South Australia, it has long been recognised that there is jurisdiction to order a successful party, even a wholly successful party, to pay his opponent’s costs in part or in whole, although there has to be some reason to depart from the usual rule.[7] This approach is consistent with the many authorities decided throughout Australia that ordinarily costs follow the event and a successful litigant receives costs in the absence of circumstances justifying some other order.
[7] Cretazzo v Lombardi (1975) 13 SASR 4.
With trials increasing in complexity courts have more readily departed from the usual rule. It is open to a court to mould a costs order to take account of the partial success of the party against whom orders have been made at trial.[8] If an “issue by issue” approach produces a fairer result than the traditional rule it should be applied.[9] Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.
[8] Nicholls v Michael Wilson & PartnersLtd (No 2) [2013] NSWCA 141.
[9] Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107.
In Ruddock v Vadarlis (No 2),[10] Black CJ and French J held that:
…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 parties' 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 law.[11]
[10] Ruddock v Vadarlis (No 2) (2001) 115 FCR 229.
[11] Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234 [11].
In Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2)[12] Blue J observed:
Where there is a single event, but the overall successful party has failed on one or more issues, the question arises whether costs should be apportioned according to issues. The question of apportionment involves an assessment of all relevant circumstances, including:
1. the degree to which the issues on which the successful party failed were distinct and severable;
2. the proportion of costs incurred in respect of the issues on which the successful party failed;
3. the strength or merit of the issues on which the successful party failed; and
4. the conduct generally of the successful party.
Where there is a single event and an apportionment of costs according to issues, the successful party might be deprived of costs in respect of issues upon which it was unsuccessful but not necessarily pay the costs of its opponent in respect of those issues. One circumstance in which such a party might be ordered to pay the costs of its opponent on issues upon which the successful party lost is where that party’s conduct in relation to those issues was unreasonable, such as when it was unreasonable to pursue those issues.
[12] Parabanks Shopping Centre Pty Ltd v City of Salisbury (No 2) [2013] SASC 204; see also Ridgway v Sporting Shooters’ Association of Australia Hunting & Conservation Branch (SA) Inc (No 2) [2015] SASC 56.
In Lesses v Maras (No 3), in dealing with cases where there was “mixed success”, the Full Court observed:[13]
When there has been mixed success at first instance or on appeal, a court may in appropriate circumstances reduce the costs ordered in favour of the overall successful party, and further may order that party to pay the opponent’s costs, in respect of such issues. When the court considers that the discretion should be so exercised, it will usually make an order for payment of a proportion of one party’s costs by the other party reflecting a broad axe assessment, even when it considers that the successful party should pay the opponent’s costs in respect of such issues.
(Citations omitted)
[13] Lesses v Maras (No 2) [2017] SASCFC 154.
Factors to be considered when assessing costs on separate issues include determining whether the issues were separate and distinct, the importance of the issues (including whether they had merit), and the time taken at trial in litigating those issues.
Both parties accepted that due to the complexity of this case it was open to the Court when exercising the costs discretion to depart from the usual rule.
Issues on Appeal
Two issues arise for consideration. First, what costs orders should be made covering the trial and appeal. Second, what orders should be made about pre-trial costs where orders were made that “costs be in the cause”.
Trial and Appeal Costs
Orders sought before the Primary Judge
Mr Viscariello sought an order that Mr Macks pay his costs of and incidental to the whole of the action on a party/party basis, save and except that Mr Macks pay to him the costs of and incidental to that part of the action referred to as Part 2 on an indemnity basis or in the alternative on a solicitor own client basis.
Mr Macks submitted that the Primary Judge should apply a “broad axe approach” and order that each party bear his own costs. Alternatively, the orders sought were that Mr Viscariello pay Mr Macks’s costs in relation to Part 1 and Mr Macks pay Mr Viscariello’s costs of Part 2, each on a party/party basis with a mutual set off. Mr Macks further submitted that, if the Primary Judge considered it necessary to decide costs on an “issue” basis as opposed to the two major “events,” Mr Viscariello pay Mr Macks’s costs of the issues on which he failed and Mr Macks pay Mr Viscariello’s costs on issues which he succeeded, each on a party/party basis with a mutual set off.
Submissions before the Primary Judge
Before the Primary Judge both parties filed lengthy written submissions. Oral submissions were not made and the parties were content to rely on the written submissions. We will not attempt a comprehensive narrative of the submissions; rather we will summarise the major issues raised by the parties before the Primary Judge.
Mr Viscariello
Mr Viscariello submitted that:
·he had been successful in the action in a substantial way; the relief claimed against Mr Macks as liquidator had been granted by the Primary Judge;
·there was only one “event”; the decision of the Primary Judge to divide his reasons into two parts was for “convenience only”;
·the issues relating to Mr Macks’s conduct as liquidator occupied approximately 70% of the trial time;
·the conduct of Mr Macks as Voluntary Administrator had formed an essential part of the factual matrix in the determination of the conduct of Mr Macks as liquidator;
·the maintenance of the Bernsteen/George proceedings had been an attempt by Mr Macks to obstruct, interfere with, impair and deter him from prosecuting this action;
·Mr Macks conducted the Bernsteen/George proceedings in the manner characterised as “trench warfare”, never conceding a point;
·Mr Macks, in unreasonably maintaining the claim for legal professional privilege over various documents, had unnecessarily prolonged the pre-trial stages of the trial and the trial itself;
·Mr Macks as a liquidator and an “officer of the court” owed a duty to act in the litigation as a “model litigant”;
·he had performed a significant public service in bringing the action and exposing the behaviour of Mr Macks;
·Mr Macks, in pleading his defence as Voluntary Administrator, had misled him into believing he had a legitimate and reasonable cause of action;
·Mr Macks had fabricated documents and much trial time was taken up on this issue.
Mr Macks
Mr Macks submitted that:
·the trial involved two clear “events”: Mr Viscariello was entirely unsuccessful in relation to Part 1 and only partially successful in relation to Part 2;
·Mr Viscariello was successful only in relation to one of the 15 main allegations contained in the statement of claim; he failed on numerous distinct and standalone claims of breach of duty and for damages or compensation;
·most of the claims made by Mr Viscariello in relation to Part 1 were both legally and/or factually untenable; Mr Macks made a “Calderbank offer” dated 21 June 2012 pointing out the deficiencies in Mr Viscariello’s case;
·the declarations on which Mr Viscariello succeeded were made on a basis which had not been argued by Mr Viscariello;
·the monetary claims based on the alleged breaches of duty were dismissed;
·Part 1 of the claim comprised a collection of separate and substantial claims in their own right and could not be described as background material to Part 2;
·the conduct of Mr Viscariello in making “scattergun” allegations against Mr Macks, which were almost totally unsuccessful, was a form of “trench warfare” against Mr Macks;
·Mr Viscariello has been unable to point to any conduct on the part of Mr Macks in the Bernsteen/George litigation that bore any relation to his decision to sue on Part 1 of his claims;
·Mr Viscariello did not bring the action in the “public interest”; he was motivated by money and a vendetta based on his view of the role Mr Macks played in the winding up of the companies;
·a liquidator does not carry the obligations of a model litigant;
·while accepting that Mr Viscariello would be entitled to his costs in relation to the claim for legal professional privilege, the claim did not inhibit Mr Viscariello in investigating lines of enquiry and cross-examining witnesses;
·while accepting the Primary Judge’s findings about the fabrication of two documents, the issues concerning the documents were “by and large collateral credit issues”; the documents themselves were of only tangential relevance to the action.
Orders sought on the appeal
Mr Viscariello maintained his submission on costs before the Primary Judge and submitted that the conduct of the trial and the nature of the Primary Judge’s overall findings were such that he ought to be entitled to the costs of the trial. In the alternative he submitted that Mr Macks have the costs of Part 1 and he have the costs of Part 2 or as submitted by Mr Macks, each party bear their own costs. Further he submitted that overall he had been more successful than Mr Macks on the trial and appeal taking all matters into account and any costs order should reflect that overall result.
Mr Macks submitted that in light of the outcome of the appeal, costs of the appeal should follow the event as he had “overwhelmingly succeeded”. In relation to the trial costs Mr Macks accepted that the Court should take “a broad axe approach”. He sought an order that Mr Viscariello should pay Mr Macks’s costs of Part 1 and 80% of Mr Macks’s costs in defending the claims made in relation to Part 2.
Submissions on appeal costs
We will not attempt a comprehensive narrative of the submissions; rather we will summarise the major issues raised by the parties on appeal.
Mr Viscariello
Mr Viscariello submitted that:
·the overall thrust of the Primary Judge’s decision in relation to the conduct of Mr Macks as liquidator was preserved on appeal; the alteration to the date with respect to s 180 of the Corporations Act 2001 to 28 April 2006 is of limited consequence;
·the issue of the Primary Judge’s power to make declarations was a complex matter involving the issue of s 75 Notices[14] and the intervention of the Attorney-General of South Australia; he was successful on this issue which involved substantial time on the appeal;
·while the declarations relating to Mr Macks’s conduct involving s 181 and 182 of the Corporations Act 2001 were set aside, that was done not on the basis that the Primary Judge’s findings of fact were wrong or not supported by the evidence, but rather because it had been determined that there was a denial of procedural fairness;
·the factual arguments in relation to the conduct of Mr Macks involved common facts; there was no significant difference between the facts leading to the application by the Primary Judge of s 181 and s 182 of the Corporations Act 2001 as opposed to s 180;
·contrary to the position asserted by Mr Macks, he succeeded in part only in setting aside declarations; those issues will not be re-litigated as the appellate court declined to remit the matter for trial;
·while accepting that the cross-appeal was unsuccessful, it represented a much lesser component of the appeal process;
·the without prejudice offers to settle the trial are of little or no assistance on the question of costs as the offers related to monetary relief only, not to all remedies and relief sought;
·he made a reasonable open offer, by letter dated 1 December 2015, that the appeal and cross-appeal be discontinued with each party bearing his own costs;
·he succeeded on a substantial matter at trial and on appeal, namely Mr Macks’s conduct as a liquidator;
·consistent with his trial costs submissions the division by the Primary Judge of his reasons into Parts 1 and 2 did not reflect the way he sought to establish the wrongful conduct of Mr Macks; it was simply a convenient mechanism developed by the Primary Judge;
·in balancing all matters either at trial, on appeal or in combination, he had been more successful than Mr Macks.
[14] This is likely to be a reference to notices issued under s 78B of the Judiciary Act 1903 (Cth).
Mr Macks
Mr Macks submitted that:
·in relation to Part 1 he was wholly successful both at trial and on appeal;
·in relation to Part 2 he successfully defended most of the allegations made against him by Mr Viscariello;
·Mr Viscariello was unsuccessful on a number of claims and allegations that were legally and/or factually distinct from the declarations ultimately granted by the Primary Judge;
·the various monetary claims made by Mr Viscariello in relation to the alleged breaches of duty were dismissed;
·he was at least partially successful in having the Primary Judge’s findings and declaration of a contravention of s 180(1) of the Corporations Act 2001 as from June 2005 set aside;
·he was successful in having the declarations of contraventions of ss 181 and 182 of the Corporations Act 2001 set aside; further the findings that he was motivated by “four substantial and actuating collateral purposes” and that the Bernsteen/George litigation was an abuse of process were set aside;
·he wrote a Calderbank letter dated 21 June 2012 offering to settle proceedings below in the sum of $300,000 inclusive of costs;
·substantial time and costs associated with Appeal Ground 1 arose from the Attorney-General’s intervention; the decision of the High Court in Rizeq v Western Australia,[15] delivered after the hearing of the appeal, affected the outcome of the appeal;
·Grounds 6, 8 and 9, in respect of the Primary Judge’s grant of permission to amend the Fourth Amended Statement of Claim, were not upheld only because Mr Viscariello did not make the amendments.
[15] Rizeq v Western Australia (2017) 91 ALJR 707.
Discussion
We have considered all of the submissions on costs made by both parties. We have read the transcript of the trial including the evidence relating to the hearing of the claim for legal professional privilege.
We make the following observations.
There were clearly two parts to the claim made by Mr Viscariello. We reject the submission that the trial related to only one “event”. We reject the submission that the Primary Judge divided his reasons into two parts as a matter of convenience. Part 1 of the claim comprised substantial claims in their own right and could not be described as background material to Part 2. We accept that in prosecuting Part 2 some evidence of the role Mr Macks played in the administration would have been necessary; however, such evidence would have been minimal.
Many of the claims made by Mr Viscariello in relation to Part 1 were legally and/or factually untenable. The same could be said of many of the claims made by Mr Viscariello relating to Part 2 of the trial. However, there was considerable factual overlap between many of the claims constituting Part 2 of the trial and the declarations finally made by the Primary Judge. Mr Viscariello was successful at trial in relation to the declarations sought.
On appeal Mr Viscariello was successful in maintaining the declaration that Mr Macks breached s 180(1) of the Corporations Act 2001 (apart from a change in the date). Whilst the other two declarations were set aside Mr Macks was unsuccessful in having the Appeal Court dismiss the allegations entirely. The Court exercised its discretion not to remit those matters for trial; Mr Viscariello does not have the opportunity to prove the allegations of a breach of ss 181 and 182 of the Corporations Act 2001 in further litigation.
We give little weight to the submission that Mr Viscariello performed a public service in bringing the proceedings. Compensation was the primary aim of the proceedings.
We accept that Part 2 of the trial took longer than the evidence relating to Part 1. The evidence of Mr Macks took considerable time; his credit was in issue throughout the trial. The claim of legal professional privilege, eventually unsuccessful, caused a disruption in the proceedings and delayed the finalisation of the matter. Further, Mr Macks’s evidence relating to the documents he was found to have fabricated caused further delay.
In dealing with the complex issue of costs in this matter the Court has applied a “broad axe” approach. Considering the matters discussed above we consider that Mr Viscariello should have 25% of his costs of the trial. In relation to the appeal Mr Macks should have 70% of his costs to be agreed or taxed.
Costs in the cause
The second question for our consideration is whether on any and if so what basis the Court may treat orders that costs are reserved as being costs in the cause. In order to address this question we have examined the detail of the attendances by the parties and then the costs orders made by the Court. In the usual course, specific orders in favour of a party were made by the Court upon such attendances. These are extant costs orders and they do not fall for our consideration here. We are only concerned with reserved costs orders that were not subsequently considered by the relevant judicial officer.
We have identified a number of reserved costs orders made by a number of judicial officers following appearances before either a Master or a Justice of this Court involving interlocutory steps in the proceedings. The reserved costs orders made by a Justice of this Court sometimes involved an appeal from a decision of a Master of this Court.
It is first helpful to set out a chart of the costs orders with which we deal here. The chart identifies orders for costs in the cause and for reserved costs. Some detail is given about the directions hearing (DH) attendances by counsel and duration. On some occasions, where there was no substantive issue dealt with, a description such as ‘no hearing/admin orders’ is shown.
The chart is as follows:
Date Presiding Officer Orders Who is obliged to pay costs Quantum of costs reserved/’in the cause’ 23/04/07 Judge Lunn 1. P pay to D 85% of his costs of the application of 6 Dec 2006 as between solicitor and own client
2. That such 85% of the costs be taxable and payable immediately
3. That the other 15% of the costs be in the cause
4. Hearings on 6 December 2006 certified fit for counsel but not senior counsel.
1. 85% Plaintiff payable immediately 3. 15% Costs in the cause Costs relate to directions hearing before Judge Lunn – discovery – fit for counsel but not senior counsel. 27/09/07 Judge Burley 1. Costs in the cause Cost in the cause Directions hearing – 30 minutes. 08/05/08 Judge Burley 1. Costs reserved Reserved Directions hearing – application for further and better particulars. 18/08/08 Judge Lunn 3. P to pay D costs of 24 June 2008 application
4. That application certified fit for counsel
5. Leave for D to apply for supplementary costs and certification that that application fit for senior counsel
8. Costs of application of 7 May 2008 are reserved3. Plaintiff (24 June 2008 application)
8. Reserved (7 May 2008 application)Costs reserved on application for further and better discovery – ½ day hearing alongside application for leave to amend SOC. 18/11/08 Judge Lunn 5. Costs reserved Reserved No hearing – administrative orders. 05/03/09 Judge Burley 1. Costs in the cause
6. “That the costs of the application by FDN 36, except for the costs of today, be the plaintiff’s costs against the defendant”1. Costs in the cause
6. DefendantCosts in the cause concern only the directions hearing of 5/3/09. Other costs of the Application (FDN 36) are borne by D.
03/07/09 Bleby J 7. Costs in the cause Costs in the cause Hearing before Bleby J – 1 hour 4 minutes. 30/07/09 Bleby J 11. Costs in the cause Costs in the cause Hearing before Bleby J – 1 hour 13 minutes. 5/11/09 Bleby J 9. Costs of today’s attendance costs in the cause Costs in the cause Directions hearing before Bleby J – 51 minutes – No senior counsel attended. 13/11/09 Bleby J 7. Costs in the cause Costs in the cause Directions hearing before Bleby J – 39 minutes – senior counsel appears for D. 19/11/09 Bleby J 6. Costs in the cause Costs in the cause Directions hearing before Bleby J – 36 minutes – no senior counsel. 25/11/09 Bleby J 3. Today’s costs reserved Reserved Application heard before Bleby J – 1 hour 40 minutes – senior counsel appears for D. 11/12/09 Bleby J 12. Costs in the cause Costs in the cause Application before Bleby J – 1 hour 15 minutes – D and P have junior and senior counsel (D has senior counsel) – ASIC also appear as non-party. 23/12/09 Bleby J 1. Appeal dismissed
2. Costs reservedCosts reserved Hearing before Bleby J – 1 hour 5 minutes – both parties have counsel – D has senior counsel. 10/03/10 Judge Lunn 3. Costs reserved Costs reserved For mention only – before Judge Lunn – approx 5 minutes – no appearance by P, 2 non-parties represented by one counsel, Minter Ellison also represented. 20/05/10 Judge Lunn 4. Costs reserved Reserved For mention only – short hearing. 22/07/10 Bleby J 3. Costs of today’s attendance reserved Reserved Application before Bleby J – 18 minutes – senior counsel for D. 27/08/10 Bleby J 8. Costs of today’s attendance reserved Reserved Directions hearing before Bleby J – 1 hour 22 minutes – senior counsel for P. 13/12/10 Bleby J 2. Costs of today’s attendance in the cause In the cause 11 minutes before Bleby J. 02/02/11 Bleby J 2. Costs of today’s attendance reserved Reserved 15 minutes before Bleby J. 09/02/11 Bleby J 2. P to pay the D’s costs of and incidental to P’s interlocutory application dated 20 Sept 2010 on party/party basis.
3. P pay D 70% of D’s costs of the application in FDN84.
9. Costs of orders 4-8 inclusive are to be costs in the cause.2. Plaintiff
3. Plaintiff
4-8. Costs in the causeOrders 4-8 to be costs in the cause.
Orders 4-8 are:
4. documents in D’s 8th supplementary list of documents to be numbered by COB 10/2/11
5. Such docs to be inspected by P
6. Further application by P for permission to amend the SOC to be filed
7. Further disclosure of docs by D based on existing approved pleadings to be made
8. Further directions hearing ordered.13/03/12 Judge Lunn 1. D does not pursue the preliminary issue of whether the costs incurred by Iles Selley can be recovered from P and that issue is determined in favour of Iles Selley.
2. Costs of preliminary issue reserved.Reserved Costs reserved concern the costs of the application of D whether costs incurred by Iles Selley could be recovered from P
No counsel appear at hearing 13/03/2012.01/05/12 Kourakis CJ 8. Question of costs is reserved Reserved Hearing before Kourakis J – 1 hour 44 minutes – P, D and 2 non-parties have counsel, D has 2 senior counsel (one for app, one for trial). 21/06/12 Kourakis CJ 7. Question of costs reserved Reserved Hearing before Kourakis J – 30 minutes – D has senior counsel – P and 2 non-parties also have counsel. 03/07/12 Judge Lunn 3. Costs of today reserved Reserved 31/10/12 Kourakis CJ 2. Question of costs reserved Reserved Hearing before Kourakis CJ – 1 hour 17 minutes. 26/02/13 Kourakis CJ TRIAL JUDGMENT RESERVED 09/12/14 Kourakis CJ TRIAL JUDGMENT DELIVERED
NO COSTS ORDER MADE18/12/14 Kourakis CJ 7. Question of Costs reserved Reserved Hearing before Kourakis CJ – 35 minutes – 3 senior counsel attended. 15/04/15 Kourakis CJ 4. P’s 2nd interlocutory app filed 8/3/2012 for inquiry under s 536 of Corporations Act dismissed. Costs reserved Reserved Hearing before Kourakis CJ over 14 and 15/4/15 – 4 hours 2 minutes – dealing mainly with P’s application under s 536 CA. 28/10/15 Kourakis CJ Judgment delivered on application to amend SOC. (application granted in part, refused in others)
Costs reservedReserved Application before Kourakis CJ to amend SOC – costs reserved – parties given until 4/11/15 to provide written subs as to costs. D filed submissions on 4/11/15, P filed submissions on 6/11/15 and D filed submissions in reply to P’s subs on 6/11/15.
We turn first to those reserved costs orders made in the period before the trial of the action commenced. Some of these reserved costs were dealt with by later orders of the Court. Some reserved costs related to very brief minor attendances of no consequence and some reserved costs were of the nature of costs in the cause. This is because those costs were to be dealt with by the Primary Judge. It is axiomatic that these costs orders were dependent upon the outcome of the trial.
The reserved costs orders which we consider here therefore fall into only two categories. The first: costs reserved but later dealt with by an order for costs of a Master or Justice of this Court. The second: reserved costs orders for attendances that were not later dealt with by a specific order of a judicial officer of the Court and whether those costs orders should be categorised as costs in the cause.
On 8 May 2008, Judge Burley heard a directions hearing commenced by an application on 7 May 2008 concerning the provision of particulars. There were a number of directions hearings at the time which involved pleadings, particulars and disclosure. His Honour reserved the question of costs. In the usual course, costs would be awarded to the party who, for example, successfully attacks the pleadings of the other. Sometimes, reserved costs orders are made pending the outcome of other contested matters. We consider that in context these costs may be treated as costs in the cause; subsequently the Plaintiff filed an Amended Statement of Claim.
Another aspect of the 7 May 2008 application concerned an application by the Defendants for further and better discovery by the Plaintiff of any documents relevant to his claim for damages and loss. On 18 August 2008, Judge Lunn made an order on this application for further and better disclosure by the Plaintiff and that the costs of the application be reserved. This further disclosure related to documents that were referrable to the Plaintiff’s pleadings on damages and so the reserved costs orders should be treated as costs in the cause.
On 25 November 2009, Bleby J heard an interlocutory application filed 7 October 2009 by the Plaintiff. In that hearing the Plaintiff did not press paragraph 3 of the application that Mr Macks be removed as a liquidator. The Plaintiff did press for an order for an inquiry into the conduct of Mr Macks as liquidator. ASIC attended the hearing and indicated to his Honour that it was not certain whether it wished to be involved in that aspect of the application. Counsel for the Plaintiff and the Defendant indicated that it would not be appropriate to deal with the inquiry application until ASIC’s position was certain. Bleby J did hear the remainder of the application being the Plaintiff’s application for permission to amend its statement of claim. Under the Rules of Court, upon such permission being given, costs would be awarded to the other party to the proceedings. In this instance Bleby J decided that the question of costs of that day’s hearing should be reserved until the whole question of the amendments was decided. The question of those amendments was decided on 11 December 2009 when Bleby J made orders, inter alia:
2. That the plaintiff have permission to file a second amended statement of claim in the form proposed and now initialled by me, and that a copy of the filed second amended statement of claim be filed and served on the defendant on or before 14 December 2009…
12. Costs in the cause.
We consider that no outstanding costs orders remain in respect of this application, all of which are to be treated as costs in the cause.
On 23 December 2009, Bleby J heard an appeal against a decision of Judge Lunn dismissing the Plaintiff’s application for release from the implied undertaking given by him in the action in respect of the use of certain documents disclosed by the Defendant. Judge Lunn also decided that the Plaintiff was required to identify individual documents about which he was seeking a release from the implied undertakings. Bleby J dismissed the appeal on 23 December 2009 and reasons were delivered on 13 January 2010. Although his Honour made an order that costs be reserved, in light of the Plaintiff’s failed appeal, those costs should be treated as costs in the cause.
On 22 July 2010, Bleby J heard an application by the Plaintiff for further discovery by the Defendant. There was only a short attendance of some 18 minutes. At the time, no orders were made because his Honour was informed that the parties were in a mediation process. His Honour did not appoint a date for the hearing of the application and then reserved the question of costs. In light of the fact that nothing transpired at the hearing, it is appropriate that these reserved costs be treated as costs in the cause.
On 27 August 2010, Bleby J conducted a directions hearing to consider two applications by the Plaintiff. The first, dated 21 July 2010, for orders that there be discovery on oath by the Defendant of all documents relating to paragraph 46 of the second amended statement of claim, orders for costs on a solicitor and own client basis and for an order that the Defendant pay the costs of the application that was made to the Federal Magistrates Court for leave to use documents revealed in a proceeding there. The second, that there should be a referral to the Registrar to take proceedings for contempt. His Honour reserved the question of costs of these two applications. For the reasons which follow, we consider that the costs issues arising from these applications were dealt with by orders made by his Honour on 9 February 2011.
On 2 February 2011, a short directions hearing was held before Bleby J and the costs of that hearing were reserved. There was no appearance by or for the Plaintiff on this occasion which had been set to hear an application by the Defendant for the costs of a discovery application and the Defendant’s application for permission to file an amended defence and other directions necessary for the action. His Honour made orders that the directions hearing be adjourned, the question of costs be adjourned and for all matters to be decided at the directions hearing also to be adjourned to 9 February 2011.
On 9 February 2011, Bleby J made orders that the Plaintiff pay the Defendant’s costs of and incidental to the Plaintiff’s interlocutory application dated 20 September 2010 on a party and party basis. That application sought orders that the Defendant file a supplementary list of documents, that the Defendant make discovery on oath and an order that the Defendant pay the costs of the application on a solicitor and own client basis.
At the same time, his Honour considered the interlocutory application filed by the Defendant on 4 August 2010 which had earlier been considered before his Honour on 27 August 2010. On this application the Defendant sought an extension of time nunc pro tunc to file a defence to the second amended statement of claim. His Honour ordered that the Plaintiff pay 70% of the Defendant’s costs of the application. By these orders, Bleby J decided questions of costs of the application argued on 27 August 2010, the appearance on 2 February 2011 and a further hearing before his Honour on 9 February 2011. Any other reserved costs orders should be treated as costs in the cause.
There were other reserved costs orders made by Judge Lunn on 10 March 2010 and 20 May 2010; these should be treated as costs in the cause as they were both short hearings at which nothing transpired for a number of reasons.
On 13 February 2012, the Primary Judge embarked upon the trial of the action. After commencement of the trial, there were a number of interlocutory matters dealt with by a Master of the Court and by the Primary Judge. On 13 March 2012, Judge Lunn of this Court reserved questions of costs arising from an application directed to a firm of solicitors, Iles Selley, and on 3 July 2012 concerning an assessment of a disputed aspect of costs claims between the parties. The Primary Judge made orders reserving the question of costs of interlocutory hearings on 1 May 2012 and 21 June 2012. These costs orders were made prior to the completion of the trial and delivery of his Honour’s judgment. It is a reasonable inference that these costs orders and any reserved costs orders made subsequently would fall according to the result of the trial then being heard by the Primary Judge. We hold this view even though the orders that were made were not for “costs in the cause”. In this context, we consider that reserved costs are referable to the decision of the Primary Judge and may be treated as, in effect, costs reserved to the Primary Judge and will follow the determination of the “cause”.
On 18 December 2014, 15 April 2015 and 28 October 2015, the Primary Judge reserved the question of costs on a number of different matters connected to or consequent upon his Honour’s judgment. An example is the Plaintiff’s application for an enquiry under s 536 of the Corporations Act 2001 and another is the application to amend the statement of claim. It is plain enough that his Honour intended that those costs should be costs in the cause. The issue of the application for the amendment of the statement of claim had arisen earlier in the proceedings and such amendments became necessary for the purposes of his Honour’s judgment. We dealt with that matter at [75]–[115] and [123]–[128] of our judgment. In the usual course, the costs of such an amendment would be the Defendant’s costs. His Honour did not deal with those costs in that way; at the time it was apparent that both parties intended to bring an appeal against his Honour’s judgment. The appropriate order now is that those reserved costs are to be treated as costs in the cause.
There were a further 10 court attendances relating to the appeal; for nine of those attendances, no order for costs was made. These were all necessary attendances for the management of the appeal preparatory to its hearing and we are satisfied that the appropriate costs order for them is costs in the cause.
On 8 November 2016 there was a further attendance preliminary to the appeal. An order was made that costs of the attendance be reserved. At this directions hearing, Mr Viscariello raised the possibility of reviving previously abandoned grounds of appeal. Orders were made for further submissions to be filed by all parties contingent upon the application by Mr Viscariello for the revival of those grounds of appeal. It was not necessary for the Court to hear or resolve any application of Mr Viscariello. The parties formulated minutes of order reflecting the matters discussed on 8 November 2016 and orders in those terms were made in chambers on 15 November 2016 without the attendance of parties. We are also satisfied that the costs arising from this attendance are costs in the cause. We note that the Intervenor made no application for costs.
We set out below the Orders that deal with all of the costs of the action both before the trial judge and on this appeal.
Orders
1. The extant costs orders made by the Court on:
1.1.All pre-trial and post-trial attendances;
1.2.All interlocutory applications before and after the commencement of the trial of this action; and
1.3.The appeal to this Court
shall be paid in accordance with those Orders of the Court, such costs to be adjudicated if not agreed.
2. Subject to the extant costs orders that are dealt with in paragraph one of these Orders, Mr Macks shall pay to Mr Viscariello:
2.1.Twenty five percent (25%) of the costs and disbursements of the trial before the Primary Judge; and
2.2.Twenty five percent (25%) of the costs of the applications before the Court for which the costs order of the Court was, or is by virtue of these reasons, costs in the cause, such costs to be adjudicated if not agreed.
3. Subject to the extant costs orders that are dealt with in Paragraph 1 of these Orders, Mr Viscariello shall pay to Mr Macks seventy percent (70%) of the costs of the appeal, which shall include the costs of all chamber attendances preparatory to the hearing of the appeal for which the costs order of the Court was or is by virtue of these reasons, costs in the cause, such costs to be adjudicated if not agreed.
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