Nguyen v Phan (No 3)
[2015] VSC 685
•2 DECEMBER 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2012 06727
| MINH NGUYEN & ORS | Plaintiffs |
| v | |
| TU PHAN & ORS | Defendants |
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JUDGE: | ELLIOTT J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 2 DECEMBER 2015 |
DATE OF JUDGMENT: | 2 DECEMBER 2015 |
CASE MAY BE CITED AS: | NGUYEN v PHAN (No 3) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 685 |
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COSTS – trial - both the plaintiffs and the plaintiffs by counterclaim largely unsuccessful – with minor exceptions, no costs awarded – Supreme Court Act 1986 (Vic), s 24(1).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr I G Waller QC with Ms K L Burgess | Baker & McKenzie |
| For the Defendants | Dr T J F McEvoy with Mr D J Fahey | Arnold Bloch Liebler |
HIS HONOUR:
On 24 November 2015, judgment was delivered in this proceeding (“the Judgment”).[1] Many issues were raised in the proceeding. As was stated in the conclusion of the Judgment, both the plaintiffs and the defendants were largely unsuccessful in the cases they ultimately advanced to the court.[2]
[1]Nguyen v Phan (No 2) [2015] VSC 634.
[2]At [856].
The Judgment was lengthy. It is unnecessary to repeat all the issues that were raised and how they were determined. It is also unnecessary to refer individually to each of the matters raised in argument today. As was stated in Luxmore Pty Ltd v Hydedale Pty Ltd:[3]
In the ordinary case, it is both appropriate and desirable that a costs question be decided at the conclusion of argument. Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This court will assume (as should the parties) that every matter addressed in argument on costs had been considered. This court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons.
I will proceed with these observations in mind.
[3](2008) 20 VR 481, 484 [12] (Maxwell P and Kellam JA).
By the fourth further amended statement of claim (“the Statement of Claim”), the plaintiffs raised issues at trial which included the following:
(1)The existence of an agreement in mid 2002 and the creation of an express trust.[4]
[4]The Judgment, at [232]-[328].
(2)The existence of an agreement in August 2003 and the creation of an express trust.[5]
[5]Ibid, at [346]-[395].
(3)The existence of an agreement in early 2009 (“the 2009 Agreement”) and the creation of an express trust.[6]
[6]Ibid, at [436]-[516].
(4)The implementation of the 2009 Agreement, as alleged to have been entered into in 2009.[7]
[7]Ibid, at [517]-[526].
(5)The existence of fiduciary duties based on the 2009 Agreement.[8]
(6)Claims that shares held in Thuan Phuoc were held on trust for Thomas.[9]
(7)Allegations that Thomas breached fiduciary duties based on his dealings with Triangle Sheetmetal Pty Ltd (“Triangle Sheetmetal”).[10]
(8)Allegations that Triangle Sheetmetal knowingly assisted Thomas in the breach of the fiduciary duties referred to in subparagraph (7) above.[11]
(9)Provision of a dongle by Thomas to Francis for use by Triangle Sheetmetal, in breach of alleged fiduciary duties.[12]
(10)Closure of 2 term deposits in Roo Sheetmetal’s name by Thomas.[13]
(11)Up until the fourth week of trial, allegations against Mega Sheetmetal Pty Ltd (“Mega Sheetmetal”), and related claims against Thomas alleging breach of alleged fiduciary duties.[14]
(12)Interference by Thomas with goods delivered by a Chinese company.[15]
(13)Unauthorised dealings with respect to the Nerang Property.[16]
[8]Ibid, at [746].
[9]Ibid, at [631]-[690].
[10]Ibid, at [622]-[693].
[11]Ibid, at [630], [698], [819]-[820].
[12]Ibid, at [694]-[713].
[13]Ibid, at [615]-[617].
[14]Ibid, at [55].
[15]Ibid, at [758]-[759].
[16]Ibid, at [760]-[762].
With respect to the allegations summarised in subparagraphs (1) and (2) above, the plaintiffs were substantially successful. As to the allegations summarised in subparagraphs (3) to (13) above, the plaintiffs substantially failed. With respect to the matters the plaintiffs failed to establish, a very large amount of the court’s time was spent dealing with these matters, both at trial and in producing the Judgment. Further, the success in relation to subparagraphs (1) and (2) needs to be seen in the context that, when the proceeding was commenced, the plaintiffs already had control of the business the subject of dispute in this proceeding. As Minh’s evidence demonstrated, the proceeding was commenced to seek to protect Roo and Oz Sheetmetal from Thomas for reasons that were found to be without substance.[17]
[17]Ibid, at [134]-[135].
By the defence and counterclaim, issues were raised which included the following:
(1)Each of the substantive allegations in the Statement of Claim was disputed.
(2)Breach of fiduciary duties and statutory duties, principally by Minh and Thuy, on the basis that Thomas was the ultimate beneficial shareholder in Roo Sheetmetal Pty Ltd (“Roo Sheetmetal”) and Roo and Oz Sheetmetal Pty Ltd (“Roo and Oz Sheetmetal”).[18]
[18]Ibid, at [763]-[767].
(3)Claims that properties held by PN & Nominees Pty Ltd (“PN & Nominees”) were subject to a constructive trust in favour of Roo Sheetmetal.[19]
(4)Claims that properties held by the Phan United Family Trust trustees (ie Thomas, Thuy, Son and Joseph) were subject to a constructive trust in favour of Roo Sheetmetal.[20]
(5)Claims that properties and assets held by Roo and Oz Sheetmetal were subject to a constructive trust in favour of Roo Sheetmetal.[21]
(6)Roo and Oz Sheetmetal was at all material times a subsidiary of Roo Sheetmetal.[22]
(7)The name of Oz Sheetmetal Pty Ltd was changed to Roo and Oz Sheetmetal without notice to Thomas.[23]
(8)$1,100,000 was transferred from Roo Sheetmetal to Roo and Oz Sheetmetal without Thomas’ knowledge or consent.[24]
(9)Minh and Thuy conducted the affairs of Roo and Oz Sheetmetal in a manner that was oppressive and unfairly prejudicial to Roo Sheetmetal.[25]
(10)The business of Roo Sheetmetal, together with certain vehicles and machinery and equipment, were wrongly transferred to Roo and Oz Sheetmetal without consideration.[26]
(11)It was just and equitable for Roo and Oz Sheetmetal to be wound up.[27]
[19]Ibid, at [773], [797]-[799], [801].
[20]Ibid, at [773], [797]-[799], [801].
[21]Ibid, at [797], [800]-[801].
[22]Ibid, at [769], [818].
[23]Ibid, at [770].
[24]Ibid, at [771].
[25]Ibid, at [825] and [831].
[26]Ibid, at [772] and [793]-[795].
[27]Ibid, at [831].
With respect to the allegations summarised in subparagraphs (1) and (10) above, the defendants were substantially successful. With respect to the allegations summarised in subparagraphs (2) to (9) and (11) above, the defendants substantially failed. In relation to the matters the defendants failed to establish, also a very large amount of time was spent by the court at trial and in the preparation of the Judgment.
Although some relief has been granted in the proceeding,[28] in large part that relief does not reflect the relief sought by either the plaintiffs or the defendants. Indeed, even with the benefit of the reasons in the Judgment, until some discussion with the bench occurred today both parties still had diametrically opposed positions as to what orders should be made, and neither of them have been successful in much of what was ultimately sought.
[28]The precise form of the final relief has not yet been the subject of final orders.
Section 24 of the Supreme Court Act 1986 (Vic) provides:
24 Costs to be in the discretion of Court
(1)Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.
(2)…
In the usual circumstances, settled practice with respect to costs is that costs ought to follow the event. Their function is compensatory.[29] The principles as summarised in Chen v Chan (No 2)[30] are particularly relevant to the questions at hand:
[29]Latoudis v Casey (1990) 170 CLR 534, 567.1 (McHugh J).
[30][2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).
(1)The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.
(2)The Rules of Court permit significant flexibility in determining questions of costs. In particular, the Court is entitled to examine the realities of the case and will attempt to do “substantial justice” as between the parties on matters of costs.
(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4)A Court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5)Where a Court determines to make an order apportioning costs, then it does so primarily as “a matter of impression and evaluation”, rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
(6)Where a number of parties have had the same representation, there is a “rule of thumb” as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted.
(7)Usually, an order for costs will be made on a party/party basis.[31] But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated, for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding. Special circumstances may also include the making of an allegation of fraud which is not proved.
[31]From 1 April 2013, costs are generally awarded on a standard basis: Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 63.28(a).
In light of the matters set out above, if the court were to order that costs followed the event, that would result in orders for the costs of the plaintiffs’ claims, or a very substantial portion of those costs, being awarded in favour of the defendants. Equally, if costs followed the event on the counterclaim, that would result in orders for the costs, or a very substantial portion of those costs to be awarded in favour of the plaintiffs. Further, if such orders were made, it is highly likely, given the implacable position adopted by the parties to date, that a taxation of the costs would be protracted and expensive.
Accordingly, with some minor exceptions to which I will refer below, I will order that, with respect to the costs of the proceeding up to and including today, there will be no order as to costs on the plaintiffs’ claims and the defendants’ counterclaims.
The exceptions to the general order are:[32]
[32]In claiming costs, Mega Sheetmetal, Triangle Sheetmetal and PN & Nominees each must be mindful of the fact that it had the same legal representatives as the remaining defendants and defendants by counterclaim respectively: see par 9(6) above.
(1)The plaintiffs discontinued against Mega Sheetmetal. Accordingly, they should pay the costs of Mega Sheetmetal in defending the plaintiffs’ claims, including reserved costs.
(2)The plaintiffs failed completely against Triangle Sheetmetal. Triangle Sheetmetal was a company in which the other defendants had no interest and Triangle Sheetmetal made no substantive claim in the proceeding. Accordingly, the plaintiffs should pay Triangle Sheetmetal’s costs in defending the plaintiffs’ claims.
(3)The plaintiffs by counterclaim failed completely against PN & Nominees. PN & Nominees was not a party to the proceeding other than as a defendant by counterclaim. Accordingly, the plaintiffs by counterclaim should pay PN & Nominees’ costs in defending the counterclaim.
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