Opalswan Pty Ltd v Commercial & General Acceptances Pty Ltd

[1996] FCA 1142

CATCHWORDS

PRACTICE and PROCEDURE - costs - judgment for less than $100,000 - whether Court should order non‑reduction of costs - whether proceeding could have been brought more suitably in another court - whether issue apportionment appropriate

Bankruptcy Act 1966, s82(1), s82(2)
Federal Court Rules, O35 r7(2)(f), O62 r36A,
Trade Practices Act 1974 (Cth), s51A, s52, s75B

Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 133 ALR 667
Cretazzo v Lombardi (1975) 13 SASR 4
Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748
Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd and Ors (Carr J, 12 May 1994, unreported)
The Texas Company (Australia) Limited v Federal Commissioner of Taxation (1940) 63 CLR 382
Tubby Trout Pty Ltd v Sailbay Pty Ltd (Drummond J, 8 February 1994, unreported)

OPALSWAN PTY LTD v COMMERCIAL AND GENERAL ACCEPTANCES PTY LTD and IAN SCOTT
NO WAG 86 OF 1994

R D NICHOLSON J
PERTH
19 DECEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA     )

WESTERN AUSTRALIA DISTRICT REGISTRY   )

GENERAL DIVISION  )      NO WAG 86 OF 1994

B E T W E E N:  OPALSWAN PTY LTD

Applicant

and

COMMERCIAL AND GENERAL ACCEPTANCES PTY LTD

First Respondent

and

IAN SCOTT

Second Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER:     R D NICHOLSON J

DATE OF ORDER:          19 DECEMBER 1996

WHERE MADE:            PERTH

THE COURT ORDERS THAT:

1. Judgment ordered on 18 November 1996 be recalled.

1. Judgment for the applicant against the first and second respondents jointly and severally for $89,000.

1. The respondents jointly and severally pay the costs of the applicant to be taxed, the reduction provided for in O62 r36A(1) of the Federal Court Rules not applying.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )

WESTERN AUSTRALIA DISTRICT REGISTRY   )

GENERAL DIVISION  )      NO WAG 86 OF 1994

B E T W E E N:              OPALSWAN PTY LTD

Applicant

and

COMMERCIAL AND GENERAL ACCEPTANCES PTY LTD

First Respondent

and

IAN SCOTT

Second Respondent

CORAM:R D NICHOLSON J

DATE:19 DECEMBER 1996

PLACE:PERTH

REASONS FOR JUDGMENT

The primary judgment and reasons in this proceeding were given on 18 November 1996.  I use the terms as defined in those reasons.  The effect of the judgment was to award to Opalswan damages in the sum of $89,000.  The issue of costs and the entry of judgment against Scott were reserved for submissions.

So far as concerns Scott, he became a bankrupt on 21 July 1992 and remains undischarged.  He is also unemployed and states he is unable to make or sustain any payment.  He also maintains that, as he acted as agent of CAGA, all costs should remain the responsibility of CAGA.

For Opalswan it is contended the matters found against Scott commenced with the representation made on 10 September 1993.  It follows this action is unrelated to and uninhibited by his bankruptcy.  The claims do not involve "an obligation incurred before the date of bankruptcy" and therefore judgment if made against him is not provable in the bankruptcy: Bankruptcy Act 1966, s82(1). Similarly the claims were for unliquidated damages and did not arise "by reason of a contract, promise or

breach of trust", and therefore are not provable in the bankruptcy: Bankruptcy Act, s82(2). The apparent unrecoverability of a judgment is not a reason for non‑entry against Scott.

As to the form of judgment I accept the submission of counsel for Opalswan that, as appears from the reasons for judgment, CAGA and Scott should be regarded as having joint and several liability.  In the normal course of events judgment would have been entered against them both.

That being the position, the question is whether the judgment given on 18 November 1996 against CAGA should be recalled and judgment then substituted on a joint and several basis.  Order 35 r7(2)(f) of the Federal Court Rules authorises the Court to vary or set aside a judgment or order after the order has been entered where "the party in whose favour the order was made consents".  Judgment has not yet been entered.  Prior to entry the order may be recalled in any event: The Texas Company (Australia) Limited v Federal Commissioner of Taxation (1940) 63 CLR 382 at 457; Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 133 ALR 667. In this case it is appropriate the judgment announced on 18 November 1996 be recalled in order that a new judgment be entered in the following terms:

"Judgment for the applicant against the first and second respondents jointly and severally for $89,000."

Turning to the question of costs, O62 r36A of the Federal Court Rules provides in sub‑r1 that where a party is awarded judgment for less than $100,000 on a claim for a money sum or damages, any costs order to be paid, including disbursements, will be reduced by one‑third of the amount otherwise allowable under the order "unless the Court or a Judge otherwise orders".  This rule is to be read with FCR O62 r36A(2) which provides that "if the Court or a Judge is of the opinion that a proceeding... brought in this Court could more suitably have been brought in another court or in a tribunal and so declares, then any costs to be paid, including disbursements, will be reduced by one‑third of the amount otherwise allowable under this order".  The same policy is reflected in both these sub‑rules - namely, the suitability or otherwise of bringing the proceedings in the Federal Court: Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd and Ors (Carr J, 12 May 1994, unreported).

This is not a case which could have been brought more suitably in another court. It was factually and legally complex, involving substantial questions of breaches of s52 of the Trade Practices Act 1974 (Cth) and the application of ss51A and 75B of that Act as well as claims for economic duress and unconscionable conduct. There was no more suitable court than this court. No application for transfer to any other court was made. In my opinion the jurisdiction as exercised in the Federal Court in relation to the nature of those claims and the complexity of them, were such that the matter could not have been more suitably brought in another court.

For CAGA it is contended the benefit of FCR O62 r36A(1) should only be denied to it if the applicant can establish conduct on the part of the first respondent at or in connection with the running of the litigation which would disentitle it to the benefit of the rule.  In support reliance is placed upon the decision in Tubby Trout Pty Ltd v Sailbay Pty Ltd (Drummond J, 8 February 1994, unreported).  However, examination of that decision shows that the reason it was decided the benefit of the O62 r36A(1) reduction should not apply to the second respondent in that case, came about because he had attempted to procure false evidence by means of a bribe.  It is not authority for the proposition advanced on behalf of CAGA. 

Taking into account the considerations accepted as relevant in Magenta (supra), I consider this is not a case where the reduction should apply.  The Court should otherwise order in respect of the reduction applicable pursuant to FCR O62 r36A(1).

For CAGA it is also contended that because Opalswan failed in relation to the allegations of economic duress and did not make out the claim in relation to the revenue account, and additionally only partially succeeded on the capital account, there should be a further reduction of one‑third in any costs payable by it.  Reliance is placed on Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 where Toohey J said:

"Section 43(2) of the Federal Court of Australia Act 1976 vests the award of costs "in the discretion of the Court or Judge". The Federal Court Rules do not purport to qualify that discretion.  The only rule to which reference is necessary is O62, r15 whereby, when costs are reserved, those costs follow the event "unless the Court or a Judge otherwise orders".

The discretion must of course be exercised judicially.  There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised.  I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.

1.Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order: Ritter v Godfrey [1920] 2 KB 47.

2.Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed: Foster v Farquhar [1893] 1 QB 564.

3.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 party's 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 of law: Cretazzo v Lombardi (1975) 13 SASR 4 at 12."

However it was in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 where Jacobs J said:

"... I would wish to sound a note of cautious disapproval of applications, which are being made with increasing frequency, to apportion costs according only to the success or failure of one party or the other on the various issues of fact or law, which arise in the course of a trial.

...

But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law.  The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might
be material to the decision of the case.  There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike.  I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."

In my opinion that is this case here.  There are no special circumstances justifying some other order than the usual order.

For these reasons, as to costs, I consider there should be an order varying O62 r36A(1) to remove the reduction but otherwise there should be an order that CAGA and Scott pay Opalswan's costs to be taxed.

I certify that this and the preceding 4 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson.

Associate:

Date:19 December 1996

APPEARANCES

Counsel for the Applicant:     Mr D Chantler

Solicitors for the Applicant:   Jon Davies & Co

Counsel for the Respondent:     Mr G Barrow

Solicitors for the Respondent:  Williams & Hughes

Date of Hearing:              Written submissions

Date of Judgment:             19 December 1996