Rodney Meates v KD Pty Ltd T/As Leader Real Estate
[2013] ACTSC 212
•16 October 2013
RODNEY MEATES v KD PTY LTD T/AS LEADER REAL ESTATE
AND DEREK WHITCOMBE
[2013] ACTSC 212 (16 October 2013)
COSTS – plaintiff succeeding against one defendant but failing against other defendant – appropriate orders as to costs to reflect outcome – unsuccessful defendant ordered to pay 90% of plaintiffs’ costs – plaintiff ordered to pay 10% of defendants’ costs to successful defendant
Trade Practices Act1974 (Cth)
Court Procedures Rules 2006, r 1721
Mareva Building Consultants v Zevon (No 2) [2012] ACTSC 24
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
No. SC 923 of 2006
Master Harper
Supreme Court of the ACT
Date: 16 October 2013
IN THE SUPREME COURT OF THE )
) No. SC 923 of 2006
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: RODNEY MEATES
Plaintiff
AND: KD PTY LTD T/AS LEADER REAL ESTATE
(ACN 098 148 424)Defendant
AND:DEREK WHITCOMBE
Second Defendant
ORDER
Judge: Master Harper
Date: 16 October 2013
Place: Canberra
THE COURT ORDERS THAT:
The first defendant pay 90% of the plaintiffs’ costs.
The plaintiff pay the costs of the second defendant, calculated as an amount equal to 10% of the costs of both defendants.
On 20 December 2012, following a hearing over a period of four days, I ordered that judgment be entered for the plaintiff against the first defendant in the sum of $76,314.00, and that judgment be entered for the second defendant.
Since then, the parties have lodged written submissions as to the orders I should make about costs.
The plaintiff’s claim arose out of a dispute with his employer, the first defendant. The second defendant is the managing director and, I infer, the controlling shareholder of the first defendant company. The company carries on business as a real estate agent, and the plaintiff was a salesman who worked for the company between March 2003 and June 2006.
He commenced the action in December 2006 against the first defendant. His claim was for unpaid commission on sales, and unpaid “second lister” fees. The Statement of Claim was amended in August 2009 to add the second defendant as a party.
Following the filing of a Certificate of Readiness, the action was listed for hearing on 31 August 2010. A week earlier the defendant’s filed an application seeking leave to make further amendments to their defence. On the first day of the hearing I refused the application with costs, for reasons which I gave orally. Later on the same day, senior counsel for the defendant made a fresh application seeking essentially the same orders, which I said that I would deal with when giving my reasons for judgment in the action.
The hearing occupied the two days set aside but was unable to finish during that time, resuming almost a year later for a further two days.
The plaintiff’s case was that during December 2004 he accepted an offer of employment with another company, and gave notice to the first defendant. Discussions took place and representations were made to him that he would be remunerated in the future on more favourable terms if he stayed with the first defendant. He withdrew his notice. In due course he found himself in dispute with the defendant’s about the terms of the arrangement. After he left the employ of the first defendant, he commenced the present proceedings. He served for commission on sales he had brought about personally of about $40,000.00, plus second lister fees of almost $190,000.00 on his own sales and those of other sales representatives with the company, less credit for advances of about $60,000.00.
The principal claim which was added when the second defendant was joined was for misleading and deceptive conduct under the then Trade Practices Act1974 (Cth) in respect of the representations which he had made to the plaintiff.
The defendant’s joined issue on the factual assertions made by the plaintiff, subject to some admissions. The defence further asserted that it was a term of the agreement with the plaintiff that he would be entitled to commission only in respect of sales which settled during the course of his employment, not sales which were settled after his employment had been terminated.
The defence included a counter claim for the $60,000.00 advance, based on the fact that this was an advance in anticipation of commissions to become due, and that no commissions had ultimately become due because the plaintiff had terminated his employment before any of the sales had settled.
The principal witnesses were the plaintiff and the second defendant. I preferred the evidence of the plaintiff to that of the second defendant. I rejected a number of portions of the evidence of the second defendant. I found that the plaintiff was entitled to commission on the sales he had effected himself, and that the first defendant was not entitled to recover any of the advance. I found that the plaintiff was entitled to a second listing fee in respect of his own sales, but that he was not entitled to a second listing fee in relation to sales made by other representatives with the company.
I was not satisfied that when the second defendant made the representations about future remuneration, he did not intend to comply with them, so that the Trade Practices claim against the second defendant failed.
In broad terms, I found in the plaintiff’s favour in amounts of about $90,000.00 for unpaid commission plus about $20,000.00 for unpaid second listing fees, less the advance, plus interest, which took the judgment sum to $76,314.00.
Having regard to my factual findings, I felt that it would be futile to allow the application by the defendants to amend their defence, and refused the leave sought in that regard.
The primary submission on behalf of the plaintiff is that costs should follow the event, and that the first defendant should pay the plaintiff’s costs of the action, but that there should be no order as to the second defendant’s costs. It will be recalled that the second defendant had been added late. The second defendant was represented throughout by the same solicitors and counsel as the first defendant.
I have reviewed the transcript of the trial. I have been unable to isolate any portion of the evidence, or of the hearing more generally, as related solely to the plaintiff’s case against the second defendant. That is to say, it does not seem to me that the hearing would have been any shorter, or the costs any less, if the second defendant had not been joined.
The submission on behalf of the defendants is that, with the exception of orders already made in relation to applications to amend the pleadings, the parties should bear their own costs on the basis that the plaintiff and the first defendant succeeded on some issues but failed on others, and the second defendant was entirely successful.
The defendants place significance on the fact that the plaintiff originally sued for something over $200,000.00 but recovered substantially less. They say that if the claim had been limited to the amount recovered, the defendants would have been likely to settle on a commercial basis, having regard for the likely costs of proceeding to hearing over such an amount.
Rule 1721 of the Court Procedures Rules 2006 provides as follows:
1721 Costs – General Rule
(1)The costs of a proceeding or an application in a proceeding are in the discretion of the Court.
(2)The costs of the proceeding include the costs of an application in the proceeding, unless the Court otherwise orders.
In Mareva Building Consultants v Zevon (No 2) [2012] ACTSC 24, Katzmann J summarised the principles as follows:
10.The Rules provide that the costs of the proceeding are in the discretion of the Court: r 1721. The Court also has a discretion to order costs in relation to a particular issue in, or a particular part of, a proceeding and to declare the percentage of the costs attributable to that issue or part: r 1705. The discretion is unfettered in its terms but, obviously enough, it must be exercised judicially.
11.There is a wealth of authority about the factors that may influence the exercise of the discretion. In Hughes v Western Australian Cricket Association (Inc) & Ors [1986] FCA 382 . . . Toohey J summarised the effect of the authorities:
(1)Ordinarily, costs following 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: Forster v Farquahar (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 p 12.
In Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373, the New South Wales Court of Appeal said:
6.Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the appellant was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed . .
7.As the appellants submitted, the commencing position is that costs follow the event so that a successful party is entitled to costs. In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument . . .
In the present case, although the plaintiff recovered considerably less than the amount initially sued for, it cannot be said that he failed on any issue which might justify departing from the usual rule that costs follow the event, and that a successful party is entitled to an order for costs. The answer to the submission by the defendants that they might have settled if sued for the lower figure ultimately recovered by the plaintiff, it should be said that the remedy was in the hands of the defendants, either to make a payment into Court or to make an offer by calderbank letter, to protect their position in relation to costs. I am unaware whether any settlement negotiations took place in this case. Settlement is to be encouraged, as are negotiations towards settlement. But a defendant cannot avoid an order for costs simply by saying that the case might have settled if the plaintiff had sued for a lower amount.
The plaintiff should have an order for the general costs for the action against the first defendant. Those costs will include the costs of the unsuccessful applications on the first day of the hearing for leave to amend the defence, without the need for any specific additional order.
The plaintiff has failed against the second defendant. It has not been argued on behalf of the plaintiff that considerations apply which might justify the making of a Bullock or Sanderson order in respect of his costs of the proceedings against the second defendant, and one cannot see that such an order could be sustained.
In other circumstances the Court might consider making an order in the second defendant’s favour against the first defendant for all or some portion of the second defendant’s costs, but that seems artificial in the extreme, in circumstances where the second defendant controls the first defendant, and the two defendants did not have separate legal representation.
I recognise that an order that the plaintiff pay the second defendant’s costs would create practical difficulties in working out what work done by the solicitors and by counsel should be seen as having been done on behalf of the second defendant rather than the first defendant. It seems to me that a practical solution which would avoid the parties and the registrar from having to deal with the matter at that level of detail would be for me to apportion a percentage of the joint defendant’s costs to the second defendant. As I have previously said, I have not been able to isolate any particular part of the trial which was made necessary purely by reason of the presence of the second defendant as a party. Much of the preliminary and preparatory work had been done before the second defendant was joined. It seems to me that a reasonable approach would be to apportion 90% of the total costs of both defendants to the first defendant, and 10% to the second defendant.
Although this is necessarily imprecise, it should also work reasonably fairly if I assume that 90% of the work done on behalf of the plaintiff related to his claim against the first defendant, and 10% to his claim against the second defendant. I propose to adopt that apportionment.
This leads to orders that the first defendant pay 90% of the plaintiff’s costs, and that the plaintiff pay 10% of the costs of both defendants. I make orders to that effect.
I certify that the preceding twenty (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.
.Associate:
Date: 16 October 2013
Counsel for the plaintiff: Mr B Howes
Solicitor for the plaintiff: Howes Kaye Halpin
Counsel for the first and second
defendants: Ms Zoe McCormick
Solicitor for the first and
second defendants: Bradley Allen Love
Date of written submissions: 21 and 26 March 2013
Date of judgment: 16 October2013
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