Rogers v Kabriel (No 2)

[1999] NSWSC 474

CITATION:	Rogers v Kabriel (No 2) [1999] NSWSC 474
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	3052/97
HEARING DATE(S):	14/05/99
JUDGMENT DATE:	14 May 1999
PARTIES :	Joan Freedom Rogers (P1) Joan Freedom Rogers Pty Ltd (P2) Bedrich Kabriel (D1) Narendra Prasad (D2) Fontana Films Pty Ltd (D3)
JUDGMENT OF:	Young J

COUNSEL :	Plaintiffs: B A Coles QC and A P Coleman Defendants 1 & 3: P L G Brereton SC 2nd Defendant in person
SOLICITORS:	Plaintiffs: Corrs Chambers Westgarth Defendants 1 & 3: Beilby Poulden Costello
CATCHWORDS:	Procedure [558]; Costs; Defendants appearing by one set of counsel and solicitors; One successful one not; Appropriate costs order; Consideration of situation where plaintiff wins on some counts only of its claim
ACTS CITED:	(NSW) Supreme Court Act 1970, s 76 (NSW) Supreme Court Rules Pt 52A r 11
DECISION:	See para 20

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG, J

FRIDAY 14 MAY 1999

3052/97 - JOAN FREEDOM ROGERS & ANOR V BEDRICH KABRIEL & ORS (NO 2)

JUDGMENT
1 HIS HONOUR : This morning I made orders carrying out the reasons for judgment I gave on 23 April 1999, but I reserved over lunch the question of costs as between the plaintiffs, on the one hand, and the first and third defendants, on the other hand.
2 It will be remembered that in the principal judgment I found the first defendant not liable to the plaintiffs on any account, but the third defendant to be liable to the plaintiffs on both transactions. However, numerous counts were laid by the plaintiffs against each of the first and third defendants, and in respect of each transaction the plaintiffs only succeeded on one of those counts.
3 The $1 million transaction involved the plaintiffs succeeding only on a statutory count, a matter which involved interpretation of the Corporations Law, so that most of the factual material on the million dollar claim was not material which in the end advanced the plaintiffs' case.
4 Costs under s 76 of the Supreme Court Act 1970 are in the discretion of the court. Since Oshlack v Richmond River Council (1998) 193 CLR 72, 88, it may be doubted whether there is a rule set in concrete that a successful party is to be compensated by the unsuccessful party for costs.
5 Mr Coles QC, who appeared with Mr A P Coleman for the plaintiffs, put that Pt 52A r 11 of the Supreme Court rules had that effect in this court, notwithstanding Oshlack's case. That rule is rather obscurely worded. It may mitigate against the full force of what was said in Oshlack, but it still leaves the court with a discretion and a general rule of thumb.
6 There was forecast, when the matter was set down for today to argue ancillary questions, that there might be a stay of proceedings sought. That was abandoned. A cynical mind such as mine would infer that may be for one of two reasons. One, that the defendants have acknowledged the rightness of the judgment, or two, that the company against whom the judgment was ordered has not the financial wherewithal to meet it in any event. I think the second is more likely, so that there is a very real chance that if particular attention is not paid to the form of the order for costs there might be unfortunate consequences for one party or the other.
7 Although Mr Coles QC submitted that I should not take into account the possible insolvency of any of the defendants, I do consider that the court can take that matter into account up to a certain extent and, indeed, there has in the past been such a consideration, it being one of the bases of the "partner in crime" costs rule. That rule is that if there are two unsuccessful defendants and one goes insolvent then it is fairer that one of those defendants pay the whole of the costs, rather than the plaintiff get only half of the costs; see Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201, and cases there cited.
8 Also it has been recognised that, generally speaking, if a co-defendant is insolvent, so that the other defendants have to pay the whole of the solicitors’ bill, instead of a part of it, then, to put it colloquially, that is their fault for teaming up with an insolvent person; see Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567.
9 However, apart from contributions between defendants and making sure that the order for costs is framed precisely, the authorities would not support the proposition that insolvency, or possible insolvency, of a party would have any further significance.
10 The first matter to consider is what order for costs should be made in favour of the plaintiffs against the third defendant, against whom they wholly succeeded, but not in respect of every count.
11 I reviewed the authorities recently in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20. I affirm what I said there and I do not need to repeat the reasoning.
12 In my view it follows from that reasoning, applied to the facts and circumstances of this case, that the plaintiffs should not get their full costs. Especially on the second transaction they did not need most of the factual material proffered and in all the circumstances they should get fifty percent of their costs.
13 The next consideration is what order for costs should be made in favour of the first defendant.
14 The authorities show that there is a rule of thumb that is applied when the plaintiff has succeeded against one defendant and not the other defendant, where both defendants have been represented by the same solicitors and counsel. The rule was laid down as early as Re Colquhoun (1854) 5 De GM & G 35; 43 ER 781, and was affirmed in Ellingsen's case. Ellingsen’s case has been applied in Australia; see Troupp v Caffery, a decision of the old Queensland District Court in [1920] QWN 27, in the Nicholas case (supra), and by myself in Mike Gaffikin Marine Pty Ltd v Princes Street Marina Pty Ltd (No 2) 15 July 1996, unreported. That decision was partly reversed in the Court of Appeal (17.12.1997) but the appeal decision did not touch this part of the case.
15 The rule is that in the absence of any evidence as to how the defendants have retained their solicitor the court infers that each is liable to pay an aliquot part of the costs, so that if successful the only order in their favour is an aliquot part of the total costs.
16 That is a rule of thumb and not a rule that must be applied in each case and in the appropriate case the court will order an assessment of costs on the basis that the costs are to be split between the costs referable to all defendants and the costs referable to a particular defendant; see Korner v H Korner & Co Ltd [1951] Ch 10. The rule of thumb will also not apply where there is evidence before the court of the exact arrangement that has been made by the defendants with their solicitor, particularly where the other side is aware of that arrangement.
17 Although I have given some thought in the instant case as to whether the defendants' costs should be apportioned between what are obviously joint costs and what appear to be costs applicable to each particular defendant, it seems to me that doing that might cost the parties more than it is worth and that a broad brush approach should be taken.
18 I have not been given any material as to whether the first and third defendants jointly and severally or severally retained their solicitor, but I will make the inference that the retainer is joint.
19 Accordingly, the plaintiffs should pay one half of the first defendant's costs.
20 I make orders 1 to 5 in accordance with the short minutes which were resolved this morning and further order:

6. That the plaintiffs pay one half of the first defendant's costs. 7. That the third defendant pay fifty percent of the plaintiffs' costs of the issues raised against it. 8. The exhibits may be returned.

oOo

Last Modified: 05/20/1999