Rohesa Nominees Pty Ltd and Ors v Rossett Pty Ltd and Ors (No.2)
[2004] FMCA 623
•20 September 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ROHESA NOMINEES PTY LTD & ORS v ROSSETT PTY LTD & ORS (No.2) | [2004] FMCA 623 |
| TRADE PRACTICES – Costs – whether Sanderson or Bullock order. |
Trade Practices Act 1974, s.87
Rohesa Nominees Pty Ltd & Ors v Rossett Pty Ltd & Ors [2004] FMCA 565
State of Victoria v Horvath (No2) [2003] VSCA 24
Framar Money Management Pty Ltd v Territory Insurance Office (1986) 87 FLR 251
Mayer v Harte (1960) 2 All ER 840
| Applicants: | ROHESA NOMINEES PTY LTD (ACN 004 950 341), BRATSLAV PTY LTD (ACN 005 369 451) and R.G.P. NOMINEES PTY LTD (ACN 005 164 269) |
| Respondents: | ROSSETT PTY LTD (ACN 005 624 288), ANDREW RONALD COOK, GREGORY DAVID COOK, ELIZABETH LESLEY FUREY, JEANETTE ANN COOK, DOROTHY EVA COOK and RONALD GEORGE COOK |
| Cross-claimant: | ROSSETT PTY LTD (ACN 005 624 288) |
| Eighth Respondent and Cross-respondent: | CVA PROPERTY CONSULTANTS LTD (ACN 064 086 960) |
| File No: | MLG 466 of 2002 |
| Delivered on: | 20 September 2004 |
| Delivered at: | Melbourne |
| Hearing Date: | 10 September 2004 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicants: | Mr Aghian |
| Solicitors for the Applicants: | Rockman & Rockman |
| Counsel for the Respondents and Cross-claimant: | Mr Moore |
| Solicitors for the Respondents and Cross-claimant: | McNab McNab & Starke |
| Counsel for the Eighth Respondent and Cross-Respondent: | Mr Dixon |
| Solicitors for the Eighth Respondent and Cross-Respondent: | Connery & Partners |
ORDERS
It is declared that the contract note dated 19 October 2001 between the Applicants and the First Respondent for the sale of the property situate at known as 81-91 High Street Preston in the State of Victoria is and was void and of no effect.
The First and Seventh Respondents shall pay to the Applicants the sum of $100,000 together with interest thereon in the nature of damages calculated from 19 October 2001 in the sum of $30,435.62.
The Applicants’ claim against the Second to Sixth Respondents is dismissed with no order as to costs.
The Applicants’ claim against the Eighth Respondent is dismissed.
The Cross-claim by the First Respondent/Cross-claimant against the Cross-Respondent is dismissed.
The First and Seventh Respondents pay the Applicants’ costs of the entire proceedings against all Respondents including reserved costs.
The First and Seventh Respondents pay the Eighth Respondent/Cross-Respondent’s costs of the entire proceedings including reserved costs.
The costs payable pursuant to this Order shall be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules to be taxed pursuant to Schedule 1 of the Federal Magistrates Court Rules.
I certify pursuant to Rule 21.15 of the Federal Magistrates Court Rules that it was reasonable for the parties in the proceedings to employ advocates to appear on their behalf.
I certify it was reasonable for the parties to incur the costs of transcript.
The orders herein shall take effect on 11 October 2004.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 466 of 2002
| ROHESA NOMINEES PTY LTD (ACN 004 950 341), BRATSLAV PTY LTD (ACN 005 369 451) and R.G.P. NOMINEES PTY LTD (ACN 005 164 269) |
Applicants
and
| ROSSETT PTY LTD (ACN 005 624 288), ANDREW RONALD COOK, GREGORY DAVID COOK, ELIZABETH LESLEY FUREY, JEANETTE ANN COOK, DOROTHY EVA COOK and RONALD GEORGE COOK |
Respondents
and
| ROSSETT PTY LTD (ACN 005 624 288) |
Cross-claimant
and
| CVA PROPERTY CONSULTANTS PTY LTD (ACN 064 086 960) |
Eighth Respondent and Cross-respondent
REASONS FOR JUDGMENT
In this application the Court delivered a judgment on 6 September 2004 (Rohesa Nominees Pty Ltd & Ors v Rossett Pty Ltd & Ors [2004] FMCA 565). Upon delivery of that judgment the parties were invited to make submissions in relation to the orders to be made following the decision.
In the judgment the Court found that there should be an award of damages in favour of the Applicants against the First Respondent and the Seventh Respondent. The Cross-claim by the First Respondent against the Agent (the Eighth Respondent) was to be dismissed. It is of no practical consequences whether the Cross-claim by the Agent against the First Respondent was upheld in circumstances where the Court found that the Applicants’ claim against the Agent should fail.
The issue arose as to the precise form of the orders and in particular whether the Court make a Sanderson or Bullock order having regard to those findings and in particular having regard to the fact that the Court did not find liability in relation to the Second, Third, Fourth, Fifth, Sixth Respondents and the Agent.
Counsel for the Applicants submitted that the Court should make a Sanderson order having declared the contract void on the basis of lack of authority by the Seventh Respondent (R.G.Cook) to enter into the contract note on behalf of the Vendor or alternatively on the basis of misleading or deceptive conduct arising out of the powers of the Court to do so under s.87(1) of the Trade Practices Act 1974. It is noted and I accept that essentially the claim of $100,000 though strictly not a claim for damages may properly be characterised as a restitutionary claim or a claim for repayment pursuant to s.87 of the Trade Practices Act. A claim is made for interest in the sum of $30,435.62 as prescribed by the Federal Court Rules which I accept as accurate and which is not now further challenged.
It was submitted by the Applicants that as to the First and Seventh Respondents it is appropriate to order they should pay costs of the trial with orders sought for taxation, an advocacy certificate and to the extent necessary certification for transcript. Given the finding the Court made that it was reasonable of the Applicants to join the other directors, it was further submitted that no order for costs ought to be made in relation to the Second to Sixth Respondents. The finding of reasonableness as to joinder according to the Applicants’ submissions precludes the Court from making an order for costs in favour of the Second to Sixth Respondents against the Applicants.
It is noted that as against the Eighth Respondent (the Agent) seeks a Bullock order whilst the Applicants propose a Sanderson order. It is submitted by the Applicants that the Sanderson order stems from the Court’s finding at paragraph 157 where it was stated, “It would not be appropriate to find the Agent liable in those circumstances though I find that it was reasonable for the Purchasers to join the Agent as a respondent.” It was conceded that the issue of costs is a discretionary matter though on behalf of the Applicants a Sanderson order was submitted to be the most appropriate form for the following reasons:
(a)The Court found that the Agent made actionable misrepresentations, but in circumstances where the Agent believed them to be correct (Reasons [157]). In effect the Agent was a conduit for the misrepresentation of its master.
(b)The Purchasers did not join the Agent to the proceeding. The Agent was joined to the proceeding by the Vendors Cross-claim which ultimately failed. The Purchasers joinder of the Agent as Eighth Respondent to the claim was simply a procedural step in a proceeding to which the Agent was already a party. It did not add substantially to the burden that the Vendor had already imposed upon the Agent by the Cross-claim.
(c)Following on from the above the real issue for the Agent was not so much whether the statements were made to the Purchasers but the scope of its instructions and whether it had been provided with accurate information about the financial health of the tenant (see Reasons [133, 134 esp. 137].
(d)The Vendors conduct in ‘blaming its Agent’ and joining the Agent to the proceeding by Cross-claim on an ‘unsuccessful’ assertion that the Agent had acted outside the scope of its authority made it both reasonable and proper for the Purchasers to join the Agent to their claim. Arguably it may also have been necessary to avoid the possibility that the Vendor might escape liability altogether by implicating its Agent. In effect, the Purchasers simply ‘rode on the coat tails’ of the Vendors allegation (State of Victoria v Horvath (No2) [2003] VSCA 24 at [12]).
It was finally submitted on behalf of the Applicants that there is similarity in the present case to those in Framar Money Management Pty Ltd v Territory Insurance Office (1986) 87 FLR 251 on the basis that the real cause of action against the Agent was the refusal of the principal to acknowledge that the contract note was void against the principal.
Both Counsel for the First to Seventh Respondents and for the Eighth Respondent submitted that a Bullock order would be more appropriate. Both conceded it is a matter of discretion for the Court. It was noted that instructions have been received by the First to Seventh Respondents to file an appeal in relation to the decision of this Court. It was argued that in those circumstances where there are no instructions to appeal the Court’s finding that the vendor’s claim against the Agent failed, that a consequence is that a Bullock order is more appropriate as if a Sanderson order were made the Agent would be precluded from recovering costs until after the appeal is heard.
Counsel for the Agent specifically noted that if the First to Seventh Respondents seek to challenge the Court’s finding in relation to the case by the Applicants against them and succeeds they would need to have the Eighth Respondent as a party to the appeal in order to set aside any Sanderson order and this would involve an inherent unfairness to the Agent who has been a successful Respondent and is not otherwise to be the subject of an appeal. I was referred to the decision of Sellers LJ in Mayer v Harte (1960) 2 All ER 840 at p.850 where the Court states the following:-
“… If there were a likelihood of an appeal between a plaintiff and an unsuccessful defendant without either party contemplating or wishing to appeal in respect of a successful defendant the true bullock order was the more desirable as there would then be no need for the unsuccessful defendant to bring a co-defendant before the appellate court to rid himself of a direct liability for the costs of that defendant.”
It is perhaps noteworthy that the Court in Mayer acknowledges that the alternative forms of orders are of course in the Judge’s discretion though further states that it may be undesirable in some circumstances where an appeal is contemplated to make a Bullock order rather than a direct order between defendants in order to avoid security.
By way of reply Counsel for the Applicants submitted that a practical problem may arise if the Court were to make a Bullock order because on that basis the Agent would get costs notwithstanding any appeal. Difficulties may arise in determining the apportionment of those costs attributed to defending the Cross-claim and those defending the claim made by the Applicants in circumstances where one order for costs may be subject to a Bullock order and the other will not be subject to that order. This problem would not arise if a Sanderson order was made.
In considering the principles to be applied by a Court in the exercise of its discretion as to whether or not it should make a Bullock order or Sanderson order, it is useful to refer to the following extract from the unreported decision of the Supreme Court of the Victorian Court of Appeal in the State of Victoria v Horvath & Ors referred to earlier in this judgment and in particulars paragraphs 9 and 15 as follows:-
“9.In general terms, a plaintiff who seeks to have the losing defendant pay the costs of the successful defendant pursuant to a Bullock or a Sanderson order must establish that, in the circumstances of the case, it would be reasonable and just for such an order to be made – see for example, Sanderson, Reid and Gould v Vaggelas. Additionally, a court will ordinarily not make such an order unless a number of requirements are satisfied. For example, a costs order in the Bullock or Sanderson form will not be made if the plaintiffs’ claims against the two or more defendants are not interdependent or are not, in essence, alternative claims. Thus, for example, in Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd, the majority refused to make a Bullock order requiring the unsuccessful defendant (the Co-operative) to indemnify the plaintiff against costs it was required to pay to the successful defendant (the insurer). Their Honours considered that the plaintiff’s unsuccessful claim on the policy was ‘a straightforward action which was not interdependent with or in any real sense alternative to the claim against the Co-operative.’ See also in this regard Bankamerica. It is plain enough, we believe, that in this case this requirement is satisfied because the plaintiffs’ essential claim against the State was interdependent with, and was essentially alternative to, its claim against the police defendants. Unless the plaintiffs established that the police defendants had acted tortiously as alleged, the question whether the State was liable pursuant to s.123 of the Act (or at all) in respect of that conduct would not have arisen for consideration.
…
15.Where the court concludes that the losing defendant should bear the costs of the successful defendant, it is entirely within its discretion, subject to it being exercised judicially, whether it makes the relevant costs order in the Bullock or Sanderson form. See, for example, Sanderson, Mayer v Hart, Bankamerica and Vucadinovic. Ordinarily, there is no practical difference between the two forms of order, but that is usually not so where the losing defendant is insolvent or, as here, where there is at least a real risk that he is impecunious. In those circumstances, it seems that the insolvency (or the impecuniosity) of the losing defendant is taken into account, as part of the overall circumstances, for the purpose of determining which form of costs order should be made as a matter of fairness. In that context, it would ordinarily be appropriate to have regard to the comparative hardships that will be experienced by the relevant parties from one or other form of the costs order. But that is only one of the matters to be considered, along with factors such as the relevant conduct of the losing defendant in relation to the proceeding and whether the plaintiff had acted reasonably in joining the successful defendant to the proceeding as well as other matters relevant to determining what form of order would be just in the circumstances.”
In my view whilst it is proper to take into account the prospect of an appeal and the consequences referred to by counsel for the respondents, it is clear that that should not automatically be a determinative factor. It may become relevant though in the present case having regard to the findings of the Court in relation to both the Applicants’ claim and the Vendor’s Cross-claim against the Agent leading to the Agent being joined as a Respondent by the Applicants, I doubt if there would be great significance to the Respondents if the Sanderson order were made even if it meant implicating the Agent in the appeal process.
It is clear that in the circumstances I was satisfied that the Applicants had reasonably joined the Agent as a Respondent and had done so in response to the fact that the Agent had been brought into the proceedings by the Cross-claim of the Vendor. That joinder by the Applicants of the Agent in my view did not add substantially to the Agent’s task which had already been established by the Vendor’s Cross-claim. As in the Horvath case the Applicants in the present application could probably be described as riding on the ‘coat tails’ of the Vendor’s Cross-claim against the Agent.
I do not take any of the parties in the present application to argue the issue of insolvency or potential insolvency which is often a factor to be considered in the exercise of the Court’s discretion as to whether or not it should make a Bullock or Sanderson order. The reference otherwise to the decision of Seller LJ provides some guidance as to a factor which may make it undesirable in certain cases for the Court to make a Sanderson order. However, in the present case having regard to my findings and the potential role of the Agent in an appeal where the Vendor Cross-Applicant does not seek to disturb findings by the court against the Agent, I am satisfied that any inconvenience that may be suffered is not of such significance as to persuade the Court that it should make a Bullock order. Instead I am satisfied for the reasons advanced for and on behalf of the Applicants that on balance and in the exercise of the my discretion having regard to my finding as to the reasonableness of the Applicants in joining the Agent and the findings otherwise made by this Court that the appropriate order is to make a Sanderson order for costs.
The issue of interest though agitated was the subject of a ruling by the Court and accordingly it is appropriate interest be awarded as now claimed by the Applicants.
I should add that upon hearing submissions for the First to Seventh Respondents in support of a stay pending appeal I was concerned to ensure that the court in fact had power to grant a stay of that kind. Clearly the Court’s Rules provide a power to specify the date upon which the order takes effect (see Rule16.02 Federal Magistrates Court Rules. However, it seems to me that any order granting a stay pending appeal to the Federal Court of Australia is dealt with by s.29 of the Federal Court of Australia Act which provides as follows:-
“29(1)Where an appeal to the Court from another Court has been instituted:
(a)The Court or a Judge or a Judge of that other Court (not being the Federal Magistrates Court or a Court of summary jurisdiction) may order, on such conditions, if any, as it or he or she thinks fit, a stay of all or any of the proceedings under the judgment appealed from; and
(b)The Court or a Judge may, by order, on such conditions, if any, as it or he thinks fit, suspend the operation of an injunction or other order to which the appeal, in whole or in part, relates.
(2)This section does not affect the operation of any provision made by or under any other Act or by the Rules of Court for or in relation to the stay of proceedings.”
In my view the express provision in that legislation clearly precludes this Court from exercising power to grant a stay where an appeal to the Federal Court from this Court has been instituted. In the present case an appeal has been foreshadowed and I am satisfied that it is sufficient to specify that the order will take effect on 11 October 2004 which would at least give the Applicants time in which to institute the appeal and then seek any stay of the Federal Court pursuant to s.29 of the Federal Court of Australia Act. Of course, any difficulties that may arise in relation to the Sanderson order that I propose making in relation to the Agent may also be dealt with as part of that stay application. In my view that is another factor which I can take into account in the exercise of my discretion to make a Sanderson orders.
For those reasons it follows that I shall make orders of a kind sought by the Applicants as follows:
It is declared that the contract note dated 19 October 2001 between the Applicants and the First Respondent for the sale of the property situate at known as 81-91 High Street Preston in the State of Victoria is and was void and of no effect.
The First and Seventh Respondents shall pay to the Applicants the sum of $100,000 together with interest thereon in the nature of damages calculated from 19 October 2001 in the sum of $30,435.62.
The Applicants’ claim against the Second to Sixth Respondents is dismissed with no order as to costs.
The Applicants’ claim against the Eighth Respondent is dismissed.
The Cross-claim by the First Respondent/Cross-claimant against the Cross-Respondent is dismissed.
The First and Seventh Respondents pay the Applicants’ costs of the entire proceedings against all Respondents including reserved costs.
The First and Seventh Respondents pay the Eighth Respondent/Cross-Respondent’s costs of the entire proceedings including reserved costs.
The costs payable pursuant to this Order shall be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules to be taxed pursuant to Schedule 1 of the Federal Magistrates Court Rules.
I certify pursuant to Rule 21.15 of the Federal Magistrates Court Rules that it was reasonable for the parties in the proceedings to employ advocates to appear on their behalf.
I certify it was reasonable for the parties to incur the costs of transcript.
The orders herein shall take effect on 11 October 2004.
It will be noted that out of an abundance of caution I have referred to there being no order as to costs in relation to the dismissal of the claim by the Applicants against the Second to Sixth Respondents.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 20 September 2004
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