Russo v Buck (No 2) - [2007] SASC 157

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
RUSSO v BUCK & ORS (No 2)
[2007] SASC 157
Judgment of The Honourable Chief Justice Doyle
8 May 2007
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - POWERS OF COURT
Plaintiff and defendants filed application for an order for costs following determination of original action - original action brought by plaintiff for orders that he was not bound by two loan contracts - plaintiff partially successful - plaintiff was not bound by second loan agreement on account of forgery - plaintiff was bound by first loan contract and related mortgage - inclusion of indemnity provision in mortgage - impact of indemnity provision on judicial discretion on the question of costs - indemnity provision requires the plaintiff to indemnify the first and second defendants against legal costs on a solicitor own client basis - effect of rule 264(5)(b) of Supreme Court Civil Rules 2006 (SA) - where entitlement to costs as between solicitor and own client, costs ordered on the basis of an indemnity - plaintiff to pay costs of the action of third and fourth defendants as between party and party - plaintiff to pay one-half the costs of the action of the first defendant on the basis of an indemnity.
Supreme Court Civil Rules 2006 (SA), r 264(5)(b), referred to.
Russo v Buck & Ors [2006] SASC 380; Citibank Savings Ltd v Pirrotta [1998] ANZ ConvR 442; Perpetual Trustees Australia Ltd & Ors v Barker (2004) 232 LSJS 400; Gomba Holdings UK Ltd v Minories Finance Ltd (No 2) [1992] 4 All ER 588, considered.

RUSSO v BUCK & ORS (No 2)
[2007] SASC 157
Civil: Application

DOYLE CJ: In this action I delivered judgment on 19 December 2006: see Russo v Buck & Ors [2006] SASC 380.
I made orders disposing of the action on 27 February 2007.
Mr Russo has made an application for an order for costs in his favour. A like application has been made by the first to fourth defendants.
The following paragraphs from my earlier reasons give an indication of the nature of the case and of the issues that arose, although by no means a complete indication:
[1]In this action Mr Russo claims orders the effect of which would be to determine that he is not bound by two loan contracts between him and Mr and Mrs Buck (“the Bucks”) nor by a second mortgage given by him as security for the loans. He has joined as defendants Private Funds Management Pty Ltd (“PFM”), a company that acted on behalf of the Bucks in relation to the loans, and Ms Conn, a director of PFM and the person who manages PFM’s business. He claims damages from each of these defendants.
[2]The fifth defendant is Mr Buttigieg, a friend of Mr Russo’s. Mr Buttigieg persuaded Mr Russo to enter into the first loan contract to help Mr Buttigieg raise money for a used car business in which he was involved.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Russo v Buck (No 2)

Details

AGLC: Russo v Buck (No 2) [2007] SASC 157
Case: [2007] SASC 157
Decision Date: 8 May 2007

CaseChat Overview and Summary

The case of Russo v Buck (No 2) involved an application for costs following a determination in the original action. The plaintiff sought to avoid being bound by two loan contracts, partially succeeding in his claim. He was found not to be bound by the second loan agreement due to forgery, but was held to be bound by the first loan contract and related mortgage. A key issue was the impact of an indemnity provision in the mortgage on the court's discretion in awarding costs. The indemnity provision required the plaintiff to indemnify the first and second defendants against legal costs on a solicitor-own client basis. The court also considered the effect of rule 264(5)(b) of the Supreme Court Civil Rules 2006 (SA) in this context. The court ruled that where entitlement to costs exists between solicitor and own client, costs should be ordered on the basis of an indemnity. The plaintiff was ordered to pay the costs of the third and fourth defendants as between party and party, and one-half of the costs of the first defendant based on an indemnity.

The court's reasoning focused on the indemnity provision and its implications for the costs order. It determined that the indemnity provision meant the plaintiff was liable for the costs of the first and second defendants as if they were their own solicitor and client. This was in line with the general rule that where an indemnity is in place, the court should order costs on an indemnity basis. The court also considered the statutory provisions and the principle that where costs are recoverable between solicitor and client, they should be awarded on the indemnity scale. This meant the plaintiff had to pay the full costs of the third and fourth defendants and half the costs of the first defendant, based on the indemnity provision. The court's decision was based on a clear interpretation of the indemnity clause and the relevant legal principles governing costs orders.

Orders