Russo v Russo (No. 2)

[2015] NSWSC 449

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Russo & Ors v Russo & Ors (No. 2) [2015] NSWSC 449
Hearing dates:	17 February 2015 and 25 March 2015
Date of orders:	20 April 2015
Decision date:	20 April 2015
Jurisdiction:	Common Law
Before:	Slattery J
Decision:	See paragraph [111].
Catchwords:	COSTS – whether costs should be reserved until account in common form completed – whether plaintiffs should pay costs thrown away by vacation of hearing date – whether Bullock or Sanderson order should be made against unsuccessful defendants in relation to successful defendant – whether relief should be granted against second defendant – whether costs should be awarded against second defendant – whether costs should be awarded against unsuccessful third plaintiff CIVIL PROCEDURE – determination of further factual issues reserved in principal judgment – whether plaintiffs entitled to declaratory relief. APPREHENDED BIAS – where final findings of credit made against witnesses in determining that joint venture existed – whether apprehended bias due to pre-judgment should prevent same judicial officer from hearing the taking of joint venturers’ accounts.
Legislation Cited:	Civil Procedure Act 2005, s 56 Uniform Civil Procedure Rules 2005, rr 6.21, 20.15, 42.19
Cases Cited:	COSTS – whether costs should be reserved until account in common form completed – whether plaintiffs should pay costs thrown away by vacation of hearing date – whether Bullock or Sanderson order should be made against unsuccessful defendants in relation to successful defendant – whether relief should be granted against second defendant – whether costs should be awarded against second defendant – whether costs should be awarded against unsuccessful third plaintiff CIVIL PROCEDURE – determination of further factual issues reserved in principal judgment – whether plaintiffs entitled to declaratory relief. APPREHENDED BIAS – where final findings of credit made against witnesses in determining that joint venture existed – whether apprehended bias due to pre-judgment should prevent same judicial officer from hearing the taking of joint venturers’ accounts.
Category:	Costs
Parties:	First plaintiff: Angelo Phillip Russo Second plaintiff: Rosemary Russo Third plaintiff: Anros Consulting Pty Ltd First defendant: Joseph John Russo Second defendant: Suzanne Russo Third defendant: John Russo
Representation:	Counsel: Plaintiffs: M.A. Ashhurst SC; L. Corbett First to Third Defendants: P.W. Bates Fourth Defendant: E. Finnane Solicitors: Plaintiffs: David Matthew Farrar, Farrar Lawyers First to Third Defendants: Anthony Steven Margiotta, Margiottta Solicitors & Attorneys Fourth Defendant: William Henry Parsons, W.H. Parsons & Associates
File Number(s):	2011/280915
Publication restriction:	No

Judgment

1. This is the Court’s second judgment in these proceedings. In the principal judgment the Court found that a joint venture had been made between several natural persons, not their companies, and foreshadowed that the defendants would be required to provide to the plaintiffs accounts in common form for three joint venture development projects, the Parramatta, the Killarney Street and the Esther Road Projects: Russo v Russo [2015] NSWSC 17.

2. The Court dismissed defences that accounts had already been provided; that the expiry of limitation periods precluded the grant of relief; and other discretionary defences.

3. But a number of issues remain. Issues as to costs have arisen not only between the plaintiffs and the first to third defendants (“the Russo defendants”) but between the plaintiffs and the fourth defendant, Barbara Murphy, against whom the plaintiffs have discontinued the proceedings. The parties are also at issue as to the form of final orders and whether in light of the Court’s findings in the principal judgment about the credibility of the defendants another judicial officer, should hear the remaining contests about the taking of accounts in common form.

4. In addition to these various matters consequent upon the Court’s orders, in the principal judgment (at [196]) the Court reserved for further consideration three other matters:

1. Whether certain building and project management fees were chargeable by Touchstone Building to the joint venture;

2. Whether other expenses claimed by John and Joseph Russo should be allowed in the form in which they appear in Mr Mangraviti’s report; and

3. Whether there was any “contra” arrangement by which Angelo and Rosemary Russo would receive the benefit of building work done at their home in discharge of some of the joint venture’s interest obligations to them.

The parties are content for the Court to make additional findings on these matters reserved for further consideration without additional evidence.

5. The Court has now received submissions in relation to these three matters and will deal with them first, followed by the other issues consequent upon the Court’s orders. These reasons should be read with the Court’s principal judgment. Events, persons and matters are referred to in the same way in both judgments.

6. Mr M. Ashhurst SC and Mr L. Corbett continued to appear for the plaintiffs. Mr P. Bates continued to appear for the Russo defendants. And Mr E. Finnane continued to appear for Barbara Murphy, the fourth defendant.

(a) Touchstone’s Building and Project Management Fees

7. The plaintiffs allege that certain building and project management fees that Touchstone claimed against the joint venture should not be treated as joint venture expenses in any joint venture accounting. The competing contentions in relation to Touchstone’s building and project management fees may be shortly stated. The Russo defendants’ contention is that Joseph spoke to Angelo and informed him that Touchstone would charge a 15 per cent building fee and 2 per cent management fee to the joint venture. Angelo denies that this conversation occurred. If Joseph and Angelo reached this agreement then it is not in contest that these two fees, 15 per cent on top of actual building costs, as the building fee, and 2 per cent of sales, as a project management fee, would be chargeable.

8. The parties’ dealings point in both directions on this issue. Joseph says he explained to Angelo that Touchstone would receive this fee for taking on a risk which includes the builder giving warranties and accepting liabilities as well as undertaking the additional work of liaising with the local council, managing engineers and architects, dealing with real estate agents and giving general oversight to the business side of the project. Joseph says that Angelo agreed that such a fee would be payable, once he gave this explanation to Angelo.

9. The Russo defendants submit that objective evidence points to the conclusion that these two fees were agreed. Angelo’s own calculation email of 6 August 2009 acknowledges building costs for the Parramatta Project at a figure close to that set out in Mr Mangraviti’s account at the time, where building fees of 15 per cent together with 2 per cent project management costs are included.

10. Similar small differences are discernible for the Killarney Street Project. Mr Mangraviti was undoubtedly given these 15 per cent and 2 per cent figures by Joseph to undertake his calculations. His evidence can be accepted to that extent. The question is whether the fees were agreed with Angelo at the time or not.

11. The Russo defendants submit that the Court should add all the project management and building fees referred to in the principal judgment (at [182] – [184]). Moreover they submit that the close correspondence between Angelo’s 2009 figures and Mr Mangraviti’s figures suggest there is no overstatement of the building and project management fees.

12. The plaintiffs propound quite a different version of the conversation between Angelo and Joseph. They say that Angelo understood Touchstone was the joint venture builder but that it would charge the joint venture its building costs and that the joint venture participants would all share in the joint venture profit and that Touchstone would not be entitled to any other margins over and above its direct building costs.

13. But the plaintiffs say that the objective evidence points to Angelo’s version objectively being the more probable. First, Touchstone did not raise contemporaneous invoices for either of these fees. The plaintiffs made a formal call on notice in the proceedings for the Russo defendants to produce documents recording or evidencing payments to Touchstone in respect of building fees and project management fees. What was produced was Mr Mangraviti’s accounts for the projects, accounts in which Mr Mangraviti records that “no invoices were raised by Touchstone Building P/L, building costs, building fee or project management fee”. Nor was the payment of the fees included in MYOB accounts for the joint venture.

14. Apart from the issue of payment, the Russo defendants produced in response to the plaintiffs’ notice to produce some invoices for “project management fees” (that later became Exhibit J), which invoices were sent to financiers as part of progress claims. The invoices amount to $50,000 for the Parramatta Project. But the Russo defendants have not provided any other evidence of project management fees being raised or paid.

15. The plaintiffs’ explanation for what was happening with respect to such fees is persuasive. The plaintiffs point to Joseph’s evidence that a project management fee was calculated at 2 per cent of sales. This is clearly what he told Mr Mangraviti, a fact which lends some support to the probability of Joseph holding that belief at the time. But what appears to have happened is that the fee was only charged as an arbitrary figure of $50,000 for each of the three projects. It appears in Mr Mangraviti’s accounts this way.

16. The Court concludes on this issue as follows. First as to the building fee, consistently with the Court’s other findings in relation to the relative credibility of Angelo and Joseph, Angelo’s evidence on this matter is preferred. That preference is supported by the lack of regular invoicing for a 15 per cent building fee and the failure to include the fee in the MYOB accounts. Secondly, some invoices do exist for the project management fee for the Parramatta Project but it seems never to have been raised or paid in respect of the later projects, the Killarney Street or Esther Road Projects. From this it can be concluded, in my view, there probably was some one-off discussion for the payment of a $50,000 project management fee in respect of the Parramatta Project. But the Court cannot infer that project management fees were either discussed or agreed to in respect of any later project.

17. But the Russo defendants claim to deduct these amounts on a joint venture accounting could only be valid for existing joint venture liabilities. Touchstone has gone into liquidation and been de-registered without claiming or receiving payment for any of these project management fees or building fees. As the three projects were all finished by late 2005, and the Parramatta Project by September 2002, any limitation period for the recovery of these fees has long expired without their being claimed or recovered, including the $50,000 in respect of the Parramatta Project. The failure to charge these fees as the joint venture progressed not only undermines the conclusion that such fees were payable but any joint venture liability for these fees is now extinguished.

18. These fees should not be treated as joint venture expenses in any accounting.

(b) The Russo Defendants’ Expenses Recorded in the Mangraviti Report

19. The Russo defendants claim, and the plaintiffs’ dispute, that as part of the joint venture accounting the Russo defendants should be reimbursed for certain expenses that appear in Mr Mangraviti’s report.

20. The issue here is whether the Russo defendants should be permitted to claim building costs for which no documents can be produced to substantiate that the individual amounts were incurred, or whether in the alternative, these costs should be the subject of verification and falsification in any accounting that the Court orders. The plaintiffs submit that the development costs should be verified or falsified as part of the accounting, rather than accepted based on the form in which they appear in Mr Mangraviti’s accounts.

21. Mr Mangraviti did not examine any source documents in preparing these accounts, as the Court found in the principal judgment (at [182]). So Mr Mangraviti’s accounts have no special status in supporting the conclusion that these expenses were actually incurred. And there was at least a flavour in the evidence (principal judgment at [194] and Exhibit H) that expenses may have been overcharged to the joint venture.

22. It would be unfair to both sets of parties to deal globally with whether these expenses should be allowed by reference to the Mangraviti Report. They should be the subject of either verification or falsification in the accounting that the Court will order as a result of these reasons.

23. The Russo defendants nevertheless asked the Court to deal with a number of particular payments. First, the Russo defendants asked the Court to disallow the plaintiffs’ claim that payment was made towards the joint venture for $100,000 that Angelo alleges had originated from his parents; the Russo defendants allege that Angelo did not make that payment to the joint venture. Secondly, the Russo defendants argue that the Court should now find that all monies which Angelo and Rosemary paid to the Miranda Project and recorded in the principal judgment (at [46], [52], [53], [59], and [60]) up until 2001 were fully repaid to Angelo and Rosemary on 31 December 2001.

24. But this Court has already dealt extensively with these matters in the Court’s principal judgment and made findings about them. To the extent that any related issue is undecided it can be dealt with during the taking of accounts.

(c) Contra Arrangements with the Plaintiffs

25. The Russo defendants allege that the plaintiffs received the benefit of a “contra” arrangement in which the joint venture’s building contractor executed building work at the plaintiffs’ domestic residence at Jindabyne Crescent Peakhurst in satisfaction of some of the joint venture’s interest obligations to them. The plaintiffs’ dispute that any building work was done at their residence pursuant to any such contra arrangement. But they agree that building work was carried out at their premises under the supervision of Mr John Rahme, their building foreman who commenced the works in October 2002 and completed them in late 2003.

26. The Russo defendants’ case is that under the alleged contra arrangement Touchstone provided building supplies to Angelo and Rosemary at the Peakhurst property to a value in the range of $90,000 to $100,000 and in addition paid for part of Mr Rahme’s labour costs at the parties’ premises. A number of invoices that Joseph produced did refer to Touchstone carrying out renovation at Angelo and Rosemary’s Peakhurst home. The Russo defendants asked the Court to infer that all of these 94 invoices (Exhibit 3) were labour and materials Touchstone supplied at Angelo and Rosemary’s Peakhurst property as part of the contra arrangement.

27. Some of Mr Rahme’s invoices (Exhibits 4 and 5) do suggest on their face that he was carrying out building works at Peakhurst. And the Russo defendants point to Mr Rahme’s failure to identify under cross-examination that he was carrying out work in the suburb of Peakhurst at any property other than Angelo and Rosemary’s residence at that time, which the Russo defendants say supports their case.

28. But Angelo and Rosemary’s answer to this claim is persuasive, an answer largely based on Mr Rahme’s evidence, that the Court accepts.

29. Mr Rahme explained why Touchstone’s name came to be included in invoices for some of the work done by him at Angelo and Rosemary’s home. Mr Rahme was allowed to use Angelo and Rosemary’s trade account to purchase his materials. They could get a better price for those materials on their account than he could. So he had permission to use their account. Mr Rahme accepts that some invoices may have been altered to replace the name of Mr Rahme’s company, Showcase Constructions, with Touchstone. But he rejected the Russo defendants’ claim that Touchstone paid him or his company for doing any work at Angelo and Rosemary’s home. I accept Mr Rahme’s evidence on this. Mr Rahme said it was his own company that was paying for labour for the work at the plaintiffs’ home. Specifically Mr Rahme says, and I accept, that when he was carrying out building work at the premises only workers he engaged did the work and he never engaged Touchstone to do any building work. He was sufficiently often on site and had sufficiently broad superintendence of the works that it is likely in my view that he would have noticed any other builders (or their work) at the Peakhurst site.

30. Angelo and Rosemary do accept that some supplies from renovations undertaken by Mr Rahme were paid for by Touchstone. And Angelo does accept that a small number of invoices do relate to building work performed by Touchstone at his home to a value of $10,185.23 but not as part of any contra arrangement with the Russo defendants.

31. But beyond this relatively small amount the Court does not accept that Touchstone did any work on Angelo and Rosemary’s home and does not accept the Russo defendants’ contention there was a contra arrangement.

(d) Costs Issues – Plaintiffs and First to Third Defendants

32. The Russo defendants contest the plaintiffs’ claim for costs against them.

33. Two main costs issues arise between the plaintiffs and the Russo defendants: (1) whether a costs order should be made or whether costs should now be reserved; and (2) whether the plaintiffs should pay the reserved costs thrown away by Lindsay J’s vacation of the 14 August 2013 hearing date. These reasons deal with each of these in turn.

34. (1) Reserve Costs or Not? Citing the observations in the principal judgment (at [200]) that it may be more appropriate for costs to be considered after the matters reserved for further consideration have been determined, the Russo defendants submit that costs questions should be decided after those matters have been resolved; and should not be decided until the Court concludes that monies will be owed by the Russo defendants to the first and second plaintiffs.

35. The plaintiffs submit to the contrary, saying that the Russo defendants’ denial of the joint venture resulted in a multi-witness hearing of many days such that a costs order now should be made.

36. The plaintiffs’ submission is persuasive. A costs order should be made in the plaintiffs’ favour. The Russo defendants’ unsuccessful denial of any liability to account has been a costly failure. The plaintiffs have been successful on the principal issues contested, namely whether they are entitled to an account in common form in respect of joint venture transactions and whether the proceedings are statute barred.

37. The Russo defendants put two arguments against making a costs order now. The first argument is that the orders to give effect to the Court’s principal judgment will not be “final orders”, and as a result it is said that a costs order should not be made now: see Carantinos v Magafas [2008] NSWCA 304 (“Carantinos”) at [142] – [147]. But this argument is not persuasive. The Court’s principal judgment involves a determination of the rights of the parties on the main issues: that there was a joint venture and that the plaintiffs are entitled to an accounting. Those findings are final, subject only to appeal, whether or not money is shown to be due to the plaintiffs after the taking of accounts. The existence of the joint venture and the right to account were disputed, resulting in factual and legal conclusions which cannot now be changed, such as for example a merely discretionary interlocutory judgment might be changed as circumstances change. The Court’s findings and conclusions are therefore sufficiently final to found a costs order.

32. The Russo defendants’ second argument also fails. They argue that a costs order should not be made until it is clear that moneys will be found due from the Russo defendants to the plaintiffs, Rosemary and Angelo, after an account is taken. But this argument misapprehends the importance of the conclusions the Court has already reached, irrespective of whether any money is due on an account and fails sufficiently to respect the two senses in which a joint venturer may be obliged to account to a fellow joint venturer. Campbell JA explained this distinction in Carantinos (at [148]) as follows:

“[148]   There are two separate senses in which one can say that a partner or joint venturer has an obligation to account to a fellow partner or joint venturer. The first is that there is an obligation to provide full information concerning the assets, liabilities, transactions and dealings of the partnership or joint venture. The second is that there is an obligation to pay whatever amounts properly fall due concerning the partnership or joint venture…”

39. I accept Rosemary and Angelo’s submission that the principal judgment involved a conclusion in relation to the first of those obligations to account. The plaintiffs have been successful in vindicating their rights to be provided with a proper account concerning the assets, liabilities, transactions and dealings of the joint venture, whether or not money is shown to be due to them in the long run once that accounting is done. The right to information between joint venturers is an important right in itself. Moreover, orders for costs at this stage of the proceedings are certainly not unknown: Carantinos at [101] – [106] and Magafas v Carantinos [2007] NSWSC 917 at [24].

40. (2) Costs of Vacating the Earlier Hearing Date. The Russo defendants contend the plaintiffs should all be ordered separately to pay the costs (including reserved costs) of the final hearing that was listed to commence on 14 August 2013 but was vacated by Lindsay J on 9 August 2013. The Russo defendants say that those costs should be quantified by agreement or assessed and should be payable forthwith, particularly as Anros, the third plaintiff, has had no further involvement in the proceedings. The Russo defendants submit that the plaintiffs, including Anros, are responsible for the costs of vacating that hearing date and should bear them, whatever be the outcome of the proceedings.

41. The events surrounding the vacation of the 14 August 2013 listed hearing are in narrow compass. The Registrar listed proceedings for final hearing to commence before Lindsay J on 14 August 2013. On 9 August 2013 at a pre-trial directions hearing Lindsay J was told that the then plaintiffs Angelo and Rosemary wished to add Anros as an additional plaintiff. Lindsay J vacated the hearing, ordered Angelo and Rosemary to serve their proposed Further Amended Statement of Claim (“FASOC”) adding Anros as third plaintiff by 30 August 2013 and reserved costs. The FASOC was filed on 11 August 2013; it added Anros, abandoned some causes of action and added the claim for account. When the matter returned before the Registrar on 11 October he ordered the plaintiffs to pay the defendants’ costs thrown away by the further amended pleadings. The Russo defendants filed their Amended Defence to the FASOC on 24 December 2013.

42. The plaintiffs should pay the costs thrown away by the vacation of the hearing that Lindsay J reserved on 9 August 2013, in addition to the costs thrown away by the amendment to the pleadings. It is clear that a substantial reason why the hearing was vacated was the filing of the FASOC. The proceedings had been on foot since 2011. It is difficult to accept that Anros should not have been joined earlier, and well before the August 2013 trial was listed for hearing. But I see no basis for making orders that these costs should be payable forthwith.

(e) Costs Issues – Plaintiffs and the Fourth Defendant, Barbara Murphy

43. The fourth defendant, Barbara Murphy claims an order for costs against the plaintiffs.

44. The fourth defendant, Barbara, seeks orders that the plaintiffs pay her costs of the proceedings on the indemnity basis. In the alternative, she seeks an order that her costs be assessed on the ordinary basis up to and including 14 March 2013 and on the indemnity basis thereafter based on the service of the Calderbank letter. And further in the alternative Barbara seeks indemnity costs after 12 August 2014, based on another Calderbank letter. In this section the Court finds that Barbara is entitled to an order for costs but not on the indemnity basis and that a Sanderson order should be made for her costs to be paid by the Russo defendants.

45. Barbara is entitled to her costs as against the plaintiffs up to the filing of a notice of discontinuance, unless the Court otherwise orders: UCPR, r 42.19. There is no obvious reason in this case why the Court should otherwise order. Barbara’s position was resolved at the commencement of the hearing of the proceedings and costs were reserved pending the trial on a date subsequent to the discontinuance. Barbara submits it is reasonable that she should also be awarded her costs subsequent to the filing of the notice of discontinuance, on the basis that she has incurred costs to maintain her position after discontinuance. I accept Barbara should have these costs as well.

46. Barbara claims indemnity costs apart from her Calderbank letters, principally on the basis that the plaintiffs maintained these proceedings against her without reasonable prospects of success: Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 per Giles JA at [111]. Barbara points to correspondence between March 2012 and the trial in which in substance Barbara was asking why, if the plaintiffs did not wish to obtain money relief from the fourth defendant, they would not discontinue against her. The plaintiffs proposed that the fourth defendant file a submitting appearance but she declined to do so. The matter was ultimately resolved at the directions hearing before trial on 28 August 2014.

47. Barbara contends that the plaintiffs never had reasonable prospects of success because their case depended on proving that Joseph and John were the fourth defendant’s agent for communicating with Angelo that she was a party to the joint venture. Barbara cannot show that the plaintiffs had no reasonable prospects of success on this ground. There was clear evidence that John and Joseph had represented Barbara to be a joint venture party. It was logical that she should be as two other wives, Suzanne and Rosemary were apparently partners. Whether the plaintiffs succeeded or not would depend upon detailed evidence at trial, which cannot now be tested.

48. Barbara also relied on Calderbank letters of 14 March 2013 and 12 August 2014. The offers were of a similar kind. The 14 March 2013 letter offered for Barbara to pay the plaintiffs $5,000 and each party would bear its own costs. The 12 August 2014 letter offered that the plaintiff discontinue the proceedings with an order that they pay the fourth defendant $30,000 for costs or they pay the fourth defendant’s costs on the ordinary basis. The solicitor for the plaintiffs say that the fourth defendant’s costs at the time of that second offer were $61,407.67.

49. A Calderbank letter will not justify an indemnity cost order unless the offer embodies a compromise and its rejection was unreasonable: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8].

50. But in my view the plaintiff’s submissions are persuasive. The 14 March 2013 offer did not contain a genuine compromise and it was not unreasonable for the plaintiffs to reject it. At that stage the plaintiffs did not know the extent of the fourth defendant’s involvement in the joint venture and could not simply discontinue against her without resolution of the question of whether she was a party to the joint venture or had contributed money to it. Had the plaintiffs done that at this time they would have risked further litigation against her in the future.

51. The same can be said about the second Calderbank letter. It was not unreasonable for the plaintiffs to reject that offer. From the plaintiffs’ perspective the position was still uncertain until the Court’s directions hearing on 28 August 2014.

52. The plaintiffs seek either a Bullock order (Bullock v London General Omnibus Co [1907] 1 KB 264) or a Sanderson order (Sanderson v Blyth Theatre Co [1903] 2 KB 533) such that any costs that the plaintiffs are liable to pay Barbara, against whom they were unsuccessful, should be payable by the first to third defendants, the Russo defendants. The order is sought on the basis that the conduct of the unsuccessful Russo defendants caused the plaintiffs to incur the costs of the successful the fourth defendant, Barbara.

53. The legal principles applicable for Bullock orders are well established. They are designed for cases in which a plaintiff has suffered a wrong and sued more than one defendant because they were unable to ascertain prior to trial exactly who was legally liable: In the Estate of the late Anthony Marras (Costs) [2014] NSWSC 1307 at [71] per Bergin CJ in Eq. King CJ set out the principles in Fennell v Supervision and Engineering Services Holdings Pty Ltd (1988) 47 SASR 6 at 7:

“The unsuccessful defendant has caused the litigation by his wrongful act and by disputing liability for it. He therefore ought to pay all costs reasonably incurred by the plaintiff in connection with the litigation. If it was reasonable, as between the plaintiff and the unsuccessful defendant, for the plaintiff to sue the successful defendant, the unsuccessful defendant ought therefore in justice be liable to indemnify the plaintiff against the costs of so doing, including those which he is ordered to pay to the successful defendant.”

54. The plaintiffs contend that the unsuccessful first to third defendants, Joseph, John and Suzanne (the Russo defendants), by their conduct compelled the joinder of the fourth defendant, Barbara. The conduct of the Russo defendants said to have occasioned Barbara’s joinder was the Russo defendants withholding from the plaintiffs information about the assets, liabilities and dealings of the joint venture, the very same conduct that gave rise to the Russo defendants’ liability to account. The plaintiffs further submit that John and Joseph told Angelo that Barbara was a partner in the joint venture. So the plaintiffs contend, it was not unreasonable for them to join Barbara as a defendant. The plaintiffs further submit that such of Barbara’s costs for which the plaintiffs may be held liable was reasonably incurred by the plaintiffs in connection with the ultimately successful litigation against the Russo defendants.

55. The plaintiffs also seek a Sanderson order, requiring Barbara to seek direct recovery from the Russo defendants. The plaintiffs point out that no evidence has been advanced to suggest that any of the Russo defendants is at risk of bankruptcy as would make a Sanderson order unfair.

56. The Russo defendants oppose the plaintiffs’ application for either a Bullock or Sanderson order. The Russo defendants deny they acted in the events in issue or in the litigation in a way which would reasonably require the plaintiffs to join Barbara. And the Russo defendants submit an order would be appropriate, because the plaintiffs substantially reformulated their case in their FASOC on 11 October 2014, but still persisted in suing Barbara in that final pleading. Moreover, the Russo defendants submit that they reasonably offered the concession (that they would not put the competency of the plaintiffs’ proceedings in issue for the failure to join Barbara as a defendant) which was first sought on 26 August 2014.

57. It made good practical sense for the plaintiffs join the fourth defendant. Where a joint venture or partnership is alleged against a number of persons it is not required for all the joint venturers, who are not plaintiffs, to be joined as defendants: Uniform Civil Procedure Rules (“UCPR”) 2005, r 6.21. But to avoid multiplicity of litigation it is often the reasonable course to take.

58. At least a Bullock order should be made. The whole of Barbara’s costs should be passed on to the Russo defendants through a Bullock order. First, the evidence strongly suggested that Barbara was a joint venturer and therefore she should be joined. The plaintiffs’ affidavit evidence, which the Court has substantially accepted, includes statements that on several occasions John and Joseph told Angelo that Barbara was a partner in the joint venture. Secondly, once Barbara was joined, neither she nor the Russo defendants indicated they would not take any point as to the competency of the proceedings, if she were eliminated as a defendant (although UCPR, r 6.21 makes the merits of a point doubtful). Thirdly, the procedural device for eliminating Barbara as a defendant really only emerged at the Court’s suggestion during a pre-trial directions hearing.

59. A Sanderson order can be made. There is no suggestion that the Russo defendants are insolvent. The common law before 2005 (see Vucadinovic v Lombardi [1967] VR 81), and now, in my view reinforced by Civil Procedure Act, s 56 suggests that, absent any other considerations such as the potential insolvency of the unsuccessful defendant that might weigh against the making of a Sanderson order (Schipp v Cameron (Supreme Court (NSW), Einstein J, 12 October 1998)), as a matter of procedural efficiency one should be made. The “just, quick and cheap” disposition of proceedings suggests significant reduction in the cost of costs assessment and recovery will occur through the making of a Sanderson order by reducing the duplication of effort.

(f) Who Should Take the Accounts in Common Form?

60. The Russo defendants have objected to my hearing the balance of these proceedings due to the findings the Court has made about their credit.

61. And the Russo defendants ask for the accounting to be deferred so they can consider an appeal, or an application for leave to appeal, from the orders made with these reasons. If the Court is not minded to defer an accounting, the Russo defendants oppose my continuing to hear the taking of accounts on the basis of apprehended bias due to pre judgment.

62. In my view the Russo defendants’ application on this point is sound. The relevant authorities concerning apprehended bias due to pre judgment are well known: Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 (“Spedley”), Southern Equities Corporation Ltd (in liq) v Bond (2000) 78 SASR 339 (“Southern Equities”) and ASIC v Rich [2004] NSWSC 970 (“Rich”). The statement of general applicable principle in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (“Ebner”) at [6] is “whether a fair minded lay observer might reasonably apprehend the judge might not bring an impartial mind to the resolution of the question that the judge is required to decide”.

63. Both Southern Equities and Rich make clear that less than absolute findings as to the credit of parties in the course of interlocutory hearings may not disqualify a judge from undertaking or completing the final hearing of the proceedings. But here the Court’s credit findings in the principal judgment (especially at [15] and [17]) are sufficiently final and absolute that in my view the Ebner principle is attracted. I will not hear the taking of accounts particularly as it may in part turn upon the credit of the parties.

64. But this issue can be resolved without much inconvenience by having the rest of the matter to be determined either by another judge or by a referee on a reference under UCPR, r 20.15. The Court will allow the Russo defendants time to appeal though in the interim, before the reference out occurs.

(g) The Form of Final Orders

65. Disputes remain between the parties about the form of the Court’s final orders. There are three main disputes. The first is whether the second defendant, Suzanne Russo should have judgment entered in her favour against the plaintiffs. The second dispute is whether or not the Court should make declarations in addition to the grant of any other relief. The third dispute is whether a costs order should be made against Anros. These reasons now deal with each of the sub-issues in turn.

66. (1) Judgment for Suzanne? The Russo defendants allege that judgment should be entered in Suzanne’s favour. The Russo defendants contend that the Court’s findings and the reasoning in the principal judgment do not justify any grant of relief against Suzanne Russo, the second defendant. In contrast, the plaintiffs allege they should have judgment against Suzanne because the Court’s findings adequately encompass her position.

67. The Russo defendants’ contentions on this sub-issue can be summarised briefly. The Russo defendants point to what they say is a degree of inconsistency in expression within the judgment which should be resolved by the Court only granting relief against Suzanne. The Russo defendants are correct that at times the reasons only mention a grant of relief against John and Joseph. But as will be seen both the conduct of the proceedings and the Court’s reasons show that Suzanne was found personally to be a party to the joint venture. The absence of reference to Suzanne rather than John and Joseph in relation to accounting is largely to be explained because of her more passive role in the joint venture and her failure to take responsibility for the accounts of the joint venture.

68. The Russo defendants’ argument relies on the following parts of the principal judgment. The Court found (at [6]) that neither Barbara “nor Suzanne took part in any of the discussions by which the joint ventures were allegedly formed”. The Russo defendants then point to the principal judgment (at [7]) which describes the main issues in the following terms:

“Thus there are two main issues. Was there a joint venture agreement among the defendants and Angelo and Rosemary Russo, or was there a joint venture agreement between the companies, Grazia, Nominee and Anros? And if there were a joint venture among the four natural persons, have the defendants already provided an adequate account to the plaintiffs for the three joint venture projects?”

69. The Russo defendants’ contention is that where the Court uses the expression “four natural persons” in [7] that must refer to the first and second plaintiffs, Angelo and Rosemary and the first and third defendants, John and Joseph. This is said to be consistent with the Court’s finding (at [192]) that “Angelo and Rosemary seek to define the scope of the task [for an account in common form] by an order that John or Joseph produce accounts in common form of each of the Parramatta, Killarney Street and Esther Road Projects…” And the Russo defendants further submit that the proper interpretation of the the Court’s conclusion (at [199]) that “the Court has found that a joint venture was made between the natural persons who are the parties to these proceedings, not their companies” is that “natural persons” should there be interpreted as not including Suzanne, but only John and Joseph.

70. The Russo defendants say that this interpretation of the principal judgment is reinforced by the Court’s conclusions in the principal judgment under the heading “Who were the Parties to the Joint Venture?”, where the Court found that it should be inferred that the joint venture agreement was made “between the several natural persons who are speaking to one another”. And the Russo defendants further submit that the words “parties to these proceedings” (at [174]) should accordingly be interpreted as referring only to Angelo and Rosemary, and John and Joseph. Moreover, the Russo defendants submit that neither the oral nor documentary evidence establishes that Suzanne actually was a party to the joint venture.

71. The Russo defendants’ submission misapprehends the Court’s reasons. The starting point for analysis is what the Court said under the heading “Who are the Parties to the Joint Venture?” (at [168] – [174]), which passages are set out below:

“Who were the parties to the joint-venture?

[168] The identity of the parties to any joint-venture is to be determined objectively by looking at what was said between the parties in the factual matrix in which it said and ascertaining between whom the parties objectively intended that the obligations would be owed: Air Tahiti Nui Pty Limited v McKenzie [2009] NSWCA 429 at [28].

[169]   The findings in the Court’s factual narrative make clear that these parties expressed themselves in such a way such that it should be objectively inferred that they were making a joint-venture agreement between the several natural persons who were speaking to one another and that to the extent the parties referred to corporate bodies it was only with the intention of identifying vehicles that provided a convenient mechanism through which monies might be paid. The parties did in fact use the corporate vehicles they each controlled as avenues to pay or receive funds from time to time during the operation of these joint ventures.

[170]   And Joseph admitted in cross-examination that the Parramatta Project joint venture conversations had been in the terms that Angelo described to the extent that the terms had referred to names of natural persons. This strengthens the inference that all these conversations were in similar terms: referring to natural person as the parties.

[171]   In addition to the findings already expressed in the factual narrative, the parties raise a number of contentions relevant to the question of the identity of the parties to the joint-venture that are dealt with here.

[172]   John and Joseph sought to answer Angelo and Rosemary’s case on this issue by pointing to an email that Angelo had sent on 6 August 2009 to “Bathroom Dynamics”, which email referred to profit shares from the Parramatta, Killarney Street and Esther Road Projects as apparently being derived in the names “Russo Nominees”, “Bathroom Dynamics” and “Russo Superannuation Fund”. But Angelo satisfactorily explained, in terms that the Court accepts, that he used these names “Russo Nominees”, “Bathroom Dynamics” and “Russo Superannuation Fund”, because they were the entities that had contributed the funds, and not because he intended them to be parties. In my view that was also obvious to all sides in these conversations. This document was not damaging to the plaintiff’s case.

[173]   And the respective investment ledgers maintained by Angelo for his own joint venture use (Exhibit C) and John for his use, with the assistance of Ms Murphy are consistent with this conclusion as they both refer to Angelo as a party to the joint venture.

[174] Each of the joint ventures, at Parramatta, at Killarney Street and at Esther Road was made in the names of parties to these proceedings. The defendants submitted that the remedy of account must be refused where the correct parties have not been sued: Southern Equity Pty Ltd v Timevale Pty Ltd [2012] NSWSC 15 at [112] and Re Cyril Sharp and Ors [1992] FCA 616. But here the correct parties have been sued.”

72. The words in [174] that “each of the joint ventures…was made in the names of parties to these proceedings” [emphasis added] is the Court’s critical finding which is reproduced in [199], “the natural persons who are the parties to these proceedings”, meaning that the joint venture was made between Angelo and Rosemary on the plaintiffs’ side and John, Suzanne and Joseph (and Barbara had she remained a party). When the Court used the expression (in [169]) “the several natural persons who were speaking to one another” [emphasis added] the words were used, as the context makes clear, to emphasise that natural persons rather than companies were making agreements. The words “speaking to one another” were not words of limitation but words of description. Were they words of limitation the Court would have found that Rosemary was not a party to the joint venture (because she was involved in the conversation).

73. The occasional infelicitous form of expression in the principal judgment, leaving out Suzanne’s name, does not mar this picture. The Russo defendants complain about what the Court said at [7]. But “four natural persons” in [7] is used here as a loosely crafted question rather than as a finding.

74. But the Russo defendants’ submissions go further. They also say that the Court’s own findings do not justify the conclusion that relief should be granted against Suzanne, nor does the evidence before the Court. To support this submission the Russo defendants take the Court to paragraphs [60], [67], [101], [108], [110], [139], and [158] of the principal judgment. The Russo defendants’ analysis of these paragraphs attempt to show that nothing in the Court’s findings or the evidence justifies the conclusion that Suzanne was bound as a joint venturer.

75. But the paragraphs the Russo defendants’ identify do not support their contention. Nor does a wider appreciation of the matters at issue in the proceedings. The Russo defendants identify a number of paragraphs that include findings that could well justify the conclusion Suzanne was a joint venturer, for the purpose of seeking to diminish the significance of those findings. At [60], Angelo refers to all the defendants as “you guys” collectively as joint venturers in the Miranda Project, using an expression that could include Suzanne. At [67], in the context of entry into the Parramatta Project the Court found that Angelo said, ”So it’s Sam, you and Sue [Suzanne] (the first and second defendants), John and Barbara (the second and third defendants) and Rose and me (the plaintiffs)”. At [101] in the context of completion of the Parramatta Project the Court found, as follows:

“[101]   Although this conversation was only working out the details of possible profit distribution, it was typical of so many of such subsidiary conversations between Joseph and Angelo in which no reference was made to company the joint venturers being companies. Joseph for John and himself always spoke to Angelo naturally as though they were all the joint venturers as individuals along with their wives, and not that any companies were involved.”

76. Again, at [108] Angelo describes the Esther Road Project joint venture as including “Joe and Sue” in very similar terms to those he used at [67] in relation to the Parramatta Project.

77. Contrary to the Russo defendants’ submissions this list of findings well justifies the conclusion that Suzanne was a joint venturer party. The Court made the same conclusion more explicit in [139] when analysing the failure to account after the conclusion of the Esther Road Project in mid-2005:

“[139]   Matthews Dooley & Gibson prepared a settlement sheet to record the cash flows upon settlement of the Esther Road project. The project settlement sheet showed that a balance of $759,692.09 would be paid from the Esther Road Project into the Matthews Dooley Gibson trust account after payment out of the mortgagees and other expenses. It was the failure of John and Joseph between July 2005 and January 2006 to account for what happened to this sum that ultimately led to the breakdown of relationships between Angelo and Rosemary on the one side and John and Joseph on the other. Little mention is made of Susanne here. Although she was a partner in these projects she took no active part in the discussions in the joint ventures.”

78. The Russo defendants sought to characterise the words “although she was a partner in these projects” as a typographical error which should be corrected under the slip rule, on the basis that the Court was repeating a similar error from earlier in the principal judgment. The Russo defendants contended that the Court had earlier in the principal judgment (at [3]) erroneously recorded a concession by the Russo defendants that Suzanne would be liable as a defendant, merely because John and Joseph were liable, a concession which the Russo defendants say was never made. The Russo defendants contend that the Court (in [3]) wrongly recorded a concession that a finding against Joseph and John was a finding against Suzanne. The principal judgment, at [3], provides as follows:

“[3]   First, the defendants contend that no relationship exists between Angelo, Rosemary, Joseph, Suzanne and John that would found any right to claim an account in common form. The defendants admit there was a joint venture in respect of these three property projects but say that the joint venture was between Anros and two other companies controlled by the defendants, Grazia Holding Pty Ltd (“Grazia”) and Russo Nominees Pty Ltd (“Nominees”). The defendants contend that if any right to an account in common form exists it is a right maintainable only by Anros against Grazia and Nominees, not a right subsisting against the present defendants. It is not in contest that if there were a joint venture among Angelo, Rosemary, Joseph and John that Angelo and Rosemary would have a right to an account against Joseph, Suzanne and John.”

79. The Russo defendants are correct that they did not make a concession in the proceedings that merely because John and Joseph were liable that Suzanne was also liable as a joint venturer. The concession that the defendants made at the pre-trial directions hearing on 28 August 2014 is formally recorded in Order 10 of the orders made on that day which provided as follows:

“10.   Note that the discontinuance by the plaintiffs against the fourth defendant today has occurred on the basis that the plaintiffs have indicated that no substantive relief was to have been sought against the fourth defendant but that the fourth defendant was joined against the possibility that were the plaintiff otherwise successful against the first to third defendants that the first to third defendants might defend or answer the proceedings on the basis that a necessary party, the fourth defendant was not joined to the proceedings and the first to third defendants now having indicated to the court that such a defence or answer will not be fielded against the plaintiff’s case, there is no need for the fourth defendant to continue as a party, although she may of course yet give evidence in the proceedings.”

80. This is clearly only a concession made for the purposes of allowing proceedings to be discontinued against the fourth defendant, Barbara. It is not a concession that merely making out a case against John and Joseph as joint venturers would be sufficient to bind Rosemary.

81. Nor has the Court operated on a basis of such a concession. The conclusion that Suzanne was a joint venturer needs to be justified on the basis of other findings.

82. Principal judgment paragraph [3] is only pointing out that the Russo defendants were not contesting that they would be liable to an account if they, as natural persons rather than their companies, were found to be the joint venturers. A reading of that whole paragraph makes that clear. Suzanne’s name has been omitted in error from the list of joint venturers in the last sentence of [3]. But her name appears in context in the first sentence. The Court has not acted on some misapprehended expansion of the Russo defendants’ concession, as Mr Bates, counsel for those defendants appears to be putting.

83. But then the Russo defendants’ argued that neither in principle, nor the way that the proceedings were conducted did these findings against Suzanne justify any liability to account on her part. The Russo defendants’ point out that for the first time in October 2013 the FASOC adds a claim for account but alleges that the only accounting parties are John and Joseph, not Suzanne. The Russo defendants submit: that the FASOC did not make allegations against Suzanne; and that many of the conversations particularised in the FASOC did not involve her and were not admitted by her. Moreover the Russo defendants say that the way that the plaintiff opened the case seemed to limit it to John and Joseph and not Suzanne.

84. The Russo defendants’ submissions misapprehend the plaintiffs’ case. The plaintiffs primarily sought an account against John and Joseph for the obvious reason that the evidence suggested that John and Joseph, rather than Suzanne, were in charge of the financial affairs of the joint venture. But the FASOC quite clearly alleges that Suzanne was a party to the joint venture and that at the conclusion of the joint venture she held monies on trust for the plaintiffs, the precise amount of which could be calculated for payment to the plaintiffs once Joseph and John had provided an account. The plaintiffs’ pleading of their claimed right to account in FASOC ([40] and [41]) makes this clear:

“Right to Account

40.   In the circumstances described above Joseph Russo and/or John Russo and/or the defendants held part of the proceeds of each of the Parramatta Project, the Killarney Street Project and the Esther Street Project on trust for the plaintiffs.

41.   Joseph Russo and/or John Russo have failed to provide an accounting of the plaintiffs’ entitlements to the proceedings of each of the Parramatta Project, the Killarney Street Project and the Esther Street Project.”

85. The foundation for this right to account starts at FASOC [21], which clearly pleads Suzanne as a joint investor in the Parramatta Project:

“In around March 2000, Joseph Russo invited Angelo Russo and/or Rosemary Russo to join Joseph Russo, John Russo, Suzanne Russo and Barbara Murphy in investing in the Parramatta Project. Joseph Russo requested that Angelo Russo and Rosemary Russo invest around $75,000 and the proceeds of the $50,000 Sydney Skytour investment (described in paragraphs 12 to 18 above) and the proceeds of the loan of $108,466.17 (referred to in paragraph 20 above) in the Parramatta Project.”

86. The FASOC further pleads that Suzanne and the other defendants held the proceeds of the Parramatta Project on trust for the plaintiffs (FASOC, [25A]), held the Killarney Street proceeds on trust for the plaintiffs (FASOC, [30A]) and held the proceeds of the Esther Road Project on trust (FASOC, [35A]) and that Suzanne was a joint venturer with the plaintiffs in each of these projects (FASOC, [47]) and that she and the other defendants held the joint enterprise assets on constructive trust for the plaintiffs (FASOC, [51]).

87. The Russo defendants’ present case that the plaintiffs did not claim relief against Suzanne is wrong. The plaintiffs did appropriately plead a case in which they acknowledged that John and Joseph were the true controllers of the finances of the joint ventures but that Suzanne was a passive joint venturer who may have to be bound into a judgment subjecting her share of joint venture profits to limitation by the plaintiffs’ rights to a share in the same profits once the account was taken. And indeed she may have to disgorge for the plaintiffs’ benefit any joint venture funds that she held once the account had been taken. The final form of relief against her is contingent upon the taking of the account against John and Joseph. But the pleadings are wide enough to enable declarations to be made against her and ultimately for orders to be made against her to pay over any joint venture funds she holds.

88. Suzanne did not admit that she was a joint venturer and therefore did not admit that she had any liability to deal with joint venture funds subject to the plaintiffs’ interests. So much is clear from her defence, which answers FASOC ([21]) with a non-admission (Defence, [28]), and answers FASOC [25A], [30A] and [35A] with non-admissions (Defence, [33], [42] and [50]). Suzanne was clearly putting in issue her liability to have any funds distributed to her from the joint venture dealt with subject to the plaintiffs’ interests. The Court’s finding that she is a joint venturer constrains her freedom to deal with such funds. The extent of that constraint will be clearer once John and Joseph have given their account of their dealings with joint venture funds. In this sense the plaintiffs have successfully claimed relief against her, although no precise order for payment of money can yet be made against her.

89. Subject to the question of whether the findings that Suzanne was a joint venturer should have been made against her, a claim which she disputed throughout the trial, the plaintiffs have succeeded in obtaining relief against her. The plaintiffs should therefore have an order for costs against her. Had she conceded that she was a joint venturer or simply put on a submitting appearance, she may have escaped a costs order. But that is not what she did.

90. But the Russo defendants also submit that the plaintiffs did not make out their case against Suzanne. The Russo defendants’ submission was that conversations between John and Joseph did not bind Suzanne because it had not been demonstrated that they had actual authority or ostensible authority to bind her in their discussions with Angelo.

91. Whether the evidence before this Court at trial justifies the findings in the principal judgment can only be a matter for appeal. The trial judge cannot re-visit such matters. This Court cannot reconsider the sufficiency of the evidence to justify the conclusions in the principal judgment on this issue.

92. But such a submission is quite contrary to the way the Russo defendants conducted the trial. Though facing a pleading and affidavit evidence that showed the primary actors making the joint venture as John, Joseph and Angelo, the Russo defendants at no stage pleaded any lack of authority in John and Joseph to bind Suzanne. They did not open such an issue to the Court. They did not cross-examine to highlight that such an issue was in play. They did not include such an issue in their closing submissions. The first the Court heard about this issue was on 17 February 2015 at the hearing in relation to final orders. That is far too late. The plaintiffs will have judgment against Suzanne with an order for costs following the event against all the Russo defendants.

93. (2) Should Declarations be Made? The Russo defendants contest the plaintiffs’ claim for declaratory relief. The Russo defendants take both general objection and specific objections to the form of declarations that the plaintiffs propose. In the result the Court had made four of the five declarations the plaintiffs have sought.

94. The Russo defendants’ general objection is that the declarations have no utility as they add nothing to the Court’s findings but are merely jurisdictional facts for the next stage of unfinished proceedings. Moreover, the Russo defendants say that five declarations sought do not relate to any continuing joint venture, only one that ended in early 2006.

95. The plaintiffs’ answers to these general objections are persuasive. The Court has wide jurisdiction to make declarations but will only do so where a declaration will be of some utility: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 (“Ainsworth”) at 581-2. The relief must be directed to the determination of legal controversies rather than answering abstract or hypothetical questions: Ainsworth at 582. And the relief will not be granted if the Court’s declaration will not produce foreseeable consequences for the parties: Gardner v Dairy Industry Authority(NSW) (1977) 52 ALJR 180 at 188.

96. The declarations sought here are of practical utility. As these reasons elsewhere make clear the Court has decided not to embark upon the hearing for the taking of accounts. As my involvement in proceedings will also now cease, the making of declaratory relief will define the result to this point for future judicial officers. Moreover the various disputes in relation to the making of final orders, especially concerning the rights and liabilities of Anros, and concerning Barbara and Suzanne, make declaratory relief particularly suitable in this case. Finally, for the reasons which Campbell JA explained in Carantinos (at [147]), of the Court’s decision on this claim for an account, “in so far as the rights of the parties have been decided, any such decision cannot be overturned or varied as a consequence of an enquiry or the further consideration of the matter”. There is no reason why the present state of finality that has been reached cannot be recorded therefore at this point in the proceedings.

86. The Russo defendants also have taken specific objections to the plaintiffs’ draft declarations. But the Court has decided to make four of the five declarations generally in the form the plaintiffs propose. So the reasons immediately below refer to the declarations as made.

87. The Russo defendants object to any imprecision in declaration 1 such as the words “not before 2006”. The Court’s finding (at [190]) was that the joint venture ended in “early 2006”. The plaintiffs’ draft declaration 1 is an appropriate way to make the declaration more precise, without asking the Court to make supplementary findings on the issue of the time at which the joint venture ended.

88. The Russo defendants oppose declaration 2 as adding nothing to the existing factual findings. But in my view this declaration accurately and sufficiently describes the scope of the joint venture.

89. The Russo defendants also oppose the making of declarations 3, 4 and 5. In my view each of declarations 3 and 4 has utility for the reasons earlier given. But the Russo defendants are right as to one matter.

90. The proposed fifth declaration was that the Russo defendants “are liable to pay the plaintiffs any monies found to be due to the plaintiffs after the taking of an account”. Precise orders for the payment of particular sums of money can be made once the accounting has taken place. No declaration or order for payment is yet required.

91. (3) A Costs Order against Anros? The last sub-issue is what order should be made in relation to the third plaintiff, Anros. The Russo defendants argue that Anros was wholly unsuccessful after being added to the proceedings by the FASOC filed on 23 October 2013. The circumstances of the filing of the FASOC are set out above under the sub-heading “(3) Costs of Vacating the Earlier Hearing Date”. The Russo defendants contend that the FASOC, [25A], [35A], [40], [41], [47] to [52] allege that Anros was in a joint venture and an accounting relationship with the Russo defendants and that the principal judgment concludes that Anros was not a party to the joint venture with any of the Russo defendants (at [169] and [174]). The Russo defendants’ short submission is that as Anros was wholly unsuccessful against them, costs should follow the event with judgment and costs orders being made in favour of the Russo defendants and against Anros.

92. The Russo defendants also argue that Anros was the alter ego of Angelo and Rosemary and was used for their consulting and investment activities. Angelo and Rosemary do own all the Anros share capital and have been officeholders of Anros since February 2002. The Russo defendants contend that Angelo, in particular, controlled Anros’ litigation strategy, a strategy that resulted in a lack of success from which Rosemary and Angelo should not now be absolved.

93. But the plaintiffs persuasively answered this argument. They submit that an order for costs in the Russo defendants’ favour against Anros would be unreasonable would fail to reflect the substance of the proceedings.

94. The applicable rules of practice are clear. Ordinarily where a solicitor acts for more than one successful defendant in a proceeding, each successful defendant is only entitled to that party’s proportion of the costs incurred on behalf of all, plus any extra costs incurred exclusively on behalf of that party. But a defendant sued by several plaintiffs who are variously successful and unsuccessful should be no better off qua joint costs than would be an unsuccessful defendant sued by one successful plaintiff alone, so that an unsuccessful defendant should bear all the costs which a successful plaintiff would have to incur in bringing the action and should only be spared those costs occasioned by the joining of the unsuccessful plaintiffs: Currabubula & Paola v State Bank of New South Wales [2000] NSWSC 232 (“Currabubula”) at [91] and [104].

95. Anros has not obviously occasioned the Russo defendants any additional costs in the proceedings beyond the costs thrown away by Anros’ joinder and the pleading of the FASOC, which are already the subject of costs orders.

96. In my view, any case advanced exclusively on Anros’ behalf was so minimal as to have made no appreciable difference to the course of the proceedings and to the costs of the Russo defendants. But Anros should not have a costs order in its favour, as it was not successful.

97. The Russo defendants seek to distinguish Currabubula. They submit that the first and second plaintiffs pleaded and conducted a case different from Anros’ case, such that Einstein J’s approach in Currabubula was not applicable. But the so called differences between Anros’ case and Rosemary and Angelo’s case were minimal. The Russo defendants explain that Angelo and Rosemary were alleging that all parties to the joint venture were natural persons, that the Russo defendants were arguing that the parties were corporate entities and that the case that Anros was advancing was different to both of these: the joint venture was a combination of natural persons and one corporate entity, Anros. The joinder of Anros did occasion both the plaintiffs and the Russo defendants filing some further evidence but the additional evidence was minimal and did not occupy any significant hearing time in addition to other issues, which would have had to be ventilated in any event.

98. No costs order will be made against Anros.

Conclusion and Orders

110. These reasons should have dealt with all the issues raised by the parties in their supplementary submissions after the principal judgment. If any party contends that any matter has not been decided that should have been decided, liberty to apply will be reserved. For example the plaintiffs appear to contend that further definition of the joint venture parties’ respective shares of profits may be required. And if any issue arises as to the form of these orders the parties may apply to the Court.

111. The Court makes the following declarations, orders and directions:

THE COURT DECLARES THAT:

1. The first and second plaintiffs (“Plaintiffs”) and first, second and third defendants (“Defendants”) entered into a Joint Venture, which was dissolved not before 2006 (“the Joint Venture”);

2. The Joint Venture was to:

1. Develop and sell land at O’Connell Street, Parramatta;

2. Develop and sell land at Killarney St, Mosman;

3. Develop and sell land at Esther Road, Balmoral (“the Projects”);

3. Upon dissolution of the Joint Venture, each partner in the Joint Venture is entitled to be repaid their capital contributions and their share of any profits of the Joint Venture;

4. The Defendants are required to provide to the Plaintiffs an accounting of the Joint Venture;

THE COURT ORDERS THAT

5. Subject to Order 7, Order the First, Second and Third Defendants pay the First and Second Plaintiffs’ costs of these proceedings on the ordinary basis.

6. Subject to Order 7, Order the First, Second and Third Defendants pay the Fourth Defendant’s costs of these proceedings on the ordinary basis.

7. Order the Plaintiffs pay the Defendants’ costs thrown away by the vacation of the final hearing listed to commenced before Lindsay J on 14 August 2013.

8. Order that the accounts of the Joint Venture be taken;

THE COURT DIRECTS THAT

9. The Defendants serve on the Plaintiffs:

1. An account, verified by affidavit, of all amounts paid and received and all dealings of the Joint Venture with respect to the Projects. Such account shall specify:

1. The contributions of each joint venture partner to the Projects;

2. The distributions to each joint venture partner from the Projects;

3. The properly incurred expenses of each Project; and

4. The income received from each Project; and

2. A statement in affidavit form of:

1. the assets of the Joint Venture at the completion of the Projects;

2. the respective interests of the partners in the assets of the Joint Venture at the completion of the Projects.

10. The items in the account shall be numbered consecutively and arranged in chronological order;

11. The Plaintiffs are at liberty within 30 days of service of the accounts to apply to the Court to examine the Defendants viva voce before a judge to be appointed or a referee or upon interrogatories in respect of the accounts provided;

12. The Plaintiffs be at liberty within 30 days of service of the accounts or of the completion of any examination of the Defendants, whichever is later, to file and serve upon the Defendants their surcharges, falsifications and objections (if any);

13. All vouching be done out of court before the matter is relisted;

14. Stay directions 10, 11, 12, 13, and 14 for sixty days to enable the defendants to consider their rights of appeal.

15. Liberty to apply;

16. The costs of the taking of accounts are reserved.

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Amendments

22 April 2015 - Coversheet - appearances

Decision last updated: 22 April 2015