Secretary to the Department of Justice and Regulation v Century 21 Australia Pty Ltd (No 2)

[2016] VSC 687

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CIVIL LIST

S CI 2015 03477

SECRETARY TO THE DEPARTMENT OF JUSTICE AND REGULATION & ORS (according to the attached Schedule)	Plaintiffs
v
CENTURY 21 AUSTRALIA PTY LTD (ACN 159 923 743)	Defendant

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JUDGE:	Ginnane J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	15 November 2016
CASE MAY BE CITED AS:	Secretary to the Department of Justice and Regulation v Century 21 Australia Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2016] VSC 687

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COSTS – Plaintiffs failing on main issue but successful on second issue – Importance of both issues to operation of Estate Agents Act 1980 – Issues based costs award appropriate

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P J Hanks QC and Ms K E Foley	Solicitor to the Director of Consumer Affairs Victoria
For the Defendant	Mr C J Bevan and Mr L P Menzies	McKay Law as agent for Jemmeson Fisher

SCHEDULE OF PARTIES

S CI 2015 03477
BETWEEN:
SECRETARY TO THE DEPARTMENT OF JUSTICE AND REGULATION	First Plaintiff
SHAFEEQ AHAMED	Second Plaintiff
SADIYA LUBNA	Third Plaintiff
JOSIE LUCIANO	Fourth Plaintiff
STEPHEN LANGDON	Fifth Plaintiff
HEIKE LANGDON	Sixth Plaintiff
ALLAN JOHNSTON	Seventh Plaintiff
KAREN JOHNSTON	Eighth Plaintiff
VIPIN GOEL	Ninth Plaintiff
ALI OSMAN	Tenth Plaintiff
OLCAY OSMAN	Eleventh Plaintiff
VINCENT CIRONA	Twelfth Plaintiff
KARALEE CIRONA	Thirteenth Plaintiff
KLARA BUNJAMIN	Fourteenth Plaintiff
- and -
CENTURY 21 AUSTRALIA PTY LTD (ACN 003 145 346)	Defendant

HIS HONOUR:

1. On 29 September 2016, I gave judgment in this matter deciding that the plaintiffs had not established that the franchise agreement on which they relied was a ‘franchising agreement’ within the definition in s 43(5) of the Estate Agents Act 1984. [1]  I will refer to this as the first issue.  As a result, the joint and several liability provision contained in s 43(3) did not apply so that the defendant was not liable for Victorian Realty Group Pty Ltd’s defalcations. The proceeding was therefore dismissed.

   [1]Secretary to the Department of Justice & Regulation v Century 21 Australia Pty Ltd [2016] VSC 590.

1. I did not accept the additional defence upon which the defendant relied, which disputed the Secretary’s right to be subrogated to the rights of the individual plaintiffs so as to give him the right to bring the proceeding (‘the subrogation issue’).

1. The parties filed written submissions about costs. 

1. The defendant sought the costs of the proceeding on a standard basis under the general rule that costs follow the event.  It submitted that most of the written submissions and virtually all of the oral argument went to the first point that I decided in its favour.[2]  It submitted that a small percentage of the written material and of the hearing time was associated with the subrogation issue.

   [2]The defendant relied particularly on the High Court decision in Firebird Global Master Fund 11 Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192 in support of the primacy of the proposition that costs follow the event. But see, Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2016] FCAFC 12.

1. The plaintiffs submitted that the Court should order that the first plaintiff pay the defendant’s costs associated with the determination of the first issue, except for any costs incurred in the preparation of its affidavits, which they submitted were unnecessary for the determination of that issue.  There otherwise should be no order as to costs.  They submitted that the first issue was substantially a question of statutory construction and that little evidence was required for its determination.  The second issue, the subrogation issue, was  distinct and separate. 

1. In my opinion, it is appropriate for the Court to take into account that the plaintiffs were successful on one of the two legal issues that were argued.  Both issues were significant and posed important questions concerning the working of the Estate Agents Act. They were not governed by previous authority.

1. The Court’s wide discretion as to costs permits, in an appropriate case,  consideration of the success or lack of success of the parties on an issues basis.  If this approach is adopted, the Court may award the overall successful party a portion of its costs.[3]

   [3]Chen v Chan [2009] VSCA 233 [10].

1. In my opinion, in the exercise of the discretion as to the costs of this proceeding, it is appropriate to adopt an issues based approach because both issues were important and raised discrete questions.  I consider that I should award the defendant a percentage of its costs of the proceeding  because I did not accept its submission about the subrogation issue, which was a significant question, going to the right of the Secretary, the first plaintiff, to bring this proceeding.

1. It is not possible to calculate precisely the costs associated with the two issues, but I consider that an order that the first plaintiff pay the defendant 80 per cent of its costs of the proceeding on a standard basis is an appropriate reflection of the significance of, and time associated with, the presentation of the two issues in the proceeding.  In adopting a figure of 80 per cent, I have taken into account that much of the description of facts in the material filed and in oral submissions was relevant to both issues.  The defendant’s calculation of the time spent on the subrogation issue, which it gave in its written submissions, did not reflect that factor.

1. I do not accept that, as the plaintiffs submitted, that I should exclude the costs of the defendant’s affidavits, as I consider that they were relevant to, or provided a context for, the consideration of the first issue.

1. The order for costs should only be made against the first plaintiff, the Secretary, as the individual plaintiffs, the second to fourteenth plaintiffs, did not appear to play an active role in the litigation.

1. Therefore, the orders I will make in the proceeding are:

1.        The proceeding is dismissed.

2.        The first plaintiff pay the defendant 80 per cent of its costs of the proceeding on a standard basis.