Territory Sheet Metal Pty Ltd v Australia and New Zealand Banking Group Limited (No 3)
[2010] NTSC 13
•09/04/2010
Territory Sheet Metal Pty Ltd & Ors v Australia and New Zealand Banking
Group Limited (No 3) [2010] NTSC 13
PARTIES: TERRITORY SHEET METAL PTY
LTD(ACN 009 634 333) SMITH, David Lennox DEAN, Edward Charles DEAN, Susan Ellen SMITH, Nicole Kerrian v AUSTRALIA AND NEW ZEALAND
BANKING GROUP LTD(ACN 005 357 522) TITLE OF COURT: SUPREME COURT OF THE
NORTHERN TERRITORYJURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION FILE NO: 177 of 2000 DELIVERED: 9 April 2010 JUDGMENT OF: OLSSON AJ CATCHWORDS: PRACTICE AND PROCEDURE – Costs – order as to – discretion of the Court – general principles relating to its exercise – general rule – departure from – basis on which justified – whether departure justified in circumstances of this case and, if so, in what manner.
Bowen Investments Pty Ltd v Tabcorp Holdings Pty Ltd (No 2) [2008]
FCAFC 107;
Cornwall and Others v Rowan (No 2) [2005] SASC 122;
Cretazzo v Lombardi [1975] 13 SASR 1 at 16
Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR
261;
Elgindata Ltd (No 2) [1993] 1 All ER 232;
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20;
GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296;
Hughes v Western Australian Cricket Assn Inc (1986) 8 ATPR 40-748;
Re Madden as Official Liquidator of Aquanaut Constructions Pty Ltd (in liq)
[2001] NSWSC 1051;
Mickleberg v Western Australia [2007] WASC 140;
NRMA Ltd v Argon (No 3) [1999] NSWSC 768;
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569;
Territory Sheet Metal Pty Ltd & Others v Australia and New Zealand
Banking Group Ltd (No 2) [2009] NTSC 03;
Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328;
Young v Central Australian Aboriginal Congress and Others [2009] NTSC
36Law of Costs (2003) at 241
REPRESENTATION:
Counsel:
Plaintiff: R Sallis Defendant: A Wyvill SC with D McConnel Solicitors:
Plaintiff: Woodcock Solicitors Defendant: Cridlands MB Judgment category classification: A
Judgment ID Number: 0104 Number of pages: 19 IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINTerritory Sheet Metal Pty Ltd & Ors v Australia and New Zealand Banking
Group Ltd (No 3) [2010] NTSC 13
No 177 of 2000
BETWEEN:
TERRITORY SHEET METAL PTY
LTD (ACN 009 634 333)
First Plaintiff
DAVID LENNOX SMITH
Third Plaintiff
EDWARD CHARLES DEAN
Fourth Plaintiff
SUSAN ELLEN DEAN
Fifth Plaintiff
NICOLE KERRIAN SMITH
Sixth Plaintiff
AND:
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LTD(ACN 005 357 522)
Defendant
CORAM: OLSSON AJ REASONS FOR JUDGMENT
(Delivered 9 April 2010)
Introduction
On 22 January 2010 I published reasons for judgment dealing with various residual issues concerning damages in these proceedings (“the residual issues reasons”)[1]. In these reasons I will continue to employ the same dictionary expressions as were defined in my primary reasons.
In the course of the residual issues reasons I indicated the quantum of damages to be awarded and the rate and basis of computation of interest that should also be allowed. The parties were requested to make and agree the computation of that interest. They were, in fact, able to reach such an agreement.
It is common ground that a correct computation of interest on the footing indicated in my reasons throws up an aggregate damages and interest figure of $936,884.31, as at the date of these reasons.
It follows that TSM is entitled to judgment against the defendant for damages and interest in that total sum. For the reasons expressed in my primary findings of fact and law, the claims of all other remaining plaintiffs and the counterclaim of the defendant must be dismissed.
There only remains for consideration the question of the costs of the action, as to which I have now received voluminous detailed submissions from the parties. I have carefully considered the detail of all those submissions, but see no profit in attempting a fine and fully comprehensive written analysis of it. For reasons that will emerge, at the end of the day, any conclusion arrived at is necessarily the product of an informed general overview of the litigation as it was conducted.
Relevant background
In both my primary findings and the residual issues reasons I made some reference to the magnitude and complexity of the issues in these proceedings. It is necessary to re-traverse some of that ground and also elaborate on certain aspects of it in order to paint the relevant backdrop for present purposes.
These proceedings relate to factual events, some of which date back to early 1997. The present action was commenced on 1 December 2000.
The trial itself commenced on 2 June 2009.
At that time the statement of claim pleaded five separate causes of action, although these all essentially focused on and arose out of a common set of narrative facts. I consider that the scope of much of the evidence led as the
trial developed was not greatly affected by the fact that there were multiple
causes of action, although there was some impact on the breadth of final
submissions made.
I recited in my primary findings that, although it was originally a plaintiff, LTD dropped out at the commencement of the trial. The trial went forward on the basis that TSM was the principal plaintiff, given that certain of the
evidence necessarily focused on the situation and operations of LTD at
given points in time. Further, despite the fact that four personal plaintiffs
remained active parties, little time or attention was directed to or arose out
of that situation in the course of the proceedings. It is not overstating the
position to say that they seem to have been retained as such parties ex
abundante cautela. It would be a well nigh impossible task to attempt to
dissect out precisely what costs may have been generated by the presence of
them as nominal parties. A good deal of evidence given by the personal
plaintiffs was, in any event, relevant narrative material that was pertinent to
all causes of action.
In substance, the principal aspects to which evidence and argument were primarily directed were:
(1)
the true narrative facts concerning the application by TSM to ANZ for the relevant loan advances and the eventual approval and settlement of such advances;
(2) the true narrative facts as to the relevant conduct of Godwin and to the
manner and circumstances in which the $570,000 cheque and the
$460,000 cheque (to which I shall collectively refer as "the impugned
cheques") were processed by ANZ;(3) what practical consequences flowed from those transactions; (4)
whether the actions of ANZ in relation to those transactions conformed with prudent banking practice and/or breached the implied terms of the bank/customer relationship existing as between TSM and ANZ; and
(5) the correct legal approach to assessment and the factual quantum of
damages suffered by TSM given the causes of action against ANZ, and
aspects allied to those issues.
| [14] | exploring issues such as: what were the detailed narrative facts on which the |
It must be said that a good deal of the pre-contractual evidence was necessarily led in order to establish the narrative history of key events leading up to the relevant breaches of contract and, in particular, the knowledge and states of mind of the bank officers concerned and, in particular, of the witness Baylis, as well as the factual matrix within which the breaches took place.
The trial occupied most of June, August and September 2008, as well as a number of days in October of that year and February of 2009. My primary findings were published on 9 July 2009. They ran to some 517 pages. These were followed by extensive submissions late in 2009 as to residual issues, which gave rise to the residual issues reasons.
In the evidentiary phase of the trial a great deal of time was occupied in on aspects such as the likely viability of TSM at relevant times and the potential profitability of its business.
Against that background and given circumstances to which I will refer, the defendant contends that a special order as to costs ought to be made and that costs should not merely follow the event.
| [16] |
|
Nevertheless, it must be recognised that, in so far as TSM sought to espouse forward sales and profit projections of the quantum adopted by the expert witnesses Martin and Clark, the resultant figures were patently unrealistic and unsupportable. I also accept that the convoluted mode of pleading adopted by the plaintiffs did create some difficulties in the progression of the litigation.
However, in relative terms, I consider that the evidentiary and hearing time specifically associated with the discrete aspect of exaggerated quantum comprised a somewhat more modest proportion of the total trial time span than is suggested by the defendant.
It is not to be forgotten that a not inconsiderable proportion of the expert evidence focused on the proper conceptual approach to ultimate assessment and was thus aimed at a mainstream issue in the proceedings that would necessarily have had to be considered in any event.
It further needs to be borne in mind that, as counsel for TSM now asserts, it is really beyond question that the defendant did not produce its expert and some important lay reports and witness statements in a timely manner and thus, in practical terms, denied the plaintiffs an opportunity to adequately consider and respond to that material prior to trial.
Whatever may have been the cause of such a situation, the plain fact is that various important aspects of this litigation were unfortunately developed "on the run" as the trial date approached and the trial progressed. This had the practical effect of markedly increasing the trial span and lessening the feasibility of a desirably efficient trial process.
No doubt neither side was entirely blameless; however, the plaintiffs had very limited resources and at times struggled to meet deadlines, whereas the same can scarcely be said of the defendant which is a large, nationally-based bank. I see no bases for visiting the consequences of that aspect of the situation on TSM, in terms of an adverse order as to costs.
Relevant principles related to the award of costs
It is trite to say that costs normally follow the event, in the sense that the party who, on the whole, succeeds in an action will usually be awarded the general costs of that action.[2]
In the course of his judgment in Cretazzo v Lombardi,[3] Jacobs J made the point that the fact that a party succeeds on some pleaded issues but fails on others does not automatically give rise to an apportionment of costs according only to success or failure of one party or the other on the various issues of fact or law that arise in the course of a trial.[4]
| [25] | end, is wholly or substantially successful, nevertheless fails along the way |
Jacobs J commented that trials daily occur in which the party, who in the of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, even though some of them may be doubtful, that might be material to the decision of the particular case.
The authorities render it abundantly clear that, at the end of the day, what is involved is, nevertheless, an exercise of discretion in which the Court seeks to achieve an outcome most consonant with the justice of the case,[5] given
the considerations adverted to in Dodds Family Investments Pty Ltd v Lane
Industries Pty Ltd[6] (“Dodds”).
Young J pointed out in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3),[7] that it is inappropriate to look at issues as if they are pleaders' issues -- the question of costs must be approached on a broad brush basis. This is
especially so where, in practical terms, there is a considerable overlap
between the issues in question, as to which there may have been differing
outcomes (cf Re Madden as Official Liquidator of Aquanaut Constructions
Pty Ltd (in liq)).[8]
Mahoney JA was reported as saying in Waters v PC Henderson (Australia) Pty Ltd[9] that it was contrary to the trend of case authority to attempt to determine which issues were won by the parties, and to what extent they were won and what was the amount of time spent on each of those issues, so as to apportion costs.
He accepted that the correct approach was that, where a proceeding involves multiple issues, unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party, without attempting to differentiate between those particular issues on which it was successful and those on which it failed. That was a philosophy essentially adopted by Newnes J in Mickleberg v Western Australia.[10]
It is relevant, nevertheless, to take into account the time occupied by each separate major issue at trial and its relevant significance. Generally speaking, it would be proper to deprive a successful party of all costs of an issue if it is possible to isolate that issue and determine that it was unnecessarily pursued.[11] Usually, however, a more general assessment ought to be made. (Re Elgindata Ltd (No 2) (“Elgindata”)[12].
In making an assessment, due regard needs to be had to the conceptual difference between not awarding costs of an issue, by way of contrast with ordering payment of such costs to the other party.
In my opinion, by way of summary, the relevant correct conceptual approach is that expressed by the learned author of Dal Pont, "Law of Costs",[13] where he comments:
to collide. On the one hand, they should not adopt an approach so
rigid as to dissuade a party, by the risk of an adverse costs award,
from canvassing all issues, however doubtful, which might be
material to the decision of the case. Conversely, in view of
extensive court delays and high legal costs, the courts should
encourage parties to consider carefully the matters they will put in
issue in their litigation. Litigants who realise that they will not
necessarily recover the whole of their costs where they have
unsuccessfully raised a discrete issue are more likely to consider
whether the raising of that issue is a justifiable course to take."… the courts must seek to give effect to two policies that are likely according to the court, the justice of the case requires" (emphasis added).
In situations in which it may be appropriate to not allow a party the full costs of action because of lack of success as to certain issues or for some other reason related to non-success as to or the patent invalidity of pursuing the full amount originally claimed, an order may potentially be crafted in one of several ways.
| [34] | order specifically related to success or failure on particular issues where that |
In most instances, a practical approach will dictate either the making of an successful party recover only a specified percentage of the costs of the action.
The latter strategy is that which is most commonly adopted, except in very clear-cut instances where the costs of specific issues can readily be determined and ought, for good reason, to be visited separately on the one party or the other.
So it was that, in Elgindata, the Court of Appeal concluded that the various principles on which costs ought to be awarded might fairly be summarised in these terms:
(1) that costs are in the discretion of the court;
(2) that costs should follow the event except when it appears to the courtthat, in the circumstances of the case, some other order should be made;
(3) that the general rule does not cease to apply simply because the
successful party may have raised issues or made allegations that failed, but that such party could be deprived of costs in whole or in part where that party had unjustifiably caused a significant increase in the length
of the proceedings; and
(4) that where the successful party has raised issues or made allegations
improperly or unreasonably, the court may not only deprive that party
of costs, but can also order such party to pay the whole or part of the
unsuccessful party's costs.
The Court of Appeal pointed out that the fourth principle implied that a successful party who neither improperly nor unreasonably raised issues or made allegations which failed ought not to be ordered to pay any part of the unsuccessful party's costs.
The contentions advanced by the parties
The defendant argues that there should be a major reduction in any costs allowed to the plaintiffs by reason of these contentions:
| ||||||||||
| [39] |
The defendant argues that at least half of the time and workload related to their claims by a more careful selection of causes of action and a more reasonable approach to the assessment of the loss.
ANZ therefore contends that a reduction of 50% ought to be made in any costs allowed.
The plaintiffs respond that, apart from their criticisms of the defendant’s mode of conduct of the proceedings to which I have referred, the vast amount of the evidence called at trial necessarily related to the cause of action as to which TSM was successful, that all causes of action arose from a single course of dealings between the plaintiffs and the defendant over a very short time span and that it cannot be said that the causes of action raised were raised unreasonably.
They contend that, viewed realistically, the overall situation fell fairly and squarely within the dictum of Anderson J in Wheeler. The plaintiffs submit that, to paraphrase what he there said, although it is strictly correct to say that different causes of action were involved, there was in reality only a single contest in substance, which arose out of one course of dealings and necessitated a single body of evidence, essentially of the nature of that actually led.[18]
They further argue that the involvement of the natural person plaintiffs, if divorced from the mainstream of the TSM case, did not significantly add to the length of the trial and that the defendant persisted in mounting a counterclaim that was patently unsustainable.
Conclusions
I commence my consideration of the matters debated by the parties by making the point that it is unsurprising that the plaintiffs eventually pleaded five separate causes of action against the defendant.
The narrative facts in this case were both extensive and complex. Certain aspects of them were either in considerable contention, or at least unclear until all of the relevant evidence was eventually placed before the court and
tested, in some respects, by comprehensive cross-examination.
As I have already indicated, the factual material eventually led was, in essence, potentially relevant to all possible causes of action. It is difficult to perceive how, absent other than the claim based on contract, the scope of the relevant evidence would have been significantly less than it actually was.
Moreover, because of the need to assess the reliability and accuracy of certain of the key witness evidence, it would have been extremely difficult for the plaintiffs to initially appreciate and definitively assess what specific causes of action would finally be maintainable in the circumstances.
I do not consider that it was unreasonable for the plaintiffs to seek to propound all five causes of action pleaded by them - particularly as doing so had little practical effect on the length or scope of the trial, given that some additional costs would have been generated at the final submissions stage in relation to whether the elements of some causes of action had in fact been made good. I agree that there was, in reality, a single contest in substance, that did arise out of one course of dealings and necessitated what was essentially a single body of evidence.
That conclusion is by no means undermined by the fact that, in the final stages of the trial, counsel for the plaintiffs particularly focused on a cause of action that, in the final analysis, I did not uphold.
Leaving aside the very large amount of time occupied by an examination of evidence touching on the core narrative facts, it can reasonably be said that other major time segments were appropriately spent on the following topics:
(1) the expert evidence bearing on proper banking practice; (2) the evidence related to the potential viability of TSM's business and its likely profitability - given certain alternative scenarios (including some expert technical evidence); and (3) the contentious expert accounting evidence bearing on both the proper
conceptual basis of assessing damages and also the validity of the
quantum figures claimed.
The expert banking evidence was potentially relevant to various causes of action. Whilst it spanned a number of aspects of banking practice, the substance of it was specifically pertinent to the cause of action based on contract. I see no reason, consistent with authority, for attempting to dissect out some portions of it that might be argued to have primarily been directed to other causes of action.
Much of the evidence, including some technical evidence, bearing on the viability of the TSM business and its likely degree of profitability was of a type necessarily explored in a case such as this. True it is that certain aspects of it proved to be contentious and resulted in considerable cross- examination. In some instances I have rejected criticisms made, whilst, in others, I have upheld them.
Generally speaking, I have accepted the technical evidence led by the plaintiffs and the evidence concerning the practical worth of the various projects that they were seeking to develop and sought to exploit. The major point of departure between the parties was as to the reality or otherwise of the forward projection figures sought to be espoused by the plaintiffs and their accounting experts. As to this, I have upheld the contention of the defendant that the figures primarily relied on were excessive and unrealistic; and that, at best, there was the loss of a chance of being able to further develop and market certain of the TSM initiatives.
It follows that it must be accepted that a proportion of the evidence of DLS and the three accounting experts who gave evidence concerning those aspects bore on some factual aspects as to which TSM did not ultimately succeed in relation to the extent of quantum claimed and that certain claims as to quantum were unrealistic and foredoomed to failure.
That is not to say that the evidence of those experts concerning the conceptual basis of assessment and the likely viability of the TSM business, had the defendant’s breaches not occurred, was not relevant to the TSM claim, to the extent that it has been successful.
It is plainly impractical to do other than make a broad brush allowance for those aspects of the relevant evidence touching on factual, financial issues that were clearly unrealistic and unsustainable and as to which it may
| reasonably be said that the defendant, in large measure, carried the day, bearing in mind that, ultimately, TSM did, nevertheless, recover a substantial quantum of damages from the defendant. | |
| [57] | appropriate course in this complex litigation is to recognise those areas that |
I consider that the justice and practicality of the case indicate that the interwoven with the other issues in the case. In doing so it is necessary to make due allowance for the practical impact of the belated production by the defendant of certain materials on which it sought to rely and the practical impact that this had on the trial process.
Various minds may fairly differ as to what that percentage abatement ought to be. In conformity with the authorities to which I have referred, I do not pretend that my conclusion is other than an overall broad brush assessment, based on my overview and impression of the whole of the proceedings, which were hard fought at all stages -- with the defendant seeking to pursue with vigour every point that it possibly could. This is particularly so when it is borne in mind that a great deal of evidence was directly or indirectly relevant to various issues and it would be an unreal task to make wholly clear cut dissections.
I have ultimately concluded that the proper approach to the issue of costs, after making due allowance for any specific orders as to costs which may have been made in the course of the proceedings, is that TSM recover from
the defendant 75 per cent of its costs of action in these proceedings, including its costs of defending the counterclaim. I consider it to be unrealistic and inappropriate to attempt to dissect out and make due or
separate allowance for the costs of the joinder of the personal plaintiffs and
the effect of the defendant’s counterclaim.
Accordingly, I direct that judgment be entered for TSM against the defendant in a total sum of $936,884.31 for damages and interest to date of judgment and that the defendant’s counterclaim against the plaintiffs be dismissed.
| [61] | been made in the course of the proceedings, the defendant pay to TSM |
I further order that, subject to any specific orders as to costs that may have costs of the counterclaim.
The claims by the personal plaintiffs against the defendant will be dismissed. As it was reasonable for them to be joined in the first instance and that joinder did not, in my opinion, give rise to any significant additional costs, there will be no order as to costs against them.
-------------------------------
[1] Territory Sheet Metal Pty Ltd & Others v Australia and New Zealand Banking Group Ltd (No 2)
[2010] NTSC 03.
[2] Hughes v Western Australian Cricket Assn Inc (1986) 8 ATPR [40-748] (“Hughes”) at [48-136],
Young v Central Australian Aboriginal Congress and Others [2009] NTSC 36, Permanent Building
Society v Wheeler (No 2) ("Wheeler") (1993) 10 WAR 569.
[3] [1975] 13 SASR 1 at 16.
[4] See also Cornwall and Others v Rowan (No 2) [2005] SASC 122 and NRMA Ltd & Ors v Morgan &
Ors (No 3) [1999] NSWSC 768.
[5] Hughes.
[6] (1993) 26 IPR 261.
[7] (1998) 30 ACSR 20 at 22.
[8] [2001] NSWSC 1051 at [4].
[9] (1994) 254 ALR 328.
[10] [2007] WASC 140 at [35] et seq.
[11] Cf Bowen Investments Pty Ltd v Tabcorp Holdings Pty Ltd (No 2) [2008] FCAFC 107, GT
Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296.
[12] [1993] 1 All ER 232.
[13] (2003) at 241.
14 See the defendant’s written submissions at [23] et seq.
[15] See the defendant’s written submissions at [27] et seq. 16 See the defendant’s written submissions at [19] et seq. 17(1993) 26 IPR 261 at 272.
[18] See the plaintiffs’ submissions at [7] as to various detailed evidentiary aspects.
0
12
0