Turelin Nominees Pty Ltd v Dainford Ltd

[1984] FCA 141

Re: TURELIN NOMINEES PTY. LTD.
And: DAINFORD LIMITED
VG No. 202 of 1982
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Smithers J.

CATCHWORDS

Practice and procedure - discretion to make orders as to costs - factors taken into account.

Federal Court of Australia Act 1976 - s.43.

HEARING

MELBOURNE

#DATE 31:5:1984

ORDER

1. The respondent pay to the applicant his costs of and incidental to the action including reserved costs.

2. The applicant pay to the respondent the costs of the attendance in Melbourne of its witnesses Bandy, Kiernanda, Flintoff and Holt, and of obtaining their attendance.

3. The applicant pay to the respondent two thirds of its costs of and incidental to the hearing of this matter on 5th, 6th, 7th, 8th and 9th December 1983 in addition to the costs of the above mentioned witnesses.

4. The costs payable by the applicant and the respondent respectively be set off against each other, the balance to be paid to the party to whom an amount is still owing by the other party.

5. There be liberty to apply.

6. Each party bear their own costs of and incidental to this Notice of Motion.

JUDGE1

In this case I have heard submissions as to costs. As the successful party the applicant seeks an order for all his costs. However, the respondent points out that the bulk of the hearing was devoted to the claim that the respondent contravened s.52 of the Trade Practices Act 1974 and was negligent, and that, although it was found that the respondent's conduct was misleading and deceptive, and negligent, the applicant failed to prove that he was induced by that conduct to act to his detriment and thereby was unable to establish any entitlement to relief in respect thereof.

It is correctly said that the applicant's claim for relief in respect of that conduct failed. The applicant succeeded upon the issue of the construction and effect of the contract as providing for the sale to the applicant of unit 15D on level 15 of the relevant buildings. The respondent was able and willing to deliver unit 15D on level 14 but not unit 15D on level 15.

The applicant succeeded also upon the issue that there was a warranty that the unit offered to the applicant was on level 15 whereas it was on level 14. The applicant contends that as he succeeded in proving that misleading statements had been made to him and negligent conduct engaged in by the respondent he should have his costs and certainly not have to pay costs in respect of the issue of the making of the statements and their untruth and of the issue of negligence.

It is my opinion that although the judgment was favourable to the applicant there is a discretion in the court to make such order as to costs as may be just. Section 43 of the Federal Court of Australia Act 1976 provides:-

"43. (1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded.

(2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge."

According to the decision of Fisher J. in Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. & Ors. (1979) 28 ALR 201 the discretion so conferred is unfettered. It must of course be exercised judicially. His Honour referred to and relied upon observations of Bray C.J. in Cretazzo v. Lombardi (1975) 13 SASR 4 at p.11 to the effect that the general discretion is absolute in the sense mentioned above and that within that discretion an order may be made that a successful party pay the costs of an unsuccessful party and that a successful party be deprived of costs on particular issues. I respectfully concur in these observations and the reasons therefor.

The question before me is, therefore, whether the applicant should bear the burden of costs of these proceedings to some and what extent. The issue of inducement was, of course, critical. It was idle to prove the respondent's wrongful conduct unless inducement was proved. No doubt the applicant hoped to prove inducement but he failed. Although, for the purposes of the action he may have persuaded himself that he was so induced, the fact is that that persuasion was self induced and unjustifiably so. There were two consequences. First much time was taken up on the issue of inducement on which the applicant lost. Secondly, much time was taken up on investigation of the respondent's conduct, which in view of the applicant's state of mind had no value in the litigation. On a true appreciation of his situation on the matter of inducement, which was essentially a matter for the applicant, he was not justified in seeking relief in respect of the respondent's conduct.

The applicant must, I think, be treated as having known that his case so far as it was based on misleading conduct, and negligence, was unsound. The nature of the issue on which the applicant failed, and of the reason why it failed, have a particular significance with respect to the applicant's responsibility for the undue magnitude of the litigation.

Accordingly, it appears to me that the justice of the case would not be met by an adjustment of costs based on the view that the burden may be split between the parties according to their success or failure or particular issues. There was, on what the applicant knew or ought to have known, no reason for litigating the respondent's conduct other than a hope that he might succeed in persuading the court, contrary to the reality, that it was that conduct which caused him to act to his detriment.

And, of course, had the decision in this case turned on the issues arising out of the respondent's conduct the respondent would have been the successful party in the litigation. It is probably relevant also that the respondent's conduct, although misleading, and negligent, did not have any element therein of deliberate intention to mislead. Against this background Mr. Stanley contended that the appropriate order would be that the applicant have his costs of the action excluding such costs as are referable to the issues of misleading and deceptive conduct and negligence and inducement thereby and that in respect of those issues the applicant be ordered to pay to the respondent its costs of and incidental thereto. It was said that almost all of the five days of hearing were occupied in dealing with those issues. It was said also, and correctly so, that it was the applicant who insisted on presenting the case in Melbourne rather than Brisbane and thereby greatly increasing the respondent's cost in relation both to witnesses and legal representation. Dr. Buchanan for the applicant contends that the general rule that a successful party should receive his costs should prevail. He relied on the circumstance that the applicant had established the misleading and deceptive conduct and negligence alleged by him. Also it was urged by Dr. Buchanan that, even had the action been limited to the breach of contract as to the location of the land which the respondent was willing to transfer to the applicant, it would still have been necessary to call evidence as to what was said about the view from, and other characteristics of, the unit purchased. He suggested that it would have been necessary to show not only the breach of the contract but that its position and characteristics were matters of essential importance to the applicant. But the judgment in his favour does not proceed on the ground that the view and characteristics of the unit described in the contract were essentially superior to those of the units offered in performance of the contract. It proceeds on the ground that what was offered was a different unit. In so far as the applicant might have sought to rely on the differences as essential factors, I would not have regarded them as such, either objectively, or in the mind of the applicant.

It seems to me to be an important consideration that it was the state of the applicant's own mind which caused his failure to prove his entitlement to relief on the ground of misleading and deceptive conduct and negligence issues. In my opinion therefore the applicant should hear the burden of costs so far as they relate to proof of that conduct and the examination of his own mind in respect of it.

Had the action related only to the issues on which the respondent succeeded the actual hearing would in my opinion have occupied not more than one day or a little more. Success on those issues depended on the documents and proof of the state of the building.

The hearing extended over four and one half days. I think the respondent should pay to the applicant his costs of and incidental to the action including reserved costs and that the applicant should pay to the respondent the costs of the attendance in Melbourne of the witnesses, Bandy, Kiernanda, Flintoff and Holt and of obtaining that attendance but not those of the attendance of the witness Crane. I consider that this witness had little or nothing of value to contribute for the respondent however the event turned out. I consider also that the applicant should pay to the respondent two thirds of its costs of and incidental to the actual hearing on the 5th, 6th, 7th, 8th and 9th days of December 1983 which were incurred in addition to the costs of these named witnesses.

I consider that the costs payable by the applicant and respondent respectively be set off against each other and the balance paid to the party to whom an amount, after such exercise of set off, is still owing by the other party and that there be liberty to apply.