Al Mousawy bht Imelda Margaret Dodds v Howitt-Stevens Constructions Pty Limited & Ors

LEGISLATION CITED : Civil Procedure Act 2005 Legal Profession Act 2004

Al Mousawy v Howitt-Stevens Constructions Pty Limited & Ors [2010] NSWSC 122 Bligh v Tredgett (1852) 5 DE G and S M 73 Brand v Monks [2010] NSWSC 313 Commonwealth of Australia v Gretton [2008] NSWCA 117 European Hire Cars Pty Limited v Beilby Poulden Costello [2009] NSWSC 526 Fernando (by his tutor, John Ley) v Minister for Immigration and Citizenship (No 9) [2009] FCA 833 Firth v Latham & Ors [2007] NSWCA 40 CASES CITED : Hawkesbury District Health Services & Anor v Patricia Chaker [2010] NSWCA 320 Leichhardt Municipal Council v Green [2004] NSWCA 341 Lemoto v Able Technical Pty Limited [2005] NSWCA 153, 63 NSWLR 300 Moon v Atherton (1972) 2 QB 435 NSW Insurance Ministerial Corp v Abualfoul (1999) FCA 433 Oasis Fund Management Ltd v Royal Bank of Scotland NV [2010] NSWSC 584 Re: Famatina Development Corporation Limited (1914) 2 Ch 271 Thacker v Hardy (1878) 4 QBD 685, Williams v Lister & CO (1913) 109 LT 699 Yakmor v Hamdoush (No 2) [2009] NSWCA 284

Thakee Khdeyer bht Imelda Margaret Dodds - Lead Plaintiff Corey Butler, Steven McKenzie, Antonino Tati and Mark Turjman - Non-lead Plaintiffs PARTIES : J A Byatt - 3rd Defendant Stonewall Hotel Pty Limited - 4th Defendant Presdate Pty Ltd - 5th Defendant Australian Town Planning Consultants Pty Limited - 6th Defendant

Mr L King SC/Mr J Spinak - Lead Plaintiff Ms M Castle - Non-lead Plaintiffs Butler, McKenzie, Tati and Turjman COUNSEL : Mr J Sexton SC - Third Defendant Mr M Windsor SC - Fourth and Fifth Defendants Mr D Bernie - Sixth Defendant

NSW Trustee and Guardian - Lad Plaintiff PT and W Law - Non-lead Plaintiffs Butler, McKenzie, Tati and Turjman SOLICITORS : Kennedys - Third Defendant Yeldham Price O'Brien Lusk - Fourth and Fifth Defendants Robert Silberberg - Sixth Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2004/176921 - Thakee Khdeyer AL MOUSAWY v HOWITT-STEVENS CONSTRUCTIONS PTY LIMITED & Ors (No 2)

JUDGMENT 1 HIS HONOUR: Nature of Proceedings The Court delivered judgment in this matter on 8 March 2010 ( Al Mousawy v Howitt-Stevens Constructions Pty Limited & Ors [2010] NSWSC 122). Judgment was entered in favour of the defendants. A detailed exposition of the facts is therein set out. This judgment is concerned with the costs which flow from that judgment.

Factual Background 2 On 24 November 2002 at approximately 5.20am the ceiling of the first floor of the Stonewall Hotel collapsed injuring a number of persons. Legal proceedings were brought by the following:

Thakee Khedyer Al Mousawy Antonino Tati Alanna Calluaud Daryl Shute Mark Turjman Steven McKenzie Dominic Vella Corey Butler 3 Eventually three sets of defendants were left in the proceedings:

JA Byatt Pty Limited (the third defendant) (hereafter referred to as Byatt), a structural engineering company, on the basis that it failed to identify defects in the ceiling on the first level of the hotel.

Stonewall Hotel Pty Limited (hereafter referred to as Stonewall) and Presdate Pty Limited (hereafter referred to as Presdate) (fourth and fifth defendants) on the basis that they were respectively the occupier and owner of the hotel and did not properly investigate complaints received from patrons and that they failed to properly instruct Byatt.

Australian Town Planning Consultants Pty Limited (hereafter referred to as ATPC) (the sixth defendant) a town planning consultancy company. It was sued on the same basis as Stonewall and Presdate. 4 Although some of the claims were initially brought in the District Court, by July 2006 all had been transferred to the Supreme Court. As part of the case management of the proceedings, and in order to save court time and legal costs, on 17 March 2008 with the consent of all parties, the Court made the following orders:

(i) The lead case of Thakee Khedyer Al Mousawy was to be determined as to liability and damages (the lead plaintiff).

(ii) The balance of cases arising out of the events occurring at the Stonewall Hotel on 24 November 2002 were to be determined as to liability only at the same time as the lead case (the non-lead plaintiffs).

(iii) The plaintiffs to agree that all plaintiffs would be represented by the same counsel at the hearing of the lead case.

(iv) The plaintiffs to file and serve a Statement of Claim common to all cases by a specified date. 5 The uniform Statement of Claim was not filed until 7 July 2009. On 30 July 2009 the following orders were made:

(i) Each defendant to file a Defence responding to the uniform Statement of Claim by a specified date.

(ii) Cross-claims filed in the lead proceedings to be treated as cross-claims common to all proceedings on the issue of liability.

(iii) Leave is granted to the cross-claimants to amend the Cross-claims to the extent necessary by virtue of the filing of the uniform Statement of Claim.

Orders were made as to service of witness statements and a joint statement by the plaintiffs identifying the issues in dispute on liability. 6 The lead plaintiff commenced proceedings in his own name on 9 July 2004. In February 2006 his solicitors advised the solicitors for the defendants that a Mr Ghassan Khamis had agreed to act as his tutor in the proceedings. Served at that time were a "Consent to Act as Tutor", "Certificate of Solicitor" and "Affidavit Verifying Signature". Those documents were dated 20 August 2004. From the court records, however, it would seem that Mr Khamis commenced acting as a tutor for the lead plaintiff from about February/March 2006. On 30 July 2009 at the request of his counsel, without objection by the defendants, Mr Khamis was replaced as tutor by Ms Imelda Margaret Dodds, in her capacity as Acting Chief Executive Officer of the NSW Trustee and Guardian. 7 The trial took place over 13 days from 1 February until 18 February 2010. Six of those days (1-5 February, 18 February) were devoted to liability issues. The other hearing days were concerned with the lead plaintiff's claim for damages. 8 The effect of the judgment was as follows:

As against Byatt, Mr Al Mousawy failed to establish breach of duty and causation.

As against Presdate, Mr Al Mousawy failed to establish any elements of liability.

As against Stonewall, Mr Al Mousawy established duty of care and breach of duty, but failed as to causation.

As against ATPC, Mr Al Mousawy failed to establish any elements of liability. 9 In these costs proceedings the lead plaintiff was represented by the NSW Trustee and Guardian. Messrs Tati, Turjman, McKenzie and Butler were represented by PT and W Law. Each of the defendants was legally represented. In relation to Daryl Shute, his solicitors filed a Notice of Ceasing to Act on 25 March 2010. I am satisfied from the affidavit of Ms Ruschen of 25 November 2010 that Mr Shute is aware of these proceedings but has decided not to participate. That is not surprising since he now resides in the United Kingdom. I am also satisfied that Ms Calluad and Mr Khamis are aware of these proceedings but have decided not to participate in them. I am unaware of the situation in relation to Mr Vella except that he did not appear and was not legally represented in these costs applications. Claim for costs by Byatt 10 Byatt submits that the liability of both the lead and non-lead plaintiffs should be joint and several from 7 July 2009, i.e. the date upon which the uniform Statement of Claim was filed. The basis for the submission is the agreement by the non-lead plaintiffs to be bound by the outcome as to liability of the lead plaintiff's case, their agreement to the filing of a uniform Statement of Claim and their agreement that they would be represented by the same counsel at the hearing of the lead case. 11 I do not agree that the consent of the non-lead plaintiffs to those matters has that effect. Each of the non-lead plaintiffs has filed his or her separate Statement of Claim. There was no express statement or assertion by them that they were joint and several plaintiffs in the same action. The situation was more analogous to a number of proceedings being heard together. 12 The benefits of proceeding in this way were substantial. The evidence on liability would be the same in each case. The inconvenience, expense and injustice in dealing many times over with identical issues in claims by different persons with a common interest against the same defendants, would be avoided. The most significant efficiencies were the saving of court time and legal costs. 13 Because separate Statements of Claims were filed and each had proceeded in its own way until the orders of March 2008 were made, it was not possible to utilise rule 7.4(1) of the Uniform Civil Procedure Rules 2005 (UCPR) which deals with representative actions. Nevertheless, the rationale behind the March 2008 orders was the same as that governing representative actions. In making the consent orders of March 2008 the Court and the parties were giving effect, as they were bound to do, to s 56(2) of the Civil Procedure Act 2005 (CPA). 14 In relation to representative actions generally, the English Court of Appeal Lord Denning MR (with whom Edmund Davies and Roskill JJ agreed) said in Moon v Atherton (1972) 2 QB 435 said at 441-442: "In a representative action the one person who is named as plaintiff is, of course, a full party to the action. The others, who are not named, but whom she represents, are also parties to the action. They are all bound by the eventual decision in the case. They are not full parties because they are not liable individually for the costs. That was held by Eve J in Price v Rhondda Urban District Council (1923) WN 228. But they are parties because they are bound by the result."

The history and effect of representative actions was valuably analysed by Biscoe AJ in Oasis Fund Management Ltd v Royal Bank of Scotland NV [2010] NSWSC 584. 15 While each of the non-lead plaintiffs was bound by the outcome of the lead plaintiff's case on liability, the Court directed that they continue to prepare their individual cases as to damages. That process was continuing on the part of each of the non-lead plaintiffs during the lead up to and the preparation for the lead plaintiff's case. 16 To the extent that the Court required power under the rules to make those orders, it had that power pursuant to r 2.1 UCPR. 17 It seems to me that the appropriate order to make in relation to costs payable following 7 July 2009, is that the lead plaintiff should pay any costs order made against him in relation to the conduct of the proceedings, in particular the hearing in February 2010. Each of the non-lead plaintiffs should pay his or her costs to the extent that they were actually incurred in the conduct of his or her matter. 18 There are other considerations which suggest that this is the correct result. 19 Had the Court not made the orders of March 2008 the lead plaintiff would have had to proceed with his case, both as to liability and damages, in any event. The only difference was that a trade practices count was added to the uniform Statement of Claim which had not been in the lead plaintiff's originating process. There was no other step taken by the lead plaintiff in the conduct of the liability part of his trial which would not have been taken if the Court had not made the orders of March 2008. 20 Accordingly, I reject the submission of Byatt that the liability of the lead plaintiff and the non-lead plaintiffs should be joint and several in respect of the lead plaintiff's proceedings from 7 July 2009. The lead plaintiff should bear responsibility for the costs arising from the conduct of those proceedings from that date. 21 That decision leads to the next question to be determined, i.e. the extent of the liability of the tutors in the claim by the lead plaintiff. 22 Byatt submits that any costs order made against the lead plaintiff can also be made against his tutor (Yakmor v Hamdoush (No 2) [2009] NSWCA 284 at [44 - 45]. That proposition is undoubtedly correct. 23 The problem here is that there have been two tutors and originally there was a period of approximately eighteen months when there was no tutor appointed. Does one apportion costs between Mr Al Mousawy and the two tutors or does the last tutor have responsibility for the whole of the costs. Byatt submits that the last tutor, Ms Dodds, should be responsible for the whole of Mr Al Mousawy's costs. 24 There is a paucity of authority on the question. The principal authority to which the Court was referred by Byatt was Bligh v Tredgett (1852) 5 DE G and S M 73. The issue before the court there was whether the liability of a next friend could be limited to the time during which his name had been on the record. The court held that there should be no such limitation of liability: "The Vice-Chancellor (Sir James Parker) said that there must be a settled rule of practice in these cases. It had always been his impression that, on a change of the next friend, the Court did not apportion the costs. If an infant came of age, and carried on a suit instituted in his name, he was responsible for the whole costs. If, on the death of a plaintiff, his executors revived the suit, they were responsible for all the costs of the suit. The same principle was applicable here." 25 While the reasoning in Bligh v Tredgett is not of itself particularly compelling, it is based upon the legal rationale behind the appointment of a tutor. That rationale is set out and discussed in NSW Insurance Ministerial Corp v Abualfoul (1999) FCA 433 (Sackville J) and Yakmor v Hamdoush (No 2). The primary bases for the appointment of a tutor are to ensure that there is a person available to bear the costs of a successful defendant and the protection of the person under the disability and the processes of the court. 26 Significantly, the rule of practice enunciated by Sir James Parker has continued to be applied until the present time. On the basis of that decision, prima facie, Ms Dodds should bear responsibility for any costs for which the lead plaintiff is liable. 27 In addition to those considerations, senior counsel for Byatt put the following submissions. Appointment as a tutor is a serious matter. While Mr Khamis may not have appreciated its significance, Ms Dodds as a representative of the NSW Trustee and Guardian certainly did. She would have been well aware of the serious responsibilities associated with such an appointment. She would also have been aware of the line of authority which Bligh v Tredgett exemplified. Despite that knowledge, there was no application to qualify or limit her responsibilities when she was appointed as tutor for the lead plaintiff on 30 July 2009. 28 In response senior counsel for Ms Dodds and the lead plaintiff submits that Bligh v Tredgett was decided at a time when courts did not have the same wide discretion as to costs as they have now. He referred to the Abualfoul decision and to that of Fernando (by his tutor, John Ley) v Minister for Immigration and Citizenship (No 9) [2009] FCA 833; (Siopis J) as demonstrating a greater flexibility in the approach by the courts to the payment of costs by tutors. He submits that Ms Dodds should only be responsible for those costs incurred after her appointment as tutor. 29 I am not sure that the Court has any wider power as to costs now than did Sir James Parker in 1852. Certainly nothing was put before me to support that submission. 30 More importantly, the results in Abualfoul and Fernando are readily explained on their facts. In Abualfoul the person under a disability reached his majority during the course of the proceedings. That was one of the examples given by Sir James Parker to support his conclusion in Bligh v Tredgett, i.e. an infant gaining his majority during the course of proceedings and continuing with those proceedings. In that circumstance, the infant bore responsibility for the whole of the costs of the proceedings. That is the result arrived at in Abualfoul. 31 The facts of Fernando are very unusual and largely explain why the Court directed that the tutor was not to be personally responsible for the costs of pursuing the litigation. In addition, the application was made by the tutor early in the proceedings. In this case the proceedings, apart from the costs argument, have been completed. 32 I have concluded that whether the principle set out in Bligh v Tredgett is a rule of practice or has become a rule of law, it has operated for over 150 years. There needs to be a powerful and compelling reason put forward for why the rule should be dispensed with in the circumstances of this case. No such reason has been put forward. That conclusion is also consistent with the reasoning of Giles JA in Yakmor v Hamdoush (No 2). 33 Accordingly, I accept the submission of Byatt that Ms Dodds as tutor for the lead plaintiff should personally be responsible for any costs liability of the lead plaintiff.

34 Byatt seeks a special costs order against the lead plaintiff and Messrs Tati, Turjman, Butler and McKenzie. Messrs Keddies, solicitors (hereafter referred to as "Keddies"), acted on behalf of those plaintiffs until this application. The special costs order sought is that any costs payable to Byatt by those plaintiffs after 7 November 2005 should be on an indemnity basis. 35 The basis for the submission is a Calderbank letter sent by Byatt to Keddies, dated 7 October 2005, in respect of the claims by those plaintiffs. At that time those plaintiffs had served on the then solicitors for Byatt an expert's report from Dr Cooke, an architect. In the Calderbank letter the solicitors for Byatt pointed out that Dr Cooke was an architect and as such was not qualified to express an opinion on engineering matters. The letter went on to challenge in detail the assumptions and conclusions in Dr Cooke's report. The letter concluded with the following offer: "If the plaintiffs in the above proceedings are prepared, within 28 days of today's date, to terminate the claims they make against the third defendant on the basis of a consent judgment in favour of the third defendant, and that judgment is in fact entered within a further seven days, then the third defendant will bear its own costs to date in the proceedings." 36 It was common ground that for Byatt to be successful in this submission, there must have been a genuine offer of compromise which it was unreasonable for the plaintiffs not to accept (Leichhardt Municipal Council v Green [2004] NSWCA 341 at [21-24] and [46], Commonwealth of Australia v Gretton [2008] NSWCA 117). 37 Byatt submits that the merits of the claim were capable of being assessed as of 7 October 2005. It submits that it was clear from the criticisms of Dr Cooke's report that the claim by those plaintiffs was based on false assumptions as to Mr Byatt's retainer. 38 Byatt submits that by 7 October 2005 it had already incurred at least $6,000 in costs so that there was a genuine element of compromise in the offer which it made. In that regard the Court was referred to the decision of Ward J in Brand v Monks [2010] NSWSC 313. In that case her Honour noted that the preparedness of the offeror to give up any chance of claiming its costs in a Calderbank situation, did represent a genuine element of compromise. 39 Other matters to which the Court's attention was drawn was that not only was no reply received to the Calderbank offer, but there was no attempt to traverse the issues raised therein. To the extent that Byatt's retainer was an issue, it submits that there was no clear statement in the instructions given to Dr Cooke or elsewhere, as to what those plaintiffs considered the Byatt retainer to have been. In all the circumstances Byatt submits that it was unreasonable for these plaintiffs not to accept the offer of 7 October 2005. 40 I have concluded it was not unreasonable for these plaintiffs to refuse the Calderbank offer of 7 October 2005. The letter was sent at a very early point in time when only part of the expert evidence eventually adduced was available. In particular, they did not have available to them the opinion of an engineer. Moreover, the assertions of fact in the letter of offer related to matters wholly within Byatt's knowledge and at that point in time, were not contained in an affidavit or statement and were otherwise unable to be verified. As became clear at the hearing, the instructions given to Byatt and the precise nature of its retainer was a controversial issue. 41 While there was an element of compromise in the offer, it was very modest. The offer was really calling upon these plaintiffs to capitulate at an early point in time before all of the evidence, both factual and expert, was available to them. These plaintiffs were not at that point in time in a position to make an informed decision about the matters raised in the Calderbank offer. 42 In those circumstances, I am not prepared to find that the non-acceptance of the Calderbank offer was unreasonable. 43 In its written submissions, Byatt seeks an order pursuant to s 348 of the Legal Profession Act 2004 (LPA) that in respect of those plaintiffs, Keddies indemnify it in respect of those costs payable to it which are not recovered. I am not sure whether this claim is still being pursued since Keddies were not represented at the costs hearing and no oral submissions were made by Byatt. For completeness, I propose to deal with the issue. 44 The basis for the application is a letter from Byatt's then solicitors to Keddies, dated 8 November 2005. That letter raised the same matters which had previously been raised in the Calderbank letter but also raised three additional matters:

A. That Mr Byatt was not able to see that the ceiling hangers were not fixed to the sides of the joists.

B. That Mr Byatt did not know if the lath and plaster ceiling had been retained.

C. That Mr Byatt was not engaged to investigate the matters that were the subject of Mr Harper's email of 11 June 2002 since it had no knowledge of that email.

Byatt submits that the significance of those three matters was that the only evidence on those matters would be that of Mr Byatt. 45 Byatt submits that contrary to s 345 LPA Keddies could not reasonably have believed on the basis of provable facts and a reasonably arguable view of the law, that the claim by those plaintiffs against Byatt had reasonable prospects of success. Byatt relies upon cases such as Lemoto v Able Technical Pty Limited [2005] NSWCA 153, 63 NSWLR 300 and Firth v Latham & Ors [2007] NSWCA 40 to establish that proposition. 46 As counsel for Byatt has pointed out in written submissions (quoting from Firth v Latham at [68]) "the conduct of litigation is a dynamic process". The pendulum can move from time to time in favour of different parties. While these plaintiffs may have had some difficulty in establishing their case against Byatt had the matter gone to court on the evidence available in October 2005, that was not so in February 2010. By that time the evidence of the engineers, Messrs Fisher and Barry, was available and that evidence was significantly stronger than that of Dr Cooke. 47 While it is true that Mr Byatt was the only person who was able to give evidence as to what he saw from the penetrations into ceilings and floors, this did not prevent him being vigorously cross-examined in the trial on those issues by reference to his notes and his report. As with Byatt's Calderbank offer, the question of Byatt's retainer was a contentious one and had Mr Creighton been believed, the outcome of the trial would have been different. 48 I have not been persuaded that there has been a breach of s 345 LPA so as to enable a claim for costs to be made personally against Keddies pursuant to s348 LPA. On the contrary, I am satisfied that when the trial commenced those solicitors reasonably believed on the basis of provable facts and a reasonably arguable view of the law that the claim by the plaintiffs whom they represented had reasonable prospects of success. Accordingly, Byatt's claim against Keddies fails. 49 It follows from the above analysis that Byatt should obtain its costs against these plaintiffs, but not on any special basis.

Submissions of Stonewall and Presdate 50 Like Byatt, Stonewall and Presdate submit that the plaintiffs should be jointly and severally responsible for the costs of the proceedings. I have already indicated in relation to Byatt my reasons for rejecting that submission. 51 Presdate seeks a special order for costs against all the plaintiffs from 13 October 2009. The basis for this submission is that a single firm of solicitors commenced to represent both Stonewall and Presdate on that date. The pleadings were thereafter amended so that Stonewall admitted the occupation and conduct of a hotel on the site, whereas Presdate's involvement was restricted to ownership. Presdate submits that this change of position should have made it clear to the plaintiffs that Presdate had no involvement in the running of the hotel and consequently the plaintiffs should have discontinued against Presdate from that point in time. 52 Presdate also relies upon the comments by senior counsel for the lead plaintiff during his opening when he said: "COUNSEL: Yes your Honour. Presdate, as I say, is the owner of the building. They are now represented by the same solicitor following the withdrawal of the cross-claim and we don't have much to say about them and I don't think we can on the present evidence propose a case against them … COUNSEL: Yes, but we don't know exactly what might come out of the factual dispute between the other defendants." (T.20.22) 53 Presdate submits that when making submissions as to liability, senior counsel for the lead plaintiff made no submissions in relation to the liability of Presdate. 54 I have found this issue difficult to resolve. Until the withdrawal of the cross-claim and the amendment of Stonewall's defence on 13 October 2009 Stonewall, both in correspondence and in its pleadings, had not admitted that it occupied and conducted a hotel business on the site. Importantly, in its cross-claim against Presdate Stonewall had positively asserted that Presdate was operating the hotel. 55 The dilemma faced by the plaintiffs is clearly illustrated in the correspondence annexed to the affidavit of Mr McHardy, the solicitor for Alanna Calluaud. In that correspondence as early as May 2006 Mr McHardy advised the solicitors for Presdate that his client was prepared to release their client from the proceedings provided Stonewall admitted that it was the entity which was conducting the hotel business. Stonewall was not prepared to make that admission until its change of position in October 2009. 56 After the change of position by Stonewall in October 2009, the plaintiffs had a dilemma. For over four years Stonewall had been asserting that Presdate was an active participant in the running of the hotel and despite requests, had refused to admit that it played any part in the running of the hotel. Was this change of position a tactical move now that both Presdate and Stonewall were represented by the same solicitors, or did the change in pleadings represent the true state of affairs? 57 I can well understand why the solicitors for the plaintiffs would be reluctant to abandon the claim against Presdate unless and until they were provided with clear evidence that Presdate played no active part in the conduct of the hotel. 58 It is significant that after 13 October 2009 there was no attempt by Presdate by way of correspondence with any of the plaintiffs to persuade them to discontinue against it, nor was there any attempt to place evidence before the plaintiffs to indicate that Presdate played no active part in the events which gave rise to the claim. 59 There is another consideration. Following the discontinuance of Stonewall's cross-claim against Presdate in November 2009, Presdate appears to have played little if any active part in the conduct of the proceedings. All of the evidence subsequently adduced was directed towards Stonewall and Byatt. Accordingly, in view of the common representation on behalf of Presdate and Stonewall in the trial, even if Presdate obtains a special order for its costs against the plaintiffs, those costs are likely to be minimal. 60 Those considerations have to be balanced against the frank admission by senior counsel at the commencement of the trial that, at that point in time, he had no evidence against Presdate. Presdate was left as a defendant in the proceedings in the hope that some evidence might emerge which would implicate it. 61 I have already referred to sections 345 and 348 LPA in the context of Byatt's claim against Keddies. In the course of that analysis I referred to such decisions as Lemoto v Able Technical Pty Limited and Firth v Latham & Ors. To those decisions can be added European Hire Cars Pty Limited v Beilby Poulden Costello [2009] NSWSC 526 (Bryson AJ). 62 Those cases make it clear that continuing proceedings against a party when there is no evidence to establish liability against that party in the hope that something might turn up in the course of the trial, is not acceptable in the conduct of present day litigation. Those cases and the legislative provisions upon which they are based, make it clear that value judgments have to be made by the profession so that court time and legal costs are not wasted. Moreover, there was sufficient time between October 2009 and the commencement of the trial in February 2010 for inquiries to be made to clarify the position of Presdate. None were made by any of the plaintiffs. 63 I have concluded that Presdate is entitled to a special costs order, such costs order to take effect from 1 November 2009. For the guidance of any costs assessor who may be required to make an assessment in this matter, I once again stress my perception as trial judge that in view of the joint representation on behalf of Presdate and Stonewall, the costs incurred by Presdate after 1 November 2009 were minimal. At most they would have involved the amendment of some pleadings 64 Stonewall and Presdate submit that because Ms Dodds became tutor for the lead plaintiff on 30 July 2009 she should be responsible for all costs orders made against him. I have already indicated why I accept that submission. 65 Stonewall seeks a special costs order against Daryl Shute. It does so on the basis of offers which it made to Mr Shute to settle his claim on 4 and 9 November 2005. The offers made by Stonewall were made before the commencement of proceedings by Mr Shute in the amount of $17,500, inclusive of costs, and then $20,000 inclusive of costs. Both those offers were said to be open for seven days from the date when they were made, i.e. 4 and 9 November 2005. 66 The solicitors for Mr Shute rejected those offers and by facsimile dated 10 November 2005 made a final offer of $55,000 inclusive of costs. That offer was not accepted by Stonewall and on 21 November 2005 Mr Shute commenced proceedings in the District Court against Stonewall. 67 I do not regard that exchange of correspondence as entitling Stonewall to a special costs order against Mr Shute. The offers were not made in the form of Calderbank offers. Moreover, at the time when these offers were made, proceedings had not even been commenced so that it was not unreasonable for Mr Shute's legal advisers to refuse those offers. The evidentiary position of Mr Shute and that of the defendants was not known at the time. 68 Subject to the qualifications I have expressed above, Stonewall and Presdate are, of course, entitled to their costs on a party/party basis against all of the plaintiffs.

Submissions by ATPC 69 As well as a general costs order on a party/party basis against the plaintiffs, ATPC seeks an order that Stonewall pay its costs. It does so on the basis that it was Stonewall's agent and as such has a right of indemnity from Stonewall to the extent that it is unable to recoup its costs against the plaintiffs. ATPC relies upon the right of indemnity which agents have against their principals where they incur losses when performing their agency agreement. ATPC relies upon the following cases: Thacker v Hardy (1878) 4 QBD 685, Williams v Lister & CO (1913) 109 LT 699 and Re: Famatina Development Corporation Limited (1914) 2 Ch 271. 70 I do not accept that submission. The principle identified by ATPC is undoubtedly correct. However, the cases upon which it relies all involve a formal agency agreement where for consideration functions were performed by agents on behalf of their principals. That was not the situation here. 71 Mr Creighton was a director of Stonewall and was also the sole director and shareholder in ATPC. As indicated in the principal judgment, Mr Creighton on his own initiative decided to send his written communications with the South Sydney Council on ATPC letterhead. He did so because he thought that using the letterhead of ATPC would have more impact with the Council than a letter from the hotel itself. 72 As I set out in para [17] of the principal judgment: "17 Mr Creighton said that in his dealings with the council in respect of the renewal of the POPE authorisation he was acting solely in his capacity as a director of Stonewall, not as a director of ATPC. He said that ATPC did not provide a letter of retainer to Stonewall, was not given a brief on the matter and was not paid any fees." 73 I appreciate that in para [143] of the principal judgment, I stated that ATPC acted as an agent of Stonewall. That was a somewhat loose characterisation intended to make it clear that at no time was ATPC acting on its own behalf as a principal. The correct characterisation of the position of ATPC is that set out in the factual findings earlier in that paragraph, i.e. that Mr Creighton utilised the letterhead of ATPC as a matter of convenience, not because there was any formal relationship of agency between Stonewall and ATPC. There is no factual basis for the indemnity which ATPC seeks. 74 There is another difficulty with the submission by ATPC. It is not an argument which should take place in a costs application of this kind. What ATPC should have done was to argue this aspect of its cross-claim in the principal proceedings. In other words, this claim by ATPC is not a consequential claim which follows upon findings in the principal proceedings. It is of itself a substantive claim and should have been argued in the principal proceedings. The cases to which ATPC has referred make this clear. Nevertheless, for the reasons I have indicated, if it had been raised in the principal proceedings it would have failed. 75 Accordingly, I reject ATPC's claim to be indemnified by Stonewall for any shortfall in its recovery of costs. With that qualification, however, ATPC is entitled to its costs on a party/party basis against the plaintiffs.

Claim for costs by Allana Calluaud 76 Although Ms Calluaud was not represented when the matter came before the Court for oral submissions on 26 November 2010, the solicitors who previously represented her had filed with the Court submissions and an affidavit dated 14 May 2010. For completeness, I propose to deal with those submissions. 77 Ms Calluaud submits that she should be indemnified by Stonewall in respect of any order that she pay the costs of Presdate. The basis for that submission is set out in the correspondence annexed to the affidavit of Mr McHardy of 14 May 2010. The correspondence took place in 2006 and 2007 and was addressed to Stonewall and Presdate. It sought clarification from Stonewall of its allegation that Presdate was running the hotel and its non-admission that it ran the hotel at the relevant time. The correspondence advised Stonewall that should proper particulars not be provided, the correspondence would be relied upon by Ms Calluaud if the question of costs arose. I have already indicated that Stonewall did not change its position until it amended its pleadings in October 2009. 78 Ms Calluaud characterises her application as being in the nature of a Bullock order. The principles applicable to a Bullock order only apply where a plaintiff is successful against a defendant, but unsuccessful against one or more other defendants. In this case Ms Calluaud was an unsuccessful plaintiff. Accordingly, the principles relating to Bullock orders do not apply to assist her. 79 If her claim has any basis, it must lie in the maintenance by Stonewall of a position which it knew was factually and legally untenable until October 2009. Such an approach by Stonewall is quite contrary to the modern "cards on the table" approach to litigation and should not be encouraged. The vices of such an approach were recently restated in Hawkesbury District Health Services & Anor v Patricia Chaker [2010] NSWCA 320 at [2] and [170-179]. 80 Ms Calluaud's submission, however, is weakened by the fact that once Stonewall did change its position in October 2009 she did not discontinue proceedings against Presdate, but allowed the matter to proceed. 81 It is appropriate that the Court express its disapproval of the approach adopted by Stonewall in response to the reasonable request received from the solicitors for Ms Calluaud by their letter of 31 May 2006 (exhibit B to the affidavit of Mr McHardy). Accordingly, I propose to order that Stonewall indemnify Ms Calluaud in respect of her obligation to pay the costs incurred by Presdate between 31 May 2006 and 1 November 2009 in defending the claim brought by her against it.

Conclusion 82 In accordance with the above reasons, I make the following orders:

(i) The plaintiff is to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff is to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff is to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff is to pay ATPC's costs of the proceedings on a party/party basis.

(vi) Imelda Margaret Dodds in her capacity as tutor of the plaintiff is to be personally liable to Stonewall, Presdate, Byatt and ATPC for the costs payable by the plaintiff pursuant to orders (i) -(v) above.

(vii) For the avoidance of any doubt, the costs of the proceedings payable by this plaintiff are to include the costs of the hearing which took place between 1 February and 18 February 2010.

(i) The plaintiff to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff to pay ATPC's costs of the proceedings on a party/party basis.

(vi) For the avoidance of doubt, the plaintiff is only responsible for those costs incurred in the prosecution of his claim and is not responsible for any costs associated with the prosecution by the lead plaintiff, Thakee Al Mousawy, of his claim.

(i) The plaintiff to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff pay Presdate's costs on any indemnity basis from 1 November 2009.

(iv) The plaintiff pay Byatt's costs of the proceedings on a party/party basis.

(v) the plaintiff pay ATPC's costs on a party/party basis.

(vi) For the avoidance of doubt, the plaintiff is only responsible for those costs incurred in the prosecution of his claim and is not to be responsible for any costs associated with the prosecution by the lead plaintiff, Thakee Al Mousawy, of his claim.

(i) The plaintiff to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff is to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff is to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff is to pay ATPC's costs of the proceedings on a party/party basis.

(vi) For the avoidance of doubt, the plaintiff is only responsible for those costs incurred in the prosecution of his claim and is not responsible for costs incurred by the lead plaintiff, Thakee Al Mousawy, in prosecuting his claim.

(i) The plaintiff is to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff is to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff is to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff is to pay ATPC's costs of the proceedings on a party/party basis.

(vi) For the avoidance of doubt, the plaintiff is only responsible only for those costs incurred in the prosecution of his claim and is not responsible for costs incurred by the lead plaintiff, Thakee Al Mousawy, in prosecuting his claim.

(i) The plaintiff is to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff is to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff is to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff is to pay ATPC's costs of the proceedings on a party/party basis.

(vi) For the avoidance of doubt, the plaintiff is only responsible for costs incurred in the prosecution of his claim and is not responsible for costs incurred by the lead plaintiff, Thakee Al Mousawy, in prosecuting his claim.

(i) The plaintiff is to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff is to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff is to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff is to pay ATPC's costs of the proceedings on a party/party basis.

(vi) For the avoidance of doubt, the plaintiff is only responsible for costs incurred in the prosecution of his claim and is not responsible for costs incurred by the lead plaintiff, Thakee Al Mousawy, in prosecuting his claim.

2006/267029 - Alanna Calluaud (i) The plaintiff is to pay Stonewall's costs of the proceedings on a party/party basis.

(ii) The plaintiff is to pay Presdate's costs of the proceedings on a party/party basis up to and including 31 October 2009.

(iii) The plaintiff is to pay Presdate's costs of the proceedings on an indemnity basis from 1 November 2009.

(iv) The plaintiff is to pay Byatt's costs of the proceedings on a party/party basis.

(v) The plaintiff is to pay ATPC's costs of the proceedings on a party/party basis.

(vi) Stonewall is to indemnify the plaintiff in respect of her liability to pay the costs incurred by Presdate between 31 May 2006 and 31 October 2009.

(vii) For the avoidance of doubt, the plaintiff is only responsible for costs incurred in the prosecution of her claim and is not responsible for any costs incurred by the lead plaintiff, Thakee Al Mousawy, in prosecuting his claim.

(i) In the cross-claim by Byatt against Stonewall and ATPC, Byatt is to pay the costs of Stonewall and ATPC.

(ii) In the cross-claim by Stonewall against Byatt, Stonewall is to pay Byatt's costs.

(iii) In the cross-claim by ATPC against Byatt and Stonewall, ATPC is to pay the costs of Byatt and Stonewall.

Costs of application for costs 83 This has been a difficult matter to resolve. Some of the parties have partially succeeded in their applications, some have succeeded completely and others have failed completely. 84 By way of illustration, the plaintiff and Ms Dodds have failed in resisting the claim by Byatt, Stonewall and Presdate that the tutor is responsible for the whole of the lead plaintiff's costs. They succeeded, however, in rejecting the claim by Byatt for indemnity costs. The non-lead plaintiffs Butler, McKenzie, Tati and Turjman have succeeded in their opposition to Byatt's claim for indemnity costs against them. Byatt has succeeded in its claim against the tutor for the lead plaintiff, but has failed in its claim for indemnity costs. Stonewall and Presdate have succeeded in their claim against the tutor for the lead plaintiff but have failed in their claim that the non-lead plaintiffs should be jointly and severally responsible with the lead plaintiff for any costs orders made against them. ATPC has failed in its claim for indemnity costs against Stonewall. 85 It seems to me that the following order for costs will best meet the results which have been achieved by the various parties and do justice between them. It also has regard to the amount of time spent arguing the various issues.

(i) Byatt is to pay the costs of the non-lead plaintiffs Messrs Butler, McKenzie, Tati and Turjman.

(ii) The plaintiff and his tutor Ms Dodds are to pay 50 percent of the costs of Byatt, Stonewall and Presdate. Otherwise Byatt, Stonewall and Presdate shall be responsible for the balance of their costs.

(iii) ATPC is to pay its own costs. **********

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