Costs order - Plaintiff's claim against second defendant failed - Plaintiff largely successful on all claims litigated - First defendant bankrupt after judgment delivery - Defendants jointly represented at trial - Appropriate costs orders - Turns on own facts

District Court of Western Australia Act 1969 (WA), s 64, s 79

No order as to costs between the plaintiff and second defendant

Amaca Pty Ltd (Formerly James Hardie & Co Pty Ltd) v Moss [2007] WASCA 162 (S)

Chittleborough v Troy Group Pty Ltd [No 2] [2025] WASCA 4

Currabubula Holdings Pty Ltd v State Bank of New South Wales Ltd [2000] NSWSC 232

Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567

Frigger v Professional Services of Australia Pty Ltd [2011] WASCA 103 (S)

Korner v H Korner & Co Ltd [1951] Ch 10

Ng v Sevastos by His Guardian Ad Litem Vanessa Vershaw [2024] WADC 75

Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388

1. These reasons deal with competing costs applications following a trial in which the plaintiff, Mr Ng, succeeded against the first defendant, Peter, but failed against the second defendant, Steven.[1] On 4 September 2024 I published reasons for judgment.[2] Mr Ng succeeded against Peter for the full amount of his claim of $160,000 but failed in his claim against Steven. During the trial (and the proceedings from their inception) Peter and Steven were represented by the same solicitors.
2. Peter was made a bankrupt shortly after judgment was entered against him. Mr Ng did not seek a costs order against Peter's guardian ad litem. As no costs application was made against Ms Vershaw, she, as Peter's guardian ad litem did not participate in the argument as to costs before me.
3. Mr Ng and Steven made competing costs applications each contending the other should pay the costs of the proceedings in whole or in part.
4. For the reasons which follow, I have determined that the appropriate exercise of my discretion as to costs is to make no order as to costs.

1. Both Mr Ng and Steven made competing costs applications, each contending the other should pay the costs of the proceedings or, part of the costs incurred by the other.
2. Mr Ng sought an order that Steven pay his costs of the action on an indemnity basis, alternatively on a party/party basis to be taxed if not agreed. During the course of argument, Mr Ng made an alternative submission that if I did not exercise my discretion to make a costs order against Steven, an appropriate order was that there should be no order as to costs as between Mr Ng and Steven. As this alternative submission was made during argument, Steven sought leave to put on supplementary written submissions which he did on 13 February 2025.
3. Steven sought an order that Mr Ng pay 50% of his costs of the action, including certain reserved costs.[3]

1. Mr Ng submits that Steven's conduct invited the litigation. In support of this submission Mr Ng's counsel made reference to:
   1. A letter of 4 December 2020 from Peter and Steven's lawyers which denied the existence of any agreement for Mr Ng to advance money in return for a subdivided lot, asserted that Steven paid a contractor for works to Mr Ng's property and suggested a counterclaim of over $1,000,000 (which obviously never ultimately eventuated).
   2. The fact that Steven had personal knowledge of the payments that Mr Ng had made, his denial of those payments and Steven's unsatisfactory evidence about the payments that were made.
2. Mr Ng also relies upon three without prejudice letters of compromise, or Calderbank offers, made during the course of the proceedings on:

1. The letter of 27 May 2021 offered to settle the proceedings on the basis that the defendants pay Mr Ng $160,000 plus party/party legal costs.
2. The letter of 2 June 2022 offered to settle the proceedings on the basis that the defendants pay Mr Ng $160,000 within 21 days, such sum being inclusive of Mr Ng's costs and subject to the parties executing a deed of settlement.
3. The letter of 13 October 2023 offered to settle the proceedings on the basis that the defendants pay Mr Ng $130,000 plus costs to be taxed if not agreed, with the parties to sign a deed of settlement and payment to be made within 7 days of the deed.
4. Each letter traverses the facts in dispute and raises various contentions based on the facts set out in each letter.

1. Steven's primary submission on costs was that Mr Ng's claim against him failed, Mr Ng did not obtain any relief against Steven, and accordingly, he was successful and should recover his costs in accordance with the general costs rule that costs follow the event.
2. Steven made an alternative submission that Mr Ng should pay half of his costs. This submission was based on a principle derived from cases that where a claim is made against multiple defendants who have the same legal representatives, and that claim is successful against one defendant but unsuccessful against one or more other defendants, a 'rule of thumb' may be adopted to award the successful defendant a percentage of the shared costs of all of the commonly represented defendants' costs (plus any costs specifically related to the claim against the particular successful defendant). The objective of the rule is to achieve substantial justice in the awarding of costs as between a partially successful plaintiff and the various successful and unsuccessful defendants.[4] I explain the 'rule of thumb' principle in further detail below when considering the issue of who was in substance the successful party.
3. Steven opposes any order whereby he pays any of Mr Ng's costs. He denies any misconduct and submits that he was entitled to dispute the plaintiff's claims.
4. Steven also refers to four without prejudice letters of compromise, or Calderbank offers, made by him and Peter during the course of the proceedings on:

(a) 25 May 2021 in which the defendants jointly agreed to pay Mr Ng the sum of $10,000 on a without admission basis;

(b) 3 September 2021 in which the defendants jointly agreed to pay Mr Ng the sum of $50,000;

(c) 29 June 2022 in which the defendants jointly agreed to pay Mr Ng the sum of $90,000; and

(d) 23 June 2023 in which the defendants jointly agreed to pay Mr Ng the sum of $80,000.

1. What may be noted from these offers is that not only did the defendants have the same legal representatives, they also made joint offers of settlement.

1. The general principles with respect to the award of costs at the conclusion of litigation are well known. For the purposes of the arguments before me I will summarise those general principles in the next subparagraphs:
   1. By O 66 r 1(1) of the Rules of the Supreme Court 1971 (WA)[5] (RSC) the court operates from the starting position that the successful party should recover their costs.
   2. In determining who is the successful party, the question to be answered is who was successful in the 'underlying, real contest' between the parties.[6]
   3. The fundamental principle guiding cost decisions is fairness and justice between parties based on each case's specific circumstances. Generally, the court operates from the starting position that the successful party should recover their costs.[7]
   4. The exercise of the court's discretion to make a costs order to reflect the limited success of a party should be approached broadly and as a matter of impression, rather than as an exercise in mathematical precision.[8]
   5. Where a party unreasonably rejects a Calderbank offer,[9] the court may award indemnity costs against that party, or order that party who is seemingly 'successful' to pay the notionally unsuccessful party's costs.

1. The Calderbank offers do not assist me in determining a final costs order. With respect to the various Calderbank offers the following observations may be made:
   1. Each of the defendants' offers were joint offers, but the amounts the defendants offered to pay Mr Ng were less than the judgment amount entered against Peter. I do not consider that Mr Ng unreasonably rejected any of those offers.
   2. With respect to the offers made by Mr Ng to the defendants on 27 May 2021 and 2 June 2022, each of those offers required the defendants jointly to pay him the full amount of his claim together with costs. To that extent, Mr Ng offered no real compromise of his claim.
   3. Mr Ng's final offer to the defendants of 13 October 2023 offered to settle for a lower amount of $130,000 but, again, required a deed and joint and several obligation from both defendants to pay him the settlement amount.
   4. Ultimately, as the result in the proceeding discloses, Mr Ng recovered a judgment of $160,000, a sum far greater than any amount offered by the defendants, but that judgment was entered only against Peter, resulting in a less advantageous outcome than contained in Mr Ng's offers to the defendants. Namely, by his offers Mr Ng required a joint payment obligation from both defendants which was an outcome he did not achieve at trial.
2. I cannot infer from the defendants' joint rejection of Mr Ng's Calderbank offers that the decision to reject those offers was made solely (or even predominantly) by Steven. I similarly cannot find that Steven was the cause of the litigation in the manner submitted by Mr Ng which I have referred to at [8] above.

1. I now turn to considering the applicability of the 'rule of thumb' principle relied upon by Steven and its application to this case.
2. The 'rule of thumb' principle, in my opinion, can be summarised in the following way with respect to the issues that arise in this case:
   1. When defendants share legal representation, they share the costs of their defence proportionately.
   2. A successful defendant can only recover their fair share of the joint defence costs from the plaintiff plus any costs specific to their individual defence. In a similar sense, a partially successful plaintiff can only recover from each unsuccessful defendant their proportion of the shared costs, plus any costs specifically related to the case against the particular defendant.
   3. The rule prevents either side from being unfairly enriched or burdened and ensures that the costs are distributed fairly when success is mixed, and representation is shared.
   4. The rule does not apply when these conditions are not met or when applying the rule would fail to achieve a fair outcome.
3. Mr Ng was predominately the successful party at trial. In saying this, obviously Steven was successful insofar as Mr Ng's claim failed against him. The issue of success is more nuanced however in the context of the joint representation of the defendants by the same firm of solicitors, the fact that the defendants raised a joint defence which failed on all issues (save that Steven was not a contracting party with Mr Ng) and the fact that the claim against Peter succeeded in full.

What were the principal issues determined at trial and who was successful in the litigation of those issues?

1. The contested issues of fact which had to be determined at trial were broadly:
   1. Whether an agreement was reached between Mr Ng, Peter and/or Steven on 25 March 2019 for the renovation and subdivision of the West Perth property and, if so, who were the parties to the agreement and what were the terms of that agreement.
   2. Did Mr Ng make any payments to Peter and/or Steven or at their direction to the plasterer building contractor, Mr Mahdi and, if so, how much did he pay?
   3. The extent of the payments made by Mr Ng and whether those payments were for the development of the West Perth property or for work carried out at Mr Ng's East Victoria Park unit.
2. Mr Ng's case was that he made an oral agreement on 25 March 2019 during a conversation between himself, Peter and Steven at Steven's home. Steven's evidence at trial was that there was no conversation on 25 March 2019 whatsoever. I found an agreement broadly in the terms Mr Ng alleged, save that the parties were Mr Ng and Peter and not Steven.[10]
3. Although I did not ultimately find that Steven was a party to the agreement with Mr Ng, I did not accept Steven's evidence that no meeting or conversation occurred on 25 March 2019.[11] Further, I preferred Mr Ng's evidence to Steven's evidence in the important aspects in which they differed in the case.[12]
4. Much of the evidence at trial related to allegations, in effect, based on Steven's oral evidence that could not be substantiated. Primarily, this involved a plea by the defendants in their defence that any payments Mr Ng made to Mr Mahdi were for building works at Mr Ng's East Victoria Park unit and not for the West Perth property. As I noted in Reasons [52], the extent (and cost) of the renovations to Mr Ng's East Victoria Park unit, and Steven's involvement in the work, was the subject of extensive evidence and occupied much of the trial time. I accepted Mr Ng's evidence on all of these issues at trial.

The relationship between the defendants and an example of a contested issue decided in the plaintiff's favour

1. Steven is Peter's nephew. There was a close relationship between Steven and Peter, both personally and financially. Steven was Peter's agent for the building works at the West Perth property and the property development generally. Prior to trial, Peter transferred the legal ownership of the West Perth property to a company associated with Steven. Peter and Steven were represented by the same solicitors from the time when Mr Ng commenced the claim against them. They filed a joint defence. Steven was the primary witness relied upon by both defendants.
2. One of the payments in issue in the proceedings was a payment of $30,000 that Mr Ng made to Steven on 16 July 2019. Peter and Steven denied Mr Ng made this payment. In my Reasons [192] - [194], I set out my reasons for finding that Mr Ng made the payment of $30,000 to Steven and how the payment should be treated as a payment for Peter's benefit.
3. The close relationship between Peter and Steven which I have explained, together with their joint position of denying this $30,000 payment, lead me to conclude that it was a reasonable position for Mr Ng to join both of them as defendants in circumstances where Mr Ng was seeking to recover the liquidated sum of $160,000 in payments that he had made to Mr Mahdi and Steven.
4. Mr Ng was entirely successful in his claim against Peter, although he will not enjoy the fruits of his judgment owing to Peter's bankruptcy. None of the pleaded defences raised by the defendants succeeded. The evidence relating to the issues raised by the defendants, occupied virtually all the time taken at trial.

1. I consider this is an appropriate case to depart from the 'rule of thumb' principle I have outlined which, if applied, would permit Steven to recover from Mr Ng half of the joint costs incurred by the defendants. For the reasons which follow, that would not be a just result and the circumstances of this case do not meet the general conditions for application of the 'rule of thumb' principle.
2. First, Mr Ng enjoyed a significant measure of success on the issues litigated in the proceedings. He succeeded in his claim against Peter for judgment for the sum of $160,000 that he advanced. Although I did not find that Steven was a party to the agreement as Mr Ng alleged, that conclusion was not reached by accepting Steven's evidence. This was the only issue where Mr Ng did not succeed. The time spent at trial on determining the identity of the contracting parties was minimal.
3. Secondly, Peter and Steven had closely aligned interests, shared legal representation, and approached the matter collectively. They jointly advanced a defence which raised many factual issues which consumed most of the trial time.
4. What constitutes success in proceedings is to be determined by the reality of the circumstances involved in the case. An order for costs in Steven's favour would inappropriately compensate him for joint costs incurred on issues where the defendants entirely failed.
5. I consider in the way in which this litigation was conducted, to order Mr Ng to pay any of the costs of the jointly represented defendants, would not lead to a just outcome. None of the factual issues which were litigated at trial were agreed by the defendants.
6. Although many guiding rules of principle and practice exist with respect to the award of costs, the discretion remains unfettered and each case must be decided on its own facts.[13] In this case, I consider the appropriate costs order, is that there be no order as to costs between Mr Ng and Steven. I do not consider it is appropriate to make a costs order in favour of Mr Ng against Steven. Mr Ng's claim against Steven failed.
7. For all these reasons, the appropriate final costs order is that there be no order as to costs between Mr Ng and Steven.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

[1] As with my first instance in this decision, I will use the defence first names. In doing so I do not intend any disrespect.

[2] Ng v Sevastos by His Guardian Ad Litem Vanessa Vershaw [2024] WADC 75 (Reasons).

[3] Steven also sought an order that the claim against him be dismissed. A review of the transcript of the judgment delivery records that there was a proposed order to this effect discussed but the order was not made at judgment delivery. It is appropriate that a formal order be made that the plaintiff's claim against Steven be dismissed.

[4] See, for example, Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567, 569 in which case the rule originated; see also Korner v H Korner & Co Ltd [1951] Ch 10. A more modern explanation of the rule is derived in the case of Currabubula Holdings Pty Ltd v State Bank of New South Wales Ltd [2000] NSWSC 232 [93] - [105].

[5] Which applies by virtue of s 64(1) and s 64(3) of the District Court of Western Australia Act 1969 (WA).

[6] See, for example, Frigger v Professional Services of Australia Pty Ltd [2011] WASCA 103 (S) [12].

[7] Order 66 r 1 RSC; Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [49].

[8] See, for example Amaca Pty Ltd (Formerly James Hardie & Co Pty Ltd) v Moss [2007] WASCA 162 (S) [6].

[9] Namely an offer to settle the proceedings on specific terms with a warning that if the other party rejects the offer and does not achieve a better result at trial, the letter and the offer contained within it will be relied upon in costs submissions to the court on who should pay the costs of the proceedings.

[13] Chittleborough v Troy Group Pty Ltd [No 2] [2025] WASCA 4 [74].