Aristotite, Rosetta v Gladstone Park Shopping Centre Pty Ltd & Ors [1984] FCA 175

CENTRE PTY. LTD. and HERSP uel DEVZLOPALNTS CORPORATION PCY. LID.

iJ er ¥ & ' JN THE FEDERAL COURT OF AUSTRALIA VICTORTA DISTRICT REGISTRY . GENERAL DIVISION BETWEEN: i é : AND: ' AND: AND: H i H ' AND: a s: . ' ;
{ AND: | } ) j } CORAM: Mr. Justice JenkinsonPLACE: Melbourne DATE: 29 June, 1984 ORDERS

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Upon the respondent Gladstone Park Shopping Centre Pty. Ltd. undertaking by its counsel that it will not prosecute the action commenced by it against the applicant by summons numbered 935844 of 1979 and issued out of the County Court. of Victoria at Melbourne on 20 December 1979f The Court Orders And Adjudyges That the respondent Gladstone Park Shopping Centre Pty. Ltd. recover against the applicant

]. There be judgment for the respondents on the applicant's claims.

The cross-claim by the respondents Gladstone Park Shopping Centre Pty. Ltd. and ilersfield Developments Corroration [ty. Ltd. be

The respondents' costs of the proceediny arising from the application be paid by the applicant.

The costs of the respondent Gladstone Park Shopping Centre Pty. Ltd. of the proceeding arising from its cross-claim ayainst the applicant be paid by the applicant.

The costs of the respondents Gladstone Park Shopping Centre Pty. Ltd. and dersfield Developments Corporation Pty. Ltd. of the proceeding arising from their cross-claim against the cross-respondents Ross Willis and Ross Wills & Associates Pty. Ltd. be paid by the applicant.

The costs of the cross-respondents Ross Wills and Ross Wills & Associates Pty. Ltd. of the proceeding arising from the cross-claim against them be paid by the cross-claimants Gladstone Park Shopping Centre Pty. Ltd. and Hersfield Developments Corporation Pty. Ltd.

The applicant pay to the cross-claimants Gladstone Park Shopping Centre Pty. Ltd. and Hersfield Developments Corporation Pty. ILtd.

the amount of the costs of the cross~respondents Ross Wills and Ross Wills & Associates Pty. Ltd. hereinbefore ordered to be paid to those cross-respondents.

Proceedings under the foregoiny orders be stayed for 21 days.

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IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION

CENTRE PTY. LTD., HERSPFICLD DEVELOPMENTS CORPORATION PTY. LTD. and GEORGE HERSCU

CENTRE PTY. LTD. Cross Claimant ROSETTA ARISTOTITE Cross Respondent

Motions for costs of a proceeding and of cross-claims.

The applicant claimed damages against three respondents upon causes of action afforded by ss. 52(1), 53A, 75B and 82{1) of the Trade Practices Act 1974. The allegations of misleading conduct inducing her to lease a shop in a shopping centre being developed by the respondents, upon which her claims were founded, implicated the third respondent, a director of the two corporate respondents, other unindentified agents of the corporate respondents and the cross-respondent Ross Willis, who was managing director of the other cross~respondent. Both those cross-respvondents were leasing agents of the corporate respondents. It was to the allegations against Mr. Wills that most of the evidence was directed at the hearing. Her claims

having been rejected by me, there is to be judgment for the respondents on her claims and judgment for the first respondent on its cross-claim against her for rent and damages for breach of contract. The other cross-claim, by the two corporate respondents to het claims, was for indemnity or contribution by the cross-respondents Ross Wills and Ross Wills & Associates Pty. Ltd.. They were acting as agents of the corporate respondents in their dealings with the applicant and it was alleged by that cross-claim that, if either agent had ~ as the applicant alleged they had - in those dealings been party to a contravention of s.52(1) or of s.53A, that had constituted a breach of the agent's

duty to the principals which attracted liability to indemnify the

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principals in the amount to be recovered by the applicant against those principals. No contravention of either section having been found by me, the agents seek an order that the cross-claimants pay their costs of the cross-claim against them. Those cross~claimants submit that no such an order should be made, but

that the applicant should be ordered to pay the agents' costs.

Counsel for the applicant has submitted that no order can, or alternatively that no order should, be made for payinent of the agents' costs by the applicant, because this court had, as it was submitted, no Jurisdiction to hear the cross-claim against them. He distinguished this cross-claim for indemnity from the claims for indemnity which the High Court held, in Fencott v. Muller (1983) 46 A.L.R. 41, to be within the jurisdiction of this

court, on the ground that in Fencott v. Muller the parties between

whom the claims for indemnity were being litigated were all parties to other claims (arising out of the same series of transactions as gave rise to the claims for indemnity) which attracted the exclusive jurisdiction of this court conferred by s.86 of the Trade Practices Act 1974. Ross Wills & Associates Pty. Ltd. and its managing director were not parties to the proceeding brought by the applicant, which alone among the matters before me attracted that exclusive jurisdiction, according to the

Notwithstanding that distinction, the question whether

Mr. Wills engaged in misleading conduct in his dealings with the

applicant was a substantial part of the matter between applicant and respondents, and of the matter between the cross-claiming respondents and the cross-respondents; and the existence of the legal relationship between the cross-respondents and those who claimed indemnity from them - that of agents and principals - was an element in the cause of action set up in each of those matters. The circumstances that the applicant did not make the agents parties to the proceeding she instituted and that neither agent sought any curial relief against her are not decisive of the question whether the matter constituted by the cross-claim against them was part of a "matter", in the sense of s.76(ii) of the

Constitution, arising under the Trade Practices Act 1974.

"In identifying a s.76(ii) matter, it would be erroneous to exclude a substantial part of what is

in truth a single justiciable controversy and thereby to preclude the exercise of judicial power

to determine the whole of that controversy. What is and what is not part of the one controversy depends on what the parties have done, the

relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely be reference to the proceedings which a part may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in the proceeding are within the scope of one controversy and thus within the

ambit of a matter." (Pencott v. Muller (1983) 46 A.L.R. 41 at 68.)

In my opinion the cross-claim against the agents was

within the scope of the one controversy to which the applicant and

the respondents were the other parties, and the court had

Counsel for the several parties recognised that the question whether the costs of the cross-respondent agents should be ordered to be paid by the cross-claimants, with a further order "that the applicant pay those cross-claimants the costs ordered to be paid by them to the cross-respondents, or should be ordered to be paid directly by the applicant to those cross~-respondents, was of practical importance because, as the evidence given on the hearing had revealed, the applicant has vexy little in the way of property or income. No party submitted that the court lacked power, except for the reason already considered, to order that the

applicant pay to the cross-respondents their costs. But 1t does not seem to me that the power is beyond doubt. From 1883 untr] 1959 express power to make such an order was ancluded in the English Rules of the Supreme Court. In Edginton v. Clark [1964] 1 Q.B. 367 the Court of Appeal held the power to be still available, notwithstanding the deletion of reference in those Rules to the express power. The reasons for judgment in that case include, as do the reasons for judgment of Pape J. in Allman v. Daly (No. 2) [1959] V.R. 614, a careful review of the relevant English

authorities and statutory provisions and rules. There are distinctions between the English, and the Victorian, provisions and those which relate to the powers of this court. It 1S expressly provided, by Ord.16 r.1 of the English Rules and hy

Ord.16 r.5 of the Victorian Rules, that a third party becomes a

party to the action when he is served with a third party notice. The very generally expressed provisions conferring discretionary power to award costs of "all proceedings" may in those circumstances be understood as authorising, in relation to an action, an order for payment of any one party's costs by any other party or parties to that action. But the Federal Court Rules have no provision corresponding with Ord.16 r.1 and Ord.16 r.5. Except where the adaptation for use in the Federal Court Rules of the Rules of the Supreme Court of New South Wales has been imperfect (as, for example, in Ord.5 r.11(6) and Ord.6 r.3(1)(a)), the word "proceeding" seems to serve, in the Federal Court Rules, the purpose which the word "action" serves in most of the rules relating to civil procedure in the English High Court and the Victorian Supreme Court and in the High Court of Australia. A careful reading of Order 5 of the Federal Court Rules, which relates to cross-claims and third party claims, leaves me uncertain whether a person before the court only by reason of the filing of a cross-claim to which he is respondent is a party to the "proceeding" on what is sometimes called, in that Order, "the originating process". The use of the plural "proceedings" in Ord.5 r.6({1) may be the result of an unintended transcription of that word from the New South Wales rules, wherein the plural is habitually used. But it may, I suppose, have been intentional. If a third party, such as the agents are, does not become, in any sense, a party to the proceeding in which the applicant is a party, it may be a question whether s.43 of the Federal Court of

Australia Act 1976 authorises an order that the applicant pay that

third party's costs. In Ord.5 r.12 the word "proceeding" seems to

comprehend all the claims and cross-claims which share the sare serial number, assigned in compliance with Ord.1l r.6. Elsewhere in Ord.5, and particularly in r.1ll thereof, the word seems to signify that which is done ("trial or hearing and all other steps") in curial resolution of those claims for relief which are comprehended within a single application or cross-claim. If the word "proceedings" in oOrd.5 4r.6(1) may be understood as comprehending all that shares the same serial number, as I think it may, there is in my opinion no sufficient reason to doubt that any party to those proceedings may be ordered, in exercise of the jurisdiction conferred by s.43, to pay to any other party the

Mr. Murdoch, who appeared for the cross-respondent agents, based his submission that his clients costs should be

ordered to be paid by the cross-claimants, not by the applicant,

on the reasoning of the Court of Appeal in Johnson v. Ribbins &

In that case the defendant mortgagee of an hotel, against whom the plaintiff mortgagor claimed damages alleged to have been caused by sale, under the mortagee's power of sale, of the mortgaged property at a gross undervalue, joined as third parties the real estate agent and the solicitor who had arranged and conducted the sale on the mortgagee's behalf. As in the case

before me, the plaintiff's statement of claim tncluded allegations

of conduct by those agents which would, 1f proved, have justified her claim for damages. The allegations not having been proved, the action and the third party proceedings were dismissed. The plaintiff being impecunious, the third parties sought orders that the defendant mortgagee pay their costs, but the mortgagee

submitted that, in lieu of such an order and a further order that

the costs of the third parties be paid by the plaintiff to

himself, chere should be a single order for payment of those costs

by the plaintiff to the third parties. The Court of Appeal accepted the submissions on bchalf of the third parties. The

eeeeee the court should be guided by the principle that normally costs follow the event as is expressly provided by R.S.C., Ord.62 r.3(2) and should, therefore, normally order the defendant, though successful in the action, to pay the costs of the third party if he also be successful. Then if in the circumstances of the case these costs ought fairly to be borne by the plaintiff the court will further order that they be added to the defendants' costs of the action as against the plaintiff.

Mr. Balcombe argued that one cannot apply Ord.62 1r.3(2) to third party proceedings, because the only relevant event is the outcome of the

proceedings as a whole. One cannot, so he submitted, look at the third party proceedings separately. We cannot accept that view as a

general proposition and certainly not as applicable to this case, though it might be true in particular cases. Generally, we think it will be found, and certainly so in this case, that the defendant and the third party stand in relation to one another as if the defendant had brought a separate action against the third party, and, in our judgment, this conclusion is fortified by the Judicature Act 1925, section 39(1)(b) and the note 16/1/17 in The Supreme Court Practice (1976), vol. 1, p.230. ~

[1958] 1 W.L.R. 717, 720, whilst careful to point out that it was a matter of discretion and that he

was not fettering the arbitrator's discretion, Diplock J. prescribed this as the normal rule in

Mr. Balcombe pointed out that in Edginton v. Clark [1964] 1 Q.B. 367, 384, Upjohn L.J. said: TT.. we should have been prepared to order that the plaintiff should pay [the third party's] costs directly.' In that case, however, the defendant had already paid the third party's costs and was only asking for recoupment by the plaintiff. The question whether the plaintiff should pay the third party's costs directly was never in issue and of course where the plaintiff and the defendant are both good for the costs it makes no significant difference.

Thus, the question resolves itse]J£ in our view into this, namely, is there on the facts of this case anything which should lead the court in exercising its discretion to depart from the normal principle that costs follow the event? We can see nothing. On the contrary, in our judgment, the facts call strongly for it to be observed.

Apart from the impact of legal aid the consideration of which, as we have already observed, is excluded by the Act itself, we can sce nothing which the defendants can call in aid except the impecuniosity of the plaintiff, but it cannot be right to deprive a third party of an order for

costs to which he is otherwise entitled against the defendant, because the defendant when looking to

the plaintiff for reimbursement finds a person not worth powder and shot.

Mr. Millett argued, though this was disputed by Mr. Balcombe, that the third party were the agents of the defendant and, apart from all other considerations, entitled as such to be indemnified by the defendants as their principals.

If this had been an action to which the plaintiff had made the agents defendants, with or without the actual defendants, we think this might have been a @ifficult question to resolve. It would, in our view, involve investigation of the exact circumstances in which an agent can look to his principal for an indemnity against a liability not inherent in the performance of his duty but

arising because of a claim wrongfully made by a stranger to the contract of agency that the agent had not properly discharged his duties.

to resolve this problem, because this is a case in which the principals themselves have sued the

agents. In such a case it must require very special circumstances to make it just not to order them to pay their costs." (1977 1 W.L.R. 1458 at

What is expressly provided in the English Ord. 62, r.3(2) is in this Court no more than a statement of the way in which the unfettered judicial discretion as to costs is exercised when no circumstance appears to justify any other order. What then are

the relevant circumstances, other than those I have already

When the hearing of the applicant's claims commenced I ordered, by consent, that the claims in the cross-claim against the agents be heard with the applicant's claims. Counsel for the parties to that cross-claim did not make any other application under Ord.5 r.12(2) at that time when I enquired whether it was desired to make any such an application. Three days later, when counsel for the agents commenced to cross-examine the applicant, I ordered, on the application of counsel for the cross-claimants and without opposition by counsel for the cross-respondent agents, that the issues between those claimants and respondents be tried concurrently with the issues in the claims on the originating

process, and that the cross-respondents have leave to defend those

claims, and that the cross-claimants and the cross-respondents be

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bound as between themselves by a judgment or decision, other than a judgment or decision by consent, on the claims on the

Mr. Wills was called as a witness by his own counsel and

was cross-examined by counsel for the cross-claimants to elicit evidence in support of the cross-claim, but no factual difference

between claimants and respondents was disclosed in relation to

allegations concerning the conduct of Mr. Wills which occasioned the proceeding against the two agents. And the institution of that proceeding was undoubtedly a reasonable course for the two corporate respondents to have taken : no agent of theirs had been present when the inpugned conduct was alleged to have occurred, except Mr. Wills, and they could not form a confident judgment as to whether the allegations would be proved. Unless the proceeding by way of cross-claim were instituted, the risk could not be obviated that one tribunal of fact would find the allegations proved and another tribunal of fact, in a separate curial proceeding against the agents, would fail to make that finding. Those might be thought to be considerations in favour of ordering the applicant, whose unjustified allegations occasioned the proceeding against the agents, to pay to the agents their costs of

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On the other hand, it was the two corporate respondents, not either of the agents, which sought contractual relations with the applicant, and it was one of the corporate respondents which did contract with her. it was against them she claimed damages, not ayainst the agents. For making against the corporate respondents allegations of wrongful conduct by their agents, which allegations exposed those respondentts to the cisks of litigation against their agents, she may be ordered to pay those respondents the costs of that litigation which they are ordered to pay their agents. It may be thought that he who makes a contract, rather than he who negotiates the contract as agent, should lock to the other party to the contract For the costs of litigation, concerning the making of the contract, which is unjuslifiably

The "difficult question" whether the third parties in

Johnson v. Ribbins were entitled to be indemnified by their

principal, the defendant, against the costs the third parties incurred in that action is similar to the question, 'just as difficult, whether Mr. Wills and Ross Wills & Associates Pty. Ltd. are entitled to be indemnified by their principals : see Bowstead on Agency (14th ed.) pp. 201-204 and the cases cited in note 44; Restatement, Second, Agency, paras. 438, 439. If entitled to indemnity, Mr. Wills and that company would be entitled to their solicitor and client costs. (No claim for costs as between

solicitor and client was advanced on their benalf.) If neither is

entitled to be undemnified by his or its principals in respect of

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those expenses, that would seem to me a circumstance which strengthens the case for an order that the cross-claimants pay the costs of each cross-respondent. Each of the principals and agents is seen, in those circumstances, to have stood his or its own risk of an unjustified claim against him or it by a person such as the applicant, with whom they have all been engaged in a commercial transaction. The misfortune fell on the principals and not on the agents. It was the principals who brought suit against the agents. They failed in their suit and no sufficient reason has appeared why the agents' costs of suit should not be ordered to be paid by them, as it seems to me. The general scheme of third party procedure in this court and the general practice as to costs in this court are sufficiently similar to the procedure and practice in the High Court in England that, notwithstanding differences between rules and statutory provisions, I think I

should allow Johnson v. Ribbins and L.E. Cattan Ltd. v. A.

Michaclides & Co. a substantial persuasive influence.

Mr. Martin of counsel for the applicant submitted that

any order that the applicant pay the agents' costs, whether

directly to them or to the cross-claimants in the event that the

cross-claimants be ordered to pay those costs to the

cross-respondents, should be limited to the costs incurred to the commencement of the hearing. Mr. Martin said that the parties to the cross-claim were at one in their denial that the misleading

conduct alleged to have been done by the agents had occurred, and

that no other issue was contested between those parties at the

hearing. His contention was that there was therefore no occasion for separate representation of the agents during the hearing. But it did not appear, by evidence or otherwise, that the cross-claimants and the cross-respondents were at less than arms' dength, notwithstanding their concordant denial of those allegations. The joinder of the agents found its justification in enabling the one tribunal to make a decision, of the issues raised

by those allegations and those denials, which should bind all those whose rights and liabilities depended on a curial determination as to whether the allegations were sustained. Tardy as the application was for an order that the agents be bound by the decision, once the order was made it was reasonable that the agents should be legally represented on the trial of those issues, as also on the trial of the issue as to the quantum of the applicant's damages, in respect of which the cross-claimants sought indemnity by the agents. Difficult questions of law and

fact were involved in the determination of the latter issue.

Upon the respondent Gladstone Park Shopping Centre Pty. Ltd. undertaking by its counsel that it will not prosecute the action commenced by it against the applicant by summons numbered 935844 of 1979 and issued out of the County Court of Victoria at Melbourne on 20 December 1979. The Court Orders And Adjudges That the respondent Gladstone Park Shopping Centre Pty. Ltd. recover against the

applicant $3,757.84 And The Court Further Orders That:

1. There be Judgment for the respondents on the applicant's claims.

2. The cross-claim by the respondents Gladstone Park Shopping Centre Pty. Ltd. and Hersfield . Developments Corporation Pty. Ltd. be

dismissed. ; 3. The respondents' costs of the proceeding ; arising From the application be paid by the : applicant. ' 4. The costs of the respondent Gladstone Park : Shopping Centre Pty. Ltd. of the proceeding } arising from its cross-claim against the

. 5. The costs of the respondents Gladstone Park ' Shopping Centre Pty. Ltd. and Hersfield

Developments Corporation Pty. Ltd. of the proceeding arising from their cross-claim ' against the cross-respondents Ross Wills and Ross Wills & Associates Pty. Ltd. be paid by F the applicant.

' 6. The costs of the cross-respondents Ross Wills and Ross Wills & Associates Pty. Ltd. of the proceeding arising from the cross-claim against them be paid by the cross-claimants : Gladstone Park Shopping Centre Pty. Ltd. and : Hersfield Developments Corporation Pty. Ltd.

! 7. The applicant pay to the cross-claimants . Gladstone Park Shopping Centre Pty. Ltd. and

Hersfield Developments Corporation Pty. Ltd. ! the amount oof the costs of the cross-trespondents Ross Wills and Ross Wills & Associates Pty. Ltd. hereinbefore ordered to be paid to those cross-respondents.

8. Proceedings under the foregoing orders be stayed for 21 days.