Break Fast Investments Pty Ltd v Perikles Giannopoulos

Judgment 1On 9 December 2011, I delivered judgment in these proceedings and reserved the question of the extent of the remedy in unjust enrichment available to the Plaintiff, Break Fast Investments Pty Ltd ("Break Fast") against the First Defendant ("Mr Giannopoulos") for further submissions. On 28 March 2012, I delivered judgment dealing with the form of relief in these proceedings and also dealing with an application for costs made by Citigroup Pty Limited ("Citigroup") which had been joined as Third Defendant in the proceedings. I reserved the question of costs as between Break Fast and the Defendants which needed to be dealt with after the delivery of my judgment dealing with the form of relief. 2The parties have agreed several orders which should be made to give effect to my judgment and I will make those orders below. I now turn to the remaining issues which are in contest between the parties as to the form of orders. Whether there should be judgment in favour of Ms Faraone 3The first issue which requires resolution in this judgment is whether there should be judgment in favour of the Second Defendant ("Ms Faraone") against Break Fast, which is the form of order sought by Ms Faraone. 4In my judgment delivered on 9 December 2011, I held that Break Fast's claims against the Ms Faraone had not been established. Break Fast submitted that it was "debateable" whether or not Ms Faraone had been successful in her defence. I do not accept that submission, since Break Fast had failed to establish each of the bases on which relief was sought against Ms Faraone. 5Ms Faraone contends that judgment should therefore be entered in her favour. The result would be to give rise to potential application of principles of res judicata, issue estoppel or Anshun estoppel in respect of the claims against Ms Faraone: J Aron Corporation v Newmont Yandal Operations Pty Ltd [2006] NSWSC 849; (2006) 202 FLR 359. In my view, that order properly reflects the result of my judgment delivered on 9 December 2011. Costs as between Break Fast and Mr Giannopoulos 6The question of costs as between Break Fast and Mr Giannopoulos involves the initial complexity that Break Fast was successful in its claim for unjust enrichment against him but unsuccessful in its claims against Ms Faraone (the costs of which I will address below) and a second complexity that several causes of action against him failed. 7Break Fast contends that the Defendants should pay its costs of the proceedings. That result would reflect the general principle that costs follow the event. However, that result would not recognise that, first, Break Fast failed against Ms Faraone; second, it failed on several causes of action, which occupied significant time at the hearing and in submissions, against Mr Giannopoulos; and, third, it succeeded in its claim for unjust enrichment only after an opportunity to make further submissions as to that claim and, to a significant extent, to reformulate the basis on which that claim was put. I will refer further to these matters below. On the other hand, Mr Giannopoulos contends that the proper orders for costs as between Break Fast and him is that Break Fast is entitled, as against him, to 50% of one-half of its costs against the two Defendants. This contention reflects an apportionment of half of the costs of the proceedings to each of Mr Giannopoulos and Ms Faraone and a discounting of the costs allowed against Mr Giannopoulos for several matters. 8Section 98 of the Civil Procedure Act 2005 (NSW) relevantly provides that: "Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court; and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) in turn provides that, where the Court makes an order as to costs, the Court is to order that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs. 9The principles underlying an award of costs include that costs are awarded to compensate the successful party for the expense of being put to the necessity of litigation; a wholly successful defendant should ordinarily receive its costs unless good reason is shown to the contrary; and the discretion to order costs must be exercised judicially and not against the successful party except for some reason connected with the proceedings: Milne v Attorney-General (Tasmania) (1956) 95 CLR 460 at 477; Oschlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98 per McHugh J, at 129-123 per Kirby J; Ruddock v Vardalis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234. In Howard's Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FCR 84, Gray J observed at [17] that: "The overriding principle that costs are in the discretion of the court can also be expressed in terms of the negative proposition that no rule or principle should be applied mechanically in the determination of the question where costs should lie in any particular case. Attention must always be paid to the particular circumstances of the individual case. The aim is to do substantial justice in relation to costs, based on the outcomes of the various issues in the proceeding, as between the entities that are parties to that proceeding." 10In some circumstances, it will be appropriate to make an adjustment as to the order for costs where a plaintiff is successful against one defendant and not successful against other defendants. In Currabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232, Einstein J dealt with the position of multiple parties, some successful and others unsuccessful, and referred to the "rule of thumb" which is designed (at [95]): "... to achieve substantial justice in the awarding of costs as between a partially successful plaintiff and variously successful and unsuccessful defendants. The rule operates upon the premise that defendants are proportionately responsible for and liable for the joint costs involved in mounting the defence. Thus, a successful defendant cannot claim from the plaintiff more than a proportionate share of the joint costs of the action in addition to any costs separately referable to that defendant. Conversely, the partially successful plaintiff is prevented from looking to each of the unsuccessful defendants for more than an equal proportionate share of the costs not solely referable to the plaintiff's case against one or other of the defendants individually, in addition to the costs which are so referable. In this way, the rule of thumb prevents both the unjust enrichment of the partially successful plaintiff or successful defendant and the casting of an unfair burden on the unsuccessful defendants." His Honour also observed at [106] that: "[t]he purpose of the rule of thumb, applied to the case of multiple, variously successful and unsuccessful defendants, is to prevent a plaintiff who has only been partially successful, from being unjustly enriched and to prevent unsuccessful defendants from being unfairly burdened by the thrusting onto them of the whole of the plaintiff's costs, not referable to the action against one or other defendants." 11In King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [35], Young JA (with whose judgment Hodgson and Campbell JJA agreed) referred to the rule of thumb and observed that Currabubula "does seem inconsistent with mainstream authority", but the Court did not overturn that decision. The principles in Currabubula were subsequently cited with approval by the Full Court of the Federal Court in Howard's Storage World Pty Ltd v Haviv Holdings Pty Ltd above and by the Court of Appeal of the Supreme Court of Victoria in Chen v Chan [2009] VSCA 233 at [10] (to which I will refer below) and I consider I should have regard to them. 12It may also be appropriate to apportion costs between issues where a party has succeeded only on some issues. In Hughes v Western Australia Cricket Association (Inc) (1986) ATPR 40-748 at 48,136, Toohey J observed that: "(1) Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. (2) Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which it has failed. (3) A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law." 13In Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272, in a passage cited by the Full Court of the Federal Court in Howard's Storage World Pty Ltd v Haviv Holdings Pty Ltd above at [60], the Court observed that: "Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation." 14In Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6]-[7], Beazley, McColl and Basten JJA observed that: "Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the appellant was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). As the appellants submit, the commencing position is that costs follow the event so that a successful party is entitled to costs. In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 (at [24]). A similar approach is adopted in the Court of Appeal. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 (at [27])." 15The relevant principles were summarised by the Court of Appeal of the Supreme Court of Victoria in Chen v Chan above at [10] as follows (omitting footnotes): "1. The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim. ... 3. Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount. 4. A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice. 5. Where a court determines to make an order apportioning costs, then it does so primarily as "a matter of impression and evaluation," rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter. 6. Where a number of parties have had the same representation, there is a "rule of thumb" as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted." 16In my view, this is a proper case for the application of the rule of thumb, so that Mr Giannopoulos should at most be held liable for 50% of Break Fast's costs attributable, by that rule to the case against him and not for the portion of costs attributable to its unsuccessful claims against Ms Faraone. 17I consider that this is also a proper case to make an adjustment to the costs recoverable by Break Fast on the basis that the matters upon which it was unsuccessful as against Mr Giannopoulos took up a significant part of the trial, both by way of evidence and argument. Numerous allegations were made against Mr Giannopoulos in a very complex pleading; he was required to lead extensive evidence to address those allegations; he was cross-examined at length concerning those allegations; and he was required to address those allegations in submissions. Ultimately, Break Fast was only successful in its claim for unjust enrichment against Mr Giannopoulos; unsuccessful in claims in reliance on the principle in Black v Freeman, for subrogation and for knowing receipt and knowing assistance; and would also have failed in its proprietary claims by reason of the application of s 42 of the Real Property Act 1900 (NSW). As I noted in my judgment on 28 March 2012, Break Fast was also only successful in establishing the basis for a substantial recovery in unjust enrichment after several reformulations of the basis on which the identification of the enrichment was put. 18In my view, the costs which would otherwise be ordered against Mr Giannopoulos should be discounted to reflect the fact that he was necessarily required to incur additional costs in the defence of claims by Break Fast which ultimately failed and in dealing with the question of relief in unjust enrichment because of the way in which Break Fast approached that question. Neither Break Fast nor Mr Giannopoulos sought to lead evidence to identify the particular costs or hearing time that were referable to particular issues. The extent of those additional costs is therefore ultimately a matter of impression, and I consider that the 50% reduction for which Mr Giannopoulos contends would be excessive. However, I do consider that these matters resulted in substantial additional length and complexity in the hearing and in the process of written and oral submissions and that, as a matter of impression and evaluation having regard to the matters specified in Chen v Chan, a reduction of 25% of the costs otherwise recoverable by Break Fast against Mr Giannopoulos is appropriate. Costs as between Break Fast and Ms Faraone 19Ms Faraone contends that the proper orders for costs is that she is entitled to recover one-half of the First and Second Defendants' costs of defending the proceedings. This reflects an apportionment of half of the costs of the proceedings to each of Mr Giannopoulos and Ms Faraone, in accordance with the "rule of thumb" to which I have referred above. Ms Faraone also contends that Break Fast should be ordered to pay those costs on an indemnity basis. 20In Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FLR 225; 118 ALR 248 at 256-257, Sheppard J summarised a number of principles as to an order for indemnity costs as follows: "It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred: ... 2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. ... In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity. 3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. ... 4. In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require''. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston [1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: "the categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata. 5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152); evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp);the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724(Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. 6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice." 21In White Constructions (ACT) Pty Ltd (in liq) v GB White [2004] NSWSC 303 at [5]-[11], in a passage subsequently quoted in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324 at [24], McDougall J also summarised the applicable principles to an award of indemnity costs as follows: "The basis upon which the discretion to award indemnity costs should be exercised has been examined in a very great number of cases. But, as those cases make clear, the discretion is not confined or limited except to the extent that it is required to be exercised judicially: see for example Harrison v Schipp [2001] NSWCA 13 at [139] (Giles JA, with whom Handley and Fitzgerald JJA concurred); see also Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 256-257. What is required, in any case, is that the Court examine the facts of that case in the light of such statements of principle as may be relevant. In the ordinary way, the Court will take into account, as offering guidance, statements of principle made by those to whom the particular judicial officer should have regard. At the most basic level, the statements of principle indicate - not unsurprisingly - that there must be some sufficient special or unusual feature to justify departure from the ordinary rule. I take the basic principle to be as stated by Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 9. Their Honours said at [44] (I omit citations): It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs, but for costs on a 'solicitor and client' basis, or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what would otherwise have been the position of the unsuccessful party in the absence of such delinquency on its part. I read what their Honours said on the basis that "some relevant delinquency" does not mean moral delinquency or some ethical shortcoming, but delinquency bearing a relevant relation to the conduct of the case: see for example Council of the Municipality of Botany v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415; NMFM Property Pty Limited v Citibank Limited (No 2) (2000) 109 FCR 77." 22The summary of principles in Colgate-Palmolive Co v Cussons Pty Ltd above was also applied in Lahoud v Lahoud [2006] NSWSC 126 at [11] and in Ng v Chong [2010] NSWSC 127 at [18]. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) above at [26], McDougall J referred to that summary of principles and observed that: "Nonetheless, it is important to bear in mind that the principles distilled by his Honour out of the authorities are guides to the exercise of the discretion. They neither define the circumstances in which the discretion is to be exercised nor limit its width. It remains, as I said in White ACT [(in liq) v JB White above], a discretion that is constrained only by the requirement that it be exercised judicially. That is to say, it is a discretion to be exercised on a consideration of all (and only) relevant facts, taking into account relevant statements of principle and revealing a conclusion supported by principled and logical reasoning. A party is not entitled to indemnity costs simply because (for example) one or more of the factors identified in cases such as Colgate Palmolive is present. Nor is a party disentitled to indemnity costs simply because none of those factors is present." 23In Chen v Chan above at [10], the Court of Appeal of the Supreme Court of Victoria observed that (omitting footnotes) "7. Usually, an order for costs will be made on a party/party basis. But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated, for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding. Special circumstances may also include the making of an allegation of fraud which is not proved." 24The factors supporting an order for indemnity costs in favour of Ms Faraone in the present case are that Break Fast pursued claims for knowing assistance and knowing receipt against her; it abandoned the claim for knowing assistance and I found that there was no evidence against Ms Faraone which was capable of establishing the requisite knowledge for that claim; and it pressed the claim for knowing receipt and I held that it was not established either that Ms Faraone had received the relevant payments in any relevant sense or had the requisite knowledge to establish that claim. The allegations made against Ms Faraone were serious, and, on a proper analysis of the authorities, Break Fast could not have succeeded in them unless it established at least that Ms Faraone knew of facts which to an honest person would indicate the existence of the relevant duty and the breach of it. Break Fast did not lead evidence which was capable of establishing that matter. 25On balance, I consider that the matters to which I have referred in paragraph 24 above warrant an order that Break Fast pay Ms Faraone's costs on an indemnity basis. I recognise that an order for indemnity costs was not made in somewhat similar circumstances in NIML Ltd v MAN Financial Australia Ltd (No 2) [2004] VSC 510, although Harper J pointed to the care which should be exercised in making allegations of fraud. I accept that the allegations of knowing assistance in this case, as in NIML Ltd v MAN Financial Australia Ltd (No 2), did not involve allegations of actual dishonesty as against Ms Faraone. Nonetheless, Ms Faraone was exposed to the costs of defending these allegations where, in my view, the evidence against her could not have established them. 26Break Fast contends that it should nonetheless be entitled to its costs against Ms Faraone, although it obtained judgment only against Mr Giannopoulos. Break Fast relies, in particular, upon the fact that I had recognised the possibility that Break Fast could be subrogated to the rights of Citigroup under its mortgage against both Defendants, to the extent of any contribution made by Break Fast to the reduction of the principal secured by the mortgage on Unit 1201 and the consequent reduction in the Homebush mortgage, but held that there was no occasion for equity to intervene by way of subrogation where other remedies were available to avoid an unconscionable result. Ms Faraone responds that this matter does not deprive her of the order for costs which would normally follow in favour of a successful party. 27In my judgment delivered on 9 December, I reviewed the relevant authorities and noted that it would arguably be unconscionable for the Defendants (including Ms Faraone) to deny Break Fast an interest to the Homebush property corresponding to its payments to the extent they had funded a reduction in the Defendants' mortgage over the Homebush property. However, I also noted that it was well established that there was no occasion for equity to intervene by way of subrogation where there was available a remedy in law or in equity sufficient to avoid an unconscionable result, and held that the remedy in unjust enrichment to which Break Fast was entitled (as against Mr Giannopoulos) would avoid that result and an order for subrogation was therefore not necessary or appropriate. I therefore also did not consider it necessary to determine the question whether a remedy in subrogation would be available notwithstanding s 42 of the Real Property Act, an issue which was noted but also not resolved in Saraceni v Mentha [2011] WASC 94 and which was not fully argued before me. 28Ms Faraone contends that, notwithstanding there were issues I did not need to determine, Break Fast nonetheless failed in its claim for relief by way of subrogation, because I held that its remedy in unjust enrichment against Mr Giannopoulos was sufficient to avoid an unconscionable result. Ms Faraone also notes that, even if Break Fast could have succeeded on the matters that it was not necessary for me to determine, an unsuccessful party who nearly succeeded will not generally obtain an order for costs in its favour: Wentworth v Rogers [2003] NSWSC 944 at [39]; Lansen v Minister for the Environment and Heritage (No 3) [2008] FCA 1367 at [41]. 29Ms Faraone submits that, if the Court is against her in respect of those submissions, she should be permitted to reopen her defence to the subrogation claim founded on s 42 of the Real Property Act. Break Fast in turn contends that the Court should allow a limited opportunity to reopen the subrogation claim and the defence to it. 30It is not necessary for me again to address the principles in which reopening of a case will be permitted, to which I referred in paragraph [4] of my judgment delivered on 28 March 2012, although I was not then dealing with an application to reopen the case after a final judgment resolving all issues. It is possible to resolve the question whether either party should be permitted to reopen the claim for subrogation on a narrower basis. I held, in my judgment delivered on 9 December 2011, that it was not necessary to reach a final conclusion as to the question of unconscionability or to the application of s 42 of the Real Property Act because the basis for a remedy in subrogation against Ms Faraone was not established in any event, where another remedy was available which was sufficient to avoid an unconscionable result. Additional submissions which either party might seek to put in favour of, or against, a finding of unconscionability or the application of s 42 of the Real Property Act will not alter that finding nor will they alter the result of the subrogation claim. If Break Fast were wholly successful in those submissions, it would still not obtain a remedy in subrogation; and if Ms Faraone were wholly successful in her submissions, she would then succeed in resisting that claim on three bases, rather than the basis on which she has already succeeded in resisting it. The additional submissions which the parties seek to make would therefore not alter the result and I can see no basis on which to permit a reopening of a matter in that situation. I am reinforced in that view where costs have already been incurred in this matter which may well be disproportionate to the amount in issue. 31I do not consider that the findings which I reached in respect of subrogation warrant an order for costs against Ms Faraone or are reason not to make an order for indemnity costs which would otherwise be made in her favour where little evidence or hearing time was devoted to this issue and, in the result, Break Fast failed to establish the claims to which I referred in paragraph 24 above and also did not succeed in this claim. The Defendants' claim for costs against Citigroup 32Mr Giannopoulos and Ms Faraone contend an order should be made in their favour that Citigroup pay their costs in respect of Citigroup's unsuccessful application that they should pay Citigroup's costs of the proceedings. Citigroup resists that order. 33Citigroup had contended that Mr Giannopoulos and Ms Faraone should pay its costs of the proceedings notwithstanding that they had not joined it as party to the proceedings and did not bring any claim against it and relied on the general law entitlement of a mortgagee to indemnity from the mortgagor in respect of costs that it reasonably and properly incurs in defending its rights as mortgagee. I dealt with that claim in my judgment delivered on 28 March 2012 and held that Mr Giannopoulos and Ms Faraone should not be ordered to pay Citigroup's costs, although break Fast, which joined it as party to the proceedings, should be ordered to pay those costs with one limitation. 34Mr Giannopoulos and Ms Faraone would have incurred costs in responding to Citigroup's application, which involved relatively complex written submissions as to the applicable legal principles. They were required to incur those costs because that application was made by Citigroup and, having been unsuccessful in that application, it is appropriate that Citigroup should be required to compensate them for the costs to which it exposed them. I note that other matters as between Break Fast and the Defendants were also argued on the date on which that matter was the subject of oral submissions, but that is a matter which may be taken into account in the assessment process. Accordingly, I will order that Citigroup pay Mr Giannopoulos' and Ms Faraone's costs of and incidental to its application for an order for costs against them. Orders 35Accordingly, I make the following orders: