4049/98 - BRUNING v KINGMILL (AUSTRALIA) PTY LTD
3142/98 - BRUNING v MMAL RENTALS PTY LTD
JUDGMENT ON COSTS
1 HIS HONOUR: I gave judgment in this matter on 18 February 2004 after a nine day hearing in the latter half of 2003.
2 The matter before the court was contained in two separate files, 3149 of 1998 being proceedings originally commenced in the Federal Court of Australian in July 1997 by the plaintiff seeking relief under the Corporations Law (as it then was) and the Trade Practices Act, and file 4049 of 1998 the proceedings which were originally commenced by the plaintiff in the Industrial Relations Commission of New South Wales in March 1998. The two sets of proceedings were transferred to this court in June 1998. Thereafter they were administered as one dispute between the parties.
3 The proceedings reached the stage in mid-2003 that they were referred to me by the Registrar to manage as a long matter. I made directions on 11 June 2003, sat in Adelaide to take some evidence of a witness who was very ill on 11 and 12 August, had a further pre-trial on 18 September and then sat from 20 to 28 October to hear the rest of the evidence in Sydney.
4 The evidence in Adelaide consisted of the evidence in chief and mainly cross-examination of Mr Ludgate, an officer of MMAL. In Sydney about three days was spent on the plaintiff's evidence, about one to one and a half days on the evidence of the other key MMAL executives, Messrs Quinn and Gardiner, and the rest of the time on subsidiary witnesses and submissions.
5 There were tendered eighteen bundles of documents and in addition to those eighteen bundles there were various lever arch files called "Ludgate Cross-Examination Bundle" or the like which meant that there were a large number of documents before the court and they were duplicated in many instances. The bulk of this material did disturb me and I think I made the fact that it disturbed me plain in my original reasons. Of course, I can now refer to what Heydon J said when speaking extra judicially in (2004) 6 Judicial Review 429, 438, where his Honour deals with practical impediments to the fulfilment of judicial duty. His Honour refers to the great problems that are caused to trial courts with excessive documentary tenders and a Judge getting the impression that no skilled mind of any degree of seniority in the relevant legal team has given consideration as to whether each document in the bundle is necessary, useful and even helpful. The Judge said it is vital to encourage a greater sense of discrimination and judgment on the part of those who decide what documents should be tendered. One way of doing this is, of course, to be very careful to make orders for costs so that the court is not burdened with irrelevant pieces of paper or duplicate pieces of paper.
6 In the instant case there were in fact eight copies of the bundle made which were one for the court, three for each side and one as a working copy or as turned out, to be used by witnesses. I will come back to this matter in due course. The principal matters for today are the form of the orders and the question of costs. I should deal with the second matter first.
7 When considering costs I must remember that part of this dispute originated in the Industrial Relations Commission. Section 181 of the Industrial Relations Act 1998 makes costs in the discretion of the Commission but if the Commission is not in Court Session subs (2) puts some limitation on the power to award costs.
8 Counsel were not able to refer me to any relevant decided cases on the section. It seems to me that I should view the costs of the proceedings, even though they originated in the Industrial Relations Commission, in the same way as I would deal with costs in any other matter in this court.
9 The plaintiff says that he was successful in the litigation in that he received an award of over a million dollars. He says although costs are in the discretion of the court the normal rule is that the person who succeeds in the litigation gets costs and the person who fails in the litigation pays costs. The plaintiff says that under this principle he was successful.
10 Mr Grant of counsel for the defendants put a series of propositions to me as to why that was an inadequate analysis in the instant situation.
11 First he said that if one is looking at the realistic merits of the situation the plaintiff has made an offer effectively of about $535,000 in August 1996. He declined that offer even though it was kept open for some months. If one takes interest into account and looks at what the plaintiff ultimately obtained, he would have been better off to have accepted that offer. Why then, he asks rhetorically, should the defendants have to pay the costs for a plaintiff who, commercially speaking, was a loser?
12 The answer to that proposition is that the offer was made at a time before the defendants exercised the option to buy the plaintiff's shares on 24 April 1998 and before any litigation commenced. It is thus of very little legal relevance when one is looking at the costs of litigation that commenced in 1997 or 1998 after the offer was made and lapsed. It is much in the same plight as a person who has had a chance to acquire property during the negotiations at a lesser price than he or she ends up paying for it after a decree for specific performance.
13 Secondly, Mr Grant says that the authorities show that where a party has failed on certain issues he or she is not only to be deprived of the costs of those issues but may be ordered to pay the other party's costs of them. He refers principally to the seminal judgment of Toohey J in Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40-748 at page 48136. There is no doubt that that principle exists and has been applied on many occasions. There is no doubt also that the word "issue" in the current context is not to be confined to issue in a technical pleading sense.
14 However, as I indicated in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at pp 22 and following, there is a world of difference between a case where there is one matter to be established, namely, some broad matter of oppression or whether something is just and fair with a number of sub-issues from the case where there are a number of counts all of which involve common questions of fact from the case where there are a series of discrete matters which have to be decided. The Hughes case (supra) really is only helpful in a third of those situations.
15 In the present case there were a series of similar issues, namely, the matter of whether there was an unfair contract or whether there was oppression and a series of sub-issues. It does not seem to me that this is a case where I can simply award the costs of some issues to the plaintiff and other issues to the defendants.
16 The third submission was that, when one looks at the case as a whole, a lot of time was spent on matters on which the plaintiff failed. The plaintiff alleged that there were misrepresentations made in his initial dealings with the MMAL people. He did not succeed on that issue. The plaintiff also claimed that the business failed because of the actions of MMAL and I think I can fairly say that he did not succeed on that matter either. His evidence was not preferred in many respects to the evidence of the MMAL executives. However, he was accepted and, indeed, it was almost common ground from the various conversations between the people at the beginning of the enterprise that the project was one which was expected to make large returns to everybody including Mr Bruning and he proceeded to invest a lot of his time and energy and some of his money on that basis. It is hard to completely separate the matters on which he failed from those on which he succeeded.
17 The fourth submission was that the defendants by Calderbank letter in 2002 put an offer which, while below what the plaintiff eventually received, was not far below it such that it was unreasonable for the plaintiff to refuse it.
18 However, when one takes into account interest that would have accrued by 2002, the offer must be seen to be well below what the plaintiff received. That letter does not move me to alter the order for costs that otherwise ought to be made.
19 Looking at the worst case scenario, Mr Lindsay SC for the plaintiff, spent about two and a half days examining MMAL men which would mean that, at the most, there were two days out of the nine that were wasted. In other words, one would be looking at a decrease of the plaintiff's costs of about twenty-two per cent. That is the worst case scenario. I believe there is some merit in what Mr Grant puts about the successful issues but I do not think that there should be an adjustment of costs of any more than ten per cent. In my view the plaintiff was generally successful and should receive ninety per cent of his costs but no costs in respect of Mr Hilton's valuation. I say that because Mr Hilton's valuation was valueless because the material that was supplied to Mr Hilton by Mr Bruning was completely unreliable.
20 Mr Grant also said that he should get the costs of proceedings 3142 of 1998 and he should get the costs of the cross claim on which he was successful. I reject both these submissions, the first because one has to look at this litigation globally, the second because the cross-claim was for specific performance on the basis that the Price Waterhouse valuation was correct and, although specific performance in a sort of form was eventually ordered, it was not on the terms that the cross-claimant wanted in the cross-claim.
21 There then arises various subsidiary issues but before I deal with those I should correct one error that has come into the judgment. At paragraph 32 of the judgment I noted that there was an argument as to the proper date of valuation of Mr Bruning's shares. I said I preferred to take the date of 24 April 1998. However, when I got to para 217 I said "I thus consider that Mr Bruning's shares had a value of $600,000 as at 24 April 1996." I am sure that that "1996" was an error. I should have said 1998 but the figure of $600,000 is worked out as at 1996 so that there are other errors that flow through from my initial error. Looking at the calculations the value on 24 April 1998 was $675,000 on the same formula as I applied so that what should be ordered is $675,000 plus interest of approximately six years at 9.5 per cent, which makes $1,059,750 in total.
22 The other problems are with the provision of competing transcripts of tapes of conversations which Mr Bruning surreptitiously made. In view of my global order for costs the difficulty here fades away as any second version of the transcript will not be part of the plaintiff's costs and the costs assessor may have to determine whether the first version was fair and reasonable or was an attempt, so to speak, to gild the lily.
23 The second matter is the question of the costs of the bundles. There was some suggestion by the solicitor that there was a standard practice in this State that initially the plaintiff pays for preparing the bundle. I am not aware of any such general practice. It has been pointed out to me that in the Commercial List of this Division under Practice Note 100 annexure 3 cl 4(3), the usual direction in the Commercial List is that the plaintiff prepares the bundle but the defendant supplies the plaintiff with two copies of all documents intended to be tendered by the defendants so that the plaintiff can put them in the bundle. This seems to me to carry out the general rule that a person who wants to tender a document before the court in first instance pays for its copying and other associated costs. However, the general cost of the time taken to put together the bundle is in the first instance paid by the person who actually does it, unless the parties come to some other agreement or the court otherwise orders.
24 So far as the bundle is concerned, the court's bundle and one bundle for each side are in a different plight to additional bundles. My view is if a party wants more than one copy of the bundle then initially that party pays for it.
25 However, ultimately it is a matter for the costs assessor to work out whether the costs of preparing eight bundles which initially fell on the plaintiff should be allowed. I would have thought that two of the defendants' bundles had to be allowed in full because they were properly costs that should have been borne in the first instance by the defendants. Of course, the plaintiff should get 100% of the costs for those extra two bundles, not just 90%.
26 As to the others, it is a matter of what the costs assessor thinks is reasonable. Mr Lindsay asks for indemnity costs in respect of the bundles. I can see the reason why he asks for that and I think that probably there was waste in connection with the bundles but I consider it is more a matter for the costs assessor working out what is reasonable than justifying indemnity costs.
27 I then turn to the short minutes of order. I prefer the version tendered by the plaintiff to that tendered by the defendants for the reasons that I have already given. I have altered the money figure in order 2 to accord with what I have already said and the same alteration has to be made in paragraph 4. I adjust order 5 to deal with the production of ten per cent. I cross out 6 and I add:
"6. Noted that in the Federal Court the plaintiff discontinued in proceedings 3412 of 1998 against Messrs Quinn, Gardiner and Ludgate. Liberty to apply as to the costs consequent upon the discontinuance if not fully covered by the Federal Court Rules;
7. Order that the exhibits be returned after twenty-eight days unless an appeal is lodged in which case they are to be held pending the outcome of the appeal."
28 Another mistake in the judgment although a more minor one, is at para 216 which should read "$535,000" not $545,000. There are, of course, consequential amendments that need to be made to the arithmetic as a result of my errors and I have made the necessary adjustment for these when making the orders.