Capogreco v Rogerson

Capogreco v Rogerson - [2016] NSWCA 61 - NSWCA 2016 case summary — Zoe

Judgment

BASTEN JA: In January 2006 the applicants purchased shares in a racehorse. The horse did not live up to expectations and, in April 2012, the original purchaser (who had retained a share in the horse) namely the first respondent, Mr Rogerson, sold the horse to the second respondent, Mr Bruce McHugh.
The applicants asserted that they had not consented to the sale of their shares in the horse and brought proceedings in the Equity Division in December 2013.
The trial ran for four days before Bergin CJ in Eq. In September 2015 the Chief Judge delivered judgment dismissing the claims brought by the applicants against Mr Rogerson for misleading or deceptive conduct but finding that Mr Rogerson did not have authority to sell the applicants' shares in the horse and making declarations as to their interests in the horse and an order for account against Mr McHugh. The applicants reached a settlement with Mr McHugh.
Subsequently, on 23 October 2015, the Chief Judge made orders with respect to costs. It is from those orders that the applicants now seek leave to appeal.
The orders required that the applicants pay 75% of Mr Rogerson's costs and that Mr McHugh pay 25% of the applicants' costs. Before the Chief Judge the applicants had submitted that costs should be awarded in favour of the successful party on each of the major issues addressed at trial. The Chief Judge, who had had the benefit of hearing the trial, declined to make such an order on the basis that it would give rise to a burdensome process of disaggregation and assessment, in circumstances where much of the evidence went to more than one issue. Although the Chief Judge varied the figures proposed on behalf of Mr Rogerson, she adopted his approach, namely that there should be a broad apportionment of costs in the form of the orders now sought to be challenged.
As the applicants accepted, Mr McHugh was innocent of any wrongdoing, but they asserted that he did not obtain a good title to their interests in the horse as a result of Mr Rogerson's conduct. The applicants established that Mr Rogerson had been wrongful in seeking to sell all interests in the horse, he having actively defended at trial his authority to sell, unsuccessfully. The fact that they ultimately obtained no relief against Mr Rogerson was significant but primarily reflected their failure on the misrepresentation claim. It was said to be unfair that the applicants should have to pay the greater share of his costs of the proceedings.
So far as it goes, that submission was no doubt correct: however, as the applicants also ran an additional case against Mr Rogerson, which was unsuccessful, they accepted that they should pay the costs in respect of that cause of action.
It was difficult for the applicants to assert that the trial judge was not conscious of the various issues raised in the proceedings before her, or that she failed to take them into account. Any conclusion that she erred in that regard would have flown in the face of the fact that one month earlier she had delivered a 76 page judgment dealing with the issues agitated in the proceedings before her. So much was conceded, but the submission for the applicants was that her assessment of how the time was spent in the course of the trial could not be relied upon as a proxy for the costs of a party.
In their written submissions the applicants based their case primarily upon the failure of the primary judge to give adequate reasons for her orders as to costs. The applicants agreed that the general principles governing the obligation to give reasons were settled, but nevertheless suggested that there was a question of general importance as to the adequacy of reasons required where apportionment of costs was in issue.
This line of challenge was not relied upon as a significant basis for the present leave application. Indeed, there was no issue of general importance in respect of that issue. The judgment required in this case involved two steps, the first of which was to determine whether costs should be awarded on an issues basis or whether an overall apportionment should be made. Once it was accepted that the issues were inextricably intertwined, there was every justification for making an overall apportionment. It may be that the parties do not disagree up to that point; the question is whether it was possible and appropriate to determine the matter on that basis.
In order to explain that issue, it is necessary to say something about the way in which the separate causes of action arose with respect to misrepresentation and the lack of authority to sell. The original agreement between the applicants and Mr Rogerson for the purchase of the horse was oral and occurred in January 2006. What was said at that time was the basis, in a general sense, for both the applicants' complaints of misrepresentation and for establishing the principles as to how authority to sell could be obtained in due course. In other words, it was at that stage that the basic arrangement between the parties was entered into.
What then happened in April 2012 was a separate question, not as to the manner in which authority to sell could be granted, but whether, the relevant steps having been identified, those steps were in fact followed. The difficulty in understanding how the evidence should be apportioned and the costs incurred apportioned thus arose from the fact that much of the evidence went to what had happened in January 2006. Numerous causes of action were pleaded in the course of the proceedings, some of which, including the final claim as to misrepresentation, were only raised at a very late stage and after the evidence had been prepared.
However, it does not follow that the costs of preparation of evidence for the purpose of several causes of action which were later added to, but with lack of success as to the new pleading, should all be allocated to the cause of action on which the applicants finally succeeded. There was much expansion and contraction of the case during the pre-trial process and up to the final submissions. So much is commonplace in litigation, but the idea that a costs assessor could and should unpick and allocate costs after the event is not only impractical but wrong in principle; and even if that course could be undertaken, the costs, as the primary judge stated, and the burden involved in that exercise would not be justified.
In these circumstances, it was understandable that the judge accepted that the issues were inextricably intertwined and there was every justification for making an overall apportionment. However, the reason for doing so removes any possible suggestion that some precise calculation should be made. It was inherently a matter of impression for the trial judge. For that, the particular apportionment adopted did not require extensive reasons, the judge set out with clarity and reasonably briefly the factors she took into account and the result of her evaluation of those matters.
It is true that she did not seek to unpick the stages in the proceedings and how the evidence and the expenses involved in preparation of evidence might be allocated between causes of action. That course was not required. In these circumstances, it would be quite inappropriate to grant leave to appeal. The application should be dismissed. The applicants must pay the respondents' costs of the application.
The respondent to the application sought indemnity costs based on a Calderbank letter dated 17 February 2016 from the solicitors for Mr Rogerson to the applicants' solicitors. The applicants submitted there was no element of compromise, the letter stating in terms, "Withdraw and pay all of our costs to date within 48 +hours."
There was no evidence that the sum of costs claimed was not the full amount of costs incurred on the leave application to that time. It was therefore true that the offer did not include a true compromise. The offer was, in effect, based upon a capitulation by the applicants in circumstances where they would still have to pay a fixed amount by way of costs. That does not constitute an adequate compromise for the purpose of varying the order which has been indicated, namely that costs will be payable on a party and party basis.
SIMPSON JA: I agree.

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