Coomera Resort P/L v Kolback Securities Ltd & Ors [1998] QSC 216

The focus in that passage is evidence that expenses could not be recovered as part of the costs of the action. It is by no means clear, since the question of quantum was not developed at this stage of proceedings, whether there are damages in this category. Further, the facts in Salvadori, where protective measures were necessary, are rather different from the present case. If the incurring of such expenses can be proved, even though they may not be precisely quantifiable, they may be recovered if conspiracy is proved. If they are proved, the fact that they have been incurred will establish the necessary element of damage for the purpose of proving the tort of conspiracy."

2 In McGregor on Damages, 16th Ed., para.333 the relevant principle is stated in the following terms:-

"The expenses incurred by the plaintiff as the result of the tort ... for which recovery is allowed in the cases are generally expenses incurred to avoid or minimise a loss. This is so where money is laid out ... upon extensive inquiries to detect the extent of the defendant's unlawful machinations ... in conspiracy."

3 Damages are at large in this kind of case. As Brooking J said in Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (No.2) (1990) 2 VR 636, 645:-

"Damage is the gist of the action with ..... conspiracy. But the plaintiff is not obliged to prove what is sometimes called specific and sometimes called special damage. He will establish his cause of action if he induces the tribunal of fact to infer from the tendency of the defendant's act in all the circumstances, that the act caused him some damage: Exchange Telegraph Co. Ltd. v Gregory and Co. [1896] 1 Q.B.147; Goldsoll v Goldman [1914] 2 Ch.603; Pratt v British Medical Association [1919] 1 K.B. 244; British Industrial Plastics Ltd v Ferguson [1938] 4 All E.R. 504, at p.511; Bents Brewery Co. Ltd. v Hogan [1945] 2 All E.R. 570, at p.578 and British Motor Trade Association v Salvadori [1949] Ch.556, at pp.566-7. It has often been said in these and other reported cases that damages are at large: see, for example, in addition to the decisions just cited, G.W.K. Co Ltd v Dunlop Rubber Co Ltd (1926) 42 T.L.R. 376, at p.377 and Coal Miners Industrial Union of Workers of Western Australia, Collie v True (1959) 33 A.L.J.R. 224, at p.228."

4 In principle, all damages foreseeable at the time of the tort are recoverable subject to the duty to mitigate. Evidence relied on by the plaintiff to establish loss relates to various expenditures which, it is submitted, were incurred in attempting to investigate and unravel the Landbase issue. As a matter of broad general principle, once the issue of Landbase's entitlement to commission was opened up, it would be reasonably foreseeable that there may be an investigation on Coomera's behalf whether a conspiracy existed between Bond and Dietz, and that making the investigation would involve perusal of documentation which might tend to prove its existence and interviewing people who may reveal facts of which they were aware with a view to establishing what had happened.

5 In principle, if the exercise extended to constructing a theory (which, by reason of the findings in the principal judgment, failed) that Pitt was involved in the arrangement between Bond and Dietz, there is no reason why PRD should bear the costs of that aspect of the investigation.

6 It follows from Salvadori that anything recoverable as costs is not recoverable as damages. The writ in the present case was issued on 26 August 1994. There had been a formal demand by PRD's solicitors for payment of the first instalment of commission in November 1992, but that had gone quiescent following correspondence entered into after the decision at an MCM that Pitt should write to PRD about it. By August 1993, at the latest, the stance being taken by Coomera was that PRD would be paid no commission until the Landbase matter was resolved. The immediate stimulus for the investigation was that Bond had lost Omura's confidence and had started proceedings by issuing a writ on 20 November 1992 in respect of breach of his agreement with Coomera. His appointment as Coomera's alternate delegate for the purpose of attending MCM's had been terminated at an MCM on 25 November 1992. The role that he had previously performed was given at that meeting to Mr Ikeda, who had commenced an involvement with the affairs of Coomera in relation to the venture agreement in the early days of that month.

7 At an MCM on 27 November 1992, the PRD commission issue was discussed. It was agreed that Pitt would write a letter approved by Omura, after consultation with his Japanese lawyers. Bond's "compensation claim" was also discussed with reference to what was said to be a deadline of 1 December 1992 to respond to it in court. Landbase was also discussed. Omura asked Ikeda to find out about it. It is apparent from this that the immediate focus of attention was on Bond's action. PRD's involvement in litigation was still far in the future.

8 The difficulty about the plaintiff's claim is that while there is no doubt that an investigation into the circumstances of Landbase's inclusion in the venture agreement was done at considerable expense, the available evidence suggests that the information concerning Landbase was primarily sought in connection with the litigation involving Bond. It is difficult to categorise the moneys spent in connection with the Bond action as recoverable in the present proceedings under the principle in Salvadori. As a general proposition the costs of defending the Bond action would have been recoverable in that action. The fact that some of the information was useful with respect to the present litigation which was not in contemplation at the time when it was incurred was fortuitous, but, in my view, expenses incurred in collecting it are not recoverable either as damages or, probably, as costs in the present action. This accords with the opinion of Mr Garrett, an experienced costs assessor, who deposes that in his opinion none of the fees and outlays associated with a category described in an affidavit of Mr Hancock were likely to be recoverable as party and party costs in the present action.

9 Mr Hancock of Deacons Graham & James, deposed that his firm in a previous manifestation acted for Coomera in the proceedings commenced by Bond. He was retained on about 27 November 1992. He rendered a number of accounts until the end of July 1995. There is reference in an account in June 1994 to meeting with Mr Conrick of Clayton Utz in relation to the joint venture. Up to that time Mr Hancock's work was concerned with Bond's proceedings. Brief summaries of work done after June 1994, to the extent that they are helpful, suggest that the expenditure related mainly to the Bond action although some concerned consultations with Clayton Utz about the present action, involving the provision of information concerning Landbase.

10 Mr Garrett's opinion is not wholly self-explanatory but what Mr Hancock essentially says is that in estimating the break-up of expenditures, he used, as one category, work related to investigations about Landbase's existence and place of incorporation, consideration of how it came to have a commission entitlement under s.37 of the venture agreement and how that offered to Coomera a ground of defence to Mr Bond's claim. Mr Garrett appears to say that the work in that category and, apparently, also in respect of providing any assistance to Mr Conrick concerning matters relevant to Landbase and the venture agreement, would not be recoverable as costs in the present action.

11 In a similar vein is evidence from Mr Kuniya, a Japanese lawyer, who acted for Coomera with respect to the venture agreements since the end of November 1992. He said that he was familiar with Bond's proceedings against Coomera Resort. He deposed that a specified percentage of his fees allotted to the Bond litigation would be referable to the exercise of investigating and attempting to unravel the Landbase issue and unravelling the transaction, involving PRD, to pay the secret commission to Bond and Nagano via Landbase.

12 Mr. Ikeda deposed that he had been engaged through his company Urbanscope as agent for Coomera in connection with the venture agreement at about the beginning of November 1992. He noticed that Landbase was to receive commission and was requested by Omura to investigate the circumstances surrounding that entitlement. He said he caused investigations to be made by Mr Hancock and discussed the results with him. He said he collected and reviewed the contents of several boxes of documents recovered after Bond's employment had terminated, especially over the Christmas vacation in 1992. He deposed that he made a special trip to Osaka to discuss documents relevant to Landbase with Omura and his staff. He said that had he not been engaged in doing this he would have been engaged in other activities related to the venture project. He deposed that the Landbase issue had a considerable impact on the scheduling of his other work for Coomera. Once again, this was not instigated in connection with the present litigation.

13 Mr Robbie deposed in his first affidavit that he was appointed as consultant to Coomera in about April 1994 to "advise with respect to actions under the venture agreement". One aspect of this was the possibility of Bond having received a secret commission through Landbase. Under his instructions he was required to collate, collect and peruse documents of Coomera and other associated companies in an attempt to understand whether and if so what sort of a conspiracy had occurred. He prepared two reports, one to Omura dated 16 May 1994 and the other to Clayton Utz on 24 August 1994.

14 He also deposed in his second affidavit that he received instructions to review and investigate the previous decisions taken in the course of the venture agreement because of Omura's concern that decisions taken may have been affected by wrong doing. It is apparent from Mr Robbie's reports that he suspected Pitt as well as Bond and PRD of being involved in a conspiracy. This expenditure, he deposed, would have been additional to the money spent unravelling the transaction involving Landbase, Bond, Nagano and Dietz.

15 It is apparent from what has been said that the principal focus of efforts to unravel the arrangement under which Landbase became entitled to commission was the litigation commenced by Bond. The most proximate activity to the present litigation is that of Robbie. He was engaged about the beginning of March 1994 and as mentioned above he prepared reports which went to Omura in May 1994 and Clayton Utz a few days before the writ was issued. However, much of the focus in his enquiries appears to have been the role of Pitt. At pp.116-117 of the principal judgment reference is made, in the context of whether the agreement would have proceeded, to the issue of "fair burden spirit" of the agreement becoming prominent, at the latest, from the time when Robbie became a consultant. Further, information concerning the Landbase transaction was well known to those advising Omura by that time and there is no convincing evidence that Robbie contributed any original enquiries with respect to that aspect of the matter. There is no convincing reason why revisiting and reanalysing matters which were already known should be considered to fall within the category of damages referred to in Salvadori.

16 I have had due regard to the proposition that damages are at large in cases of this kind. The difficulty with this case is that, assuming the investigation into the Landbase issue fell properly within the category of defensive measures referred to in Salvadori, the reason why the investigation was undertaken at the time when it was undertaken was primarily concerned with defending the claim by Bond. It is true that about the same time there had been a demand from PRD for payment of the first instalment of commission. Had PRD at that time pursued the issue of commission in legal proceedings the information collected in this litigious context would have been arguably recoverable as costs in that action. One would think that any investigations reasonably related to defending the claim against Bond would have been recoverable as costs in that action. The mere fact that they will probably be irrecoverable against Bond does not convert them into damages of the kind referred to in Salvadori.

17 One other matter tending against the plaintiff's categorisation of the expenditure is that PRD and Dietz were not joined as defendants when the writ was initially taken out. They were joined by order of 23 February, 1995. PRD had itself commenced proceedings to recover the commission on the transaction from Coomera and Kolback by writ dated 29 August 1994.

18 The conclusion is that the claim for damages of the kind referred to in British Motor Trade Association v Salvadori has not been established. The four findings necessary to establish tortious conspiracy are set out at pp.55-56 of the principal judgment and are as follows:-

"To summarise the position with respect to conspiracy:

1. I am satisfied that Bond and Dietz combined together to allow Bond and probably Nagano to obtain, through Landbase, part of the commission payable to PRD in return for an expectation that PRD would obtain the right to commission.

2. To make such an arrangement was contrary to the statutory provisions relating to secret commissions and therefore an unlawful act for the purpose of the law relating to tortious conspiracy.

3. There was an intention at the time the agreement was made to injure Coomera in that, if necessary, Bond would subjugate Coomera's interests to ensure that PRD would obtain the right to commission, although the predominant intention was to implement the combination in 1, and the evidence does not establish that Coomera's interests were subjugated.

4. Whether damage was caused depends on whether it is established whether there are damages of the kind referred to in British Motor Trade Association v Salvadori."

The fourth finding in that group is not established. As one element of the tort of conspiracy is not established the claim based on tortious conspiracy fails.

19 In the circumstances it is unnecessary to consider the submissions made on PRD's behalf that some other form of damage must be proved before expenses of defensive measures can be recovered and that any damages awarded for tortious conspiracy should be set off against the commission forfeited in consequence of the findings in Ch.34 of the principal judgment.

20 The formal finding is that the plaintiff did not suffer loss or damage of the kind referred to in British Motor Trade Association v Salvadori. The claim insofar as it is based on tortious conspiracy is dismissed. The question of costs of this phase of the matter will be resolved in conjunction with the question of costs of the action which was, by agreement, deferred until a later dated.