Domino Hire Pty Ltd v Pioneer Park Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4398/99 DOMINO HIRE PTY LTD & ANOR v PIONEER PARK PTY LTD (In Liq) & ORS

JUDGMENT His Honour: 1 These were proceedings for the removal of liquidators for bias. The plaintiffs were successful; the liquidators were removed: see Domino Hire Pty Ltd v Pioneer Park Pty Ltd (In Liq) [1999] NSWSC 1046 ("my judgment"). The main burden of the facts as contested before me is set out in my judgment [1] to [13]. The principal opposing contentions put by the parties are summarised in [23]. In the result, I found that the liquidators were not guilty of any actual partiality [26], but that there was an appearance of lack of independence which required their removal unless they resigned [30]. They did not resign and were removed by order. 2 It has been contended on behalf of the defendants that in this case costs should not follow the event and that the plaintiffs should not have the costs of the proceedings generally ordered in their favour. It is said that although an order was made for the removal of the defendants, there were issues determined against the plaintiffs in the course of the proceedings and that the appropriate course was for there to be no order as to costs. The principal issue that was determined in the defendants' favour was my finding that there was no actual partiality on their part. A long list of "issues" said to have been decided in the defendants' favour is set out in the written submissions on their behalf. The Law 3 The Supreme Court Act 1970 ("the SCA") by s 76 confers on the Court a general discretion as to the costs of proceedings. The Supreme Court Rules ("the SCR") provide by Part 52A r 11 as follows: "11 If the Court makes any order as to costs, the Court shall, subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs."

The Federal Court of Australia Act 1976 has in s 43 a similar provision to s 76 of the SCA, the Federal Court Rules do not have a provision corresponding with SCR Part 52A r 11. In courts with a general discretion as to costs, and no rule to the effect of Part 52A r 11, the relevant principles were stated as follows by Toohey J in Hughes v Western Australian Cricket Association (1986) ATPR 40-748 at 48,136 as follows: "Subsection 43(2) of the Federal Court of Australia Act 1976 vests the award of costs 'in the discretion of the Court of Judge'. The Federal Court Rules do not purport to qualify that discretion. The only rule to which reference is necessary is O 62 r 15 whereby, when costs are reserved, those costs follow the event 'unless the Court or a Judge otherwise orders'. The discretion must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect. 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey [1920] 2 KB 47. 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 he has failed. Forster v Farquhar [1893] 1 QB 564. 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 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 of law. Cretazzo v Lombardi (1975) 13 SASR 4 at 12."

Those three principles were cited by the Full Federal Court (Gummow, Hill and French JJ) in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271. Their Honours continued: "The propositions enunciated in that case are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. In Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213; 28 ALR 201, Fisher J regarded the discretion to apportion costs as one to be exercised only in the most exceptional circumstances. Nevertheless he accepted that where a considerable part of the trial is taken up in determining issues upon which a party fails, it is a proper exercise of the discretion to reduce the costs allowed to that party. Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demand of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs."

Turning to the situation under the SCR, in Waters v P C Henderson (Australia) Pty Ltd 6 July 1994 NSWCA unreported Mahoney JA (with whom Kirby P and Priestley JA agreed), after setting out the predecessor of Part 52A r 11, said, referring to Ritchie's Supreme Court Procedure: "In the notes to the Rules, Pt 52.11.2, the following appears: 'Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupy the bulk of the time taken by the proceedings. Nevertheless 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.' Reference is made to cases, some of which I have considered. They appear generally to support the principle which is stated in the Practice. I think that was the principle to which his Honour had regard in the present case. I do not think that it would have been appropriate for his Honour to attempt to determine which issues were won by particular parties, to what extent they were won, and what was the amount of time spent on each of the issues so as to apportion costs accordingly. I think that would have been contrary to the trend of decision in relation to the exercise of discretion as to costs. I have dealt with this matter at some length - perhaps at unnecessary length - in deference to the submissions made by Mr Wilson and Mr Stevenson. But, in the circumstances, I am of the opinion that it is not appropriate for the Court to interfere with the judge's discretionary order. I would dismiss the appeal in relation to costs."

Santow J considered the application of these principles in Ronnoc Finance Ltd v Spectrum Network Systems Ltd 19 November 1997 SCNSW unreported. Conclusion 4 In this matter I do not perceive that there were any issues, or any issues of any magnitude, which were clearly separable and determined in the defendants' favour. The evidence essentially showed a history of the initiation and course of the administration and the liquidation. It is perhaps too much to say that it was a seamless web, but certainly there was a continuity and unity in the evidence, all of which had to be considered to determine whether there was actual partiality displayed, an apprehension of partiality, or neither. This is illustrated, I believe, by an examination of the statement in my judgment of the facts, the contentions and my reasons. True it is that in respect of some actions of the liquidators which were contended to establish actual partiality, I rejected that contention. However, as I have said, the entire course of the defendants' actions in relation to the company had to be examined to come to conclusions on the matter, including the conclusion which led to the plaintiffs' success in the proceedings. Whether there is any real difference between the respective approaches of the Federal Court and the Court of Appeal as set out above, or flowing from the presence in the SCR of Part 52A r 11, may be a moot point. But, in my view, in this case, it does not much matter whether one approaches the matter through the conclusions stated in the Court of Appeal in the Waters case or through the formulation in Hughes v Western Australian Cricket Association and Dodds Family Investments. One basis on which the plaintiffs put their claim was not upheld, but in essence they obtained the whole of the relief which they sought. On the one hand it may be said simply that it does not appear to the Court that some order other than the award of costs generally to the plaintiffs should be made. On the other hand, as I have said, I do not think that there are readily separable issues which took considerable time and upon which the generally successful plaintiffs failed, so that there is a requirement of justice that the generality of a costs order in the plaintiffs' favour should be diminished. 5 The result is that there will be an order that the defendants pay the plaintiffs' costs of the proceedings. …oOo…

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