Fifteenth Eestin Nominees Pty Ltd & Ors v Rosenberg & Anor

1 On 27 May 2009, the Court dismissed this appeal[1] and proposed the following orders:

1. Barry Rosenberg, as executor of the will of Emanuel Rosenberg, is substituted as the first respondent to the appeal in place of Emanuel Rosenberg, and the title to the appeal is amended accordingly.

1. The appellants pay the respondents' costs of and incidental to the appeal.
2. The appellants pay the respondents' costs of the proceedings below, including any reserved costs.[2]

2 On that day, a direction was made that the parties file written submissions regarding the proposed orders after they had read the Court's reasons for judgment. The parties were also asked to indicate in those submissions whether a further hearing on the matter of costs was necessary. The parties have filed their submissions. As no further hearing has been requested, we have reached our decision on the basis of the written submissions. Paragraphs 1 and 2 of the proposed orders are uncontroversial, and the following reasons concern paragraphs 3 and 4 only.

3 It is necessary to begin by revisiting some of the complex history of this matter. The appeal concerned a decision of a Trial Division judge, holding that the second and third appellants, Sabrina and Ian Berger, were not entitled to various interests in property.[3] Those interests were claimed on the basis of what was said to have been Mr and Mrs Berger's detrimental reliance on representations made to them by Emanuel Rosenberg, Mrs Berger's father. The appellants also appealed from his Honour's decision that Mr Rosenberg was entitled to exercise his power of appointment to remove the first appellant, Fifteenth Eestin Nominees Pty Ltd, as the trustee of the E Rosenberg Investment Trust and to appoint the second respondent, Glen Oak Nominees Pty Ltd, in its stead. The appeal concerned 76 grounds of appeal, none of which were successful.

4 The judgment the subject of the appeal was given on 27 April 2007.[4] Despite the resolution of the matters raised by the appeal, the proceeding before the judge below remains on foot. At the time of giving judgment, the learned trial judge made the following observation:

[O]ne outstanding issue is whether the vesting of trust property in Glen Oak is subject to an equitable charge or lien by Fifteenth Eestin over the property of the Investment Trust to secure its right to be indemnified in respect of the liabilities of the Investment Trust.[5]

5 On 14 June 2007, the judge below made orders which (among other things) provided for the future conduct of the proceeding insofar as it related to the above matters and reserved 'the costs of, and occasioned by, the Judgment and the application for directions, including the costs of the hearings on 31 May 2007 and 5 June 2007'.

6 The notice of appeal was filed in this Court on 28 June 2007. At a directions hearing on 14 September 2007, his Honour granted the parties liberty to apply for the matter to be re-listed for mention following a mention before the Court of Appeal. The proceeding has not since come back before his Honour, and the issues relating to the right of indemnity, the equitable charge or lien, as well as the costs of the proceeding below, remain outstanding.

7 Counsel for the appellants submitted that paragraph 3 should be limited to the costs of the appeal and should not refer to 'costs of and incidental to the appeal' because the latter formulation 'would result in a more generous allowance of costs than the usual party/party order'. It was submitted that there was 'no justification for departing from the usual party/party order for costs'. Counsel for the respondents submitted that the language of paragraph 3 was appropriate and that, for consistency, paragraph 4 should order the appellant to pay the respondents' costs of and incidental to the proceedings below.

8 In our view, paragraph 3 of the order should remain as drafted. This is not because the words 'and incidental to' have any significance. Quite the contrary. But to omit them now would amount to an implicit acceptance of the appellant's contention that those words do have significance.

9 Under s 24 of the Supreme Court Act 1986 (Vic), 'the costs of and incidental to all matters' are in the discretion of the Court, which has full power to determine 'by whom and to what extent the costs are to be paid'.[6] As this statutory language suggests, an order for 'the costs of the proceeding' is synonymous with - and has the same effect as - an order for 'the costs of and incidental to the proceeding'. That has been the conventional understanding, and the consistent approach of the Taxing Master of this Court, for many years.[7] When one party is ordered to pay the other party's costs of a proceeding, that liability extends to the costs of such preparatory steps as are shown to be reasonably connected with the proceeding.[8] That is so whether or not the words 'and incidental to' are included in the order.

10 In relation to paragraph 4 of the proposed orders, counsel for the appellants submitted that this Court should not make any order regarding the costs of the proceeding below:

The question of the costs of the proceeding below has not yet been adjudicated upon by the trial Judge, and that very issue is awaiting hearing by him, together with the remaining issues in the proceeding ... The final formulation of any order for costs of the proceeding below will, to some extent, depend upon the outcome of the remainder of the proceeding below in relation to the claim for a lien, and ought to be left to the trial Judge.

11 In our view, this submission should be accepted. The question of the costs of the proceeding below should properly be dealt with by the trial judge, once all matters before him are resolved.

12 Counsel for the respondents submitted that it was unnecessary for the Court to make any order under Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 63.26 in relation to the costs of the first appellant. Rule 63.26 provides that:

Unless the Court otherwise orders, a party who sues or is sued as trustee or mortgagee shall be entitled to the costs of the proceeding out of the fund held by the trustee or out of the mortgaged property in so far as the costs are not paid by any other person.

The trial judge's declaration, upheld on appeal, was that the first appellant had ceased to be the trustee of the E Rosenberg Investment Trust prior to the commencement of the proceedings below. Accordingly, the first appellant was not sued in its capacity as trustee. Thus, it was submitted, r 63.26 is inapplicable.

13 We agree with this submission. Rule 63.26 is inapplicable and, accordingly, no question arises as to whether any contrary order should be made.

1. Barry Rosenberg, as executor of the will of Emanuel Rosenberg, is substituted as the first respondent to the appeal in place of Emanuel Rosenberg, and the title to the appeal is amended accordingly.

1. The appellants pay the respondents' costs of and incidental to the appeal.

[1] Fifteenth Eestin Nominees Pty Ltd & Ors v Rosenberg & Anor [2009] VSCA 112.

[2] The proposed orders also provided for liberty to apply. As the parties have had the opportunity to make written submissions, such an order is no longer necessary.

[3] Rosenberg & Anor v Fifteenth Eestin Nominees Pty Ltd & Ors [2007] VSC 101.

[7] See LL Oliver_, The Law of Costs_ (1960), 3 (LL Oliver was then the Taxing Master of the Supreme Court).

[8] Re Hudson (1986) 11 FCR 141, 143-4 (Pincus J).