[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: On 21 December 2022, this Court dismissed an appeal filed by the applicant, Gilmore Finance Pty Ltd, as incompetent, and dismissed a summons seeking leave to appeal.
The only substantial relief sought on appeal was the removal of the first and second respondents as trustees of two unit trusts. The third respondent was the sole director of the first and second respondents. The first, second and third respondents retained the same solicitors and senior and junior counsel and led the defence of the proceedings in this Court.
The fourth and fifth respondents were unit holders of the trusts. The applicant had made separate claims against them at first instance (based on failure to pay subscription monies and other breaches of contract) which were dismissed by the primary judge and were outside the scope of the appeal. However, the fourth and fifth respondents were separately represented, both at trial and in this Court, by a different firm which briefed junior counsel. In this Court they filed relatively short written submissions, which adopted parts of the submissions of the first, second and third respondents, and said that in light of the failure to challenge the dismissal of the claims in contract which had been made against them, the appeal should be dismissed against them.
At the hearing, the fourth and fifth respondents' roles was small. Their submissions occupied fewer than four pages of transcript, much of which was directed to questions from the Bench as to why they were taking an active role. Their written submissions were more substantial.
Paragraph 47 of the Court's judgment was as follows:
For those reasons, the notice of appeal should be dismissed as incompetent, and the summons seeking leave to appeal should be dismissed. Costs would ordinarily follow the event. However, a question arises whether Gilmore Finance should be liable to pay a second set of costs on the part of the fourth and fifth respondents (the authorities dealing with cases where separately represented respondents who are successful should each receive a costs order are addressed in Local Democracy Matters Incorporated v Infrastructure NSW (No 2) [2019] NSWCA 118 at [18]-[24]).
When dismissing the appeal and the summons seeking leave to appeal, the Court made directions concerning the filing of submissions concerning costs, as had been requested by the fourth and fifth respondents. The submissions contemplated by the directions have now been supplied. There was no dispute that the applicant should pay the costs of the first, second and third respondents, and indeed those parties have agreed to a quantification of that order. The parties are divided as to whether the applicant should also pay the costs of the fourth and fifth respondents (submissions filed 9 and 22 February 2023).
The fourth and fifth respondents relied on open correspondence stating that they had been wrongly joined, and a without prejudice offer which proposed dismissing the appeal as against the fourth and fifth respondents with no order as to costs. That was met by a response that Gilmore Finance was agreeable to that proposal on the condition that they did not oppose the appointment of a new trustee. That was not acceptable to the fourth and fifth respondents, who say that they wished to retain the existing trustees and did not want to risk any lack of opposition to their removal being used by Gilmore Finance to bolster its claim.
There was other correspondence, to the effect that the fourth and fifth respondents might file a submitting appearance, and as to whether the fourth and fifth respondents were appropriate parties, which need not be summarised.
The fourth and fifth respondents thereafter remained as parties, and "embraced their role as active parties: they made their own substantial submissions (particularly in writing), rather than relying upon the submissions made by other parties", and on that basis sought to distinguish what had been said in Local Democracy Matters Incorporated v Infrastructure NSW (No 2) [2019] NSWCA 118 at [18] and [23]. They said that it was relevant for the Court to know that the unitholders other than Gilmore Finance did not consent, and was not apathetic in respect of the proposal to replace the trustee. They said that filing a submitting appearance would not convey that stance. They said that they should not be denied their costs of an unmeritorious appeal, and relied upon what had been said in HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79 at [14], namely:
the ultimate question is not (as the respondents submit) whether they have acted reasonably, nor whether there has been shown to be duplication. The question is whether it is reasonable for the unsuccessful litigant to bear more than one set of costs.
We do not accept these submissions. As the applicant pointed out in response, they do not address the principle stated in Statham v Shephard (No 2) (1974) 23 FLR 244 at 246, and regularly applied in this Court, including in Local Democracy Matters and HP Mercantile Pty Ltd v Hartnett, which is that "the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases." In the present case, there was no possibility of conflict between the trustees and their owner and controller on the one hand, and the unitholders who joined with them in opposing the removal of the trustees. The fourth and fifth respondents could have retained the same firm and counsel, who could have made it clear that they opposed the removal application. The fourth and fifth respondents could also have filed an appearance and put on a submission (or asked the first, second and third respondents to do so) indicating that they opposed the application, but otherwise not taking any active part in the proceedings in this Court.
To be clear, the fourth and fifth respondents were perfectly entitled to adopt the active stance that they did. But the question which arises is whether it is reasonable for the unsuccessful applicant to bear two sets of costs when, if either of the courses mentioned above had been adopted, there would only have been one set of costs.
This is a case where there is no reason to depart from the general principle stated in Statham v Shephard (No 2). The applicant should only have to pay the costs of the first, second and third respondents.
The costs of the dispute as to costs are severable from the rest of the costs of proceedings in this Court. Those costs should follow the event.
Accordingly, we make the following orders:
By consent, the applicant is to pay the first to third respondents' costs of the Notice of Appeal filed 10 August 2022 and Summons seeking leave to appeal filed 9 September 2022 in the fixed amount of $127,000.
Subject to 3 below, no order as to the costs in this Court of the fourth and fifth respondents, with the intent that they bear their own costs.
The fourth and fifth respondents to pay the applicant's costs of their application for costs in this Court.
[3]
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Decision last updated: 28 February 2023