Hawcroft v Jamieson

Supreme Court of NSW|2017-11-20|Before: Gleeson JA

Solicitors: Jenkins Legal Services (Plaintiff) Fox & Staniland (Defendants) File Number(s): 2016/383547

Judgment

GLEESON JA: Judgment in this matter was delivered on 31 October 2017 (the principal judgment). The plaintiff, Jennifer Hawcroft, succeeded in challenging the validity of the chairperson resolution, being the resolution of directors of Hawcroft General Trading Co Pty Ltd (the company) on 28 June 2016, adopting the terms of the chairperson proposal tabled at a meeting of the directors of the company on 1 February 2016 and appointing the first defendant as chairperson of the company. A declaration was made that the chairperson resolution was invalid and of no effect. The plaintiff's amended statement of claim filed 21 February 2017 was otherwise dismissed, except in relation to the question of costs.
As to costs, I indicated my preliminary view at [290] of the principal judgment that the plaintiff's mixed success in the proceeding, whilst not overlooking the outcome in terms of setting aside the chairperson resolution, should be reflected in an order that the defendants, Michelle Jamieson and John Hawcroft, pay 60 percent of the plaintiff's costs of the proceedings. Directions were made for the exchange of written submissions if any party sought a different costs order to that proposed, and also in respect of the plaintiff's application for an order for interest on costs.

The costs orders which are sought

The defendants seek a different order as to costs to that which I indicated in the principal judgment at [290] was my preliminary view. The defendants' primary submission is that the plaintiff and defendants ought to pay their own costs of the proceedings. Alternatively, the defendants submit that the plaintiff should receive no more than 25 percent of her costs on the ordinary basis.
The plaintiff does not seek to disturb the proposed order that the defendants pay 60 percent of the plaintiff's costs of the proceeding.

Decision

The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides, relevantly, that subject to the rules of Court and the Act, costs are in the discretion of the Court, including by whom, to whom and to what extent costs are to be paid. Next, Uniform Civil Procedure Rules 2005 (NSW), r 42.1 provides that if the Court makes any orders as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs.
In Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219, the Court of Appeal (Ward JA, Emmett JA and Gleeson JA) said at [15]: Generally the "event" refers to the event of the claim or counter-claim, as the case may be, and may be understood as referring to the practical result of a particular claim. See also Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [39] (Gleeson JA; Meagher and Barrett JJA agreeing).
As White J observed in Leppington Pastoral Co Pty Ltd v Chief Commissioner of State Revenue (No 2) [2017] NSWSC 68 at [7]: … the relevant event for the purposes of the rule is primarily determined by reference to whether or not the plaintiff has obtained a judgment in its favour, even if the defendant has defeated some claims and has succeeded on others, or has succeeded on some issues.
However, it is also necessary to bear in mind the remarks of Hodgson JA in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]: Underlying the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair having regard to what the Court considers to be the responsibility of each party for the incurring of costs.
In the present case, the plaintiff succeeded in setting aside the chairperson resolution but failed on her claim that the Protocol was legally binding and enforceable. The defendants were unsuccessful on the Anshun estoppel issue which was raised by way of defence to the plaintiff's claim that the Protocol was legally binding and enforceable.
I accept the plaintiff's submission that the "event" is properly seen as the plaintiff's success in obtaining a judgment in her favour, in the form of a declaration that the chairperson resolution is invalid and of no effect. Prima facie the plaintiff is entitled to an order for payment of her costs.
It has been said that the Court will not ordinarily attempt to differentiate between those issues on which a party did or did not succeed unless a particular issue is "clearly dominant and separable": Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA). In my view, it is appropriate to do so in this case.
Here, the plaintiff's failure to establish her claim that the Protocol is legally binding and enforceable, although not an entirely separable issue, was plainly a dominant issue in respect of which the plaintiff sought (but failed to obtain) declaratory relief separate from the declaratory relief concerning the validity of the chairperson resolution. It is appropriate to discount the plaintiff's costs to reflect both the plaintiff's lack of success in that respect and the amount of time that was directed towards that issue, which was significant.
It is well-established that where there is a mixed outcome in the proceeding, the process of apportioning costs between the parties is to be carried out on a relatively broad-brush basis and largely as a matter of impression and evaluation: Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [47]; Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 at [26] (Ward J).
I am not persuaded by the defendants' submissions that my preliminary view that the plaintiff should receive 60 percent of her costs should be revised.

Interest on costs

Sections 101(4) and 101(5) of the Civil Procedure Act 2005 (NSW) empower the Court to order that interest be paid on any amount that is payable under an order for the payment of costs. Such interest will not run on a costs order unless the Court expressly orders that it do so: Spedding v Nobles (No 2) [2007] NSWCA 87 at [14]-[15]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [36] (Campbell AJA).
The plaintiff's application for an order for interest on costs is not opposed by the defendants. The affidavit of the plaintiff's solicitor, Ms Jenkins, affirmed 20 November 2017 establishes the length of time between the payment of the costs and disbursements by the plaintiff to her solicitors in tranches commencing on 8 July 2016 through to 7 August 2017 and the delivery of judgment on 31 October 2017.
The plaintiff seeks an order for interest on costs at the prescribed rate from the dates the costs are actually paid: Penson v Titan National Pty Ltd (No 3) at [36]. There is no reason not to adopt that course here. The terms of the order sought by the plaintiff are in similar terms to that ordered by Campbell J (as his Honour then was) in Lahoud v Lahoud [2006] NSWSC 126. An order in the terms sought by the plaintiff will be made with some modifications.
The terms of the order take into account the percentage of the costs that the defendants will be ordered to pay to the plaintiff: see Hancock v Rinehart (Costs) [2016] NSWSC 11 where Brereton J made orders for interest on costs in relation to a reduced percentage due to the mixed success of the plaintiff.
It is also appropriate to order that there be liberty to apply in the event of any difficulty in coming to the correct figure for interest as contemplated by order 2.

Orders

For the above reasons, I make the following orders: 1. Defendants to pay 60 percent of the plaintiff's costs of the proceedings. 2. The defendants pay to the plaintiff interest on costs and disbursements, at the prescribed rate as defined in s 101(7) of the Civil Procedure Act 2005 (NSW), on the Allowed Percentage of each amount of costs and disbursements actually paid by the plaintiff, from the date of payment by the plaintiff of each such amount of costs and disbursements until such time as the defendants have paid the costs due to the plaintiff pursuant to order (1), where: 1. the Allowed Percentage equals ((Y/X) x 100%); 2. Y - equals the total amount of costs and disbursements allowed on assessment to the plaintiff under order (1); 3. X - equals the total amount of costs and disbursements which the plaintiff has paid or is liable to pay to her legal advisers in connection with these proceedings. 1. There be liberty to apply in the event of any difficulty in working out interest under order (2).

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 November 2017

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