Igaki Australia P/L & Anor v. Coastmine P/L & Ors [1994] FCA 872

The applicants' proceedings against the fifth respondent are dismissed;

including reserved costs, of and incidental to those proceedings to be taxed.

Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

AND: R.1. GAYRUEN Second Applicant AND: COASTMINE PTY. LTD. First Respondent AND: ROBERT JAMES BURGESS Second Respondent AND: NICHOLAS CASSAR KARLOS Third Respondent AND: XASUO WATANABE Fourth Respondent AND: PAUL GERRARD STEER Fifth Respondent AND: XASUO WATANABE Cross-Claimant AND: COASTMINE PTY. LTD. First Cross-Respondent AND: ROBERT JAMES BURGESS Second Cross-Respondent AND: NICHOLAS CASSAR KARLOS

On 2 November I published my reasons for deciding to dismiss the applicants' claims against the first, second, third and fifth respondents and also for my refusal to make any order that the first to third respondents recover their costs of the action from the applicants. As to the entitlement of the fifth respondent to his costs of the action

"Irrespective of any findings that might be made concerning Steer's conduct, he did not cause the applicants any of the loss they suffered. This consideration, together with the absence of any justification for implicating Steer in the 'black money' discussions seems to me at the moment to make it inappropriate to deprive him of his costs of the proceedings. I will, however, give the applicants an opportunity, if they wish, to contend for a contrary outcome on these costs."

The applicants have now submitted that I should deprive the fifth respondent of all or, alternatively, of part of his costs even though he has been successful in resisting the applicants' claims against him. They advanced three reasons why one or other of these orders should be made: firstly, to reflect disapproval of Steer's conduct in involving himself in the attempt by Burgess and Karlos to dupe Igaki into parting with the $4 million he ultimately caused the first applicant to pay to the first respondent; secondly, to reflect the time taken up in litigating Steer's untruthful

assertion of minimal involvement in the preparation of the "private sale" document and, thirdly, to reflect my findings

I have been referred to a number of authorities, including Cretazzo v Lombardi (1975) 13 S.A.S.R. 4 where Jacobs J at page 16 sounded what he called "a note of cautious disapproval", designed to disabuse litigants of the expectation that where they have ultimately failed in an action but have succeeded on some of the issues litigated, costs will be apportioned according to the success and failure of each party in respect of those issues. This caution, appropriate though it may have been back in 1975 and even 10 years later when Toohey J mentioned it in his judgment in Hughes v Western Australian Cricket Association (Inc.) (1986) A.T.P.R. 40-748 at 48,136, may now have lost some of its force. There is such concern at containing the costs of resolving disputes by litigation that the courts are, I think, now readier than before to depart from the prima facie rule that the successful party recovers all his costs, as an encouragement for litigants to focus on, and to seek determinations only of, issues of critical significance to the

In my view the discretion with respect to costs is a broad one, to be exercised judicially, i.e., for reasons connected with the case. It is not circumscribed by rigid rules. The most that can be said is that the conduct of a

respondent that gives rise to the dispute will rarely be relevant to whether a successful respondent should be deprived of any of his costs, but the conduct of a _ successful respondent at, or in connection with, the running of the litigation itself is relevant to the exercise of the

discretion to deprive him of some or all of his costs. I

refer to the decision I gave in The Tubby Trout Pty. Ltd. v Sailbay Pty. Ltd. on 8 February, 1994, a decision on costs

recently affirmed by the Full Court in a judgment given on 7

November, 1994, and also to Tela Pty. Ltd. v Ampol Ltd. (1986) A.T.P.R. 40-746.

In my view this is not a case in which I should deprive the fifth respondent of his costs of the proceedings against the applicants, for a number of reasons. Firstly, points 1 and 3 relied on by the applicants are really founded on conduct by the fifth respondent that, at its highest for the applicants, can be said to be conduct that gave rise to the dispute rather than conduct at the trial or conduct in connection with the way the fifth respondent ran his case at

Secondly, given this, since I have concluded that Steer's conduct did not cause the applicants any loss because Mr. Igaki did not rely on anything he said, did, or failed to do, it would not be appropriate to treat this as one of those rare cases in which the discretion with respect to costs

should be exercised, in a sense to punish a litigant for conduct not connected with the running of litigation but with

the events out of which the litigation itself arose.

Thirdly, as to the applicants' second point, it is true that Steer did, in his written statement, seek to distance himself from anything other than very limited involvement in the preparation of the "private sale" agreement. In paragraph 12 of his written statement, to which

counsel for the applicants directed me, Steer said:

"The projections prepared by me were mathematical calculations and were the result of a mechanical derivation from information provided or approved by my client."

However, he did, from the outset, make it clear that he had an extensive association with the first, second, and third respondents and an extensive involvement in the provision of accounting services to them. See, by way of example, what he says in paragraph 2 of that same statement. I do not think the time taken to illuminate the full extent of his involvement in the preparation of the private sale document was responsible for extending, to any significant

dismissed without any order in respect of the costs of those respondents of or incidental

(3) That the applicants pay the fifth respondent's costs, including reserved costs, of and incidental to those proceedings to be

I certify that this and the preceding five pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Drummond.

Counsel for the first, second and third respondents:

Solicitors for the first, second and third respondents: