Jones v Apps

3 Initially the defendant appeared by a solicitor but that solicitor ceased to act on 3 August 2006. By then the defendant had filed a defence, the plaintiff had filed particulars of the statement of claim, and the parties had filed affidavits of documents.

4 On 15 August 2006 the plaintiff's solicitor filed a summons to strike out the defence, and for judgment in the proceeding. Prior to that application being heard, in September 2006 another solicitor commenced to act for the defendant. That solicitor filed an amended defence dated 7 September 2006 which denied liability and, among other things, stated that the defendant signed each agreement "acting as agent for Tumut Development Co Pty Ltd".

5 On 17 October 2006 a master made orders including that the defendant file particulars of the alleged agency relationship; particulars were filed on 22 December 2006. Then, the defendant's solicitor ceased to act on 8 February 2007.

6 Shortly after judgment my Associate received a letter from the defendant's former solicitor which advised that the defendant sought costs on the basis that, there being no exceptional circumstances, costs should follow the event, relying on the well known decision in Ritter v Godfrey[1]. The solicitors advised that they were instructed to seek costs on an indemnity basis by reason that from the filing of the amended defence the plaintiff was on notice that the defendant was an agent acting for a disclosed principal. Alternatively, costs were sought on a solicitor and client or party and party basis.

7 My Associate emailed that letter to the plaintiff with an invitation to respond.

8 On 13 July 2009 the defendant's solicitors filed an appearance thereby resuming their position as solicitors on the record.

9 On 20 July 2009 the plaintiff advised my Associate that he believed he should not be liable to pay costs because the defendant had had free help all the way as his solicitors were acting on a pro bono basis.

10 In order to regularise the position, at my request on 10 August 2009 my Associate emailed the plaintiff and the defendant's solicitors advising that unless this course was objected to, I would deal with the issue of costs on the papers without requiring any further attendance in court. It was stated that any further submissions on costs should be made by email as follows: by the defendant on 17 August and the plaintiff on 21 August, each submission to be copied to the other party. I received no response from the plaintiff. The defendant's solicitors responded that the defendant sought costs based upon the successful defence.

11 In these circumstances I now rule on the question of costs.

12 It is axiomatic but important to bear in mind that costs lie in the discretion of the court and that, like all judicial discretions, the discretion as to by whom and to whom costs should be paid is to be determined on a consideration of all of the relevant circumstances. Thus, while ordinarily costs might follow the event, that is not necessarily the case, whether as to the whole or part of the costs. Moreover there are factors, such as those considered in Ritter v Godfrey, and other cases, that might warrant a contrary approach. There may, for example, be an issue as to whether the successful party had by his conduct caused or contributed to the litigation occurring, or its prolongation.

13 What I saw at the trial was a sad situation. The plaintiff impressed me as a decent, well meant man, who had wished to invest wisely in his family's interest. But, when he made the investments he was an innocent in such matters and quite out of his depth. No person with a modicum of experience in investing, and possessed of a sense of caution and care in one's own interest, or an understanding of the risks of investing in a development project elsewhere in Australia, could have proceeded with such a lack of ordinary prudence. Moreover the investments were made on an oral understanding without a loan agreement, the provision of proper information able to be considered and advised upon, or proper security for repayment. The written agreements on which the plaintiff sued came later.

14 The defendant impressed me in a different way. While he too has lost his money in these matters, as he so informed me, he clearly had experience in investment projects and was by no means an innocent in obtaining money from investors. He was a willing agent in procuring money from others such as the plaintiff for investment in the speculative development ventures of his principal. When he met the plaintiff at the seminar, and subsequently, the plaintiff was, I find, eager, naïve and easily taken in. To put it in the vernacular, the defendant could have seen him coming.

15 In the result the plaintiff has lost his money and he is left as a pensioner. He so informed me during the trial and subsequently upon my having given judgment he referred to his position and his bewilderment at the result. The defendant too states that he has lost his money, indeed he said he had lost millions.

16 It is true that the defendant succeeded on his agency defence. I also consider that the likelihood of success of such a defence ought to have been apparent on the face of the agreements upon which the claim was based. I have regard to these considerations and to the consideration of bearing responsibility for one's own decisions. The question of agency was one of fact and law, and it must have been considered the plaintiff had grounds upon which to meet the defence. In the end, for lack of money, he represented himself at the trial and it must be taken that he said all that he understood could be said in his behalf.

17 If I were of the view that costs should follow the event I would not, in all of the circumstances, have made a special order for costs. But, considering the matter overall, I am of the view that in the particular circumstances there should be no order for costs. The devastation suffered by the plaintiff by these wholly imprudent investments into which he was led by the defendant with a lack of proper care or sense of responsibility for the plaintiff's interest, is loss enough without rubbing in the salt of the defendant's costs of the litigation. I consider the defendant's conduct to have been unmeritorious and such that it led to the litigation which in desperation the plaintiff continued in the hope of obtaining a judgment and recovering his losses. The just and appropriate disposition on costs is that the parties be left to bear their own. I will therefore order that there be no order for costs.

[1] [1920] 2 KB 47.