McCarthy v McIntyre [1999] FCA 805 | Case summary

COSTS: 10. The second respondent pay eighty per cent of the third appellant's costs of the appeals and the cross-appeal referred to in [63] of the principal reasons for judgment. 11. Set aside order 4 of the orders made by Beaumont J in proceeding numbered NG 672 of 1996 and remit the question of costs dealt with in that order to Beaumont J for further determination consistently with the reasons for judgment of this Court. 12. Set aside order 3 of the orders made by Beaumont J in proceeding numbered NG 292 of 1998 and in lieu thereof order that the respondent pay eighty per cent of the applicant's costs. 13. Order that the first respondent be granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) stating that, in the opinion of the Court, it is appropriate for the Attorney-General to authorise a payment under the Act to the first respondent in respect of his costs of the appeal so far as they relate to the issue of third party reliance. 14. Subject to orders 10 and 13, there be no order as to the costs of the appeals and cross-appeal.

THE COURT: 1 In our reasons for judgment, delivered on 11 June 1999, we invited submissions on costs and on the form of the proposed orders. We imposed a tight timetable because of the impending judgment of the High Court in Re Wakim; Ex parte McNally. Written submissions have now been received from the parties and we have had the benefit of oral argument on issues other than costs. 2 The appellants took the opportunity, when filing their submissions, to foreshadow a motion to amend par 12 of the second further amended statement of claim. They were apparently prompted to take this course by the fact that the principal reasons for judgment (at [38] and [45]) note that no claim based on misleading or deceptive conduct had been pleaded or advanced by Edlan. It is now said that the second further amended statement of claim inadvertently omitted reference to Edlan and that the opportunity should be provided to correct this error. 3 There was no suggestion made during the hearing of the appeal that par 12 had inadvertently omitted any reference to Edlan. The appellants' submissions do not attempt to explain how Edlan would seek to establish that it had suffered loss. Nor do they attempt to particularise Edlan's claim to damages. Indeed, Mr Ashhurst, who appeared with Mr Slattery QC for the appellants, conceded that this claim had never been particularised. 4 These proceedings have been characterised by vagueness in pleading and a failure to identify issues with precision and clarity. We do not consider it appropriate, after the delivery of our substantive reasons for judgment in the proceedings, to permit Edlan to amend its pleadings to pursue a case that has never been properly pleaded (even assuming the omission of Edlan from par 12 was inadvertent) and remains ill-defined. We would not be disposed to accede to any application to amend the second further amended statement of claim in the manner foreshadowed. To the extent necessary, we would dismiss the appellants' motion. 5 Next, the appellants drew attention to the fact that the Court had not dealt expressly with an argument advanced in their written submissions on the Tropicana appeal. Those submissions had argued that Neville's misleading or deceptive conduct was undertaken on behalf of Nevitoro and that Nevitoro is therefore deemed by subs 84(2) of the Trade Practices Act 1974 (Cth) to have engaged in the misleading or deceptive conduct itself. The primary Judge made no findings on this aspect of Max's third party reliance claim, which is embraced by the second further amended statement of claim. 6 The appellants also correctly pointed out that, in the course of oral argument, the Court expressed the view that it was appropriate for the question of whether Auro and Nevitoro were "knowingly concerned" in Neville's conduct to be remitted to the primary Judge. The proposed orders do not reflect the course discussed in oral argument and should be amended to enable that issue to be determined by the primary Judge, in the context of Max's third party reliance claim. The orders should also provide, in the same context, for the question of Nevitoro's principal liability (if any) for Neville's misleading or deceptive conduct to be remitted to the primary Judge. 7 We now turn to the question of costs. This question is complicated by the fact that the appeals and cross-appeal related to two separate proceedings determined by the primary Judge, the first of which involved a number of parties and distinct causes of action. 8 It is convenient to deal first with the costs of the proceedings insofar as they relate to the Riverview Lodge transaction. The relevant appeals and cross-appeal are identified in par [63] of the principal reasons for judgment. In substance, Edlan has succeeded, save that its appeal against the order limiting the award of interest to the period from 1 December 1997 is to be dismissed. 9 Rather than deal with each of the appeals and the cross-appeal separately, we think that the simplest course is to order Auro to pay eighty per cent of Edlan's costs of the appeals and cross-appeal referred to in par [63] of the principal reasons for judgment (so far as the appeals and cross-appeal relate to the Riverview Lodge claims). This order takes account of Auro's success on the interest question. 10 The primary Judge, in the second Riverview Lodge claim (NG 292 of 1998), ordered Edlan to pay Auro's costs of the proceedings. That order should be set aside and in lieu thereof it should be ordered that Auro pay Edlan eighty per cent of its costs of those proceedings. 11 So far as the appeal relating to the Tropicana transaction is concerned, the position is now as follows: · Max has succeeded in obtaining orders remitting to the primary Judge his third party reliance claim against the respondents; and · Jack and Edlan have failed on their appeals. 12 The appellants were represented by the one set of legal representatives. Similarly, the respondents had but one set of legal representatives. There was no clear differentiation in the argument between the position of Max (on the one hand) and Jack and Edlan (on the other) so far as the Tropicana transaction was concerned. The distinction emerged largely as the result of the Court's questioning of counsel. Since each side has enjoyed a measure of success, we think it appropriate that there be no order as to the costs of the proceedings insofar as they related to the Tropicana transaction. 13 The primary Judge ordered that the applicants (the present appellants) pay the costs of the respondents of the claims with respect to the Tropicana transaction in Proceedings NG 672 of 1996 (order 4). That order reflected the fact that the claims of all three applicants had failed. 14 As a result of the orders we propose to make, Max's third party reliance claim will be remitted for determination by the primary Judge in accordance with the Court's reasons for judgment. Order 4 made by the primary Judge should be set aside and the costs of the claims with respect to the Tropicana transaction (including the costs of the first trial) should be determined by his Honour in the light of the outcome of the remitted proceedings. Of course, any costs order ultimately made by his Honour with respect to the Tropicana transaction will also need to take account of the fact that he correctly dismissed the claims of Jack and Edlan. 15 Neville seeks a certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under the Act to him in respect of his costs of the appeal so far as they relate to the issue of third party reliance arising out of the Tropicana transaction. We think it correct to say that Max's appeal succeeded on a question of law, namely the proposition that a third party reliance case was open to Max as a matter of law, subject to appropriate findings of fact being made. We also think it appropriate, in the circumstances of the case, for a certificate to be granted to Neville. 16 The respondents have pointed out that the stay orders made by us on 31 May 1999 should be discharged. We propose to make such an order. 17 The orders which we now make give effect both to our principal reasons for judgment and to these reasons for judgment. 18 We add that we think it appropriate to make no order for costs as to today's hearing. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Hill, Sackville and Katz.

McCarthy v McIntyre

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Judgment (12 paragraphs)

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