Pages Property Investments Pty Ltd v Attila Boros & Ors

Judgment

By my Judgment delivered on 17 September 2020 ("Judgment"), I found that the Plaintiff, Pages Property Investments Pty Ltd ("PPI") had established certain aspects of its case against Mr Boros. I ordered (at [281]) that Mr Peter Gothard and Ms Robyn Duggan of KPMG be appointed liquidators jointly and severally of Pages Equipment Holdings Pty Ltd (in prov liq) ("PEH"); Pages Sales Pty Ltd (in prov liq); Phire Pty Ltd (in prov liq) and Pages Austructures Pty Ltd, with that order to be entered forthwith; and that the parties otherwise bring in agreed short minutes of order to give effect to the judgment, including as to costs, within 14 days or, if there was no agreement between them, their respective draft minutes of order and short submissions as to the differences between them. I subsequently extended the time for the parties to bring in agreed short minutes of order, by agreement of the parties, although they have not now reached agreement as to consent orders.

The parties' proposed costs orders

Turning now to the question of costs, I had observed (Judgment [280]) that: "PPI sought an order for costs and interest on costs under s 101(4) of the Civil Procedure Act 2005 (NSW) from the date that the costs concerned were paid by it. PPI has been successful in part and there should at least be an order that Mr Boros pay a portion of its costs of the proceedings. My preliminary view is that Mr Boros should not be ordered to pay all of PPI's costs of the proceedings, where PPI has pursued several claims that were not likely to succeed as a matter of law; several claims that could recover no more than, at best, Ms Bateman's costs which were likely to be recoverable as costs of the proceedings in any event; and other claims for which it concedes it could establish no loss. It seems to me that the case would have been significantly shorter had PPI exercised greater rigour in determining which claims should have been pursued. I will hear the parties in that regard."
In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], the Court of Appeal noted that: "Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed. … In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument." [Citations of authorities omitted]
That principle has been recognised and applied in earlier and several later cases. In Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136, Toohey J noted, with reference to authority, that where a litigant had succeeded only upon a portion of its claim, the circumstances may make it reasonable that it bear the expense of litigating that portion upon which it failed, and that a successful party who had failed on certain issues may not only be deprived of the costs of those issues but may also be ordered to pay the other parties' costs of them. In Short v Crawley (No 40) [2008] NSWSC 1302 at [33], White J noted, with reference to authority, that the entitlement to costs, even of a plaintiff which enjoyed substantial success was potentially: "modified having regard to the various issues on which the Plaintiffs were wholly or partially unsuccessful, the extent to which those issues were dominant or severable, their overall significance to the outcome, the time they occupied during the hearing, and so far as can be discerned, in preparation."
PPI submit that, subject to an additional order, and except so far as costs are "not" (which appears to be an error) the subject of previous costs orders, Mr Boros and PEH pay 60% of their costs of PPI's proceedings, as agreed or as assessed, on the ordinary basis. PPI submits that the usual outcome is that it would, as the "successful party" be entitled to an order for the whole of its costs, but it submits that the 40% reduction in its costs which it concedes is a "generous" deduction for the time devoted to the claims in the proceedings for which it did not succeed. PPI also submits, and I accept, that PPI faced ongoing difficulties throughout the proceedings in obtaining relevant books and records from Mr Boros and other Defendants, and that a substantial amount of time during the hearing (and, necessarily, in preparation for it) was directed to issues on which PPI succeeded, namely Mr Boros' failure to keep proper books and records and the application to wind up the several corporate Defendants on just and equitable grounds. PPI also points to several other matters which increased its costs of the proceedings, including Mr Boros' advice that he would be reading affidavits of witnesses which ultimately were not read and Mr Boros' unsuccessful set-off defence in relation to an alleged loan to Mrs Page.
In respect of PPI's claim for costs against PEH, it submits that PEH resisted the claims against it until it was placed in provisional liquidation shortly before the hearing; that PPI succeeded on two substantial money claims against PEH in the proceedings; that PPI's claim for surrender of the Second Lease (as defined) was not pursued as a result of PEH entering voluntary administration shortly before the final hearing and its subsequent provisional liquidation; and that PPI was ultimately successful in obtaining a winding up order against PEH.
Mr Boros submits, by reference to a list of allegations in several iterations of the Statement of Claim, that many allegations put by PPI were not pursued or were not successful and that PPI had adopted "an unethical position" which he described as "machine gunning" in the proceedings. I do not accept that those terms are appropriate, although it is plain that PPI advanced and pursued a significant number of claims on which it did not succeed, either in respect of liability or in respect of establishing damages. In further submissions, by leave, Mr Boros contends that the claims on which PPI was successful only required "minor or very little evidentiary argument or presentation and were based heavily on Ms Bateman's reports". I do not accept the first part of that submission, where the claims as to failure to keep adequate accounting records and as to winding up on the just and equitable ground required extensive evidence, but the second part of that submission supports PPI's claim for the costs of Ms Bateman's reports which I address below. On that basis, Mr Boros submits that he and PEH should pay 20% of PPI's costs of the proceedings.
On balance, I am satisfied that the majority of the evidence on which PPI relied, and the majority of the time at the hearing, went to the issues on which it was successful, and an order that Mr Boros and PEH pay 60% of PPI's costs will fairly reflect the outcome of the proceedings. I am also satisfied that, given the extent to which PPI succeeded and the amount of its recovery, and also bearing in mind the significant parts of the case which it pursued on which it failed or could not establish damages, Mr Boros and PEH should (as PPI contends) pay 60% of PPI's costs of the proceedings as agreed or as assessed.
PPI also submitted that a specific order should be made that Mr Boros and PEH pay its costs of engaging Ms Bateman as an expert in the proceedings, to the extent those costs would not have been recovered under the costs order. In the course of the Judgment, I noted several claims where PPI had sought to establish damages referable to the costs of Ms Bateman's work. I observed, for example, in respect of Mr Boros' breach of his duties in respect of PPI's failure to keep adequate financial records that: "… the only particularised loss and damage which is the subject of any evidence is the cost of engaging Ms Bateman to review the financial records of PPI and its related companies to ascertain PPI's true financial position. PPI quantifies its loss in respect of this claim as the final cost of that exercise, being $200,101.18. PPI submits that the costs of that exercise would not have been incurred, but for Mr Boros' contravention of s 180(1) of the Act in failing to ensure that PPI complied with its obligations under s 286 of the Act during the period that he was its sole director. PPI also submits that it is not necessary to apportion the total accountancy costs incurred by PPI between the various contraventions by Mr Boros in connection with PPI and the other corporate entities as the aggregate total cost was the result of those contraventions. It seems to me that the findings that I have reached above would support PPI's claim to recover a significant part of the substantial costs claimed by PPI in respect of several reports of Ms Bateman covering a much wider range of issues. However, this would not support the recovery of all of those costs, which plainly also involve a substantial amount of work directed to companies other than PPI, and Ms Bateman's evidence allows no basis to allocate those amounts between those matters. Little may turn on this, where the reasonable costs of Ms Bateman's reports would properly be recoverable as disbursements in the proceedings, where those reports were plainly relevant to and were read in the proceedings. I reach that conclusion notwithstanding that not all of PPI's legal costs may be recoverable in the proceedings, for the reasons noted below."
In response to PPI's claim as to Ms Bateman's costs, Mr Boros repeats the proposition that PPI has "machine gunned unsustainable allegations" and submits that he should be required to pay 15% of Ms Bateman's costs; that an itemised account should be provided; and that "due to the Court's decision not to delay the hearing, Mr Boros did not have the ability to fund an expert witness".
PPI submits that it would not have been exposed to the significant costs of obtaining accounting evidence from Ms Bateman but for Mr Boros' failure to ensure that PPI complied with its obligations under s 286 of the Act to maintain proper accounting records. It seems to me that that is relevant to the costs of the proceedings, so far as it plainly made the task of leading expert accounting evidence more expensive for PPI than it would otherwise have been. As to the costs of Ms Bateman's report, Mr Boros submits, in further submissions by leave, that a substantial amount of her work was directed to other companies, repeats the proposition that she should provide an itemised account, and submits that no more than 15% of her total account should be paid.
On balance, I accept PPI's submission that, notwithstanding the difficulties with aspects of Ms Bateman's evidence to which I referred in the Judgment, and the fact PPI was not successful in all of the claims as to which Ms Bateman led evidence, I should order that Mr Boros and PEH pay PPI's reasonable costs of engaging Ms Bateman as an expert in the proceedings as agreed or as assessed. If no agreement is reached between the parties as to those costs, it will be a matter for a costs assessor to determine the amount of Ms Bateman's fees that were reasonably incurred and are properly recoverable by PPI as disbursements.
Accordingly, I make the following orders: 1. Judgment entered for the Plaintiff against the First Defendant in the amount of $2,538,656. 2. Judgment entered for the Plaintiff against the Second Defendant in the amount of $2,617,085. 3. Subject to order 4 below, and except so far as costs are the subject of previous costs orders, the First Defendant and the Second Defendant pay 60% of the Plaintiff's costs of the proceedings, as agreed or assessed, on the ordinary basis. 4. The First Defendant and the Second Defendant pay the Plaintiff's reasonable costs of engaging Fiona Bateman as an expert in the proceedings (to the extent that those costs have not been included in Order 3), as agreed or as assessed.

At a glance

Court

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Before

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Judgment (5 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (3)

Cited By (5)