Perricoota Boat Club Investments Pty Limited v Anthony Rupert Watson

(2) The question of costs 6As to costs, there is no doubt that the first defendant should pay the plaintiff's costs. The matters that need to be considered as to costs are: (a)Whether any costs should be made on the indemnity basis. (b)The position of the second defendant; and (c)Whether any order in the nature of a Sanderson order should be made with respect to the second defendant's costs. 7As to the first defendant, there was what would qualify as a Calderbank letter: see Calderbank v Calderbank [1975] 3 All ER 333 which was given on 4 September allowing three weeks for reply. It made an offer which was more advantageous to what the plaintiff eventually obtained and I can see no reason why the ordinary consequence that the costs should be on the indemnity basis after 5 September 2011 should not apply. 8Accordingly, I make order 3 in the consent order. 9So far as the second defendant is concerned, Mr Pesman SC, who appeared for the second defendant, rightly says that no matter what happened on the separate questions, no order could have been made against his client because his client was never actually liable to repay moneys on the basis that it had not received any moneys. 10However, the statement of claim claimed that there should be an order that it and the first defendant jointly and severally repay the monies. 11On the separate question, the plaintiff failed and ordinarily it should pay the costs. 12Mr Alstergren has raised a number of reasons why that ordinary rule should not apply but, I must confess, with great respect, I do not see that they are sufficient to make me exercise my discretion under s 98 of the Civil Procedure Act 2005 (NSW) to deny the second defendant costs. 13However, when one remembers that the second defendant was added only after the first defendant convinced another judge that it was a necessary party to the proceedings and the plaintiff then reluctantly added the second defendant, and as the first defendant was the main protagonist in the matter that was argued before me, it seems appropriate that there should be a Sanderson order, and although I order that the plaintiff pay the costs of the second defendant, the costs which the first defendant must pay the plaintiff must include the costs which the plaintiff has to pay to the second defendant. 14So I decline to make order 4 in the consent orders but in lieu, make the order that I have just mentioned.

(3) Should any judgment be stayed pending the disposal of other issues? 15The next matter is whether there should be a stay pending the other issues in the case being determined. 16When one looks at the other issues, it would seem to me that all of them have gone save the issues raised in the first defendant's cross-claim. 17The first defendant's cross-claim falls into two sections; (1) a claim based on there being some sort of joint venture; and (2) a claim for breach of fiduciary duties against not the plaintiff but Mr Jarman and a company allegedly operated by Mr Jarman's wife, Mashoubra Pty Ltd. 18So far as the first section of the claim is concerned, it is arguable that my decision on the separate questions has meant that it has ceased to be maintainable because there are now issue estoppels. That may be so, but I have got some doubt about it. It is not sufficiently clear for me to strike out the statement of claim under the leading authorities, but it does not seem to me that there is that much to be said for the cross-claim as would warrant a stay. 19So far as the second part of it is concerned, I have very great doubt as to whether Mr Watson has any standing to maintain the claim. The claim may well be one of Deep Creek Marina Pty Ltd. Unfortunately, that company has been deregistered, so that if the claim is to be made by someone in the Watson camp there will have to be some preliminary work done first. 20The ordinary principle - and I may be overstating it by calling it "ordinary principle" - is that where there is a verdict on a separate question or where there is a consent order made in debt, but there is a cross-claim which could be set off, one stays the judgment on the claim until the set of is decided. There are exceptions to that principle such as where the debt is on a bill of exchange. 21Here, it does not seem to me that this is really a situation where there are claims which can be set off in the view I have taken of the debt not being joint venture or partnership debt, and in view of the rather fragile nature of the cross-claim, I do not consider that any stay is warranted unless of course there is a short stay being sought to seek leave for appeal, but no such application has been made.

(4) Should the cross-claim that was filed by the first defendant be struck out? 22The question as to whether the cross-claim should be struck out I have already addressed and I do not consider it appropriate to do that at this stage. However, it is clear that if the cross-claim is to continue it will need to be radically amended, perhaps both as to parties as well as to substance. 23Mr Gunning, who appears for the first defendant, suggested it would take him six weeks to put it in order and as there is no stay and as there is a judgment with interest accruing on it, I cannot see any great prejudice. 24Accordingly, I am prepared to give leave to amend the cross-claim provided that a draft is served on the plaintiff/cross-defendant no later than 24 May 2014. 25By consent, I order that the cross-claim be dismissed as against Hillington Valley Pty Ltd, with no order as to costs otherwise I make orders 1, 2, 3, 4 in the document called "consent orders" and order that the plaintiff pay the costs of the second defendant, but that the costs to be paid by the first defendant to the plaintiff are to include the costs payable by it to the second defendant. 26I stand the matter over for further case management before me on 5 June at 9.30 am.

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