Peter Holmes Investments Pty Ltd v S&C Nicola Pty Ltd

Costs

1. For convenience, in advance of the costs argument, I referred the parties to earlier decisions of mine concerning the costs of multi-claim proceedings involving mixed success between the parties on the claims, or issues arising in those claims: Akierman Holdings Pty Limited v Akerman (No 3); In the matter of Akierman Holdings Pty Limited (No 2) [2021] NSWSC 869 at [54]-[86]; at Trentelman v The Owners - Strata Plan 76700 (No 3); The Owners - Strata Plan 76700 v Trentelman (No 3) [2021] NSWSC 578 at [38]-[39]; see also Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336 at [30]-[45]. I also referred the parties to my decision in Shazbot Pty Ltd v Warner Capital Pty Ltd (No 6) [2024] NSWSC 81, which concerned the costs of partnership proceedings.
2. These decisions were expressly adopted by counsel for PHI as the foundation for his submissions. Counsel for SCN and Manotik did not question the decisions or their application in the present case. I will therefore use them as my starting point.
3. Counsel for PHI began with the rule that costs should follow the event (Uniform Civil Procedure Rules 2005, r 42.1) but subject to the proposition that, in a case involving a multiplicity of claims, such as the present case, the rule should be applied distributively, by reference to the different claims: see Akierman Holdings at [81]-[86]. On this footing, it was contended that SCN and Manotik should pay PHI's costs of: 1. defending SCN's specific performance claim with respect to the two units in the Clyde Road project ([13(1)] above), up until the settlement on 7 September 2021; 2. defending SCN's claim for breach of contractual, fiduciary and statutory duties with respect to the Clyde Road project ([13(2)] above), again, up to the settlement on 7 September 2021; 3. prosecuting its claim with respect to the Clyde Road project ([11 (3)] above); 4. defending Manotik's claim under the Clyde Road building contract ([15] above), and with costs to be assessed on an indemnity basis; 5. pursuing its claim for recovery for the HNH Loan ([11(4)] above), and, again, with costs to be assessed on an indemnity basis; and 6. defending SCN's claim with respect to the Pacific Parade project ([14] above).
4. I did not find it clear from PHI's submissions how these orders would apply to costs which were referable to the general conduct of the proceedings, or more than one claim. I will return to this question below. The submissions did, however, make it clear that PHI was also claiming the costs of the cost's argument. PHI conceded costs claims (1) and (5), provided that they were limited to costs solely referable to the relevant claim, but on ordinary basis only. The other claims were opposed.
5. SCN and Manotik also made costs claims of their own. They sought orders against PHI for payment of their costs of the hearing before Sackar J from 6-8 September 2021, and 85% of their costs of the hearing which resulted in my September 2022 judgment. This was resisted by PHI.
6. On Manotik's behalf, a further claim was made with respect to some of the costs incurred in earlier proceedings in which PHI and Manotik had been involved. Those proceedings, which I will describe in more detail later in this judgment, were settled and a consent order was made that, as between PHI and Manotik, the costs were to be costs in the cause in these proceedings. It was contended for Manotik that, having regard to the result of these proceedings, it should receive its costs of the earlier proceedings. The opposite contention was made for PHI.

Clyde Road breach of duty claims by SCN

1. SCN's liability to pay PHI's costs of these claims is not disputed.

Clyde Road specific performance claim by SCN

1. The immediate difficulty faced by PHI in its application for costs of defending this claim is that the claim was settled as part of the September 2021 settlement agreement and was not ultimately determined. Usually, where proceedings are settled or otherwise resolved in circumstances where it is unnecessary for the Court to decide the proceedings, costs will be left to lie where they fall. This is because the Court will not be drawn into trying the case for the purpose of determining costs: Re Minister for Immigration; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625.
2. Counsel sought to meet this problem by arguing that, as part of the settlement, SCN had effectively capitulated on this claim. Counsel referred me to PHI's submissions which had been lodged prior to the hearing and which pointed out what was said to be fundamental difficulties with SCN's claim. Counsel also submitted that the consent orders dealing with the two units in question made pursuant to the settlement agreement effectively reflected, or at least where much closer, to the position which had been taken by PHI.
3. I do not find these submissions sufficiently persuasive to depart from the usual rule laid down in Lai Qin. In my view, the contrast with the breach of duty claims is instructive. Those claims were formally abandoned in submissions before the beginning of the hearing: that was a clear capitulation. The specific performance claim was not abandoned and was ultimately compromised. The compromise was one which dealt with other issues in the proceedings as well, in particular the terms on which the accounts for the Clyde Road and Pacific Parade projects where to be undertaken. It would defeat the purpose of the Lai Qin rule if the Court were now required to unravel the negotiations and trade-offs between the parties for the purpose of determining whether the terms agreed by SCN represented a "capitulation" in the relevant sense. In the light of the settlement, the costs of this claim should lie where they fell.

Clyde Road project claim by PHI

1. The main thrust of PHI's claim was to obtain the taking of accounts and to determine the amount owing, if any, by PHI as the accounting party. Counsel for PHI submitted that, having regard to the result before the referee ([27]-[30] above) and the 2022 hearing before me ([33] above), PHI had been the successful party overall. In particular, on the capital contribution issue there had been a difference between the parties before Mr Samuel of $2.6 million and PHI had wholly succeeded.
2. In evaluating counsel's submission, it is necessary to take account of the nature of the proceedings. In another part of the argument, counsel quoted and relied upon the following statement by me in Shazbot at [66]-[67]: Both parties agreed that the traditional rule in partnership actions was that, generally, the costs of proceedings for the winding up of a partnership were paid out of the partnership assets. But that general rule did not apply in all cases. In Meekin v Gersbach (Supreme Court of New South Wales, 6 August 1997, unrep), McLelland CJ in Eq stated, at 2: The distinction to be drawn is between proceedings which are necessary for the administration of partnership assets where there is no relevant fault on either side, on the one hand, and proceedings which are rendered necessary by reason of the default of one of the partners, on the other. When the proceedings are caused by such default there is normally good reason not to order payment of costs out of the partnership assets, but rather to order costs against the partner in default, at least up to the conclusion of the hearing … His Honour went on to quote from the 16th edition of Lindley & Banks on Partnership (R I'Anson Banks, Lindley & Banks on Partnership (16th ed, 1990, Sweet & Maxwell) at [23-112]: ... it has long been an established rule that all the costs of dissolution proceedings should be paid out of the partnership assets, unless there is a good reason for making some other order. Where, however, such proceedings are, in reality, commenced in order to obtain an adjudication on some disputed claim between the partners, the unsuccessful litigant will normally be ordered to pay the costs up to the date of trial.
3. Accounting proceedings are an ordinary incident of the winding up of a partnership by the Court. The general rule that the costs of the proceedings are ordinarily paid out of the partnership assets unless the need for the accounting results from some default on the part of one of the partners, therefore applies to such proceedings.
4. In my view, there is nothing exceptional about the proceedings insofar as they involved a partnership account being taken for the Clyde Road project. SCN did not resist the taking of accounts; in fact, SCN's cross-claim sought an order for accounts to be taken: see [13(1)] above. The accounting proceedings which then took place involved consideration of numerous individual items and the outcome cannot be seen as success by PHI on some particular "event". Indeed, the result was that SCN obtained judgment against PHI as the accounting party for a substantial sum.
5. The general rule as outlined above opened the possibility of PHI seeking an order for payment out of the partnership assets (which would have in effect required SCN to pay half). But had such a claim been made it would have given rise to further questions. One question would have been weather such a claim should have been in the accounting proceedings themselves. Another would have been whether SCN had a similar entitlement to recover a share of its costs. As no claim was made on this basis, it is not necessary to take this any further.
6. PHI did also claim a declaration which would have resolved the specific performance claim by SCN with respect to the two units in the development in its favour. But that appears to have been a very minor aspect of PHI's claim with respect to the Clyde Road project. Furthermore, for reasons already given, no costs order should now be made concerning the costs of the specific performance claim in light of the September 2021 settlement.

Clyde Road building contract claim by Manotik

1. To understand PHI's application for costs for defending the costs of this claim, it is necessary to refer to a further part of the background. In October 2019, Mr Stuart Latham, PHI's solicitor, wrote to SCN and Manotik about the four projects which later became the subject of these proceedings. So far as the Clyde Road project was concerned, the letter enclosed a report (described in the letter as the Compilation Report) prepared by a firm of accountants described as "the accountants for" the project (by which I assume Mr Latham meant that the firm had been instructed by PHI to prepare the accounts). The letter pointed out that the report calculated the amount owing to SCN as $462,520 and, to Manotik, as $124,040. The letter proposed a settlement which would involve these payments being made to SCN and Manotik and a formal settlement agreement being prepared.
2. The directors of SCN and Manotik were invited to appoint legal advisors to reply to the letter. There was no evidence about what response was made to the letter, but plainly, if any discussions did take place they did not result in an agreement, and the proceedings were commenced in the following year. The amount eventually claimed under the Clyde Road building contract in Manotik's cross-action was $105,000.
3. In his submissions, counsel for PHI contrasted the $124,040 payment proposed in the October 2019 letter with the $84,000 judgment ultimately obtained by Manotik ([34(1)] above). His submission was that this meant that Manotik had "failed" in its claim. In support of the application for indemnity costs, counsel characterised the October 2019 letter as an "open offer" to pay Manotik $124,040, which Manotik had unreasonably rejected.
4. I do not agree that the mere fact that Manotik obtained judgment for less than the figure claimed in its initiating statement of cross-claim means that Manotik failed in the proceedings, and is prima facie liable to pay PHI's costs. The fact is that Manotik obtained a judgment in its favour. The amount obtained by Manotik was less than that initially claimed, but it was more than the amount which PHI was prepared to concede for the purposes of the reference (see [28] above) and, although not large in the context of the dispute, it was still a significant amount. If anything, Manotik was successful in the proceedings, but as no claim has been made for costs on Manotik's behalf it is not necessary to take this further.
5. Nor do I think that the October 2019 letter helps PHI. In the first place, the letter did not take the form of a Calderbank offer. It was not expressed to be made on the basis that it was "without prejudice except as to costs" and did not refer to costs of the proceedings (which, of course, at that time had not been commenced) at all.
6. Furthermore, the so called "open offer" in the letter was not one which was capable of immediate acceptance by Manotik. The letter stated: … If you have any queries or comments regard [sic] the above, please ask your legal advisers to contact us. Otherwise, if you agree with the position as stated, please ask your legal advisers to let us know. In that case, we will draw a deed of agreement terminating the JVA and providing for the payments to [SCN] and Manotik as discussed above. However, for the avoidance of any misunderstanding, [PHI] will also require a satisfactory resolution of the issues regarding [the Avon Road project] (discussed below) before finalising the JVA and before paying any monies to [SCN] or Manotik. …
7. Finally, even if the letter had satisfied the requirements for a valid Calderbank offer, it would be necessary for PHI to demonstrate affirmatively that rejection of the offer, in the context in which it was made, was unreasonable. The evidence before me fell far short of establishing that, and counsel's assertion of unreasonableness lacked any explanation.
8. As earlier noted, the cross-claim related to a partnership liability for which, as between itself and PHI, SCN was responsible for half. Costs incurred in defending the cross-claim, if any could be separately identified, might therefore have been claimed by PHI out of partnership assets with the eventual result that half of them would be borne by SCN. But again, no such claim was made on this basis, and it is not necessary to consider the matter further.

HNH loan claim by PHI

1. PHI obtained a judgment in its favour. There is no dispute that SCN is liable for PHI's costs of the claim.
2. In support of the application for indemnity costs, counsel for PHI relied upon an offer made by letter in November 2020. The offer proposed the making of declarations fixing SCN's liability under the HNH Loan at $205,000.
3. The letter took the form of a Calderbank offer. Although it contained various offers to do with different aspects of the proceedings, it was framed in such a way as to permit the HNH Loan offer to be separately accepted.
4. But I am not satisfied that the judgment obtained by PHI was clearly more favourable to SCN than accepting the offer would have been. Based on the figure in Mr Samuel's April 2022 report, and adjusting for interest, the amount owing as at August 2022 was $285,409. But I concluded that the $76,667 owing from PHI to SCN should be credited against the HNH account, thus reducing the ultimate judgment to $208,742. Counsel pointed out that in my judgment I described the question of which account the $76,667 was to be credited to as a "minor issue" and so it was in the scheme of things. But that does not alter the fact that the eventual judgment obtained for the balance owing on the HNH Loan was less than $5,000 more than the amount which had been offered almost two years before, and in that time interest had accrued. The ultimate outcome appears to have been, in real terms, very close to, if not slightly below the amount offered.
5. In any event, the application for indemnity costs faces a further hurdle. As with the "open offer" of October 2019, it is necessary to demonstrate that the rejection of the offer was unreasonable. Again, counsel for PHI asserted that this was so, but did not present any evidence of submissions demonstrating it to be so by reference to the circumstances at the time the offer was made. Certainly, a mere comparison between the offer sum and the ultimate judgment does not demonstrate reasonableness.

Pacific Parade project claim by SCN

1. In his argument, counsel for PHI pointed out the difference between the amount initially claimed by SCN ($1.135 million, based on the accounts relied on by SCN (see [14] above) with the amount ultimately paid out to SCN under the consent orders made last year ($321,000). Counsel submitted that PHI was "completely successful" in defending SCN's cross-claim.
2. Again, however, it must be borne in mind that the proceedings involved a claim for an account. That was not resisted by PHI. Counsel's submissions did not attempt to explain where the difference between the amount initially claimed by SCN and the amount ultimately paid out had come from. Again, I assume that there would have been multiple issues considered in the reference before Ms Conoulty.
3. In these circumstances, I am not satisfied that the outcome of the proceedings reflects PHI's success on an "event", and I see no reason to depart from the usual rule applicable to partnership account proceedings.

Scope of liability for PHI's costs

1. I have concluded that PHI is entitled to its costs of defending the breach of duty claims made against it by SCN and prosecuting its claim against SCN for recovery of the HNH Loan. There remains a question of how far that liability should extend.
2. The breach of duty claim was abandoned before the accounting reference took place but the HNH Loan claim was part of the reference and was not finalised until the consent orders which were made following the end of the reference in December last year. The parties, however, agreed as part of those consent orders that there would be no orders as to costs of the reference proceedings. The costs order in favour of PHI on the HNH Loan claim must therefore be confined to costs of the court proceedings.
3. There is a further issue about the scope of the liability. PHI is clearly entitled to the costs solely referable to the claims on which it succeeded. For instance, if an affidavit was prepared solely for the purpose of one of those claims, PHI will be entitled to the costs of preparing that affidavit. In the case of pleadings, affidavits or submissions dealing with more than one claim it may be possible, in the assessment, to make an appropriate division of the costs: Smith v Madden (1946) 73 CLR 129 at 136-137. But costs generally referable to the proceedings, such as a filing fee or the costs of attending a directions hearing, cannot be dealt with in this way and can only be recovered under an order for payment of the general costs of the proceedings.
4. The breach of duty claim on which PHI succeeded was made by SCN as part of its cross-action. In proceedings involving an action and a cross-action, where the cross-action is dismissed with costs, an order that the defendant/cross-claimant pay the costs of the cross-action is interpreted as being limited to the costs solely referable to the cross-action; costs referable to both the action and the cross-action follow the action. But this is only a rule of interpretation. The Court has full power in a proper case to order that the costs referable to both action and cross-action follow the result of the cross-action, or to apportion such costs between the parties: Medway Oil & Storage Co Ltd v Continental Contractors Ltd [1929] AC 88, 95, 98; Southern Oil, at [30]-[45].
5. In the present case, the situation is more complex still because the breach claim was only one of the claims advanced in SCN's cross-action and there has been no order in favour of PHI as to the costs of the other claims. A similar situation exists with respect to the HNH claim, which was only one of the claims advanced by PHI in its action.
6. Where a plaintiff succeeds on one of two claims in an action and abandons or settles the other, the general costs commonly follow the event of the successful claim: see Southern Oil at [40]-[45]. A similar order can be made in favour of a successful defendant. But it is not an automatic outcome. The incidence of general costs in a case where a party enjoys mixed success is a matter for the Court to consider in every case and the relative importance of the successful and unsuccessful claim, or defence may be a relevant factor.
7. Counsel for PHI did not address these allocation issues in his submissions. PHI has established an entitlement to costs of only one out of numerous claims brought in its action and has obtained an entitlement to the costs of the successful defence of only one of the claims in the cross-actions brought against it.
8. In the absence of argument, I think it would be unrealistic to assume that these claims were sufficiently significant to justify PHI's success in them carrying an entitlement to all of the general costs of the proceedings. The orders in PHI's favour will therefore be limited to the costs solely referable to the two claims in question.

September 2021 hearing

1. The application for costs by counsel for SCN focused on the argument concerning interest which was the subject of Sackar J's judgment. Counsel pointed out that ultimately this was the only issue debated before his Honour, and SCN ultimately succeeded on the issue on appeal. Counsel also pointed out that the issue was a commercially significant one on its own right, resulting in the re-allocation from SCN to PHI of half of the interest sum of $1.169 million.
2. In these circumstances, counsel contended that SCN was entitled to its costs of the issue, on the basis of the rule that costs generally follow the event. Counsel submitted that the best way to give effect to this entitlement would be to order that PHI pay the costs of SCN (and presumably Manotik) of the hearing before Sackar J. Rather than pick through the costs of the earlier stages of the hearing when there had been multiple issues in play, the just quick and cheap solution was, so the submission ran, simply to award PHI the whole costs of the hearing.
3. Even if I were persuaded that SCN had a prime facie entitlement under the rules to the costs of the issue, I think that counsel's solution would have been excessive. As Macfarlan JA noted, there were other issues debated at the hearing before Sackar J. Having read the transcript of the three days, the only part of the hearing which seems to me to have been concerned with the interest issue was the mention on 8 September. The hearings on 6 and 7 September (and the hearing on 20 September concerning the orders) were concerned with the proceedings generally. Apart from the costs on the mention on 8 September, the only other expense clearly referable to the interest issue would have been the preparation of the short submissions requested by his Honour (see [21] above).
4. But I think there is a more fundamental objection to counsel's submission. The interest issue was only one of the questions which arose in the taking of the accounts for the Clyde Road project. In the ordinary course, the issue would have been dealt with as part of the reference, and any question of construction involved in it would have been addressed, if necessary, as part of the adoption of the referee's report. Sackar J only undertook to consider the issue and deliver a judgment on it as a matter of convenience for the parties.
5. In these circumstances, I see the costs of the issue as having been, in effect, part of the costs of the reference. The parties agreed that there was to be no order as between them concerning those costs, understandably so given the swings and roundabouts involved in the reference proceedings. In my view, the costs of the interest issues should not be now singled out and made the subject of a separate order. There will be no order as to the costs of the September 2021 hearing.

August 2022 proceedings

1. Counsel for SCN and Manotik contented that they had had the better of the August 2022 hearing before me. Counsel pointed out that PHI succeeded on only one issue (the contract works insurance issue, and even then, only to the extent of about $20,000). On all the other issues, counsel submitted, SCN and Manotik prevailed. Counsel submitted that, in these circumstances, PHI should be ordered to pay 4/5 of the costs of SCN and Manotik of the hearing.
2. Again, this submission glosses over some of the complexities associated with the different claims which were the subject of the reference and the proceedings. The claim by Manotik under the building contract was quite distinct conceptually from the claims as between PHI and SCN concerning the partnership entitlements under the Clyde Road project and the HNH Loan. Furthermore, PHI defended Manotik's claim on behalf of SCN, as well as on its own behalf, and should in principle have been entitled to contribution from SCN for the costs of doing so: Morgan Equipment Company v Rodgers (No 2) (1993) 32 NSWLR 467, at 481D-485B. Moreover, although PHI failed before me in recovering the $100,000 payment from SCN, PHI ultimately succeeded on this issue in the reference before Ms Conoulty.
3. Again, however, I think that the context provides a more fundamental answer to the claim for the costs of the hearing. Even more clearly than the hearing before Sackar J in September 2021, the hearing before me in August 2022 was part of the reference proceedings. The issues involved in it were relatively small by comparison with the amounts at stake in the reference. Again, it would be artificial to award costs when there has been no order as to the costs of the reference.

Earlier proceedings

1. The earlier proceedings arose out of a dispute concerning yet another property development, this one at Howard Avenue Dee Why. The partners in the development were PHI, Manotik, and a third party, Tadros Holdings Pty Ltd ("Tadros").
2. The earlier proceedings consisted of two separate matters in this Court, one of which was commenced in 2016 and the other in 2020. Neither of the files was before me for the purposes of the cost's argument. My information about the proceedings came from submissions by counsel for SCN and Manotik and an affidavit in reply from Mr Latham, PHI's solicitor.
3. The 2016 proceedings were brought by PHI and Manotik as plaintiffs against Tadros as the defendant. Mr Elee Georges, a solicitor of G&S Law Group ("G&S"), acted for PHI and Manotik.
4. In September 2019, the parties agreed to settle the proceedings, on terms which included Tadros paying $450,000 to PHI. The monies were paid into G&S's trust account and in February 2020 consent orders were made disposing of the proceedings.
5. After the deduction of costs, the monies remaining in G&S's trust account totalled $391,000. Mr Latham instructed Mr Georges to pay this sum out to PHI, but Mr Nicola objected. He claimed $52,000 for Manotik (pursuant to separate dealings between PHI and Manotik) and $184,000 for SCN (apparently as a reimbursement of monies contributed by PHI to the Howard Avenue project out of the bank account for the Clyde Road project). Given the dispute, the monies remained in the G&S trust account.
6. A notice of motion was then filed in the 2016 proceedings on behalf of PHI, in May 2020, seeking orders that G&S account to PHI for the monies held in the trust account. The motion sought to invoke the Court's power under s 73 of the Civil Procedure Act 2005 to make orders enforcing agreements to compromise proceedings in the Court. Mr Georges caused G&S to commence separate interpleader proceedings, and paid the trusts monies into Court.
7. In August 2020, the motion proceedings and the interpleader proceedings were settled. The disputed sum of $184,000 was paid back into PHI's Clyde Road project account. The consent orders provided that the costs of the motion and of the interpleader proceedings "be costs in the cause in" the present proceedings.
8. According to the submission by counsel for SCN and Manotik (which was based on the description of the earlier proceedings in those submissions, before the affidavit was filed from Mr Latham) it was "not possible to draw any direct connection between the subject of the work done in the earlier proceedings and the matter decided by the Court in the present proceedings". Counsel submitted that the parties probably did not expect these proceedings to take the course they did. But the agreement, in counsel's submission, nevertheless tied the parties' entitlement to costs of the earlier proceedings to the outcome of the present proceedings.
9. As already noted, counsel submitted that SCN and Manotik had substantially succeeded in the proceedings before Sackar J and myself. Counsel submitted that "the only matters which were decided by the Court were decided almost entirely in a manner favourable to Manotik and SCN" and they should therefore receive the cost of the earlier proceedings.
10. This interpretation of the earlier proceedings was contested in Mr Latham's affidavit. As already noted, the $184,000, which was the subject of the claim by SCN, resulted from PHI's withdrawal of monies from the Clyde Road project bank account. Mr Latham stated that the substance of the parties' dispute concerning this sum "was directly referable" to SCN's breach of duty claims against PHI ([13(2)] above). It was also "generally referable" to SCN's claims concerning the Clyde Road project ([13(1)] above). Mr Latham noted that Ms Conoulty ultimately found that the monies in the bank account belonged exclusively to PHI (I assume, on the basis that PHI was responsible for financing the development and no capital contribution was made by SCN: see [27] above).
11. Counsel for PHI pointed out that the breach of duty claim had been abandoned. Counsel's submission was that PHI had succeeded on the relevant issue and should receive the benefit of the consent order concerning the costs of the earlier proceedings.
12. Where, as in the present case, a costs order is made that the costs of proceedings are to be costs in the cause in later proceedings, and there is uncertainty, given the outcome of the later proceedings, about what the effect of the order is, or ought to be, procedural questions arise about the nature of the original "costs in the cause" order. Does it attract the principle in Woods v Sheriff of Queensland (1895) 6 QLJ 163, so that, once made, it cannot be altered without the consent of the parties? On this view, the Court's role is confined to interpreting the original order. The alternative view is that such an order does not render the Court functus officio and the Court may, as a matter of discretion, make a replacement order dealing with the incidence of costs in the light of the actual outcome of the subsequent proceedings.
13. I discussed this question in Akierman at [159]-[164]. In that case, however, it was not necessary to reach a final conclusion, because the parties agreed that the original "costs in the cause" order should be replaced by a fresh order.
14. The issue was not addressed before me in the present case and I was not asked to re-open the files from the earlier proceedings. In these circumstances, I think it best to proceed on the basis that I am only being asked to interpret the earlier consent order, and not to make a fresh exercise of the Court's power to award costs of those earlier proceedings. This seems to me to accord with the way in which the submissions were presented for both parties.
15. Accordingly, the question before me is whether, as a matter of interpretation, and in the light of the outcome of the present proceedings, the consent order for "costs in the cause" allocates liability for the costs of the earlier proceedings to one or other of the present parties.
16. The consent order was made shortly after PHI had filed its statement of claim. PHI's action, at that point, contained various claims concerning four different development projects. The parties would however have contemplated that the claims might be amended or that cross-claims might be brought concerning one or more of those projects. To my mind, the most natural reading of the reference to the "cause" is to the outcome of the proceedings (that is, the action together with the cross-actions), taken as a whole.
17. I have refused the applications by counsel for SCN and Manotik for orders for costs of the hearings before Sackar J and myself. As a result, the basis for the claim for the costs of the earlier proceedings falls away. On no view have SCN and Manotik succeeded in the "cause", so understood.
18. But nor has PHI. PHI has obtained two orders in its favour for the costs solely referable to two specific claims raised in the proceedings. It has not obtained an order for the general costs of the whole, or any party, of the proceedings.
19. It is true that PHI has obtained an order in its favour for costs solely referable to the defence of the breach of duty claims. But at the time the consent order was made, the particular claims in question had not yet been propounded (SCN's cross-claim was only filed several weeks later). At that point, any such claims would have been seen as part of PHI's claim concerning the Clyde Road project, and PHI did not obtain a costs order in its favour on that claim either (see [52]-[57] above). I do not think that, on any view, the "cause" for the purpose of the consent orders can be identified with the outcome of the breach claims on their own.

Costs argument

1. Counsel for PHI sought to have the costs of the costs argument specifically included in the orders for costs which were claimed against SCN and Manotik. Most of those claims for costs failed, and overall, PHI has not enjoyed a great deal of success in the costs argument. Nor have SCN and Manotik. There will be no order as to the costs of the costs argument.

Orders

1. The orders of the Court are: 1. Order that the first defendant pay the costs of the plaintiff solely referable to the plaintiff's claims for recovery of the "HNH loan" the subject of prayers 16-19 in the statement of claim (but not including any such costs incurred in proceedings before the referees). 2. The first defendant/cross-claimant pay the costs of the plaintiff/first cross-defendant solely referable to the claims for breach of duty contained in prayers 4-5 of the first cross-claim. 3. Otherwise no order as to costs as between the plaintiff, the first defendant and the second defendant in the action or the cross-actions. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 August 2024