Plaintiff v First Defendant

2 On 24 July 2012, the plaintiff filed further submissions dealing with my reference in the published reasons to the case of Tyco Fire & Security v Norfolk Mechanical[2]. The case was not referred to by the parties and they were not given an opportunity to consider the case and make submissions.

3 The plaintiff has urged me to consider the further submissions. The defendants submitted that the court was under no obligation in the circumstances (judgment handed down) to invite further submissions and that they should not be considered.[3] In any event, it was submitted that the submissions do not change the findings and the result in relation to what I have called the Put Option Issue.

4 The court is generally under no obligation to invite further submissions or consider further submissions in relation to a case referred to in the court's reasons for judgment and not cited by any of the parties. The position may be different if the entire case depended on the application of principles derived from binding authority and the parties did not have an opportunity to deal with the case. This is not the position in this case.

5 Nevertheless, I have considered the submissions in relation to the Tyco case and I do not propose to change any of my findings. As demonstrated by the defendants, my decision did not depend in any way on the Tyco case. The decision was reached after a proper and detailed consideration of the relevant clauses. Having reached the conclusion I was of the opinion that the Tyco case provided some useful statements even though the clause in the Tyco case was different.

6 In the circumstances I do not propose to engage in any further analysis of the Tyco case as there is no utility in doing so.

7 Each party filed and served written submission and submissions in reply in relation to costs and an appropriate form of order. Neither party has requested an oral hearing. I will not rehearse the facts and will assume familiarity with my reasons for judgment published on 22 June 2012.

(a) The first defendant should have its costs because it succeeded in the Put Option Issue. No claim was made against the first defendant in relation to the Unit Adjustment Issue.

(b) The second defendant and it alone should pay the plaintiff's costs of the Unit Adjustment Issue because it should not have adjusted the units in the manner that it did. The first defendant was not involved in this issue.

9 The plaintiff contends that it has been sufficiently successful - having succeeded on all issues other than one of the construction points - and should have its costs from the defendants. Alternatively the plaintiff submits that the defendants should pay its costs of the trial, other than the first day, the court books, discovery and other associated costs.

10 Central to the plaintiff's submission is that the defendants prolonged the trial by making amendments raising issues that were ultimately unsuccessful. Much time and expense was therefore wasted and not only should the otherwise successful defendants be deprived of their costs but they should pay the plaintiff's costs. The issues were sufficiently discrete and unconnected with the Put Option Issue - which was a construction issue - and accordingly, it was contended that the defendants should pay the plaintiff's costs either of the entire case, because the successful construction point would only have taken a day or alternatively, costs other than the first day of trial. In its written submissions the plaintiff contended that there was persuasive authority in favour of the proposed costs order.[4]

11 The Court has a broad discretion in relation to costs and may in suitable cases and despite its general reluctance to do so, deprive a successful party (whether plaintiff or defendant) of certain costs or order a successful party (whether plaintiff or defendant) to pay the costs of issues that it did not succeed on. In my opinion this is precisely such a case. The issues were discrete, clearly defined and there was a winner and a loser in relation to each such discrete issue. Costs should, subject to the matters set out below, follow the event in relation to each discrete issue.

12 In my opinion, it is not necessary to determine who was the successful party and then assess whether that party should be deprived of part of its costs because of some misconduct.[5] Rather, such party should pay the other party's costs not because of some misconduct but because it lost the particular issue. Consequently, it is not a case of disentitling a successful party of its costs but it is giving it costs to the extent that it succeeded and depriving it of costs, and ordering it to pay the other party's costs because it lost the issue.

13 The plaintiff lost the Put Option Issue and it should pay the first defendant's costs in relation to this issue. There is no reason to deprive the first defendant of its costs. It was entitled to defend this claim and did so successfully at all stages.[6] The Put Option Issue was a key issue in the proceeding as a whole. The plaintiff wished to specifically enforce a put-option agreement and it was unsuccessful. The fact that this discrete issue may not have taken much time is not a fact that would disentitle the first defendant to its costs. The time was certainly not de minimis.

14 Accordingly, the plaintiff should pay the first defendant's costs of the Put Option Issue such costs to be taxed as between party and party in the absence of agreement. It must be recalled that the first defendant succeeded on a key issue in the case. I include in these costs, costs associated with the Unit Holding Certificate point. Although the first defendant lost the point it is sufficiently connected with the Put Option Issue and it should not be deprived of those costs. It won the overall issue. I note that no costs are sought by the second defendant in relation to the Put Option Issue.

15 I now turn to the plaintiff's costs. The second defendant lost the Unit Adjustment Issue and should pay the plaintiff's costs in relation to this issue. There is no reason to deprive the plaintiff of its costs. The plaintiff was entitled and indeed obliged to make the claim and was successful. The fact that the plaintiff lost on another discrete issue - albeit a key issue - does not in this case disentitle it to its costs. The plaintiff's contention that its units were in effect taken away without compensation and improperly was vindicated despite vigorous opposition. Further, on the second defendant's version, the responsible entity in issuing the units in the first place at the price that it did was in breach of trust.

16 Accordingly, the second defendant should pay the plaintiff's costs of the Adjustment of Units Issue, such costs to be taxed as between party and party in the absence of agreement. I do not propose to specifically include or deal with categories of costs as sought by the plaintiff. All costs normally recoverable in relation to a successful claim - in this case the discrete Adjustment of Units Issue - should be recovered. Although this may require detailed analysis, it is a relatively easy task to identify what proportion of the Court Book, the Supplementary Court Book, Lists of Documents and the like relate to what issue. If the parties cannot agree on the percentage, it will unfortunately be a matter for the Costs Court.

17 The second defendant should also pay the plaintiffs costs of the subpoena directed to Ashurst and the costs associated with the contested privilege application that followed, including costs reserved. The subpoena was necessary. Relevant documents were obtained and the plaintiff was sufficiently successful.

18 I propose to make the following declaration and orders.

(1) The Plaintiff's unit-holding in the MacarthurCook Office Property Trust is 4,733,248.31 units.

(2) The Plaintiff's claim against the First Defendant in relation to the Put Option Issue is dismissed.

(3) There be judgment for the Plaintiff against the Second Defendant in relation to the Adjustment of Units Issue.

(4) The Plaintiff pay the First Defendant's costs of the Put Option Issue, including reserved costs, such costs to be taxed as between party and party in the absence of agreement.

(5) The Second Defendant pay the Plaintiff's costs of the Adjustment of Units Issue, including reserved costs, such costs to be taxed as between party and party in the absence of agreement.

(6) The Second Defendant pay the Plaintiff's costs of the subpoena directed to Ashurst and the costs associated with the contested privilege application, including costs reserved.

(7) The register of the MacarthurCook Office Property Trust be amended within 28 days of the date of this order to record that the Plaintiff's unit-holding in the MacarthurCook Office Property Trust is 4,733,248.31 units.

[1] [2012] VSC 262.

[2] [2007] NSWSC 585: Judgment [56]-[58].

[3] Reference was made to Eastman v DPP (ACT) [2003] HCA 28; (2003) 214 CLR 318 at 330, [29], and Stockdale v Alesios [1999] VSCA 128; [1999] 3 VR 169, at 171 [5].

[4] Reference was made to G T Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296 and other cases referred to and summarised therein.

[5] Both parties referred to Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, [40] and [69].

[6] The Put Option issue was heard before Randall AsJ and Bell J (on appeal) and the first defendant was successful in defeating the plaintiff's claim for summary judgment.