RIL Aviation HL 7740 and HL 7741 Pty Ltd v Alliance & Leicester plc & Ors

Judgment 1This judgment relates to competing applications in relation to costs of the proceedings, the subject of the judgment delivered on 29 October 2010: RIL Aviation HL 7740 and HL 7741 Pty Ltd v Alliance & Leicester plc & Ors [2010] NSWSC 1235 (the Judgment). On 15 December 2010 I made orders in accordance with the Judgment save as to costs. The Judgment should be read with these reasons and the same terminology will be adopted in these reasons as was adopted in the Judgment. 2The main issue in the proceedings was whether RILA was obliged to pay Ladbroke the monthly fee that was payable to the previous manager (the Fee Issue). RILA claimed that it was not so obliged but was held to be liable to make the payments. The other issue was whether the defendants were entitled to rely on the Notices of Default (the Default Notice Issue). The defendants were held to be not so entitled. 3By Notice of Motion filed in Court on 15 December 2010 the defendants seek an order that RILA and two non-parties, KV Aviation Holdings Pty Limited (KVA) and David Lloyd Veal (Mr Veal), jointly and severally pay the costs of the defendants/cross-claimants on an ordinary basis.The defendants also seek an order that RILA pay the costs of the first and second defendants on an indemnity basis. 4The defendants submitted that the central or main issue in the proceedings was resolved in their favour and costs should follow the event in accordance with usual principles: Uniform Civil Procedure Rules (UCPR) 42.1; Oshlack v Richmond River Council (1998) 193 CLR 72 at [67]. The defendants submitted that the "event" in question in the proceedings is the defendants' success in relation to the Fee Issue. 5The defendants sought to characterise the Default Notice Issue as a "secondary" issue for determination in reliance upon the following passage of the Judgment: [135] It is not unreasonable for the defendants to have relied upon RILA's conduct in failing to disclose the name of the account and writing a letter that on any reasonable view would suggest that it was the RILA account into which the money was to be paid, to suggest that RILA intended to deal with the Secured Property. It seems to me that RILA's conduct in this regard was most unsatisfactory. Unfortunately Mr Lennox gave advice that RILA did not have to disclose the name of the account to A&L. 6The defendants submitted that once their suspicions were triggered (not unreasonably) by RILA's conduct, they were obliged to issue a Notice of Default. 7The Judgment describes the way the evidence developed during the trial [85]. It was the evidence of Mr Lennox, the solicitor for the directors of the plaintiff, that was decisive in relation to whether there had been an attempt to deal with the Secured Property. This evidence was not available until late in the trial and was certainly not material that had been provided to the defendants prior to that time. However, the plaintiff established that the defendants were not entitled to rely on the Notices of Default. 8The defendants submitted that where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the party was successful and those on which it failed. In support of these submissions the defendant relied upon the following passage of Elite Protective Personnel Pty v Salmon (No 2) [2007] NSWCA 373: [6] Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the appellant 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: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). 9However in that case the Court of Appeal also said: [8] Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 (at [18]) per Hislop J (with whom Beazley JA and Tobias JJA agreed). 10The defendants also relied upon Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 in which the Court of Appeal referred to Elite Protective Personnel as having reviewed the principles governing "the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed": at [38]. In summarising those principles in Bostik the Court referred to the following at [38]: · If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27] ... · A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 2 96 at [34]. 11The defendants also relied upon Turkmani v Visvalingam (No 2) [2009] NSWCA 279 in which the Court of Appeal again referred to James v Surf Road Nominees and on this occasion cited the following passage of that judgment (at [9]): [33] Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748: