Singtel Optus v Almad

Judgment (ex tempore - revised 12 december 2013) 1HIS HONOUR: I gave judgment in these proceedings on 30 September 2013, after a trial lasting some 15 hearing days. My reasons may be found at [2013] NSWSC 1427. 2On 16 October 2013, the matter came back for the making of orders. The parties were agreed as to the judgments that should be given to reflect my conclusions and I made orders accordingly. The parties could not agree on costs and other matters, and accordingly I stood those other matters over for yet further consideration. I am today dealing substantially with the question of costs, but also with the way in which the plaintiff's success against the second to fifth defendants should be reflected in final orders. 3The plaintiffs have propounded short minutes of order. 4One of those quantifies the first plaintiff's entitlement against the fifth defendant in the sum of $144,139. The making of that order is not opposed (the fifth defendant is represented before me today). 5The second order proposed is that the amount for which judgment was given for the plaintiffs against the second defendant is held by that defendant on constructive trust for the plaintiffs. The second defendant has not been represented at any material time, because it is in liquidation. Thus, the making of an order to that effect was not opposed. However, since the second defendant has not consented, it is necessary that I deal briefly with that order. 6The judgment against the second defendant was given on the basis that it was knowingly involved in the numerous breaches of fiduciary duty proved against its principal and controller, the third defendant. The submissions for the plaintiffs are sufficient to satisfy me that it is appropriate, in those circumstances, to declare the existence of a constructive trust by way of remedy. The plaintiffs rely on what is said in Young, Croft and Smith, on Equity (Lawbook Co, 2009) at [16.1190]. To my mind, in circumstances where the profits concerned are the fruits of breach of fiduciary duty, of which the second defendant must have been aware through its controller, it is appropriate to impress them with a trust in favour of the plaintiffs. And to my mind, the fact that the entitlement was expressed by way of judgment rather than by way of account of profits cannot affect this, where the underlying liability is based on the same facts and the same principles of equity. 7Some small part of the amount recovered against, or ordered to be recovered against the second defendant was based on breach of bailment. In circumstances where the underlying facts disclose the same wholesale breach of fiduciary duty, it does not seem to me to be necessary to differentiate those claims. 8Accordingly, as I have indicated, the plaintiffs are entitled to the second order sought. 9The third order sought is that the first plaintiff pay the first defendant's costs. That follows because the claim against the first defendant failed. However, the first defendant seeks an order that its costs be assessed on the indemnity basis. 10In the usual way, the submissions put on the point have involved selective dredging of the facts of the case and the circumstances of the hearing, and to some extent a selective rewriting of history. That no doubt reflects the fact that the history is said to be written by the victors. 11Regardless of those historiographical considerations, there are a number of important matters to bear in mind. The first is that the plaintiff's case against the first defendant, so far as it was reflected in the further amended commercial list statement on 26 October 2012, had undergone very considerable revision. In broad outline, that revision consisted in substance of dropping entirely the claim that had initially been made (for overcharging for storage space, and for overcharging the rate at which pallet storage was to be charged) and by substituting other claims. Costs orders were made in respect of the amendments. The plaintiffs submit that if some other order was sought in respect of the costs thrown away, it should have been sought at the time. In those circumstances, they submit, to the extent that the costs relate to the dropping of the claim as originally framed, and the articulation of new claims, the matter has been dealt with and should not be revisited. 12In my view that submission, so far as it goes, is correct. If the first defendant thought that the costs order that was made did not properly articulate or measure the way in which its costs should be assessed for the dropping of the claims against it, the time to argue that point was when the amendments were sought and leave was granted (which was on 26 October 2012) and not now, 14 months down the track. 13The next point made is that, after the amendments, there were some four claims articulated. However, the only claim that was pressed in final submissions was one for overcharging by reference to the number of pallets stored at one warehouse rather than another. 14The plaintiffs characterise the dropping of the additional claims as an exercise in responsible advocacy (to adopt the language of Kirby P in Huntsman Chemical Company Australia Limited v International Pools Australia Limited (1995) 36 NSWLR 242 at 247-248. Thus, they submit, to make any indemnity costs order based on those matters would be to penalise the plaintiffs for responsible advocacy, and could be seen to deter other litigants in the future from taking a similar responsible step. 15The plaintiffs also call in aid the observations of Davies J in Ragata Developments Pty Limited v Westpac Banking Corporation (1993) 217 ALR 175. His Honour made two points of relevance. The first is that it is best to limit cases to the real issue in dispute, so far as possible. The second is that abandonment of issues should not ordinarily be taken as a concession that the abandoned issues were unreasonably or improperly raised. In that case, his Honour said (at 179) that he would not infer that the applicant "was entirely unjustified in bringing the present case, or that the issues, as originally raised, were issues which [the applicant] was never justified in litigating". 16To my mind, there is (as, if I may say so with respect, one would expect) much force in the observations of Kirby P and Davies J. 17The unfortunate fact is that although this matter was set down for hearing on the basis of the issues articulated in the further amended commercial list response statement and the responses thereto, and with adequate time to prepare the issues thus raised, nonetheless a flurry of last minute activity on all sides led to a very considerable recasting of the case. I referred to that in part in my reasons given earlier, when, in setting out the real issues in dispute, I noted "amendments to delete claims that were dropped, progressively, in the course of the hearing" (see at [7]). 18It is also appropriate to note, in respect of one of the claims that was so dropped, that it was the subject of evidence from the relevant defendant adduced not in the form of any statement or affidavit filed in accordance with the Court's rules, but, rather, evidence adduced orally, by leave, in the course of the hearing. 19I do not wish to be thought to condone the practice of bringing cases that cannot be substantiated. But at the same time, and being of the same mind as Davies J, I do not infer, from the fact that particular claims were dropped, the conclusion that they were never sustainable. In those circumstances I do not think that the dropping of the claims affords any basis for ordering costs on the indemnity basis. 20That leaves, as I see it, the claim on which the first defendant succeeded. It is sufficient to say that the case against it was finely balanced and that my decision turned, ultimately, on an analysis of the affidavit evidence (supplemented by cross-examination) and its weight as against powerful inferences available from documentary evidence. 21In all the circumstances, I do not think that a ground has been shown for departing from the usual basis upon which costs are payable: namely, on the ordinary basis. 22The next question relates to the order that the unsuccessful defendants (second to fifth defendants) should pay the plaintiff's costs. It is submitted for those defendants that an order in those terms would be unjust, because the plaintiffs might recover against them the costs of its unsuccessful claim against the first defendant. I think that there is merit in this submission. It can be addressed by qualifying the order sought, by adding to it the words "except costs incurred only in relation to the plaintiff's claim against the first defendant". [Mr Rayment requested to be heard on the word "only". A short discussion ensued; see transcript.] 23I should note that it was put for the second to fifth defendants (or so many of them as were represented before me) that the costs should be further limited by reference to what were said to be severable issues, including the issue of knowing involvement in the case of misleading or deceptive conduct alleged against the first defendant. That case failed, and thus the claim against the relevant defendants for accessory liability also failed. But as was submitted for the plaintiffs, if the balance had turned the other way on the overcharging case, it is likely that the claim for misleading or deceptive conduct would also have succeeded. 24In circumstances where the real issue was whether there had been misleading or deceptive conduct, and where I do not see the separate issue of accessory liability as having any particular significance in terms of time taken, evidence led or submissions put (because, it seems to me, it would have followed automatically had I found a case of misleading or deceptive conduct), I do not see any reason for qualifying the plaintiff's costs entitlements against the second to fifth defendants any further than I have indicated and am about to indicate. 25There is yet another issue to be dealt with in relation to the plaintiff's costs. It relates to the reports of an expert, Mr Andrew Ross. Mr Ross is an accountant. If I recall rightly, he conducted an exhaustive analysis of various business records, in an attempt to show that there had been overcharging for pallet storage, and other matters. In the result, the reports of Mr Ross were not tendered and he was not called. That development occurred on the day when he was due to give evidence. I should note that, because objection had been flagged to the whole of his reports, I took the view that I would hear his evidence on the voir dire and rule on the evidence thus obtained in the course of ruling on his reports. Thankfully, I was spared that task. 26Having regard to the volume and detail contained in the reports of Mr Ross, I have little doubt that very substantial costs were incurred in their preparation. The costs to be paid by the second to fifth defendants should exclude also all costs referable to the reports of Mr Andrew Ross. 27The next order in dispute is the one relating to the costs of the first defendant's cross-claim against the first plaintiff. It appeared in the course of the hearing that the first defendant was asserting an entitlement against the first plaintiff for unpaid storage charges. That entitlement had not been raised (as it could have been) as a defence by way of set-off. Nor had it been raised (as it should have been) as a cross-claim in the proceedings. 28In the course of the hearing, when it was suggested for the first defendant that it might take its chances in the District Court after my decision was known, and after I indicated that I did not view that as a satisfactory state of affairs, the cross-claim was filed. 29The first plaintiff submits that in those circumstances, notwithstanding the first defendant's partial success on its cross-claim, there should be no order as to costs. 30The question of partial success arises because I concluded that the first defendant had made good its claim to storage charges up to a certain point, but not thereafter. I came to that view because of what I thought was an agreement reached at the relevant cut off point where no further storage charges would be incurred or payable. 31Although little time was incurred in relation to the cross-claim, it does nonetheless reflect a separate issue and in my view, to the extent that costs were incurred in respect of it, they should follow the event. 32Thus, I propose to order that the cross-defendant pay the cross-claimant's costs of the cross-claim. 33The next order in dispute is that the amount payable by the first plaintiff (as cross-defendant) to the first defendant (as cross-claimant) be paid into a controlled money account. That order is sought because apparently an appeal has been brought from at least the relevant judgment in favour of the first defendant. 34When that order (which had not been articulated by notice of motion or in the written submissions) was put before the Court, the defendants against whom judgments have been recovered said that the same should in effect apply to them. 35On the face of things, it might be thought to be somewhat unsatisfactory that, with barely more than a week left in the hearing year, and two months after the orders were made, what are in effect stays are now being sought. 36If a stay had been sought when I directed entry of judgments, I would have ordered, if asked to do so, that the judgment be stayed for sufficient time to enable the judgment debtors to approach the Court of Appeal. Doing that now would impose an intolerable burden on a Judge of Appeal in the last week of term (and would also impose a severe burden on the relevant parties to get their cases before the Court of Appeal in that time). Accordingly, whilst regarding it as unsatisfactory in the extreme, what I propose to do is to order that the judgment in favour of the cross-claimant against the cross-defendant and the judgment against the third defendant are stayed up until and including 17 February 2014. 37The last contested matter related to a notation sought as to the way in which costs should be assessed. In my view that is a matter for the costs assessor and I do not propose to interfere with the cost assessor's exercise of his or her responsibilities and discretions.