Sze Tu v Lowe

[2015] NSWCA 91

Court of Appeal (NSW)|2015-04-10|Before: Meagher JA, Barrett JA, Gleeson JA, Gzell J, Smart AJ

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2015-04-10

Before

Meagher JA, Barrett JA, Gleeson JA, Gzell J, Smart AJ

Source

Original judgment source is linked above.

Judgment (26 paragraphs)

[1]

Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 Gould v Vaggelas [1985] HCA 75; 157 CLR 215 Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Latoudis v Casey [1990] HCA 59; 170 CLR 534 Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Probiotec Ltd v University of Melbourne [2008] FCAFC 5; 166 FCR 30 Re Estate of Hodges; Shorter v Hodges (1988) 14 NSWLR 698 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Shorten v Shorten (No 2) [2003] NSWCA 60 Sze Tu v Lowe [2014] NSWCA 462 Telstra Corporation v Australian Competition Tribunal (No 2) [2009] FCAFC 34 Windsurfing International Inc v Petit [1987] AIPC 90-441 Texts Cited: G E Dal Pont, Law of Costs (3rd ed, LexisNexis Butterworths, 2013) Category: Costs Parties: 2013/107940 Shiu Shing (Sunly) Sze Tu (First Appellant) Shiu How (Gordon) Sze Tu (Second Appellant) Geoffrey Lowe (First Respondent) Mary Lowe (Second Respondent) Scott Pascoe as Trustee of the Estate of the Late Kut Sze Tu (Third Respondent) Margaret Sze Tu (Fourth Respondent) Helen Sze Tu (Fifth Respondent) Janet McNamara (Sixth Respondent) Stella Sze Tu as Trustee of the Estate of the Late Chow Fung Chun (Seventh Respondent)

[2]

2013/107472 Margaret Sze Tu (Appellant) Geoffrey Lowe (First Respondent) Mary Lowe (Second Respondent) Scott Pascoe as Trustee of the Estate of the Late Kut Sze Tu (Third Respondent) Helen Sze Tu (Fourth Respondent) Janet McNamara (Fifth Respondent) Shiu Shing (Sunly) Sze Tu (Sixth Respondent) Shiu How (Gordon) Sze Tu (Seventh Respondent) Stella Sze Tu as representative of the Estate of the Late Chow Fung Chun (Eighth Respondent)

[8]

Judgment

MEAGHER JA: I agree with Gleeson JA.
BARRETT JA: I agree with Gleeson JA.
GLEESON JA: The Court delivered judgment in these three appeals on 23 December 2014: Sze Tu v Lowe [2014] NSWCA 462 (the principal reasons).
The appeals were allowed and the orders of the primary judge (Gzell J) made on 13 March 2013 against the appellants were set aside. The costs orders below were also set aside, other than certain interlocutory costs orders in favour of the appellants and the other defendants in the proceedings on discrete issues.
This Court concluded that the appellants had indefeasible title in relation to their respective interests in three properties which had been acquired by their late father, Kut Sze Tu (KST), in his name and in the names of one or more of the appellants. This was a sufficient basis to set aside the proprietary and related accounting relief awarded against the appellants by Gzell J.
This Court also concluded that the partnership between the plaintiffs and certain of the defendants was dissolved on 1 July 1989, with the consequence that the plaintiffs' claim against the defendants who were partners for the taking of accounts of the partnership was time barred under s 15 of the Limitation Act 1969 (NSW). Accordingly, the accounting relief relating to the partnership was set aside as against the partners who included the appellants (Margaret and Helen) and the third respondent, as administrator of KST's estate (the Estate).
The proprietary and related accounting relief awarded against the Estate in respect of the late KST's interest in the three properties was not disturbed. However, consistently with this Court's conclusion referred to in [6] above, the terms of the inquiry which had been directed by Gzell J were varied to limit its scope to an account of profits (if any) derived by the Estate from the three properties, subject to just allowances.
The Court reserved all remaining questions of costs. In default of agreement between themselves, the Court directed the active parties to the appeals to make submissions as to the costs of the proceedings, including the proceedings in this Court. As some of the orders proposed by the active parties affected the interests of the Estate, the Court also granted leave to the Estate to make submissions as to costs. The Court has now received submissions as to costs.
The Court also received, without objection by any party, an affidavit from the administrator of the Estate deposing to the present gross value of the Estate as being approximately $4,123,000. This evidence is relevant to certain of the submissions made in relation to the costs orders sought by the first and second respondents (Geoffrey and Mary).

[12]

(d) Geoffrey and Mary

Geoffrey and Mary contended for the following orders: 1. save as provided for by order 10 made by Gzell J on 13 March 2013, the first and second respondents (Geoffrey and Mary) pay 50% of the appellants' (Margaret, Helen, Sunly and Gordon) costs of the appeal and at first instance; 2. the third respondent (the Estate) pay the first and second respondent's (Geoffrey and Mary's) costs of the appeal and of the proceedings at first instance, to be paid out of the Estate (and only to the extent that the assets of the Estate are sufficient to pay those costs); 3. the third respondent (the Estate) to indemnify the first and second respondents (Geoffrey and Mary) in respect of the costs order to be paid in order 1, such indemnity to be paid out of the Estate (and only to the extent that the assets of the Estate are sufficient to pay those costs); and 4. the costs referred to in order 2 and the indemnity referred to in order 3 are to be paid: 1. in priority to the constructive trust declared by the Court in order 3(iii) made on 23 December 2014; 2. in advance of the inquiry directed to be held by the Court in order 3(iv) made on 23 December 2014; and 3. in priority to fulfilment of order 3(v) made by the Court on 23 December 2014.
The reference in the proposed orders of Geoffrey and Mary to orders 3(iii), (iv) and (v) made by this Court on 23 December 2014, was a reference to the following orders made in each of the appeals: (iii) Declare that 90% of any profits (if any) derived by the late Kut Sze Tu from the Partnership Properties after just allowances (if any) since the date of their acquisition were and are held on constructive trust for the Partnership. (iv) Direct that an inquiry be held to identify what (if any) moneys the plaintiffs [Geoffrey and Mary] are entitled to from the late Kut Sze Tu by way of an account of profits after taking into account any just allowances, in respect of the benefits (if any) obtained by the late Kut Sze Tu through his ownership, possession and/or use of his respective interests in the Partnership Properties since their acquisition. (v) Order that the first defendant [the Estate] pay to the plaintiffs [Geoffrey and Mary] 20% of the amount of the benefits the late Kut Sze Tu obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be due pursuant to the inquiry referred to in order (iv) above.

[15]

(a) The appellants

The appellants acknowledged that they had not been successful on some issues, both on appeal and at first instance, but argued against any apportioning of costs on an issue-by-issue approach, or an award of only an a proportion of their total costs by reason of a lack of success on particular issues. They contended that, where the defendant prevails in the proceedings, it will generally not be appropriate for the Court to adopt an issue-by-issue approach: Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 (Griffith) at [19] (Hodgson JA; McClellan CJ at CL agreeing) and [38]-[39] (Basten JA).
The principal discretionary matters relied upon by Margaret in relation to her appeal were as follows: 1. the appeal was relatively confined and succeeded on the issues that were the primary focus of Margaret's arguments, being indefeasibility, the date of dissolution of the partnership and limitation questions (other than in relation to claims to recover trust property); 2. the issues on which Margaret did not succeed were not so clearly dominant or separable such as would make an issue-by-issue costs order appropriate in this case: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]; Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [17]-[19].
Margaret also relied upon the following matters in relation to the proceedings below: 1. In light of Margaret's indefeasible title, the allegations against her should not have brought about the incurring of any costs at all: Griffith at [19]. It was said that any apportionment in favour of Geoffrey and Mary would involve "a nit-picking exercise which would obscure and ignore the ultimate result": Telstra Corporation v Australian Competition Tribunal (No 2) [2009] FCAFC 34 at [15]. 2. The matters on which Margaret was unsuccessful at trial did not contribute in any separable and material way to the prolongation of the hearings. 3. As a defendant Margaret was entitled to marshal all reasonably arguable defences in resisting Geoffrey and Mary's claims: Griffith at [19], [38]-[39]. 4. The issues on which Geoffrey and Mary succeeded at trial were essential to their claim against the Estate, and they would have had to establish those matters in any event. It was said that any costs apportionment against Margaret in respect of those matters would have the effect of requiring Margaret to subsidise Geoffrey and Mary's claims against the Estate, notwithstanding that their claims against Margaret were wholly unsuccessful.
Sunly and Gordon (and Helen) relied upon the following discretionary considerations: 1. The issues on which they had succeeded on appeal in establishing error (the express trust and resulting trust issues; the indefeasibility issue; the Limitation Act issues; and the partnership dissolution issue), were sufficient to dispose of the whole Geoffrey and Mary's claim against them. 2. Insofar as their arguments regarding the breach of fiduciary issue were unsuccessful, the finding made by this Court that any claim against the appellants was barred meant that the findings as to breach of fiduciary duty by KST gave rise to no relief as against the appellants. In those circumstances, such issues cannot be considered an "event", nor can they be considered a success of Geoffrey and Mary as against the appellants. 3. The appellants won the "event", albeit that not all the arguments were successful. 4. A similar approach should be adopted in relation to the defendants (other than the Estate) costs of the proceedings below, on the basis that the claims for relief against them have totally failed.

[18]

Decision

Costs are not awarded by way of punishment of the unsuccessful party but, rather, "are compensatory in the sense that they are awarded to indemnify to successful party against the expense to which he or she has been put by reason of the legal proceedings": Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 (Mason CJ); Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Mahenthirarasa (No 2)) at [8] (Basten JA; Giles and Bell JJA agreeing). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: Latoudis v Casey at 542; Mahenthirarasa (No 2) at [9].
The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent costs are to be paid. Reference should also be made to r 42.1, Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or part of the costs.
How "the event" should be defined will depend upon the nature of the litigation. Generally the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861 - 37,862 (Waddell J).
In a proper case, the party that is successful overall may be deprived of part of its costs, or ordered to pay the costs of a discrete issue. The circumstances in which this may occur are not limited to cases where it was unreasonable for the successful party to raise the issue on which it failed: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D. The relevant principles were reviewed by this Court in Elite Protective Service Pty Ltd v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows: • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party 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 1996, unreported). • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • 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]. • 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 and Tobias JJA agreed). • 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 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.
In approaching the question of apportionment where there are multiple issues, it has also been recognised that there is a basis for distinguishing between the position of successful defendants and successful plaintiffs. In Griffith at [19] Hodgson JA explained the distinction as follows: In the former case, the defendant has been caused to incur costs in defending a claim which the decision in the case has wholly rejected, and has thus determined should not have brought about the incurring of any costs at all. In those circumstances, it may be considered appropriate that the defendant have costs associated with reasonable defences, even if they ultimately proved to be unsuccessful and severable. In the latter case, the plaintiff has chosen to bring the whole proceedings and thereby to incur costs and cause costs to be incurred which otherwise would not have been incurred; and in those circumstances, it may be seen more readily as appropriate that the plaintiff be liable for the costs of unsuccessful severable claims or issues, even if it was reasonable to include those claims or issues.
A similar view was expressed in Griffith by Basten JA at [38]-[39]. After referring, with apparent approval, to the statement of Burchett J in Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169 that: ... A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably he may suffer in costs. Ultimately, the question is one of discretion and judgment. Basten JA said (at [39]): Even were it otherwise, caution should be taken in allowing an unsuccessful plaintiff to resist payment of costs in respect of particular independent defences which are unsuccessful or need not be addressed.

[19]

(a) What costs order should be made in favour of the appellants?

Each of the appellants has succeeded in setting aside the relief awarded against them in the Court below. Ordinarily costs should follow the event. Are there circumstances which justify some other order on the appeals?
If one looks at the appeals, there were multiple issues and more than one "event". The grounds of appeal relied upon by the appellants and the relief sought by them on appeal were directed to setting aside both the relief awarded against the appellants and the relief awarded against the Estate in which they had an interest on intestacy.
With respect to the Estate, Margaret sought to characterise all of the claims made by Geoffrey and Mary as, in substance, claims for partnership accounts, with the consequence that all claims were said to be barred by s 15 of the Limitation Act. Sunly and Gordon (and Helen) made a similar submission to this effect. These appeal grounds had mixed success. The grounds failed insofar as Geoffrey and Mary's claims against the Estate were to recover trust property for the partnership. Sunly and Gordon (and Margaret and Helen) also challenged the findings of Gzell J that KST had used partnership funds in the purchase of the three properties and the consequential relief by way of constructive trust in favour of the partnership over the Estate's interest in the three properties. These appeal grounds also failed.
To the extent that the appellants failed on issues argued in the interests of the Estate, some allowance in favour of Geoffrey and Mary should be made to reflect Geoffrey and Mary's success on appeal in maintaining their distinct claim against the Estate, except for the variation to the orders by Gzell J to limit the terms of the scope of the inquiry.
The process of apportioning costs as between different issues with respect to the Estate and the appellants can only be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: James v Surf Road Nominees Pty Ltd (No 2) at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. Related to this assessment is the issue whether the appellants should be deprived of part of their costs on appeal because they otherwise raised issues in their own interests on which they were unsuccessful. I now turn to this issue.
In my view, in the circumstances of these appeals, the Court should not attempt to differentiate between the issues raised in their own interests on which the appellants were successful and those on which they failed. The appellants succeeded on the central or dominant issue being the question of whether they had indefeasible title to their interests in the three properties. That success also involved success on a number of related issues including issues raised by Geoffrey and Mary in resisting the appeals such as the fraud exception to indefeasibility; the attempts to uphold the orders of Gzell J on the grounds of either an express trust, or a resulting trust or a statutory trust; and the attempt to rely upon s 55 of the Limitation Act as a postponement of the limitation period. (This last contention was ultimately abandoned by Geoffrey and Mary as against the appellants).
The issues on which the appellants failed on appeal, were raised defensively in answer to Geoffrey and Mary's claims as plaintiffs. It is important to bear in mind at all times the overall outcome of the proceedings on appeal as between the parties. The costs orders should reflect a just and fair outcome on appeal, without isolating and weighing individual issues with minute precision: Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 at [10].
I do not consider that this is an appropriate case where one party's failure on what might be viewed as a separable issue, such as the appellants' failure on the defences based on delay and conventional estoppel, should be treated as justifying an order for costs in respect of that particular issue. The failure of some of the defences raised by the appellants needs to be considered in the light of their position as defendants who have achieved complete success in setting aside the relief awarded against them at first instance.
Finally, this is not a case where the appellants acted unreasonably in the pursuit of their appeals. The appellants properly abandoned a number of grounds of appeal including their challenge to the finding of Smart AJ that there was a partnership. The focus of the appellant's arguments on appeal was largely directed to the issues critical to their ultimate success - the nature of the trust claim advanced by Geoffrey and Mary; the indefeasibility defence; and the applicable limitation period to Geoffrey and Mary's various claims. Accordingly, I reject any implicit submission by Geoffrey and Mary (who complained that the appellants adopted a "scatter gun" approach to the appeals) that the appellants acted unreasonably.
The separate arguments of Margaret and Helen (concerning the date of dissolution of the partnership and the applicable limitation period for claims for the taking of partnership accounts) were also properly focused on the issues critical to their separate success in setting aside the accounting relief awarded against them as partners and in obtaining a variation to the accounting relief awarded against the Estate.
Geoffrey and Mary describe this separate "success" by Margaret and Helen as a minor variation of the orders made below. I reject this contention. The variation to the accounting order was significant in terms of the outcome for the appellants and also the respondents who were partners. As a result of the variation, the partners do not have to provide an account with respect to the partnership in respect of a period of approximately thirty years. The practical significance of this outcome for the affected partners in terms of obtaining finality in their dealings with Geoffrey and Mary, and avoiding further costs and expense of ongoing litigation cannot be understated.
In my view, looking at the matter globally, an overall assessment reflecting the respective success of the parties on appeal where the appellants were wholly successful in their own interests and only partly successful to a limited extent in the interests of the Estate, leads to the conclusion that Geoffrey and Mary should pay 85% of the respective appellants' costs of the appeals.

[20]

(b) Should a Bullock order be made on appeal against the Estate in favour of Geoffrey and Mary?

The power to make a Bullock order is found in the Court's statutory discretion as to costs: Civil Procedure Act, s 98. In G E Dal Pont, Law of Costs (3rd ed, LexisNexis Butterworths, 2013), the author suggests at [11.18] the following rationale for a Bullock order: At a basic level, the rationale for a Bullock order is that in some circumstances it will be just for a successful plaintiff who has sued two (or more) defendants to be indemnified by the unsuccessful defendant for the costs he or she incurred in proceeding against the successful defendant. This may be a just outcome where the allocation responsibility between the potential defendants is uncertain, making it a reasonable course for the plaintiff to proceed through to trial against more than one defendant.
In support of the making of a Bullock order, Geoffrey and Mary relied upon the following passage in Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 at [15], in which this Court (Beazley, Hodgson and McColl JJA) said, in the context of the making of a Sanderson order, but relevantly also for a Bullock order: In determining whether it is fair to make such an order, two matters are usually considered to be relevant. First, it must have been reasonable for the plaintiff to have brought the proceedings against the successful defendant: see Gould v Vaggelas [1985] HCA 85 [sic]; (1985) 157 CLR 215 per Gibbs CJ (at 230); Wilson J (Murphy J agreeing) (at 247); Brennan J (at 260); Lackersteen v Jones (No 2) [1988] NTSC 72; (1988) 93 FLR 442 (at 449); Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179; (2000) NSWCCR 417 (at [128]) per Mason P (Stein and Heydon JJA agreeing). … Secondly, there must be some conduct on the part of the unsuccessful defendant which would make it fair to impose liability on it for the costs of the successful defendant: Gould v Vaggelas (at 230; 247 and 260).
What constitutes relevant "conduct" of the unsuccessful defendant which makes it a proper exercise of discretion to make a Bullock order may be seen from Gould v Vaggelas [1985] HCA 75; 157 CLR 215 and the other cases referred to in Council of the City of Liverpool v Turano (No 2) at [16]-[22]. It is sufficient to refer to one of the cases.
In Almeida v Universal Dye Works Pty Ltd (No 2) [2001] NSWCA 156, the plaintiff's husband was injured on a building site. The defendants were under common control and the plaintiff was unable to ascertain who was the occupier or head contractor in charge of the work on the site. These matters were denied by the defendants in the proceedings. Priestley JA at [8] stated the relevant consideration in these terms: … any conduct by the defendant or state of affairs in which the defendant is an integral part which makes it fair and reasonable for other parties to be joined as defendants will be relevant to deciding on fair costs orders.
His Honour (at [13]) considered that the denials of occupation and the head contract, of themselves, would have been sufficient conduct to warrant the making of a Bullock order in that case.
Here, it was the appellants who joined both the Estate and Geoffrey and Mary as respondents to the appeal. The basis of the application by Geoffrey and Mary for a Bullock order on appeal had to be different from that in relation to the costs at trial, where Geoffrey and Mary were the moving party: Bostik Australia Pty Ltd v Liddiard (No 2) at [32]. Yet the written submissions of Geoffrey and Mary did not address this distinction with respect to the appeals.
Aside from the difficulty that Geoffrey and Mary were not the moving party on the appeals, no conduct of KST caused Geoffrey and Mary to resist the appeals in the face of the protection of indefeasibility available to the appellants. Nor did the Estate engage in any relevant conduct which might attract the exercise of the discretion to make a Bullock order. The Estate did not bring any appeal or seek to disturb the orders below; and it did not actively participate in the appeals brought by the successful appellants, save for making certain written submissions which ultimately were not pressed.
In resisting the appeals, Geoffrey and Mary should be taken to have made and acted upon their own decision. The application for a Bullock order in respect of their costs of the appeal is misconceived and must be refused.

[22]

(a) What costs order should be made in favour of the successful defendants?

The proceedings below, like the appeals, involved multiple issues and more than one "event". Geoffrey and Mary have failed against the appellants but succeeded (with some modification) in their claim against the Estate for proprietary and accounting relief with respect to KST's interest in the three properties. The mixed outcome for Geoffrey and Mary is best approached by considering the costs position of the Estate and the successful appellants separately.
The starting position with respect to the appellants is that they are to be treated as having succeeded at first instance in resisting all relief sought against them by Geoffrey and Mary. The question is whether there should be some apportionment of costs on an issue-by-issue approach, or an award of only a proportion of the appellants' total costs, by reason of their lack of success on particular issues. This raises similar issues to those already considered above in relation to the appeals.
The appellants' ultimate success has been achieved in circumstances where there is no suggestion that the appellants acted unreasonably in their defence of the proceedings at first instance. None of the unsuccessful defences raised by the appellants were clearly dominant as between Geoffrey and Mary and the appellants. On a number of issues, such as the trust based claims and the limitation issues, the parties had mixed success. As with the appeals, I do not consider that this is an appropriate case where one party's failure on what might be viewed as a separable issue, such as the defendant's failure on the defences based delay and conventional estoppel, justifies an order for costs in respect of that particular issue.
In the circumstances of the proceedings at first instance involving significant claims for proprietary and accounting relief in respect of events occurring between 20 to 30 years earlier, where there was no allegation of personal wrongdoing by the appellants, it was not unreasonable for the appellants to have raised all arguable defences to those claims. Again, as with the appeals, it is important to bear in mind at all times the overall outcome of the proceedings at first instance as between the parties.
Having successfully resisted all claims for relief, the appropriate order in the present case is that Geoffrey and Mary pay the appellants' costs at first instance.

[23]

(b) Should a costs order be made against the Estate?

Whilst Geoffrey and Mary have enjoyed substantial success in their claim against the Estate, their entitlement to costs is modified by a number of matters: the multiplicity of parties, actions and issues, the various issues on which they had mixed success, the extent to which those issues were clearly dominant or separate, their overall significance to the outcome, and the time they occupied during the hearing and preparation, so far as can be discerned. As to these matters, the following observations can be made.
Whilst Geoffrey and Mary were successful on their principal claims for relief against the Estate they failed on their various claims for accounting relief against the Estate as a partner, which were barred by s 15 of the Limitation Act. Some allowance in favour of the Estate should be made in respect of these unsuccessful claims.
Nor should the Estate have to bear the costs burden of issues raised unsuccessfully by Geoffrey and Mary, such as whether the subject matter of the partnership concerned the investment in real property, the alternative trust based claims against the Estate (of which only the constructive trust claim succeeded), and by contesting some issues, such as the reopening application before Smart AJ, at great length only to be unsuccessful.
Further, Geoffrey and Mary should not have the whole of their costs of the proceedings in circumstances where there were multiple parties, actions and issues, and they have succeeded only against the Estate. This has two aspects. One is that the Estate should not be required to bear the costs at first instance which relate to matters against other defendants which were separate and distinct from matters concerning the Estate. The separate matters concerning the successful defendants included the resulting trust claim; the indefeasibility defences; Margaret's asserted contribution to the Maroubra Road property; and the re-opening application before Smart AJ. The other aspect is that there should be some allowance for the extent of the Estate's participation in the proceedings at first instance relative to the participation of the successful defendants who were the active defendants at first instance. It is common ground that the Estate was not an active party at first instance. Insofar as Geoffrey and Mary incurred costs in pursuing their claims against the Estate and claims against the successful defendants, the greater proportion of Geoffrey and Mary's costs would have related to the later claims.
The manner in which the above matters can be best accommodated is by allowing Geoffrey and Mary a proportion of their costs at first instance.
It is also relevant to take into account that any costs order against the Estate would burden parties who played a passive role in the proceedings and have an interest in the Estate. This matter can be accommodated by imposing a condition, as sought by the Estate, as to the source from which any costs order may be satisfied.
Although the Court was not provided with any information as to the quantum of Geoffrey and Mary's costs, it may be inferred from the form of orders proposed by them that the orders they seek against the Estate, if made, may substantially, if not wholly, erode the assets of the Estate. In those circumstances the successful appellants would, in effect, be paying or contributing to Geoffrey and Mary's costs. This is a further reason for imposing a condition as to the source from which any costs order may be satisfied.
Against this it must be accepted that the Estate took an adversarial position, at least to the point of filing a defence in which it did not admit the basis for Geoffrey and Mary's claims for relief, and also pleaded a number of defences which were ultimately rejected.
In my view, an order for costs should be made against the Estate in favour of Geoffrey and Mary subject to two limitations. The first limitation is that Geoffrey and Mary should receive only a proportion being 35% of their costs at first instance having regard to the matters identified above.
The second limitation relates to the source from which such costs should be paid. I accept the Estate's submission that the costs order should be subject to the condition that it is payable only to the extent that the costs can be satisfied from KST's 20% share of the partnership assets currently held by the Estate. The effect of this condition is that the inactive defendants and the successful appellants will not be required to fund Geoffrey and Mary's costs.
As Geoffrey and Mary have succeeded against the Estate in relation to their principal claim for proprietary relief, it is appropriate, as they contended, that their costs in respect of that success should be paid forthwith. No submissions to the contrary were made by either the Estate or the appellants.
I reject however the contention of Geoffrey and Mary that any costs order against the Estate should have priority over the constructive trust declared by this Court in favour of the partnership in respect of 90% of any profits (if any) derived by the late KST from his interest in the three properties, subject to any just allowances: see [16] above. No basis for conferring such priority was suggested in submissions.