Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd

Supreme Court of NSW|2010-09-24|Before: Barrett J, Mr J

CITATION : Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 1106 This decision has been amended. Please see the end of the judgment for a list of the amendments.

16/06/08, 17/06/08, 18/06/08, 19/06/08, 20/06/08, 23/06/08, 24/06/08, 25/06/08, 26/06/08, 27/06/08, 30/06/08, 04/07/08, 28/07/08, 29/07/08, 27/08/08, 28/08/08, 24/11/08, 25/11/08, 26/11/08, 27/11/08, 28/11/08, 10/06/09, 11/06/09, 24/08/09, 25/08/09, 26/08/09, 27/08/09 Written submissions: 01/09/09, 03/09/09 Judgment: 05/02/10 HEARING DATE(S) : Written submissions: 19/03/10, 22/03/10 Further hearing: 23/03/10 Written submissions: 21/06/10, 16/07/10 Judgment: 29/07/10 Further hearing: 22/9/10

CATCHWORDS : PROCEDURE - judgments and orders - interest - interest up to judgment - from when computed - relevant rate - PROCEDURE - costs - departing from the general rule - whether costs orders should be made with respect to distinct issues - no reason to depart from general rule - PROCEDURE - each party obtains money judgment - one party obtains costs order - costs yet to be quantified - whether there should be set-off - whether there should be stay

LEGISLATION CITED : Civil Procedure Act 2005, ss 100, 101 Uniform Civil Procedure Rules 2005, rules 6.12, 36.5

Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 CASES CITED : NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 Padkohe Pty Ltd v Fletcher [2006] NSWSC 1239 Wentworth v Wentworth (unreported 21 February 1996 BC9600213)

TEXTS CITED : Mason and Carter; "Restitution Law in Australia", 2nd ed, 2008 Ritchie's Uniform Civil Procedure NSW. para 100.80

Tim Barr Pty Limited - First Plaintiff PARTIES : Timothy James Barr - Second Plaintiff Narui Gold Coast Pty Limited - Defendant

COUNSEL : Mr R G McHugh SC (to 4/7/08; from 24/11/08 to 18/5/09; from 24/8/09); Mr I M Barker QC (from 28/7/08 to 28/8/08); Mr J E Lazarus (to 4/7/08; from 24/11/08) - Plaintiffs Mr M L Einfeld QC/Mr R E Dubler SC/Mr A C Harding (to 27/6/08); Mr A C Harding (30/6/08); Mr I M Neil SC/Mr A C Harding (from 28/7/08) - Defendant

SOLICITORS : Corrs Chambers (to 25/2/09); Tzovaras Legal (from 26/2/09 to 24/11/09); J T Law Pty Limited (from 25/11/09) - Plaintiffs Verekers - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2001/62056 TIM BARR PTY LTD & ANOR v NARUI GOLD COAST PTY LTD JUDGMENT 1 I am dealing with a number of matters relevant to the formulation of final orders in these proceedings, following the substantive decisions of 5 February 2010 (Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29) and 29 July 2010 (Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 828). 2 The orders for which the successful defendant (NGC) contends are as follows: "1. Declare that the Defendant on 3 May 2002 validly terminated registered lease number 731267B of the land known as Cudgen Paddock, Duranbah Road, Kingscliff, New South Wales, and being the whole of the land comprised in Folio Identifier 326/755701 and part of the land (namely lots 272 and 76 in Deposited Plan 755701) comprised in Auto Consol 12048-136 ( the Land ), including the option therein to purchase the Land ( the Option ). 2. Further to Order 1, declare that the purported exercise by the First Plaintiff of the Option was ineffective to cause the Defendant to be bound to any contract for the sale and purchase of the Land. 3. The order made on 23 March 2010 extending the operation of Caveat number 95727472 lodged by the First Plaintiff over the Land until further order be vacated. 4. Subject to any further order, extend the operation of Caveat number 9572472 lodged by the First Plaintiff over the Land until 29 December 2010. 5. Judgment for the Cross Claimant against the First Cross Defendant in the sum of $86,261.15 plus interest thereon pursuant to section 100 of the Civil Procedure Act 2005 up to [22 September 2010] in the sum of [$54,238.78] 6. Judgment for the First Plaintiff against the Defendant in the sum of $331,258.24 plus interest thereon pursuant to section 100 of the Civil Procedure Act 2005 up to [...] in the sum of [$...]. 7. The Fourth Further Amended Statement of Claim be otherwise dismissed. 8. The Third Further Amended Cross Claim be otherwise dismissed. 9. The Plaintiffs pay the Defendant's costs of the proceedings, including the cross-claim. 10. The Defendant's liability to the First Plaintiff under Order 6 be set off against both of its liability as First Cross Defendant to the Cross Claimant under Order 5 and the First Plaintiff's liability to the Defendant under Order 9. 11. Any execution of Order 6 be stayed pending the earlier of a further order or: (a) if the Gross Sum Costs Application is allowed, the determination of the Gross Sum Costs Application, or, (b) if the Gross Sum Costs Application is dismissed, until a certificate of assessment within the meaning of Rule 36.10 of the Uniform Civil Procedure Rules 2005 is issued." 3 The reference in draft order 11 to "the Gross Sum Costs Application" is a reference to a pending notice of motion filed on 7 September 2010 by which NGC seeks an order that its costs be fixed in a specific sum rather than being quantified through the costs assessment process. 4 The parties have different views on three aspects of these orders. In the first place, there are differences about the computation of interest for the purposes of draft order 6 (the figures for order 5 are agreed: had judgment been given on 22 September 2010, the interest would have been $54,238.240). Second, the plaintiffs (TBPL and Mr Barr) say that draft order 9 should be replaced by an order that the first plaintiff (TBPL) pay 70% of NGC's costs of the proceedings (excluding costs relating to interlocutory proceedings in which orders for costs were made in favour of the plaintiffs or it was ordered that each party bear its own costs) and that NGC pay 30% of the plaintiffs' costs of the proceedings (with the same exclusion). Third, TBPL and Mr Barr say that draft orders 10 and 11 should not be made. 5 I shall deal with these matters in turn. 6 As to draft order 6 and the interest component, it is not disputed that the judgment sum of $331,258.24 should be supplemented by an appropriate interest amount. There are differing views about the computation of pre-interest judgment and, in particular, the date from which interest should be computed and the rate at which it should be calculated. 7 It is, I think, important to recall the grounds on which it was decided that there should be judgment for the first plaintiff against the defendant in the sum of $331,258.24. The claim was a restitutionary claim. It was determined by the judgment of 29 July 2010 ([2010] NSWSC 828). The decision was that TBPL was entitled to a restitutionary order for restitution in respect of its expenditure on the plantation after termination of the lease. The basis of the decision in TBPL's favour was that NGC derived benefit from TBPL's expenditure since it was in the interests of NGC for the plantation to be established and nurtured. That was consistent with NGC's desire to have land on which native regrowth was kept to a minimum. On this basis, the plantation for which TBPL paid represented an improvement to the land from NGC's perspective. 8 In relation to the question of the date from which interest should be computed, the competing views are that the relevant date is the date on which NGC took possession of the land, that is, 20 September 2005 (alternatively perhaps 3 May 2002 when the lease was terminated) or that each item of expenditure should be supplemented by interest as from the time the expenditure was actually made. 9 I was referred to various passages in Mason and Carter, "Restitution Law in Australia", 2nd ed, 2008 about interest as an element of restitutionary awards. In the end, however, it seems to me that the question of interest should be approached not by reference to abstract principles but rather according to a proper appreciation of the purpose of the restitutionary award. 10 Here, as I have said, the judgment in favour of TBPL recognised that NGC derived ongoing benefit from expenditures made by TBPL and that this was because those expenditures produced for NGC land on which native regrowth was controlled. On the footing that each item of expenditure had some effect in that direction from the time it was made (at least to the extent that the like expenditure did not have to be made at some later time), I am persuaded that TBPL should have the benefit of an interest component from the making of each particular payment. The entitlement to restitution arose from the fact of the making of the payments by TBPL, not the circumstance that a subsequent claim was made by reference to the fact that it had made the payments. 11 As to the rate of interest, it is to be noted that TBPL's claim for interest generally is expressed to be a claim under s 100 of the Civil Procedure Act 2005. That section leaves in the discretion of the court the rate at which interest is to be awarded. 12 Reference was made in the course of submissions, however, to the fact that, as a matter of practice, the rates prescribed for interest on judgment sums under s 101 is often adopted for these purposes. Indeed, as is stated at paragraph 100.80 of Ritchie's Uniform Civil Procedure NSW, those rates will ordinarily be allowed under s 100 without the necessity for calling specific evidence. I might say that no evidence relevant to the decision regarding interest rate was tendered by either party. 13 There were, however, references to the fact that Schedule 5 to the rules, setting out rates of interest for the purposes of s 101, had been discontinued as from 1 July 2010. Until that time, rule 36.7 said that the prescribed rates for the purposes of s 101 were those set out in Schedule 5. The schedule referred to different rates for different periods going back to 1 July 1972. Under the change that occurred with effect from 1 July 2010, however, the rate for s 101 purposes is, in relation to any period at any time (being a period from 1 January to 30 June in a given year or from 1 July to 31 December in a given year) a stated margin over the cash rate last published by the Reserve Bank of Australia before the commencement of the period in question. 14 The circumstance I have just mentioned means that there is likely to be a difference between interest at the s 101 rate calculated on the basis that applied when the claim for interest was made and interest on that basis as now calculated under the regime that now applies as a result of the change on 1 July 2010. 15 I was taken to requirements in rule 6.12 of the Uniform Civil Procedure Rules to the effect that, in the case of a liquidated claim, a summons or statement of claim seeking interest up to judgment must specify the period for which interest is claimed and "may specify the rate or rates at which interest is claimed": rule 6.12(7)(b). It is then stated that, if there is no specification of rate, interest is to be regarded as claimed in respect of each successive half-year at the rate which is 4% above the most recently published Reserve Bank cash rate before the commencement of the half year (the terminology is the same as that mentioned at paragraph [13] above) - but this too is the result of an amendment effected as of 1 July 2010 before which the rules filled the gap by means of the Schedule 5 rates. 16 The provisions just mentioned appear after rule 6.12(6): "An order for interest up to judgment must be specifically claimed." 17 The plaintiffs satisfied rule 6.12(6) by including in the fourth further amended statement of claim, under "relief claimed", the following: "Interest pursuant to section 100 of the Civil Procedure Act 2005." 18 This, coupled with the fact that no rate was included in the fourth further amended statement of claim, means that the claim is to be regarded as one in which interest is claimed at the rate derived from rule 6.12(8). 19 But which version of rule 6.12(8) is the relevant version - the pre-1 July 2010 version that applied when the fourth further amended statement of claim was signed and filed or the version adopted with effect from 1 July 2010 and in force today? 20 I was not taken to any transitional provision of assistance. I must therefore do the best I can with the provisions as I find them. A point of particular significance is that rule 6.12 is concerned with the content of a statement of claim or summons. It has applied, at any given time in the past, to an initiating process created and activated at that time, just as it applies today to one created and activated today and will apply tomorrow to one created and activated tomorrow. The content requirements must therefore be regarded as speaking at the time of creation and activation so that, to the extent that there is any default mechanism (as in rule 6.12(8)), the mechanism will operate to supply content at the time of creation and activation. 21 On this basis, the fourth further amended statement of claim created and activated in March 2008 must be taken to include the default content supplied by the rules as they stood in March 2008. On that basis, the claim for interest must be taken to be a claim for interest at the rates derived from Schedule 5 as it existed in March 2008. 22 But, of course, the court, having decided that interest should be awarded, is not confined to simply granting or rejecting the claimant's claim, including any claim deemed by the rules to have been made. Section 100 empowers the court to award interest "calculated at such rate as the court thinks fit". The court must therefore make an award of interest that is just. 23 The just outcome, in the light of the change to the rules, is that there should be interest at the rate provided for in rule 36.5 as it now stands. That rule must be taken to reflect the prevailing view about what is just. This, to my mind, indicates that, in the absence of any countervailing consideration (and none is suggested), the rates of interest applicable at the date of the order for the purposes of s 101 should also be applied for the purposes of s 100; and this is so even if the actual claim is for something else. 24 I turn now to the question of costs. The main question here is whether, as the plaintiffs contend, there should be apportionment among issues and whether costs should be awarded according to which party was successful on the respective issues. 25 The plaintiffs have identified eleven issues which they say are discrete and severable issues on which the defendant failed, even though the overall result was that the defendant was successful. The plaintiffs' list of issues identifies each of the eleven matters, refers to the paragraph of the reasons of 5 February 2010 (and, in one case, 29 July 2010) that disposed of the issue and refers to the number of pages in the plaintiffs' closing submissions devoted to the issue. The list is as follows (the references in the second column are, except in the case of item 11, references to paragraphs of the judgment of 5 February 2010, while the references in the third column are references to the number of pages occupied in the plaintiffs' closing submissions): Issue Judgment PCS no. pages 1. The Lease was not frustrated [226] 4/183 2. No breach of clause 4.3 based on lack of licence under Threatened Species Conservation Act [293] 13/183 3. The partnership agreement was not a breach of clause7.1 [313] 7/183 4. The Austcorp option was not a dealing with the lease, in breach of clause 7.1 [314]-[317] As above 5. The SWOs and IPOs did not bring about any 'reclassification' of the land, so no breach of clause 18 [324] 8/183 6. The misrepresentation in clause 4.3 did not play any part in inducing Narui to enter into the Lease [456] 6/183 7. There is no basis for a finding that silence in the circumstances could be of itself be misleading or deceptive, and in any event the subsequent silence of TBPL did not induce Narui to enter into the Lease [458]-[459] As above 8. No breach of any implied term relating to the insertion of market value in the sale contract [464]-[465] 14/183 9. None of Narui's proposed implied terms (i.e. that breach would prevent the exercise of the option) satisfies the BP Refinery tests [485]-[486] As above 10. Barr was not a fiduciary vis-à-vis NGC [528]-[529] 6/183 11. TBPL is entitled to restitution for costs expended as part of the plantation Judgment 3/183 29/7/10, [24] Total 51/183

26 The defendant's position is simply that it was successful in the proceedings, that the plaintiffs should be ordered to pay its costs in full and that there should be no apportionment among issues. 27 The guiding principles in this connection have been stated in many cases. They are conveniently summarised in the judgment of the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]: "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 were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised 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 1994, 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) 26 IPR 261 at 272.

These principles were applied in City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 at [22] and most recently in Turkmani v Visvalingham (No 2) [2009] NSWCA 279." 28 An important point in the present case is that everything in the reasons of 5 February 2010 after paragraph 443 was, in a sense, surplusage, and that the discussion, analysis and conclusions to that point were alone dispositive of the parties' claims. Paragraph 443 followed a summary of conclusions reached. Paragraph 443 then said: "These conclusions are sufficient to dispose of the proceedings. TBPL's central claim for an order for specific performance of a contract for sale arising from purported exercise of the clause 15 option on 17 April 2003 fails." 29 The remainder of the reasons of 5 February 2010 - which covered five of the eleven postulated distinct issues (being items 6 to 10 inclusive) - was added for the particular reason stated in paragraph 444: "It is desirable, however, that I deal with a number of other issues arising on the pleadings on which submissions were made. This is in case the matter is taken on appeal." 30 This to my mind militates against any dissection and separate treatment of those five postulated distinct issues. They were part of a supplement following the conclusion of the judgment at paragraph 443. The defendant is, in a sense, entitled to say that the plaintiffs' success on those issues was irrelevant. 31 In any event, I do not consider it desirable or feasible to single out any of the postulated distinct issues (I leave to one side for the moment number 11) and to regard it as sufficiently discrete and self-contained to warrant separate treatment for costs purposes. I referred at paragraph 12 of the reasons of 29 July 2010 to the comprehensive decision flow charts produced on both sides at the conclusion of the hearing. The close inter-relationship of issues was obvious. I do not regard any of those identified by the plaintiffs as clearly dominant or separate in the relevant sense. There was a web of interconnected issues and each of the issues from each side's point of view, stood at some point or another on the scale from strongest point to weakest point. It is important to bear in mind what Giles J said in NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 at [24]: "[I]t must be remembered that parties should not be dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case, and unless a particular issue or group of issues is clearly dominant or separable from the balance of the proceedings it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the issues on which he was successful and those on which he failed. It is sufficient to refer to Cretazzo v Lombardi (1975) 13 SASR 4 at 12; Hughes v Western Australian Cricket Association (1986) ATPR 40-748 at 48,136; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271-2; and Waters v P C Henderson (Australia) Pty Ltd (NSWCA, 6 July 1997, unreported)." 32 This, to my mind, emphasises that the mere fact of failure on a particular point by the party enjoying overall success cannot lightly be singled out with a view to its becoming the basis for some special costs order. 33 I must make special reference to number 11 in the plaintiffs' list. The plaintiffs or, rather, TBPL achieved success in a claim for restitution in respect of expenditure on the leased land which worked an advantage to NGC. But the essential foundation of that successful claim was TBPL's failure in resisting NGC's claim that the lease had been validly terminated by NGC by means of the notice of 3 May 2002. It was only because NGC succeeded - and TBPL lost - on the issue of termination of the lease that TBPL's subsidiary claim became relevant. 34 The success of TBPL on the restitutionary claim was thus a modest victory about which there was very little controversy (see paragraphs [20] and [21] of the reasons of 29 July 2010) snatched from the jaws of defeat and, in a real sense, merely a minor adjustment to the consequences of that defeat. 35 There will be no apportionment on any issue-by-issue basis. The defendant is entitled to its costs of the proceedings. 36 A subsidiary matter in relation to costs is the submission of the plaintiffs that a costs order in favour of the defendant should be against TBPL only and that Mr Barr should not be ordered to pay costs. 37 The transcript of the hearing begins by recording appearances as follows: "Mr R G McHugh SC with Mr J E Lazarus for the Plaintiff, Tim Barr Pty Limited and the two cross-defendants, Tim Barr Pty Limited and Mr Timothy Barr …" 38 This, the plaintiffs say, made it clear from the very outset that TBPL alone pursued the claims in the fourth further amended statement of claim and that Mr Barr's involvement was merely to defend the cross-claim brought by NGC against him and TBPL. The substance of the cross-claim, so far as Mr Barr was concerned, was that he owed fiduciary duties to NGC and that he had breached those duties. That formed a basis for a claim by NGC against him, as well as a derivative claim for accessorial liability for his breach against TBPL. The conclusion reached was that Mr Barr did not owe fiduciary duties to NGC - but that, I must emphasise, was one of the matters determined after the statement of conclusion at paragraph 443 (see paragraph [28] above). 39 Counsel for NGC pointed out, however, that Mr Barr and TBPL were both named as plaintiffs in all versions of the statement of claim up to and including the ultimately operative version, the fourth further amended statement of claim. Each was verified by both parties. Each contained pleading by both parties. 40 It may be - and I think NGC concedes this - that no claim for relief in the fourth further amended statement of claim was a claim by or to the direct and immediate benefit of Mr Barr. The fact remains, however, that Mr Barr prosecuted the proceedings as a plaintiff in company with TBPL. 41 The fourth further amended statement of claim is dated 6 March 2008. Mr Barr did nothing between that date and the start of the substantive hearing on 16 June 2008 (or, for that matter, thereafter) to extricate himself from the proceedings. Whatever counsel may have said when announcing appearances, the pleading before the court was one propounded by both TBPL and Mr Barr. If Mr Barr wished to play some kind of useless or surplus role in someone else's proceeding, that was a matter for him. But he exposed himself to the liabilities of a plaintiff and he must live with that. It is significant that, as counsel for NGC pointed out, Mr Barr at no time sought to discontinue the proceedings. Had he done so, it would have been on the basis of a liability for costs on Mr Barr's part in accordance with the rules unless he persuaded the court to make some other order. 42 The costs order in favour of NGC will be an order against both plaintiffs. 43 I turn now to draft orders 10 and 11. The proposition for which NGC contends is that TBPL should not be allowed to enforce its judgment for $331,258.24 (plus interest) until the plaintiffs' liability to NGC for costs has been quantified. NGC accepts that there will be set-off as between the order 5 judgment sum and the order 6 judgment sum. It follows that draft orders in question concern, in substance, the excess of the latter over the former and its relationship with the costs awarded to NGC. 44 For the purposes of this part of the controversy, TBPL concedes that it has no assets of significance other than the fruits of this litigation and costs orders already made in its favour in these proceedings. Against that, NGC points to evidence tendered upon the security for costs hearing in June 2009 (Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 563) that, at that point, actual outlays for legal expenses in this litigation were $6.87 million on the part of the plaintiffs and $3.04 million on the part of NGC. NGC's gross sum costs application seeks an order fixing a sum of $1.85 million as its costs of the proceedings, including the cross-claim. This, it is said, is less than would be expected to be allowed on assessment. 45 The basic contention of NGC is that, whether or not the gross sum costs order it seeks is ultimately made, the plaintiff's liability to NGC will be greater than NGC's liability to the plaintiffs; and that, given TBPL's financial position, NGC would be unfairly prejudiced if it had to pay the order 6 judgment sum before being able to set off in full not only the order judgment sum but also the quantified costs awarded to NGC. Implicit in this, of course, is an assumption that money that TBPL received from NGC in consequence of order 6 in advance of NGC's ability to enforce a quantified costs order would not be retained intact by TBPL pending that quantification. And, of course, absent an order in terms of the draft orders sought, there is no reason why TBPL should retain the moneys intact. 46 The principles relevant to this question are those summarised by White J in Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22 at [68] - [70]:: "[68] … Set-off of judgments for costs in different actions and in different courts has long been allowed, as has the set-off of judgments for costs against judgments for debt or damages. Such set-offs do not depend upon the statutes of set-off, or the general equitable jurisdiction, but on the control a court exercises over its own proceedings. The jurisdiction is explained in many cases dealing with claims by solicitors to assert a lien over a judgment for costs in favour of their client where the opposite party has obtained judgment against their client in the same or in other proceedings ( Edwards v Hope (1885) 14 QBD 922 at 926-927; Reid v Cupper [1915] 2 KB 147; Puddephatt v Leith (No 2) [1916] 2 Ch 168 especially at 173-174; Re a Debtor No 21 of 1950 [1951] 1 Ch 612 at 617-618).

[69] This jurisdiction is accurately described in R Derham, The Law of Set-Off , 3 ed, 2003, at paras 2.71-2.83. Although in Edwards v Hope , Brett MR and Bowen LJ (at 926 and 927) described the jurisdiction as an equitable jurisdiction, in truth, it was not a creature of the Court of Chancery, but was applied by all courts. Indeed, it was applied more liberally in the Courts of law than in the Court of Chancery owing to Lord Eldon's care that solicitors should not be deprived of liens for their costs ( Puddephatt v Leith (No 2) at 174-179).

[70] Dr Derham says at para 2.80 that: " he basis of the set-off is the general jurisdiction of the Court over the suitors in I" , citing Mitchell v Oldfield (1791) 4 Term Rep 123; 100 ER 929. There, in a case where each party had recovered judgment against the other for separate debts in separate actions, Lord Kenyon CJ stated that the case did not depend on the statutes of set-off, but the general jurisdiction of the Court over the suitors in it." 47 It was submitted on behalf of TBPL that an order in terms of draft order 10 would confer an undue advantage on NGC by, as it were, promoting its unquantified entitlement to costs to "the same plane as" the quantified judgment balance emerging from orders 5 and 6. Reference was made, in that connection, to Padkohe Pty Ltd v Fletcher [2006] NSWSC 1239. 48 That, however, was a case in which one party had consented to a money judgment in the context of an express promise to pay within 28 days but then sought to negate that promise by obtaining a stay because of an unquantified costs liability owed to him by the other party. The fact of the consent and the express promise were important elements in that case which are missing here. 49 Of greater relevance here is the decision of the Court of Appeal in Wentworth v Wentworth (unreported 21 February 1996 BC9600213) which approved the conclusion at first instance that there should be no execution on any costs order until the ascertainment of the amounts payable under all orders was complete and a final balance was struck. That was a case where each party had the benefit of costs orders, some of which had been quantified while others had not. 50 The Court of Appeal said: "The court's general control of its own processes must permit it both to prevent possible unfairness in the working out of payment of costs orders and in doing so balance as well as it can the possibilities in a case such as the present: … Further, we would observe that in cases such as the present when a court is deciding whether or not to stay enforcement of some duly quantified costs orders pending final quantification of others, matters to be considered in exercise of the discretion must include: the connection between the matters in which the orders for costs have been made; the degree of diligence shown by the person seeking the stay in bringing to finalisation the quantification of the costs to which that person is entitled; and the possibilities, should a stay be refused, of recovery by the person who has paid, of the eventual balance in that person's favour, if the balance falls that way." 51 This observation is not confined to costs orders. It is applicable to any case in which each party has an obligation to the other but there remains some element of lack of quantification. 52 A circumstance not so far mentioned is the one foreshadowed by paragraph 444 of the principal judgment, that is, the possibility of appeal. The plaintiffs have made it clear that they intend to appeal once final orders are made or, at least, that there is a very strong likelihood that they will do so. This injects another consideration. There is at least a possibility that one or more of the existing orders creating financial obligations will be varied or set aside. 53 In the whole of the circumstances (including TBPL's admitted circumstances of financial weakness) it is appropriate that the financial consequences flowing from the final orders be suspended until there has been full quantification of the plaintiffs' costs liability and that set-off be allowed so that a net sum only eventually changes hands. A safety valve is built in by way of the reference in draft order 11 to "a further order". 54 In the result, therefore (a) the interest component in draft order 6 will be in accordance with paragraphs [10] and [23] above; (b) the order for costs will be in accordance with draft order 9; and (c) draft orders 10 and 11 will be made. 55 The parties should now make the calculation required to complete draft order 6, update the content of draft order 5 on the existing basis of calculation and deliver to my Associate promptly short minutes of orders in terms of draft orders 1 to 11 as set out at paragraph [2] above, with those adjustments only. **********

24/09/2010 - Typos - Paragraph(s) Paragraph 2.5Paragraph 2.6

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At a glance

Court

Decision date

Before

Source

Judgment (17 paragraphs)

Parties

Cases Cited (16)