Todd v Jingalong Pty Ltd

EX TEMPORE Judgment 1HIS HONOUR: These proceedings are before me today for the making of final orders consequent upon my judgment in Todd v Jingalong Pty Ltd [2014] NSWSC 362 delivered on 31 March 2014. 2In the course of helpful exchanges between counsel and the Bench, all of the orders bar one have been able to be resolved without the need for argument. The one issue which I am required to determine is a dispute as to what should be done in relation to the costs of the second defendant, Mr Pernice, in particular in relation to the cross-claim brought by him in these proceedings (the "first cross-claim"). 3The circumstances of Mr Pernice's involvement in the proceedings are slightly unusual. The main dispute in the proceedings was undoubtedly between the plaintiff, Mr Todd, and the first defendant, Jingalong Pty Limited ("Jingalong"), represented by its director and controlling mind, Mr Cameron. Jingalong denied that Mr Todd had any interest in a particular parcel of land in the circumstances fully set out in my judgment in these proceedings (the "land"). Jingalong was ultimately unsuccessful. I reached the conclusion that notwithstanding the indefeasibility provisions of the Real Property Act 1900 (NSW), Jingalong held the land on constructive trust for Mr Todd. Mr Pernice's involvement in the drama arose from an earlier oral arrangement that had been entered into between Mr Todd and Mr Pernice whereby Mr Todd agreed to sell the land to Mr Pernice in return for instalment payments. 4Mr Pernice came into these proceedings in the following way. Earlier in their history, the dispute between Mr Todd and Jingalong came before Lindsay J on 6 February 2013 in the duty list. While the transcript of what occurred on that occasion is not available and the recollections of counsel present are not completely identical, I am satisfied that what happened was as follows. Mr Pernice appeared by counsel on that occasion wishing to "intervene" in the proceedings to protect what he perceived to be his interest in the land. It was certainly the case that if Jingalong's assertion of right to the land was ultimately successful, then it would have been put out of Mr Todd's power to complete his agreement to convey the land to Mr Pernice. (The agreement between Mr Todd and Mr Pernice was oral and, therefore, strictly unenforceable. That is not to the point, because it was always common ground that Mr Todd did, in fact, wish to convey the land to Mr Pernice in accordance with their oral agreement.) 5Mr Pernice's suggestion that he should be permitted to "intervene" in the proceedings did not find favour with Lindsay J. I am satisfied that there was no application by Jingalong in a formal or in any other sense for Mr Pernice to be joined to the proceedings. Rather, Lindsay J took the view, I respectfully say understandably, that as a formal matter Mr Pernice's interests would only be protected if he was joined to the proceedings as a defendant. 6His Honour made orders joining Mr Pernice and designating Jingalong and Mr Pernice as the first and second defendants respectively in the proceedings. His Honour also made orders for the plaintiff to file and serve an amended statement of claim and, later, for the defendants to file any cross-claims. When the amended statement of claim was filed in accordance with Lindsay J's orders, it contained two new prayers for relief: 2A. In the event of the making of the declaration in Order 2 or a declaration to substantially that effect, a declaration that the Plaintiff is entitled to nominate the Second Defendant as the person being entitled to have the benefit of the declaration referred to in Order 2. 2B. In the event that the Plaintiff is not entitled to a declaration substantially in accordance with that sought in Order 2, a declaration that the Second Defendant is only entitled to the recovery from the Plaintiff of deposit and contributions in respect of purchase price paid to the Plaintiff. 7It is to be noted that prayer 2A assumed victory for Mr Todd against Jingalong, whereas prayer 2B raised a dispute between Mr Todd and Mr Pernice that would arise only if Jingalong succeeded against Mr Todd. That dispute would have related to the return of so much of the instalments for the consideration for Mr Pernice's purchase of the land from Mr Todd, as had been paid by the former to the latter. The amended statement of claim also added a number of paragraphs setting out what were alleged to be the terms of the agreement between Mr Todd and Mr Pernice for the sale of the land. 8Also in accordance with the orders of Lindsay J, Mr Pernice filed the first cross-claim which sought declarations as against Jingalong that Jingalong held the land on trust for Mr Pernice. The basis for that trust was put in a number of ways. Alternatively, there was a claim by Mr Pernice against Jingalong in what was described as unjust enrichment for the value of improvements alleged to have been made by Mr Pernice to the land in the belief that the land would ultimately find its way to him pursuant to the agreement which he had made with Mr Todd. 9Significantly, the first plea in the first cross-claim was: The cross-claimant will not move on this cross-claim in the event the court makes orders 2, 2A or 4 in the Amended Statement of Claim as filed on 18 February 2013. 10What that first plea was saying was that Mr Pernice would not move on his cross-claim if Mr Todd succeeded in his principal claim against Jingalong. That is, in fact, what has occurred and it was therefore unnecessary for the Court to ever enter upon consideration of the claims made by Mr Pernice in the first cross-claim. However, evidence was led and submissions were made about those claims at the hearing. 11Mr Pernice has submitted that either through what are known as Bullock or Sanderson orders, his costs ultimately should be paid by Jingalong. It is put on his behalf that in exercising the Court's undoubted discretion as to costs, Mr Pernice was both a necessary and proper party to the proceedings and that the reason why Mr Pernice was a party to the proceedings was Jingalong's ultimately unsuccessful assertion that it was entitled to the land absolutely. The justice of the case required Mr Pernice's costs to be visited upon Jingalong. 12Jingalong submitted that one of two courses was appropriate as to Mr Pernice's costs. It was first submitted that Mr Pernice's intervention in the proceedings was premature and, therefore, unnecessary. It was said that Mr Pernice could have stood by, did not need to be a party and could simply have asserted his rights, one way or the other, against Mr Todd depending on the outcome of the proceedings between Mr Todd and Jingalong. Alternatively, Jingalong submitted that if anyone was to pay Mr Pernice's costs, it should be Mr Todd. This result was said to follow from Mr Todd having asserted alternative rights against Mr Pernice in prayer 2B of the amended statement of claim. If anyone was to be held responsible in costs for Mr Pernice's participation in the proceedings, it had to be Mr Todd. 13Both the manner of Mr Pernice's introduction into these proceedings and the position in which he ultimately finds himself forensically, as a result of the outcome which I reached in my judgment, are unusual. They do not readily lend themselves to what I might call the more usual analysis in determining where costs should fall. It was appropriate for Mr Pernice to be a party to the proceedings. Depending upon the outcome of the dispute between Mr Todd and Jingalong, Mr Pernice had rights which he wished to assert against either or both of Mr Todd and Jingalong in relation to the land. There were, undoubtedly, common issues of fact which, in addition to those peculiar to any dispute between Mr Pernice and Jingalong, justify Mr Pernice's participation in the proceedings. Those were facts which would have had to have been revisited if he had not been party to these proceedings and the outcome of these proceedings had then otherwise warranted his commencement of a separate set of proceedings against either or both of Mr Todd and Jingalong. It is clear both factually and legally that it was appropriate for Mr Pernice to be a party to the proceedings. 14Another unusual feature of the way in which the case proceeded was that, on the assumption (which was ultimately proven correct) that Mr Todd had an entitlement to the land, for much of the proceedings Mr Todd and Mr Pernice were in common interest. That was demonstrated by the fact that, in addition to argument that was put on behalf of Mr Todd by his own counsel, additional matters were contended for by Mr Pernice's counsel in support of Mr Todd's case as a necessary prerequisite to making out Mr Pernice's own claim, if that latter point ever had to be reached. As I have said, in the events which happened, it was not reached. 15Looking at the position from first principles, the Court starts with the general rule that costs follow the event. In this case that principle is not such an obvious guide as it might be in other circumstances. In the events which happened, the relief sought in prayers 2A and 2B of the amended statement of claim never had to be decided upon. As between Mr Todd and Mr Pernice, the declaration sought in paragraph 2A was always a matter of agreement. So too were the essential terms of the agreement pleaded between them for the sale of the land. Insofar as the first cross-claim is concerned, Mr Todd's victory against Jingalong meant that the first cross-claim never had to be the subject of adjudication. The parties agree (correctly) that as a formal matter the first cross-claim should be dismissed, but it is being dismissed not because it has been determined adversely to Mr Pernice but because in the events which happened it never had to be decided. 16The discretion as to costs is at large but must be exercised judicially: it must be exercised rationally and for the purpose for which it is conferred. It is necessary for me to look to some other circumstance that should guide the outcome in relation to Mr Pernice's costs other than reliance on the usual starting point of costs following the event, for the reasons which I have just given. It was submitted for Mr Pernice that the appropriate way to look at the matter was to ask this fundamental question: why was everybody here? There is force in that submission. The ultimate source and cause of the issues that brought the parties to court was Jingalong's ultimately unsuccessful assertion that it was absolutely entitled to the land as against Mr Todd. 17Jingalong submitted, in the face of that approach, that it could not be said that there was anything which Jingalong had done as against Mr Pernice that could justify Mr Pernice's costs being visited on Jingalong. I do not accept that submission. The litigation was ultimately constituted in the way it was in circumstances which had as their source, as I have said, the position taken by Jingalong in relation to the land. 18The parties have drawn my attention to authorities concerning Bullock and Sanderson orders. I do not think it is necessary for me to enter into detailed discussion as to the differences between those orders because, it seems to me with great respect, that they ultimately achieve the same result. The conceptual differences between them do not have any impact in the circumstances of this case. In Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215 at 230; (1984) 56 ALR 31; (1984) 58 ALJR 560, while speaking of Bullock orders, Gibbs CJ said: In my respectful opinion the true position was clearly stated by Blackburn C.J. in Steppke v. National Capital Development Commission (1978) L.G.R.A. 94 at p 100; (1978) 21 A.C.T.R. 23, at pp.30-31, when he said that "there is a condition for the making of a Bullock order, in addition to the question whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant." 19That statement is one which I respectfully accept as offering guidance to the Court in the circumstances of this case, again without troubling over whether one is making a Sanderson or Bullock order. The question is where Mr Pernice's costs should fall. As a matter of analogy, the conclusion I have earlier reached about the necessity and propriety of Mr Pernice being a party to these proceedings satisfies the notion that the suing of the successful defendant was reasonable in this case. Again, by analogy only, the conduct of the unsuccessful defendant (Jingalong) which has been such as to make it fair as to impose some liability on it for Mr Pernice's costs is, as I have identified, the fact that the source of the difficulties which brought the parties to court was Jingalong's ultimately unsuccessful view of its rights in relation to the land. 20I am therefore satisfied that, in the exercise of the Court's discretion, Jingalong should be ordered to pay Mr Pernice's costs of the proceedings. However, that is not the end of the matter. 21Counsel for Mr Pernice (correctly) recognised that it would be a proper exercise of the Court's discretion to make some discount to reflect the unusual circumstances of this case. Those circumstances certainly include that there was a great deal of commonality in the conduct of the proceedings between the positions adopted by Mr Todd and Mr Pernice, which was reflected in the way the case was run, the cross-examination undertaken of Jingalong's witnesses and the submissions that were ultimately made. There is also, undoubtedly, a deal of work that was undertaken by Mr Pernice's side to deal with the dispute that would have arisen between Mr Pernice and Mr Todd if Jingalong had won. None of that could be visited on Jingalong. 22I also take into account that, in the course of final address in relation to the first cross-claim, Mr Pernice's counsel accepted that insofar as Mr Pernice asserted against Jingalong that the land was held in trust for Mr Pernice, that case was a very difficult one. There were also, it seemed to me, significant issues in the way of Mr Pernice ultimately establishing the value of such improvements as he alleged he had made on the land which he said demonstrated the unjust enrichment which Jingalong had received. 23In referring to those matters, I am not to be taken as attempting to adjudicate what the ultimate outcome of the first cross-claim would have been had I been required to deal with it. However, I consider that in the exercise of my discretion as to costs I am entitled to take account of concessions made and the nature of the submissions that were ultimately put on behalf of Mr Pernice in relation to the first cross-claim and the answers that were made to it in the course of submissions on behalf of Jingalong. 24All of the matters to which I have just referred warrant a discount being made in relation to the quantum of Mr Pernice's costs which Jingalong is to pay. That discount should be 50 per cent. 25Therefore, in addition to the orders that the parties have been able to agree upon which I will shortly pronounce, there will be an order that the first defendant pay 50 per cent of the second defendant's costs of and incidental to the proceedings. 26Having heard the order that I propose to make as between the first and second defendant, counsel for Mr Pernice has submitted further that a costs order should be made as between Mr Pernice and Mr Todd in relation to the claim between them arising from prayer 2B of the amended statement of claim. 27The order is only sought in relation to the amended statement of claim. The Court notes that Mr Pernice makes no claim against Mr Todd in relation to Mr Pernice's costs of the first cross-claim. I would not have been disposed to make any further order, in any event, for Mr Pernice's costs of the first cross-claim over and above the order I have made against Jingalong. 28In relation to Mr Pernice's costs of the amended statement of claim, the impression that I have, both of the amount of evidence that would have been devoted to that issue and the extent of the submissions that were made in relation to it, supports the conclusion that, in the way the case was ultimately run, it formed a very small part. It certainly did not have to be decided. In the exercise of the Court's discretion, having regard to the overall justice of the case and the way in which costs have generally fallen, I decline the application for any further costs order in favour of Mr Pernice in relation to the amended statement of claim. The appropriate result as between Mr Todd and Mr Pernice, in relation to the amended statement of claim, is that there be no order as to costs. 29I make orders in accordance with the document headed "Order" bearing the various changes which I have indicated to the parties, which I have initialled, dated today and placed with the papers. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 April 2014