Trajkovski v R K Findlay Pty Ltd [2008] NSWSC 773 | Case summary

JUDGMENT 1 HIS HONOUR: On 31 March 2008 I delivered judgment in this matter and ordered that the defendants pay the plaintiff $10,000 together with interest from 29 November 1994; see Trajkovski v R K Findlay Pty Ltd [2008] NSWSC 273. I indicated on that occasion that I would hear the parties on the question of costs. 2 The plaintiff seeks his costs of the whole of the proceedings upon the basis that the ordinary rule that an unsuccessful defendant should be ordered to pay the costs of a successful plaintiff should apply. He contends that there is nothing in the circumstances of the present case that places it outside that general proposition. In particular the plaintiff contends that the Court's discretion to award costs is wide and unconfined and that in general courts will not attempt to differentiate between the parties' respective successes on various issues of law or fact arising in the proceedings when making an order as to costs. 3 The plaintiff's submission anticipates the matters upon which the defendants rely in response. Put simply, the plaintiff sued for damages alleged by him to have been incurred as the result of a breach of contract or breach of duty by the defendants. The plaintiff contended that he suffered significant losses as the result, in effect, of the loss of a chance to exploit a valuable commercial opportunity involving the importation of Porsche motor vehicles or parts and their subsequent sale as whole vehicles. The plaintiff sought in the alternative to recover moneys paid to the defendants pursuant to the agreement as a consideration that had wholly failed. In the events that occurred, that claim was the only claim upon which the plaintiff succeeded. 4 The plaintiff has argued before me that in considering the proposition that costs follow the event, "the event" is for present purposes to be regarded as its success on that limited issue in the proceedings. The plaintiff argues that it is inappropriate in the present case to attempt to dissect either amounts claimed and amounts recovered, or time spent on one issue as opposed to another, in order to gauge the relative significance of the plaintiff's ultimate success in the proceedings compared to the claim made by him in the first instance. 5 The plaintiff relies upon what was said by McHugh J in Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 567 as follows: "… The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings…" 6 The plaintiff concedes, however, that in a case where there are multiple issues the court may, in the exercise of its discretion, order that a successful party be deprived of costs, or a portion of its costs, if the matters upon which that party is unsuccessful took up a significant part of the trial, either by way of evidence or argument: see Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306. Moreover, the plaintiff emphasised that such an approach may be appropriate where either the matter on which the plaintiff failed was the clearly dominant issue in contest or where various issues on which the plaintiff failed (if applicable) were clearly separable from the matters upon which he succeeded. 7 In the present case the plaintiff contends that determination of the issue on which he succeeded could only be arrived at, and isolated, after a consideration of the issue on which he failed. In other words, the plaintiff's claim for recovery of money upon a total failure of consideration was the predicate of his failure to establish the existence of a contract which he could enforce. 8 The defendants' response to these submissions is that the issue on which the plaintiff succeeded took little, if any, time to run and that in fact no time was devoted to it in submissions. The total time taken for the hearing and submissions is out of all proportion to the judgment in favour of the plaintiff on the discrete issue on which he succeeded. In particular, on the issue of the plaintiff's attempt to recover loss of profits in relation to his inability to import and resell vehicles, the plaintiff failed. The defendants contend that the overwhelming majority of hearing time was taken up with that issue. 9 The hearing proceeded for 12 days before me. In the defendant's submission, no part of those days was occupied by evidence or argument directed to avoiding a refund to the plaintiff of the sum of $10,000 which he paid. Moreover, none, or very little, of the expert evidence was relevant to the plaintiff's entitlement to recover money paid under the agreement. The expert evidence was primarily and overwhelmingly concerned with the commercial viability of the scheme being propounded by the plaintiff. 10 The defendants argue that the disproportion between the claim brought by the plaintiff and that part of the claim upon which the plaintiff succeeded means that it would be unjust to require the defendants to pay the costs of a 12 day hearing and associated ancillary preparation. The defendants go as far as to submit that on the real issue in dispute, and the issue which occupied the resources and the time of all of the parties, the defendants were the effective victors. Finally, the defendants submit that it is difficult to imagine a clearer case in which the issues litigated have resulted in discrete outcomes that are readily divisible for the purposes of ascertaining the extent of costs attributable to the resolution of those issues. 11 In Waters v P C Henderson (Australia) Pty Ltd [1994] NSWCA 338, Mahoney JA referred with approval to the statements made in the predecessor to Ritchie's Uniform Civil Procedure NSW, which now appear at 42.1.15. Priestly JA suggested that the test of whether one took a global approach to the making of a costs order, or a more particular approach, depended upon the likelihood of the analysis proving worthwhile "when compared to the possible difference in result". 12 The defendants contend that it is beyond serious argument that the difference between the costs attributable to obtaining the order for payment of the sum of $10,000 and the costs incurred in defeating the plaintiff's claim for damages consequent upon his being unable to import Porsche parts for construction into a motor vehicle is likely to be so great as to make it worthwhile to distinguish those costs from the costs of litigating all of the other matters in the proceedings. In Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 the Court said that it would be appropriate not to differentiate between issues unless a particular issue or group of issues is clearly dominant or separable. 13 In the present case I found that the plaintiff's evidence was unsatisfactory in a number of respects. The defendants emphasise that that evidence was critical to proof of the plaintiff's case concerning the commercial viability of his plan to import cars. The plan included, unknown to the defendants, the plaintiff's proposal to bring in parts to be converted into whole cars. The defendants emphasise that the relevant evidence touching on these matters was rejected, at least to the extent that it was said to cast light on what had been agreed and what was the plaintiff's loss in the circumstances. Further, according to the defendants, the plaintiff sought a very large sum in damages and conducted his case in a way that presumed that profitable importation and modification of vehicles could be established. The defendants submitted that this approach failed to pay any proper regard to the realities of what the plaintiff was attempting to do. 14 Finally, the defendants submit that without exaggeration the controversy as to the recovery of money paid by the plaintiff under the "agreement" occupied less than one per cent of the effort devoted to trying the case as a whole. In those circumstances, the defendants submit that an order that the plaintiff pay the defendant's costs other than the costs solely attributable to the recovery of the money paid on a consideration that wholly failed is justified. 15 In my opinion, a proper analysis of what occurred during the trial falls between these competing submissions. Although it is true that the plaintiff's claim to recover moneys paid under the alleged agreement could have been litigated as a discrete issue in another court, the plaintiff's claim for that sum in this court was denied by the defendants and involved to some extent at least, a consideration of the nature of the respective obligations of the plaintiff and the defendants which it appeared to bring forth. It is not correct to say that the plaintiff's claim for recovery of moneys paid on a consideration that wholly failed could have been adjudicated without reference to the circumstances capable of supporting such a conclusion. On the other hand, there is no doubt that much of the Court's time was occupied with issues that bore no relationship to the single issue upon which the plaintiff ultimately succeeded. That part of the case which dealt with calculation of the plaintiff's damages is the best example. Another example consists in evidence given by the plaintiff that it was his intention to import Porsche motor vehicles in parts and that that intention had been communicated to the defendants either from the outset or from early on in their relationship. Resolution of neither of these issues favoured the plaintiff. 16 The defendants have sought an order that the plaintiff pay their costs of the whole of the proceedings with the exception of costs referable to the single issue upon which the plaintiff succeeded. I do not consider that such an order should be made. Although I am not satisfied that the issue upon which the plaintiff succeeded required investigation of all of the matters that were examined during the course of the hearing before me, there was a relationship between them. I am not satisfied that it is correct to say, as the defendants submit, that the plaintiff's success flowed only from evidence occupying an insignificant proportion of the evidence taken, or an insignificant portion of the hearing time that it occupied. 17 In my opinion this is an appropriate case in which the defendants should pay the costs of the successful plaintiff but that those costs should be limited having regard to the fact that not all of the evidence and not all of the hearing time were directly referable to the establishment of the issue upon which the plaintiff succeeded. I consider that, having regard to those matters, the defendants should be ordered to pay 25 per cent of the plaintiff's costs of the proceedings.

Trajkovski v R K Findlay Pty Ltd

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Judgment (12 paragraphs)

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Cases Cited (6)