18 There was disagreement about aspects of the other recovery costs. Leaving aside legal costs of these proceedings, which are part of the cost orders, dealt with below, Enterprises claims the receivers' costs and other consequential costs associated with pursuing Mr Zibara and Mr Antonios into bankruptcy in the sum of $16,137.15. The bankruptcy costs are uncontroversial. The issue arose in respect of the receiver's claimed costs of $46, 487.72 of which $20, 936.54 is said to be paid and $20,440 remains unpaid.
19 The contest in relation to the receiver's costs related to the receivers invoices. The form in which the invoices from the receivers were presented was confusing. The only figure that is justified when one looks at all the materials is a receivers' recovery figure in the form of the tax invoice from Hall Chadwick on 16 August 2006 charging fees of $41,135.50 plus GST of $4,113.55 and disbursements of $1,238.67 making a total of $46,487.72. This invoice is authentic and represents the sum, which I will allow in this judgment but it must be offset against receivership receipts.
20 The defendants' submission was that the receivers' costs were only of the order of $6,468.27 rather than $46,487.72. The basis for this submission was a financial statement from the receivership covering the period 24 March 2006 to 1 September 2008 (from the receiver, Mr Mc Donald's affidavit, page 100) that showed the receivers' professional costs and fees, apparently for that period, of $6,468.27. This document was to be contrasted with what Enterprises relies upon in the sum of $46,487.72. Enterprises contended that the 16 August 2006 invoice was the correct one. There was no affidavit evidence from either side to assist in reconciling these two documents. The Court must do the best that it can on the available materials.
21 The Court finds that the Hall, Chadwick invoice of 16 August 2006 in the total sum of $46,487.72 is an authentic invoice representing Enterprises' liability to the receivers for receivership expenses. The Court has confidence in the regularity and authenticity of this invoice for several reasons. First, it is referred to and apparently accompanied by a Hall Chadwick letter of report of the receivership dated 1 September 2006. The letter of report itself is plainly authentic, describing in some detail the course of the receivership between March and August 2006. Secondly, although the tax invoice is described in the 1 September 2006 report as a "draft tax invoice for the cost of the receivership up to the date of this report" the invoice itself is not in the form of a draft. There is no fresh invoice in evidence indicating that it was withdrawn or replaced with another invoice at any time after 16 August 2006. Thirdly, the defendants did not seek to cross-examine Mr Macdonald on this issue to displace the inference that these reasons show arises from the form of these documents.
22 What then is to be made of the receiver's management accounts, indicating receivership fees of $6,468.27? They ultimately remain unexplained. They probably represent some part of the total receivership costs, which were subdivided for a particular purpose of the receivers. It is odd that receivers' fees for a much longer period of 3 years are said to be lower than the original invoice. The 16 August invoice is to be preferred because of the time it was issued and its obvious regularity and the confirmation of its existence in the text of the 1st of September letter. The other figure is part of a set of management accounts which are unaudited and do not bring with them a compelling sense of reliability. In my view they can be ignored for the present assessment and I will only have regard to the 16 August 2006 invoice as the record of the professional costs of the receivership. It is necessary to look to the deductions that occur on account of funds received in the receivership and the other recovery expenses.
23 But the management accounts are the only evidence of what the receivers got in from the receivership and they show that other receipts from the receivership offset the receiver's fees of $6,468.27. In my view the appropriate approach on the state of the evidence is to deduct $6,468.27 from the plaintiff's claim for recovery of receivers' expenses, as it seems that this amount was offset by receipts and it is not shown not to be included in the $46,487.72. There should further be deducted the sum of $1,529.69 (being the difference between the management accounts receipts of $30,723.38 and expenses of $29,193.69). Thus from the total sum of claimed receivers' fees of $46,487.72 the sum of $7,887.96 ($1,529.69 plus $6,468.27) should be deducted, leaving a net recovery figure of $38,489.76. 80% of this figure will be Enterprises entitlement to recovery under this head of damage.
24 I have now decided all the assessment issues of principle. The parties should complete the calculations including of interest by Friday 26 November, 2010.
Costs
25 There are two costs issues. The first is whether Enterprises should recover all its costs of the proceedings given that it did not succeed on all issues. The second is whether Enterprises should have the benefit of a lump sum costs order under Civil Procedure Act 2005, s 98(1)(c). The Court deferred consideration of the second of these issues because one of the considerations relevant to the making of a lump sum costs order was the extent of any cost orders otherwise made in Enterprises favour.
26 Enterprises submitted that it should recover all its costs of the proceedings. The defendants submitted that Enterprises should (1) only recover costs of the misleading and deceptive conduct claim on which Enterprises was successful and should (2) pay the defendants' costs of the claim on its charge ("the charge claim") on which Enterprises was unsuccessful. The first judgment explains Enterprises' case is based upon conduct in two distinct time periods: Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd [2010] NSWSC 963 at [7]. Enterprises alleges that the Dib Group engaged in misleading and deceptive conduct in causing Enterprises to make the loan to E-Style in September/October 2003. Enterprises also advanced on the charge claim other causes of action arising from the Dib Group's later dealings with the assets of E-Style after E-Style had defaulted on the loan from Enterprises. This latter conduct occurs mostly from the end of 2004 through to 2006. Enterprises' case during the later period was that the Dib Group had wrongly appropriated E-Style's assets and deprived Enterprises of the benefit of those assets when Enterprises was exercising its rights under the charge. Enterprises was successful on the misleading and deceptive conduct claim and failed on the charge claim. This is the foundation of the defendant's argument that Enterprises costs should be reduced and that Enterprises should pay some of the defendants' costs.
27 The principles of the assessment of costs that apply in these circumstances are not controversial. Costs will normally follow the event, unless it appears to the Court that some other order should be made as to the whole or any part of the costs: Uniform Civil Procedure Rules 2005, r 42.1 and Oshlack v Richmond River Council (1998) 193 CLR 72 at [97]. The plaintiff would normally be entitled to the whole of its costs even if it is unsuccessful on some issues, so that there would not normally be a differential between particular issues on which the party was successful and those in which it failed, unless the matters on which the party failed were either the clearly dominant issue in contest or were clearly separable from the matters on which the party succeeded, Waters v P C Henderson (Aust) Pty Ltd (1994) 254 ALR 328. If a proportion of Court time is spent on issues which are severable and on which the plaintiff is unsuccessful then a successful plaintiff may be deprived of costs on those issues: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No. 3) (1998) 30 ACSR 20. An order that a successful party pay the costs of an unsuccessful party is generally regarded as requiring particular justification: Ottway v Jones (1955) 1 WLR 706 at 708 and Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) (1979) 28 ALR 201.
28 The defendants' counsel Mr Cook undertook a useful exercise of analysing the amount of time spent on the misleading and deceptive conduct issues and the charge issues during various parts of the case. He conceded that his analysis should not be regarded as scientific. It is not a definitive way of analysing the time spent by parties on particular issues. Too close a regard to it would be artificial. Nevertheless it usefully analyses the tender bundle, the statement of claim, the parties' submissions, the agreed statement of issues, the cross-examination of George Dib and the judgment to show in Mr Cook's submission what percentage of each was devoted to the issues on which the Dib Group was successful, (the charge issues) and what proportion was devoted to issues on which the Dib Group was unsuccessful (the misleading conduct issues).
29 The result of Mr Cook's analysis shows that a considerable proportion of the proceedings was devoted to issues on which the Dib Group was successful. At a general level too this conclusion accords with my own assessment of the course of the trial. A brief summary of his analysis follows. I have omitted reference to Mr Cook's analysis of the tender bundle and the plaintiff's bundle of documents of 28 March 2008 because the underlying methodology he used is not clear and the results do not accord with my understanding of the evidence. Similarly the analysis below does not deal with the agreed statement of issues, which is not a particularly helpful basis for analysis as to how much time was taken at trial.
30 The indicators in Mr Cook's table that are closer to the real determinants of how Court time was consumed are the amended statement of claim, the plaintiff's written submissions, the defendant's written submissions, the cross-examination of George Dib and the judgment. The results are the following:
(a) of the 28 paragraphs of the statement of claim, 15 (or 54 percent) paragraphs relate to the charge claim;
(b) in the plaintiff's written submissions of 134 paragraphs some 74 paragraphs (or 55 percent) were devoted to the charge claim;
(c) in the defendant's submissions of some 202 paragraphs some 43 paragraphs (or 15 percent) are devoted to the charge claim in relation to the defendant's submissions it is put that a further 70 paragraph (or 24 percent) relate to the issue that E-Style was in financial stress, another issue in which the defendants were unsuccessful, bringing the total in which the Dib Group was successful to 39 percent;
(d) of the 203 pages of cross-examination of George Dib, 138 pages it is said, are devoted to cross-examination on whether or not the Dib Group knew that E-Style was under financial stress for the charge issue some 68 percent;
(e) the judgment of 202 paragraphs deals with Dib Group knowledge of financial distress in 9 paragraphs (4 per cent) and the charge issue in 57 paragraphs (28 percent) giving a total of the issues the Dib Group was successful of 32 percent.
31 This analysis shows that a substantial part of the trial was devoted to issues on which the Dib Group was successful. However I do not accept this analysis fully. In some areas it overestimates the time devoted to issues on which the Dib Group was successful. Also it fails to take into account that there was overlapping significance in some evidence to both the misleading and deceptive conduct claim and the charge claim, including as to credit.
32 Enterprises says in response that costs should follow the event and that it should have all of its costs. The flaw in that position is that it cannot be said that the amount of time devoted to charge issues was insignificant. In my view it added significantly to the total hearing time of the proceedings.
33 However the charge issues were not wholly disconnected from the misleading and deceptive conduct issues. The decision to pursue the charge issues arose out of the receivers' work. Furthermore the impetus to pursue recovery action was increasingly driven by Enterprises' understandable and in my view reasonable attempts in the circumstances to recover some money from E-Style.
34 Enterprises should not be able to recover all of its costs though. However I do not think that the situation warrants a costs order against it. In my view justice will be served by depriving Enterprises of 25 percent of its costs on account of its failure on the charge issue.
35 The order will be limited to costs incurred up to the date of this judgment. The parties have yet to argue the supplementary costs question of whether a lump sum costs order should be made pursuant to Civil Liability Act, s 98(1)(c). That application is likely to raise separate cost questions. They will be dealt with when that application is argued and decided.
36 Accordingly I will order the defendants to pay 75 percent of Enterprises' costs of the proceedings up to the date of this judgment.
Conclusion and Orders
37 I have found the following in relation to the three issues determined in this judgment. First, the liability of the defendants who are concurrent wrongdoers is limited to an amount reflecting 80 percent of the damage or loss that Enterprises claimed being a figure that the Court considers just having regard to the extent of the defendants responsibility for the damage or loss, when contrasted with the responsibility of Ms Betty Ventouris the other concurrent wrongdoer. Secondly, the Court has decided the contested issues of principle on the assessment of damages. The parties should now agree on the final calculation including interest so that judgment can be entered in one amount on Friday of this week. Thirdly, the plaintiff should not have all of its costs given that it failed on the charge issues, although it succeeded on the misleading and deceptive conduct issues. On the other hand, I have found that there should not be a costs order made against the plaintiff in favour of the defendants on any of these issues. Enterprises will recover 75 percent of its costs of the proceedings against the defendants up to the date of this judgment. Issues of a possible lump sum costs order under Civil Liability Act, s 98(1)(c) will be listed for further argument.
38 The orders of the Court therefore will be:
1. Direct the parties to complete the calculations of the amount for judgment in accordance with these reasons by 4.00pm on 25 November 2010 and provide them to the Court and if not agreed the parties shall provide separate calculations.
2. I order the defendants to pay 75 percent of the plaintiff's costs of these proceedings incurred up to date.
3. I direct the parties to file and serve written submissions about the desirability or otherwise of a lump sum costs order by Friday, 3 December 2010.
4. I direct the plaintiff to file and serve any written submissions and documentary evidence about any claim for indemnity costs by 5pm on Monday 29 November 2010.
5. I direct the defendant to file and serve any written submission and documentary evidence in reply on the issue of indemnity costs by 5pm on Friday 3 December 2010.
6. I grant liberty to apply.
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