Y Primavera v T Bakos & Anor

Supreme Court of NSW|2019-07-24|Before: Black J, Hodgson JA, Mason P

Solicitors: WMD Law (Plaintiff) One Group Legal (First Defendant) File Number(s): 2017/90542

Background

After a hearing over several days, on 30 April, 1-3 and 8-10 May 2019, I delivered judgment on 3 July 2019 ([2019] NSWSC 825) ("Judgment") and held that the Plaintiff, Ms Primavera, was entitled to recover an amount of $37,251.30 in respect of overpaid salary and an amount of $32,314.88 in respect of unauthorised transfers from the First Defendant, Ms Bakos. A third claim by Ms Primavera, relating to an alleged failure to account for funds incorrectly received by another entity, was abandoned by her and not addressed in the Judgment.
The parties have agreed orders necessary to give effect to the Judgment as to liability but have not agreed orders as to costs. The parties agree that orders should be made that Ms Bakos pay Ms Primavera the sum of $69,566.18 and interest in the sum of $28,285 to 3 July 2019 pursuant to s 100 of the Civil Procedure Act 2005 (NSW), and at a specified rate for the additional period until final orders are made and entered. I make orders in that form below.

Ms Primavera's submissions

Ms Primavera submits that Ms Bakos should pay 80% of her costs of the proceedings as agreed or assessed, on the ordinary basis. That is a somewhat ambitious submission where Ms Primavera recovered an amount substantially less than the Court's minimum jurisdictional threshold, after a hearing over seven days. In her written submissions as to orders and costs, Ms Primavera set out an outline of the manner in which her first claim in respect of overpayment of wages developed. She pointed out, inter alia, that Ms Bakos' position was initially that she was entitled to a higher level of payments, under an agreement reached between the parties, but Ms Bakos had ultimately not led evidence to support that claim and abandoned it in the course of the hearing. Ms Primavera also pointed out it was only after several amendments to the Defence, in the course of the hearing, that it became apparent that the only issue in relation to this claim was quantum. Ms Primavera submitted that she also partly failed on claims for overpayment of wages which she "assumed were agreed and accepted by [Ms Bakos] and for this reason did not bother amending her pleading to formalise what she perceived was an agreed position". It does not seem to me that approach was justified, and those claims were not successful for the reasons set out in the Judgment.
Ms Primavera also points out that, in respect of her second claim in relation to unauthorised transfers, Ms Bakos initially denied that she had breached any of the pleaded duties in making the transfers and failed in that position. That proposition is correct, but Ms Primavera in turn succeeded in establishing a narrower, and more fundamental, breach of duty which did not depend on the wide range of arguments that she put at the hearing. Ms Primavera rightly also points out that there was considerable complexity associated with the issues raised by both parties and the quantification of her claim, although that emphasises the extent to which the claim and the manner in which it was conducted was significantly disproportionate to the amount in issue in it. Ms Primavera also fairly accepts, albeit "with the benefit of hindsight" that she should not have pursued the third claim to which I referred above. She also refers to the extent of evidence and cross-examination addressed to that issue. Ms Primavera submits that a reduction of 20% in a costs order in her favour would reflect the costs of the pursuit of the third issue, which she now accepts should have not been pursued.
Ms Primavera accepts that she enjoyed only "modest financial success" with respect to the first and second claims (and, as I noted above, the third was abandoned) but submits that it was Ms Bakos' wrongdoing that brought about the proceedings; that Ms Bakos would have benefited from that wrongdoing at Ms Primavera's expense if the proceedings had not been brought; and the proceedings were necessary to vindicate Ms Primavera's rights. There is force in that submission, subject to the difficulties that will inevitably arise where an attempt to recover an amount will cost significantly more than the amount to be recovered.

Ms Bakos' submissions

Ms Bakos contends for an apportionment of costs on an issue by issue basis, and submits that costs should be allowed to her in respect of issues on which she claims to have succeeded, which she contends occupied a significant amount of time at the hearing. Ms Primavera fairly points, in submissions, to the Court's general reluctance to engage in an issue by issue analysis of costs, which is not likely to lead to a just and equitable result and will tend to add to the complexity of litigation: Saraceni v Mentha [2013] WASC 95(S) at [9]; see also Bostik Australia Pty Ltd v Liddiard (No 2) above at [38]; LGS v Barbagallo (No 4) [2013] NSWSC 311 at [18]. Ms Primavera responds that Ms Bakos' submissions as to this issue depends on the identification of issues, and I am not persuaded that Ms Bakos has identified all issues, or undertaken an adequate allocation of time and costs between each issue, if that approach were otherwise appropriate. It seems to me Ms Bakos' analysis is artificial and unpersuasive, so far as she seeks to demonstrate that she was successful on the majority of the disputed issues of fact and law raised in the contest as to the first two claims pursued by Ms Primavera, where Ms Primavera was ultimately successful in respect of those claims, albeit in modest amounts. I do not consider that the approach formulated by Ms Bakos should be adopted.
Ms Bakos also submits that Ms Primavera ought not to have pursued the costs of every transaction forming part of her first claim, and particularly the low value transactions forming part of that claim. There is substantial force in that submission, but also force in Ms Primavera's response that those transactions were not dominate or separable. While each transaction individually may have occupied little time, the fact that multiple transactions of small value were pursued, at length, seems to me to have substantially contributed to the length of the hearing. Ms Bakos also submits, and I do not accept, that she should have the costs of various arguments which the Plaintiff pursued, which were arguable but were not successful, for example, as to whether Ms Bakos' loss should be calculated by reference to her salary on a net or gross basis.
Ms Bakos contends that Ms Primavera, in money terms, achieved a result at a level that was well within the jurisdiction of the Local Court. Ms Primavera accepts that that is a fair characterisation of the result, but submits that she had "no choice" but to bring the proceedings in this Court where equitable claims were advanced and issues originally arose as to ss 471B and 477 of the Corporations Act 2001 (Cth). On balance, but with hesitation, I accept that these proceedings were reasonably pursued in this Court, notwithstanding the limited recovery that was ultimately achieved in them.
Ms Bakos fairly points out that she was cross-examined at considerable length in respect of claims for knowing receipt and assistance and the third claim that was ultimately abandoned by Ms Primavera. She submits that the claims for knowing receipt and the third claim were unreasonably pursued, and that Ms Primavera could have obtained the evidence to establish that by the issue of subpoenas, prior to issues as to those claims arising in the hearing. I give little weight to that submission, where Ms Bakos could equally have disclosed information as to the relevant transactions, in a more transparent way, during the course of the parties' preparation for the hearing.
Ms Bakos seeks an order that all previous costs orders be vacated and each party bear its own costs in respect of the proceedings. It does not seem to me that any basis to vacate previous costs orders has been established, where those orders were made having regard to the circumstances of the particular applications to which they were directed. Ms Bakos also argues that costs orders should not be made, where that would avoid the need for a lengthy, complicated and costly assessment. I also do not accept that submission, since an assessment of an order awarding Ms Primavera a percentage of her costs will not be complicated or lengthy, and such an order properly reflects the compensatory nature of costs orders. An order that each party bear its own costs in respect of the proceeding would not reflect Ms Primavera's success in respect of the first and second claims brought in the proceedings, notwithstanding her modest recovery.

Determination and orders

It seems to me that these proceedings would have been significantly shorter, and significantly less costly, had they been conducted by Ms Primavera in a manner that, for example, focused on the claims of larger value and paid greater attention to the need for proportionality of the time and costs incurred to the amount of the likely recovery. Having regard to that matter, and to Ms Primavera's abandonment of her third claim, it seems to me that the appropriate order is that Ms Bakos pay 60% of Ms Primavera's costs of the proceedings, as agreed or assessed, on the ordinary basis, leaving all previous costs orders undisturbed.
Accordingly, I make the following orders:
The First Defendant pay the Plaintiff the sum of $69,566.18.
The First Defendant pay the Plaintiff interest in the sum of $28,285 to 3 July 2019 pursuant to s 100 of the Civil Procedure Act 2005 (NSW) and continuing thereafter at a rate of $9.99 per day until 16 August 2019.
Except so far as costs are the subject of previous costs orders, the First Defendant pay 60% of the Plaintiff's costs of the proceedings, as agreed or as assessed, on the ordinary basis.

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: 23 August 2019

Corporations Act 2001(Cth)ss 471B, 477

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