CATCHWORDS Costs - costs of. successful third party against respondent on cross claim with right of respondent to recover from applicant - whether applicant should be ordered tod pay ~ directly third party's costs - discretion to award costs pursuant to s.43 Federal Court of Australia Act ~- appeal from discretion of trial judge. Federal Court of Australia Act 1976 s.43 GLADSTONE PARK SHOPPING CENTRE PTY. LTD. and HERSFIELD DEVELOPMENTS CORPORATION PTY. LTD. Vv. ROSS WILLS and ROSS WILLS & ASSOCIATES PTY. LID. and ROSETTA ARISTOTITE V. No. G. 210 of 1984 Northrop. Davies and Beaumont JJ. Melbourne 18 December 1984 FEDERAL COURT OF AUS IA VICTORIA DISTRICT REGISTRY GENERAL DIVISION V. No. G 210 of 1984 ON_AP OM THE FEDERAL COURT OF AUSTRALIA BETWEEN : GLADSTONE PARK SHOPPING CENTRE PTY. LTD. and HERSFIELD DEVELOPMENTS CORPORATION PTY, LTD. Appellants and ROSS WILLS First Respondent and ROSS WILLS & ASSOCIATES PTY. LTD. Second Respondent and ROSETTA ARISTOTITE Third Respondent CORAM: Northrop, Davies and Beaumont JJ. DATE: 18 December 1984 PLACE: Melbourne ORDER THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellants pay the costs of the first and second respondents of the appeal. N_ THE ERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V. No. G 210 of 1984 GENERAL DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: GLADSTONE PARK SHOPPING CENTRE PTY. LTD. and HERSFIELD DEVELOPMENTS CORPORATION PTY. LTD. Appellants and ROSS WILLS First Respondent and ROSS WILLS & ASSOCIATES PTY. LID. Second Respondent and ROSETTA ARISTOTITE Third Respondent CORAM: Northrop, Davies and Beaumont JJ. DATE: 18 December 1984 PLACE: Melbourne REASONS FOR JUDGMENT NORTHROP J: I would dismiss the appeal with costs for the reasons given by Beaumont J. I certify that this. andthe prow —popewtd a-true copy of- the Reasons for Judgment herein of the Honourable Mr. Justice Northrop. Associate "AE Low Dated: 8 December /48y i< OR G DI ION BETWEEN hed ww evnw No. VG.210 of 1984 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA GLADSTONE PARK SHOPPING CENTRE PTY LTD and HERSFIELD DEVELOPMENTS CORPORATION PTY LTD Appellants ROSS WILLS First named Respondent ROSS WILLS & ASSOCIATES Pry LTD Second named Respondent ROSETTA ARISTOTITE Third named Respondent REASONS FOR JUDGMENT CORAM : Northrop, Davies and Beaumont JJ 18 December 1984 DAVIES J : I have had the prepared by Mr Justice Beaumont. add a few words of my own. opportunity of reading the reasons 'I agree with them, but would Section 43 of the Federal Court of Australia Act 1976 (Cth) provides : "43.(1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded. (2) Except as provided by any other Act, the . award of costs is in the discretion of the Court or Judge." The discretion conferred by this section is wide. Attempts to specify narrow criteria for its exercise have not been successful. In the exercise of the discretion, each case must be considered on its own particular facts. Nevertheless, the discretion is to be exercised judicially. An award of costs does not arise only occasionally and in special circumstances. It is a question which arises in almost every case. In such circumstances, justice demands consistency of approach. Necessarily, rules of practice or guidelines for the exercise of the discretion have evolved. One such rule is that, ordinarily, costs should follow the event. As Lord Sterndale, MR, said in Ritter v Godfrey [£1920] 2 KB 47 at 52-3, ...there is ... a settled practice of the Courts that inthe absence of . special circumstances a successful litigant should receive his costs, that it is necessary to show some ground for exercising a discretion by refusing an order which would give them to hin. The discretion must be judicially exercised, and therefore there must be some grounds for its exercise, for a discretion exercised on no grounds cannot be judicial. ..."" At p.54, Atkin. Ld said .: ",.. Costs are to be in the discretion of the Court or judge. If this discretion is absolute the appellant must fati; if the discretion is limited, then the -appellant must show that the exercise of the discretion in this case exceeded the proper limits. I think that it will appear from the authorities to be mentioned that the discretion of the Court or a judge is not an absolute discretion, but must be exercised subject to certain governing principles which in this appeal it seems to me necessary to ascertain." His Lordship went on to review "...cases where costs follow the event, unless 'the judge thinks there is' good -cause;" ~and then, - after reviewing other authorities, said at p.60 ",.. In the case of a wholly successful defendant, in my opinion the judge must give the defendant his costs unless there is evidence that the Gefendant (1.) brought about the litigation, or (2.) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary iitigation and expense, or (3.) has done some wrongful act in the course of the transaction of which the plaintiff complains. It is not necessary for me to review the authorities further, for the principles governing the award of costs are well understood. In the present case, an application had been brought in the Federal Court of Australia based upon ss.52 and 53A of the Trade Practices Act 1974 (Cth) alleging that the first named respondent in the appeal, Ross Wills, and his company, the second named respondent, Ross Wills & Associates Pty Ltd, had engaged in conduct that was misleading and deceptive and had done so0 as agents for the appellants, Gladstone Park Shopping Centre Pty Ltd and Hersfield Developments Corporation Pty Ltd. In addition to defending themselves, the appellants joined Ross Wills and Ross Wills & Associates Pty Ltd in the action and sought indemnity from them should the applicant's claims succeed. In the result, the applicant failed and, consequentially, the proceedings for indemnity between the appellants and the respondents, Ross Willis His Honour recognised that there was an "unfettered judicial discretion" but nevertheless there'was a "way in which the unfettered judicial discretion as to costs is exercised when no circumstance appsars.to - justify any other order..." - His 'Honour took into account the impecuniosity of the applicant and the fact that this impecuniosity gave "practical importance" to the manner in which costs were awarded. In my view, his Honour was correct in doing so. I do not find in his Honour's judgment any misstatement of fact. There was no relevant fact which his Honour failed to take into account and no irrelevant matter to which his Honour gave weight. The main crux of the appellants' case on the appeal was that the conduct which had led to the litigation was conduct of Ross Wills and of Ross Wills & Associates Pty Ltd. It was their conduct which gave rise to the litigation, not conduct of the appellants, and therefore, it was submitted, it was not proper to award costs against the appellants, who were the innocent parties in the affair. That was the substance of the matter, though the argument was put in more elegant terms. It would I think have been open to the learned trial Judge to accept that view. Conduct which gives rise to litigation can provide a ground for refusal of costs. - See Harnett v Vise -41880) 5 Ex D 307, Bostock v Ramsey Urban District Council £19003 2 QB 616 and Beale v Taylor £1967] 3 All ER 253. But his Honour was the judge of the facts and had a discretion to exercise. He came .. to the view that the conduct prior to the litigation~- of Ross Wills and of Ross Wills & Associates Pty Ltd was not such as to justify deprivation of the costs to which, as successful parties, they would ordinarily 'be entitled. The argument put on the .-. appeal did not persuade me that his Honour's conclusion in this respect was erroneous. - <- Lorot I would therefore dismiss the appeal with costs. -eraty thatthis andthe frye Cs) preceding pages are a true copy of the reasons for judgment herein of The Honour- able Mr, Justice J.D Vaviest Cth Associate Dated 1F/i2/ee N IE FED! COURT OF AUSTRALIA ) ) VICTORIAN REGISTRY . ) ) ) GENERAL DIVISION No. VG 210 of 1984 QN APPEAL from the Federal Court of Austraiia BETWEEN : GLADSTONE PARK SHOPPING CENTRE PTY. LIMITED and HERSFIELD DEVELOPMENTS CORPORATION PTY. LIMITED Appellants AND: ROSS WILLS First Respondent AND: ROSS WILLS & ASSOCIATES PTY. LIMITED Second Respondent AND: ROSETTA ARISTOTITE Third Respondent CORAM: Northrop, Davies and Beaumont, JJ. DATED: 18 December 1984. REASONS FOR JUDGMENT BEAUMONT, J.: This is an appeal from part of the judgment of a single judge of the Court (Jenkinson, J.) in proceedings brought by the third respondent against the appellants claiming, first, damages pursuant to 38.52, 53A and 82 of the Trade Practices Act, 1974; and _secondly, a declaration that certain leases were void. In the proceedings, the appellants brought a cross-claim against the third respondent for monies alleged to be due by her under one of the leases and for damages for breach of the agreement for that lease. The appellants also brought a cross-claim against the first and second respondents for indemnity or contribution in respect of the claims of the third respondent. For reasons he then gave, after noting an undertaking given by the first appellant. the learned judge dismissed the claims of the third respondent, and dismissed the appellants' cross-claim aqainst the first and second respondents. The third respondent was ordered to pay the appellants' costs of the proceedings and the costs of the appellants arising from their cross-claim against the first and second respondents. The appellants were also ordered to pay the costs of the first and second respondents of the cross-claim against them. Further, althouqh (for reasons which will appear) there is only a slight prospect of recovery on this account, the third respondent was ordered to pay to the appellants the amount of the costs of the first and second respondents ordered to be paid by the appellants. The appeal is brought against the order that the appellants pay the costs of the first and second respondents of the unsuccessful cros's-claim against them: the appellants contend that the learned judge should have ordered that these costs be paid by the third respondent. - In essence, the case sought to be made at the trial by the third respondent against the appellants was that she was induced to enter into a lease of premises in a shopping centre being developed by the appellants by misleading conduct of a number of persons. A director of the appellants. the first respondent and other unidentified agents of the second respondents were implicated. The second respondent was retained by the appellants as their leasing agents. The first respondent was the managing director of the second respondent. Most of the evidence at the hearing was directed at allegations against the first respondent. In the factual contest which developed. the learned judge accepted the evidence ot the first respondent and rejected the third respondent's case. In the result, both the claim and the cross-claim were dismissed. Although. in the circumstances. the ultimate burden for the costs of the whole proceedings was thrown upon the third respondent, she has not sought to': appeal from any part of the judgment. She did not appear on this appeal. If she were in a financial position to 4. discharge this burden in its entirety. it is probable that this appeal would not have been brought. But, since it appears that she is inno such position having, as his Honour said. -very little in the way of property or income, it is unlikely that the appellants will obtain satisfaction of the order made in their favour by way of reimbursement. as it were, for the costs which they are liable to pay the first and second respondents on their cross-claim. As has been said. it is the appellants' contention that. in the circumstances. the proper order to be made on the costs of the cross-claim is that the third respondent should pay the costs of the first and second respondents to the exclusion of the appellants. In support of this contention. the appellants submit that the discretion with respect to costs conferred by s.43 of the Federal Court of Austrailia Act, 1976 is an unfettered discretion: that, although this discretion must be exercised judicially, there is no rule that costs must follow the event. Rather. they arque, costs should be awarded as the justice of the case requires. Here, they say, the dictates of justice require that the first and second respondents should alone carry the ultimate burden of the costs of the cross-claim, since the fate of the litigation turned on the outcome of a number of discussions between the third respondent and the first respondent acting as the appeliants' agent for that purpose. In that sense, the appellants arque. it may be said that the first respondent caused the proceedings to be brought in the first place. The appellants submit that, if it be needed, precedent for an order that an unsuccessful plaintiff pay the costs of a successful third party may be found in two English cases (Edginton v. Clark £1964] 1 Q.B. 367: Thomas v. Times Book Co.-Limited [19661 2 All E.R. 241) and in an unreported decision of Kaye, J. in Devon Bown (Administrators) Pty. Limited v. Theodoropoulos (Supreme Court of Victoria, 7 April 1982). In those cases, as here, the arqument runs, it was thought appropriate to visit the third party with costs because the real contest lay between the plaintiff and the third party. It is common aground that since the award of costs is a matter within the discretion of the trial judge. the appellants must demonstrate an error in the exercise of that discretion of the kind which would justify the intervention of an appellate court in accordance with the well established principles (see House v. R. (1936) 55 C.L.R. 499 at pp.504-5:; Adam FP. Brown Male Fashions Pty. Limited v. Philip Morris Incorporated (1981) 35 A.L.R. 625 at p.628). In my view. the learned judge, in the course of his careful consideration of the question of the allocation of the burden of the. costs of the cross-claim. correctly applied the Judicial discretion he was called upon to exercise. It is suagested on behalf of the appellants that the learned judge fell into error by applying certain English authorities in this area. In particular, it is submitted that those Enalish cases which hold that, asa general rule, .costs should follow the event, are distinaquishable here because. unlike s.43 of the Federal Court of Austraiia Act, the English provision explicity refers to costs following the event. The appellants also attack his Honour's reliance upon the reasoning of the Court of Appeal in Johnson v. Ribbins £19771 1 W.L.R. 1458. In that case. the defendant mortgagee, against whom the plaintitf mortgagor claimed damages for an alleged sale of the mortaaged property at an undervalue. joined as third parties the real estate agent and the solicitor who had arranaed and conducted the sale on the defendant's behalf. The plaintiff's statement of claim inciuded alleqations of conduct by those agents which would, if proved, have justified his claim for damages. The allegations were not sustained and the action and the third party proceedings were dismissed. The plaintiff was impecunious and the third parties sought orders that the defendant pay their costs. The defendant araqued that, in lieu of such an order anda further order that the costs of the third parties be paid by the plaintiff to himself, there should be a single order for payment of those costs by the plaintiff to the parties. The Court of Appeal rejected the suagestion 3s (at p.1463), in a passage cited by Jenkinson, J.: oe. the court should be aquided by the principle that normally costs follow the event as is expressly provided by R.S.C., Ord.62 r.3(2) and should. therefore, normally order the defendant, though successful in the action, to pay the costs of the third party if he also be successful. Then if in the circumstances of the case these costs ought fairly to be borne by the plaintiff the court will further order that they be added to the defendants' costs of the action as against the plaintiff. Mr. Balcombe argued that one cannot apply Ord.62 xr.3(2) to third party proceedings, because the only relevant event is the outcome of the proceedings as a whole. One cannot, so he submitted, look at the third party proceedings separately. We cannot accept that view as a general proposition and certainly not as applicable to this case, though it might be true in particular cases. Generally, we think it will be found, and certainly so in this case, that the defendant and the third party stand in relation to one another as if the defendant had brought a separate action against the third party ... Thus, the question resolves itself in our view into this, namely, is there on the facts of this case anything which should lead the court in exercisina its discretion to depart from the normal principle that costs follow the event? We can see nothina. On the contrary, in our judgment, the facts call stronaqly for it to be observed. Apart from the impact of legal aid the consideration of which, as we have already observed, is excluded by the Act itself, we can see nothing which the defendants can call in aid except the impecuniosity of the plaintiff, but it cannot be right to deprive a third party of an order for costs to which third aying he is otherwise entitled against the defendant, because the defendant when looking to the plaintiff for reimbursement finds a person not worth powder and shot." In my opinion, the learned judge was correct in his application of this reasoning in the present case, recognising, as he put it, that "the general scheme of third party procedure in this Court and the qeneral practice as to costs in this Court are sufficiently similar to the procedure and practice in the High Court in England that, notwithstanding differences between rules and statutory provisions, I think I should allow Johnson v. Ribbins and L.E. Cattan Ltd. v. A. Michaelides & Co. (a decision of Diplock, J. - see £19583 1 W.L.R. 717 at p.720) a substantial persuasive influence". In anv event, whilst 3.43 of the Federal Court of Australia Act may not use the same language as the English Rule of Court. the judicial discretion aranted by s.43 should. I think. be exercised in accordance with similar principles and, ordinarily, costs in this Court should follow the event (cf. Milne v. Attorney-General for the State of Tasmania (1956) 95 C.L.R. 460; Trade Practices Commission v. Nicholas Enterprises Pty. Limited (1979) 28 A.L.R. 201 at pp.206-7: The Dow Chemical Company v. Smith (Commissioner of Patents) and Imperial Chemical Industries P.L.C.. unreported, Northrop, J.. 20 November 1984 at pp.4-5). 9. The learned judge was of the view, correctly I think, that. because the appellants. as principals, had brought suit against their agents, and the first and second respondents had failed in their suit. they should pay the costs in the absence of any sufficient reason to displace the ordinary rule in the event of such failure. In mv opinion. this was a@ proper exercise of the judicial discretion in the events which happened. The appellants urae that, instead of costs following the event, his Honour should have made orders of the kind made in Edginton v. Clark, supra. and Thomas v. Times Book Co. Limited, supra. Neither case, in mv view, provides any useful analogy here. In Edginton v. Clark, the plaintiff occupied a vacant bombed site as a squatter from 1947 until September, 1961. when the defendants entered on the site as weekly tenants of the freeholders and dispossessed hin. He brought an action against them for trespass, claiming that he had acquired a title to the site by virtue of his adverse possession for over 12 vears (which was uncontested). In 1954, however, the plaintiff had written two letters to the agent of the freeholders otfering to purchase the site. and the defendants, who joined the freeholders as third parties, submitted that these letters 10. amounted to an acknowledament of the freeholders' title so as to bar the acquisition by the plaintiff of a title to the site by adverse possession. Upjohn, L.J.. delivering the judgment of the Court of Appeal, said (at p.384): "The High Court still has, in our view. full and ample power to make such orders as to costs as between plaintiffs, defendants and third and subsequent parties as the justice of the case may require, and so ex concessis has the county court. As the county court judge held that he had no jurisdiction to exercise any discretion, it falls to this court to do so. In the circumstances of this case it is abundantly clear that the real and only fight was between the plaintiff as the alleged owner by adverse possession and the true owners, the third parties, and, accordingly, we should have been prepared to order that the plaintiff should pay their costs directly." (emphasis added) This approach was adopted. for the same reason, in Thomas' Case, supra. But. in the present proceedings, to borrow the lanquage of Upjohn. L.J.. the real fight was between the third respondent and the appellants. It was their lease that the third respondent was attacking in the litiaation. The conduct of the first and second respondents was relevant only as acts done as the agents of the appellants for which they were vicariously liable. On the other hand, in both Edginton v. Clark and Thomas' Case, it was proper to treat the defendants as little more than nominal parties. ll. Nor, in my view, does the decision in Devon Down (Administrators) Pty. imited v. Theodoropoulos, supra, assist the appellants. For one thing, Kaye, J. there declined to make any order for judament in respect of the third party proceedings. For another, Kaye, J. approached the question of costs by enquiring whether the conduct of the defendants in joining the third party was reasonable. No doubt such an enquiry is relevant in an application for a Bullock order (see Gould v. Vaggelas, Full High Court, unreported, 6 November 1984). But the making of such an order clearly involves different considerations to the question now arising. In the present case, the decision of the appellants to launch the cross-claim against the first and second respondents may be seen as something done with a view to advancing their own interests by seeking to secure immediate indemnity or contribution from the first and second respondents in the event that the third respondent should succeed in her claim. In those circumstances, it is only just that the appellants, rather than the first and second respondents. should bear the costs of the attempt to secure such an advantage for their own benefit. I would dismiss the appeal with costs. | certify that this and the /O preceding Pages are a true copy of the reasons for judgment herein of The Honourable Mr Justice Beaumont. freer SE Assoclate Dated /7 DE Wied