Supreme Court New South Wales Medium Neutral Citation: Pages Property Investments Pty Ltd v Attila Boros & Ors [2020] NSWSC 1474 Hearing dates: Orders on the papers, last submissions 20 October 2020. Date of orders: 23 October 2020 Decision date: 23 October 2020 Jurisdiction: Equity - Corporations List Before: Black J Decision: Judgment for Plaintiff against First Defendant in the amount of $2,538,656. Judgment for Plaintiff against Second Defendant in the amount of $2,617,085. First and Second Defendant pay 60% of Plaintiff's costs as agreed or assessed, and reasonable costs of engaging expert. Catchwords: COSTS – Basis of quantification – Judgment for Plaintiff – Plaintiff ran number of unsuccessful claims – Whether costs awarded to Plaintiff reduced to reflect number of unsuccessful claims. Cases Cited: - Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 - Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 - Pages Property Investments Pty Ltd v Attila Boros & Ors [2020] NSWSC 1270 - Short v Crawley (No 4) [2008] NSWSC 1302 Category: Costs Parties: Pages Property Investments Pty Ltd (Plaintiff) Attila Boros (First Defendant) Pages Equipment Holdings Pty Ltd (prov liq apptd) (Second Defendant) Pages Sales Pty Ltd (prov liq apptd) (Fifth Defendant) Phire Pty Ltd (prov liq apptd) (Sixth Defendant) Pages Austructures Pty Ltd (Seventh Defendant) Representation: Counsel: M White/R Gration (Plaintiff) Solicitors: WMD Law (Plaintiff) A Boros (self-represented) File Number(s): 2016/357782 Judgment 1. By my Judgment delivered on 17 September 2020 ("Judgment"), I found that the Plaintiff, Pages Property Investments Pty Ltd ("PPI") had established certain aspects of its case against Mr Boros. I ordered (at [281]) that Mr Peter Gothard and Ms Robyn Duggan of KPMG be appointed liquidators jointly and severally of Pages Equipment Holdings Pty Ltd (in prov liq) ("PEH"); Pages Sales Pty Ltd (in prov liq); Phire Pty Ltd (in prov liq) and Pages Austructures Pty Ltd, with that order to be entered forthwith; and that the parties otherwise bring in agreed short minutes of order to give effect to the judgment, including as to costs, within 14 days or, if there was no agreement between them, their respective draft minutes of order and short submissions as to the differences between them. I subsequently extended the time for the parties to bring in agreed short minutes of order, by agreement of the parties, although they have not now reached agreement as to consent orders. The parties' proposed substantive orders 1. By their respective draft orders submitted on 16 October 2020, PPI and Mr Boros both proposed an order for the appointment of liquidators to the companies to which I referred in paragraph 1 above. That order is unnecessary since the Court already made it on 17 September 2020 and it was entered and took effect on that date. 2. By its proposed orders, PPI initially sought judgment for PPI against Mr Boros in the amount of $2,551,538 and judgment against the Second Defendant, PEH in the amount of $2,636,428. By submissions dated 21 October 2020, made by leave, PPI corrected an error in its proposed orders to decrease the amount of the judgment sought by PPI against Mr Boros to the amount of $2,538,656 (comprising components of $457,280 and $2,081,376) and against PEH in the lesser amount of $2,617,085 (comprising $590,816 plus $2,029,269). Mr Boros in turn provided short minutes of order which provided for judgment to be entered against him in the amount of $2,480,950.43 (a lesser amount than contained in PPI's orders) and for judgment to be entered against PEH in the amount of $2,579,159.43, also a lesser amount than proposed in the PPI's orders. 3. These calculations relate, first, to PPI's claim against Mr Boros as to rent and outgoings under the First Lease (as defined) (Judgment [97]ff). In respect of that claim, I observed (Judgment [112]-[113]) that: "In closing submissions, PPI points out that Ms Bateman originally calculated the quantum of unpaid rent under the First Lease from 1 July 2009 to 30 June 2015 as $329,880; was unable to calculate the shortfall of rent for the financial years ended 30 June 2016 and 30 June 2017; and calculated unpaid outgoings from 30 June 2012 to 30 June 2016 (when the First Lease ended) of $205,726 and interest (up to 30 June 2020) of $486,593, totalling $1,022,199 (Bateman, Ex P11, pp 87-89). In a supplementary report dated 10 August 2020 (P19), Ms Bateman calculated unpaid rent from 4 April 2011 (the date six years before the Statement of Claim was first filed against Mr Boros) to 30 June 2016 as $328,068; calculated the rental shortfall for the financial year ended 30 June 2016 by reference to PPI's bank statements as $103,054; and also calculated the outgoings paid by PPI but not reimbursed by PEH for the financial year ended 30 June 2014 (not included in her earlier report) as $105,855. On this basis, PPI calculated its total rent shortfall from 4 April 2011 to 30 June 2016 as $328,068 and the total unpaid outgoings as $311,581. However, the claim against Mr Boros extends to the later date of his removal as a director of PPI on 12 September 2016. PPI again recalculates these figures, including additional elements, in its schedule of quantification of damages, although the direction to provide that document allowed a summary of its claim and not a reformulation of it. I have found that Mr Boros is liable to pay compensation to PPI in respect of a contravention of s 180 of the Act, referable to unpaid rent and interest for the period from 4 April 2011 to 12 September 2016. It is not apparent that PPI has calculated its claim on that basis and I will direct the parties to bring in agreed orders to give effect to this judgment, which will need to include an agreed calculation limited to this amount and interest." 1. These calculations also reflect an alternative claim by PPI that PEH pay unpaid rent under the First Lease (as defined in the Judgment) and outgoings plus interest. I observed (Judgment [114]) that: "PPI alternatively seeks an order that PEH pay it unpaid rent under the First Lease and outgoings plus interest under cl 13.3 of the First Lease in respect of unreimbursed operating costs incurred by it under that lease (5FASC, Relief, [12A]). PPI submits and I accept that this is a claim in debt and PEH (as distinct from Mr Boros) has not raised a limitation defence to that claim. As a result of this judgment, PEH will pass from provisional liquidation into liquidation, and the Court plainly cannot make any mandatory order that would involve a payment to PPI, allowing it priority over other unsecured creditors of PEH. There should, however, be judgment for PPI against PEH in the amount of unpaid rent and interest, consistent with the findings I have reached above. That also should be addressed in the agreed orders to give effect to this judgment." 1. In support of its quantification, PPI relied on a further report of the accounting expert whose evidence it led in the proceedings, Ms Bateman, dated 7 October 2020. Mr Boros in turn attaches to his submissions a letter from a Ms Leone, whose qualifications are not identified and whose letter does not contain a statement acknowledging the code of conduct. Ms Bateman calculated the amount payable by Mr Boros pursuant to paragraph 113 of the judgment as $457,280 and the amount payable by PEH pursuant to paragraph 114 of the Judgment as $590,816, inclusive of simple interest at the specified rates. Ms Leone calculated the amount payable by Mr Boros as $424,856 and the amount payable by PEH pursuant to paragraph 114 of the Judgment as $523,065. I can have regard to both calculations not as expert evidence, but so far as they represent a mathematical calculation which could have been undertaken by way of submission. 2. PPI points out that the parties appear to agree that the total amount of unpaid rent under the First Lease, for the purposes of paragraphs 113 and 114 of the Judgment was $338,318. The difference between PPI's and Ms Bateman's calculation on the one hand and Mr Boros' and Ms Leone's calculation on the other arises only from a difference between the parties as to the basis on which interest as to rent and outgoings under the First Lease is to be calculated. Ms Bateman adopts a calculation based on the Reserve Bank of Australia (RBA) Statistics Tables: F5 Indicator Lending Rates for variable overdraft (Schedule 3) and Ms Leone adopting a calculation based on the RBA Statistics Tables: F5 Indicator Lending Rates for variable term loan (Schedule 14). 3. PPI submits, and I accept, that interest in respect of the First Lease should be calculated on the basis set out in that lease. Clause 13.3 provides that the tenant must pay interest to PPI on any Rent, the Operating Costs or other money payable by it to PPI and unpaid for 10 business days at the "Default Rate", which is defined in cl 1.1 as "the rate which is 2% per annum above the highest overdraft rate charged as at the due date for payment by [PPI's] bank for commercial loans in excess of $100,000". As PPI points out, Ms Bateman's calculations adopt the RBA indicator lending rate for small business overdrafts whereas Ms Leone's calculation adopts the rate for small business variable term loans, which is a lower rate than the overdraft rate. Ms Bateman's calculations allow the 2% additional interest provided within the definition of Default Rate, which is not included in Ms Leone's calculation. In further submissions, by leave, Mr Boros confirmed that Ms Leone had, by contrast, used interest rates applicable to term loans rather than overdrafts and questioned the inclusion of the 2% margin in Ms Bateman's calculation. I am satisfied that Ms Bateman's calculation of these figures properly reflects the terms of the First Lease. 4. The parties proposed orders reflect, third, PPI's claim for monies paid by PPI to the benefit of PEH. I observed (Judgment [127]) that: "By way of relief, PPI sought a declaration that Mr Boros breached a fiduciary duty to it by causing ANZ to debit the amount of $1,658,931.43 from its Asset Finance Facility with ANZ and using those monies to repay a debt owed by PEH to ANZ (5FASC, Relief, [10]). It also sought an order that Mr Boros pay it that amount plus compound interest at the ANZ Bank Business Rate from time to time plus a margin of 1.5% per annum from 21 March 2016 to the date of judgment, reflecting the amount of interest payable on the borrowing (5FASC, Relief, [12]). The declaration sought is not necessary where I have recorded my findings above but an order for compensation should be made in favour of PPI against Mr Boros in the amount of $2,056,094.43, calculated on the basis claimed by PPI in its quantification schedule, comprising the principal amount of $1,658,931.43, fees and charges paid by PPI to ANZ on the additional debt of $350,005 and pre-judgment interest of $47,158. Mr Boros did not advance any alternative calculation of that amount. … 1. I also observed (at Judgment [132]) that: "PPI seeks an order that PEH pay it the amount of its additional borrowing from ANZ plus compound interest at the ANZ Bank Business Rate from time to time plus a margin of 1.5% per annum from 21 March 2016 to the date of judgment, reflecting the amount of interest payable under the borrowing (5FASC, Relief, [12]). That order cannot be made where that would allow PPI priority over other unsecured creditors in the liquidation of PEH. There should be judgment for PPI against PEH for the principal amount of the additional borrowing and interest, which will need to be quantified in the orders submitted by the parties to give effect to this judgment, and PPI can then prove for that amount in the liquidation of PEH." 1. PPI points out that the parties appear to agree, in relation to paragraphs 127 and 132 of the Judgment, that the increase in the ANZ Debt was $1,658,931; additional interest paid to 30 June 2020 was $240,028; an additional "lines fee" paid to 30 June 2020 was $105,944; and PPI paid stamp duty of $4,032, totalling $2,008,935. PPI points out that pre-judgment interest on those amounts to 30 June 2020 was $47,158 and no alternative figures are provided by Mr Boros in his submissions as to orders. PPI submits that ongoing interest and line fees should, in principle, be calculated to the date of judgment, 17 September 2020, and updates that calculation to $2,026,296 and the damages calculated for the purposes of paragraph 127 to $2,081,376 and for paragraph 132 to $2,026,269. I accept those calculations are properly founded. The parties' proposed costs orders 1. Turning now to the question of costs, I had observed (Judgment [280]) that: "PPI sought an order for costs and interest on costs under s 101(4) of the Civil Procedure Act 2005 (NSW) from the date that the costs concerned were paid by it. PPI has been successful in part and there should at least be an order that Mr Boros pay a portion of its costs of the proceedings. My preliminary view is that Mr Boros should not be ordered to pay all of PPI's costs of the proceedings, where PPI has pursued several claims that were not likely to succeed as a matter of law; several claims that could recover no more than, at best, Ms Bateman's costs which were likely to be recoverable as costs of the proceedings in any event; and other claims for which it concedes it could establish no loss. It seems to me that the case would have been significantly shorter had PPI exercised greater rigour in determining which claims should have been pursued. I will hear the parties in that regard." 1. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], the Court of Appeal noted that: "Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed. … In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument." [Citations of authorities omitted] 1. That principle has been recognised and applied in earlier and several later cases. In Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136, Toohey J noted, with reference to authority, that where a litigant had succeeded only upon a portion of its claim, the circumstances may make it reasonable that it bear the expense of litigating that portion upon which it failed, and that a successful party who had failed on certain issues may not only be deprived of the costs of those issues but may also be ordered to pay the other parties' costs of them. In Short v Crawley (No 40) [2008] NSWSC 1302 at [33], White J noted, with reference to authority, that the entitlement to costs, even of a plaintiff which enjoyed substantial success was potentially: "modified having regard to the various issues on which the Plaintiffs were wholly or partially unsuccessful, the extent to which those issues were dominant or severable, their overall significance to the outcome, the time they occupied during the hearing, and so far as can be discerned, in preparation." 1. PPI submit that, subject to an additional order, and except so far as costs are "not" (which appears to be an error) the subject of previous costs orders, Mr Boros and PEH pay 60% of their costs of PPI's proceedings, as agreed or as assessed, on the ordinary basis. PPI submits that the usual outcome is that it would, as the "successful party" be entitled to an order for the whole of its costs, but it submits that the 40% reduction in its costs which it concedes is a "generous" deduction for the time devoted to the claims in the proceedings for which it did not succeed. PPI also submits, and I accept, that PPI faced ongoing difficulties throughout the proceedings in obtaining relevant books and records from Mr Boros and other Defendants, and that a substantial amount of time during the hearing (and, necessarily, in preparation for it) was directed to issues on which PPI succeeded, namely Mr Boros' failure to keep proper books and records and the application to wind up the several corporate Defendants on just and equitable grounds. PPI also points to several other matters which increased its costs of the proceedings, including Mr Boros' advice that he would be reading affidavits of witnesses which ultimately were not read and Mr Boros' unsuccessful set-off defence in relation to an alleged loan to Mrs Page. 2. In respect of PPI's claim for costs against PEH, it submits that PEH resisted the claims against it until it was placed in provisional liquidation shortly before the hearing; that PPI succeeded on two substantial money claims against PEH in the proceedings; that PPI's claim for surrender of the Second Lease (as defined) was not pursued as a result of PEH entering voluntary administration shortly before the final hearing and its subsequent provisional liquidation; and that PPI was ultimately successful in obtaining a winding up order against PEH. 3. Mr Boros submits, by reference to a list of allegations in several iterations of the Statement of Claim, that many allegations put by PPI were not pursued or were not successful and that PPI had adopted "an unethical position" which he described as "machine gunning" in the proceedings. I do not accept that those terms are appropriate, although it is plain that PPI advanced and pursued a significant number of claims on which it did not succeed, either in respect of liability or in respect of establishing damages. In further submissions, by leave, Mr Boros contends that the claims on which PPI was successful only required "minor or very little evidentiary argument or presentation and were based heavily on Ms Bateman's reports". I do not accept the first part of that submission, where the claims as to failure to keep adequate accounting records and as to winding up on the just and equitable ground required extensive evidence, but the second part of that submission supports PPI's claim for the costs of Ms Bateman's reports which I address below. On that basis, Mr Boros submits that he and PEH should pay 20% of PPI's costs of the proceedings. 4. On balance, I am satisfied that the majority of the evidence on which PPI relied, and the majority of the time at the hearing, went to the issues on which it was successful, and an order that Mr Boros and PEH pay 60% of PPI's costs will fairly reflect the outcome of the proceedings. I am also satisfied that, given the extent to which PPI succeeded and the amount of its recovery, and also bearing in mind the significant parts of the case which it pursued on which it failed or could not establish damages, Mr Boros and PEH should (as PPI contends) pay 60% of PPI's costs of the proceedings as agreed or as assessed. 5. PPI also submitted that a specific order should be made that Mr Boros and PEH pay its costs of engaging Ms Bateman as an expert in the proceedings, to the extent those costs would not have been recovered under the costs order. In the course of the Judgment, I noted several claims where PPI had sought to establish damages referable to the costs of Ms Bateman's work. I observed, for example, in respect of Mr Boros' breach of his duties in respect of PPI's failure to keep adequate financial records that: "… the only particularised loss and damage which is the subject of any evidence is the cost of engaging Ms Bateman to review the financial records of PPI and its related companies to ascertain PPI's true financial position. PPI quantifies its loss in respect of this claim as the final cost of that exercise, being $200,101.18. PPI submits that the costs of that exercise would not have been incurred, but for Mr Boros' contravention of s 180(1) of the Act in failing to ensure that PPI complied with its obligations under s 286 of the Act during the period that he was its sole director. PPI also submits that it is not necessary to apportion the total accountancy costs incurred by PPI between the various contraventions by Mr Boros in connection with PPI and the other corporate entities as the aggregate total cost was the result of those contraventions. It seems to me that the findings that I have reached above would support PPI's claim to recover a significant part of the substantial costs claimed by PPI in respect of several reports of Ms Bateman covering a much wider range of issues. However, this would not support the recovery of all of those costs, which plainly also involve a substantial amount of work directed to companies other than PPI, and Ms Bateman's evidence allows no basis to allocate those amounts between those matters. Little may turn on this, where the reasonable costs of Ms Bateman's reports would properly be recoverable as disbursements in the proceedings, where those reports were plainly relevant to and were read in the proceedings. I reach that conclusion notwithstanding that not all of PPI's legal costs may be recoverable in the proceedings, for the reasons noted below." 1. In response to PPI's claim as to Ms Bateman's costs, Mr Boros repeats the proposition that PPI has "machine gunned unsustainable allegations" and submits that he should be required to pay 15% of Ms Bateman's costs; that an itemised account should be provided; and that "due to the Court's decision not to delay the hearing, Mr Boros did not have the ability to fund an expert witness". 2. PPI submits that it would not have been exposed to the significant costs of obtaining accounting evidence from Ms Bateman but for Mr Boros' failure to ensure that PPI complied with its obligations under s 286 of the Act to maintain proper accounting records. It seems to me that that is relevant to the costs of the proceedings, so far as it plainly made the task of leading expert accounting evidence more expensive for PPI than it would otherwise have been. As to the costs of Ms Bateman's report, Mr Boros submits, in further submissions by leave, that a substantial amount of her work was directed to other companies, repeats the proposition that she should provide an itemised account, and submits that no more than 15% of her total account should be paid. 3. On balance, I accept PPI's submission that, notwithstanding the difficulties with aspects of Ms Bateman's evidence to which I referred in the Judgment, and the fact PPI was not successful in all of the claims as to which Ms Bateman led evidence, I should order that Mr Boros and PEH pay PPI's reasonable costs of engaging Ms Bateman as an expert in the proceedings as agreed or as assessed. If no agreement is reached between the parties as to those costs, it will be a matter for a costs assessor to determine the amount of Ms Bateman's fees that were reasonably incurred and are properly recoverable by PPI as disbursements. 4. Accordingly, I make the following orders: 1. Judgment entered for the Plaintiff against the First Defendant in the amount of $2,538,656. 2. Judgment entered for the Plaintiff against the Second Defendant in the amount of $2,617,085. 3. Subject to order 4 below, and except so far as costs are the subject of previous costs orders, the First Defendant and the Second Defendant pay 60% of the Plaintiff's costs of the proceedings, as agreed or assessed, on the ordinary basis. 4. The First Defendant and the Second Defendant pay the Plaintiff's reasonable costs of engaging Fiona Bateman as an expert in the proceedings (to the extent that those costs have not been included in Order 3), as agreed or as assessed. ********** 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: 28 October 2020