New South Wales Court of Appeal CITATION : Westpac Banking Corporation v Tanzone Pty Limited & Ors [2000] NSWCA 77 FILE NUMBER(S) : CA 40453/99 HEARING DATE(S) : 28/2/00 29/2/00 (Judgment on appeal) JUDGMENT DATE : 5 April 2000 PARTIES : Westpac Banking Corporation v Tanzone Pty Limited, Perpetual Trustee Company Limited and Archie Raymond and Mary Ann Raymond JUDGMENT OF : Priestley JA at 1; Fitzgerald JA at 1; Foster AJA at 1 LOWER COURT JURISDICTION : Supreme Court LOWER COURT ED 5075/98 FILE NUMBER(S) : LOWER COURT Windeyer J JUDICIAL OFFICER : Appellant - R. Macfarlan QC / P. Durack COUNSEL : Respondents - T. Bathurst QC / D. Hammerschlag Cth Attorney General (Intervening) - R. Orr / M. Duncan Appellant - Allen Allen & Hemsley Respondent 1 - Freehill Hollingdale & Page SOLICITORS : Respondent 2 - Heidtman & Co Respondent 3 - Barker Gosling Intervenor - Cth Govt Solicitor CATCHWORDS : Reasons for decisions on disputed costs orders and on question whether restitution appropriate to be considered in the appeal. LEGISLATION CITED : Supreme Court Act 1970 s75A(10) Supreme Court Rules Pt 51 r 26 Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd Supreme Court,(unreported, 3 June 1998 CASES CITED: Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659 TCN Channel Nine v Antoniadis [No 2] [1999] NSWCA 104 DECISION : Appeal allowed. Orders as in par 16 of judgment. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40453/99 ED 5075/98 PRIESTLEY JA FITZGERALD JA FOSTER AJA Wednesday, 5 April 2000 WESTPAC BANKING CORPORATION v TANZONE PTY LTD & ORS 1 THE COURT: The appeal in this case was argued on 28 February this year. On 29 February reasons for upholding the appeal and setting aside the judgment below in Tanzone's proceedings were published. A direction was given that draft minutes of appropriate orders be filed and that in the absence of an agreed draft, draft minutes by each of Westpac and Tanzone should be filed. The parties were not able to agree on all matters and each filed written submissions annexing a draft of proposed orders. 2 Westpac's draft minutes. The draft submitted by Westpac was as follows: " the court orders that: 1. Appeal allowed. 2. The orders made by the court below be set aside and in lieu thereof make the following orders: (a) the plaintiff's statement of claim be dismissed; (b) the plaintiff to pay the defendant's and the second cross-defendant's costs of the proceedings; (c) declare that on its proper construction cl 2.02(ii) of the lease dated on or about 10 July 1985 registered No W006367 should be read as if the words underlined below were added to it: '(ii) the amount of the rent payable immediately prior to the Review Date multiplied by X over Y where X is the Consumer Price Index Weighted Average Sydney All Groups Number for the quarter last preceding the Review Date and Y is, for the first Review Date , the Consumer Price Index Weighted Average Sydney All Groups Number for the last quarter preceding the Date of Commencement of the term of this Lease, and for each subsequent Review Date, that Number for the last quarter preceding the immediately preceding Review Date .' 3. The first respondent pay the appellant's, the second respondent's and the third respondents' costs of the appeal. 4. The first respondent pay the appellant the sum of $310,907.80. 5. The first respondent pay the appellant interest in the sum of $8,936.01. the court declares that: 1. The appellant is entitled to claim and the first respondent is obliged to pay interest on the sum in par 4 above at the rate of 9.5% from the date of these orders until the date of payment. the court notes: 1. The undertaking given by the first respondent to the court that until either the first respondent gives notice to the appellant that the first respondent will not seek special leave to appeal to the High Court of Australia against the decision of this court or the determination of any application for special leave, the first respondent will not deal in any way with its interest in the land comprised in Folio Identifiers A and B437686 without having first given 21 days' written notice to the appellant of any such proposed dealing such notice to be by letter addressed to Mr Alastair Mackay, Dispute Resolution Group, Westpac Banking Corporation, 60 Martin Place, Sydney, New South Wales and sent by facsimile to number (02) 9226 1447, copied to Allen Allen & Hemsley, attention Lynne Harman to facsimile number (02) 9230 5333. " 3 Tanzone's draft minutes. Tanzone's draft differed from Westpac's in regard to orders 2(b) and 3, which dealt with costs, and orders 4, 5, and the declaration, which dealt with restitution to which Westpac claimed to be entitled. There was no dispute about the noting of the undertaking. 4 In regard to order 2(b) Tanzone proposed that it pay one half of the defendants' costs of the proceedings and pay the second cross-defendant's costs of the proceedings. In regard to order 3, Tanzone proposed that it pay one half of Westpac's costs of the appeal, and pay the second respondent's and the third respondent's costs of the appeal, with Tanzone to be granted an indemnity certificate under the Suitors Fund Act if not disentitled under s 6(7) of that Act. 5 As to orders 4 and 5, and the declaration, Tanzone opposed the making of any of them. 6 Costs. Tanzone's written submissions referred to the relevant cases in which the usual rules concerning costs are set out. These cases uniformly show that ordinarily costs follow the event but that in circumstances where the party successful overall failed on issues unconnected with those on which that party succeeded, then the court, if it thinks it reasonable to do so, may order the successful party to bear the expense of litigating the issues on which that party failed. Tanzone then relied on the facts that Westpac had failed on all issues before Windeyer J (with the exception that it had established it would have been entitled to rectification against the Raymonds) and in this court had succeeded only on the construction issue, none of the others having been argued, and submitted that this took the case outside the usual position. 7 In its submissions, Westpac referred to what had been said by Hodgson J in Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (unreported, 3 June 1998): " ... in general terms I accept that if an issue is raised reasonably and is not disproportionate to the whole case, then normally the successful party should get his or her costs. However, particularly in relation to severable issues, the lesser the strength of the point raised and the greater the proportion it bears to the whole case, the more likely it is that the successful party may be deprived of costs; and if the Court comes to the view that it was unreasonable to raise the issue, then the successful party may have to pay the costs of that issue. " 8 In the present case, the court is not in a position to form any firm opinion upon the strength of the issues raised by Westpac but not considered or decided in the appeal. In the circumstances the court is of the view that the sounder exercise of discretion is to follow the usual rule and to make the costs orders as proposed in Westpac's draft minutes. 9 However, the court is also of the view that the Suitors Fund Act Certificate should be granted as requested by Tanzone. 10 Westpac's restitution claim. From material in the written submissions it appears that following Windeyer J's judgment Westpac paid the higher rent in accordance with his decision and that the amount which Westpac seeks to be repaid to it pursuant to its proposed order 4 is the difference between the rental so paid until the date of this court's decision and the rental payable pursuant to this court's decision. It also appears that Westpac paid the rent as demanded by Tanzone (a) in order to avoid the possibility of breach of the lease if it failed in its appeal and (b) notwithstanding that, according to Tanzone's written submission, the judgment was stayed. (We express no opinion about the effect of these matters.) 11 Westpac submitted that the making of orders 4 and 5 would restore it to the position it would have been in but for the judgment of Windeyer J and referred to this court's powers under s 75A(10) of the Supreme Court Act 1970 and in particular Pt 51 r 26 of the Supreme Court Rules, to make such orders, which it referred to as restitution orders. Reliance was placed on this court's reasons in TCN Channel Nine v Antoniadis [No 2] [1999] NSWCA 104. That case was based on an earlier decision of this court in which the situation had been discussed at length by Handley JA: Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659. In Production Spray Painting it was held that a successful appellant is "entitled to be restored to all things which he may have lost by [an] erroneous judgment and proceedings" (at 661). In Antoniadis [No 2] it was said that "A successful appellant is entitled, in principle, to recover all moneys paid under the judgment that has been set aside" (par 4). 12 In the present case, according to Tanzone's submissions, " Westpac made its own choice to pay the higher rental. Even if that choice was made in fear of possible termination for breach, as it has suggested, this still does not mean that the payments were made because of the step taken to enforce the judgment. " 13 Thus Tanzone asserts that one of the prerequisites for the orders sought by Westpac is not present. 14 This particular issue was not (obviously it could not have been) before Windeyer J. There was no evidence directed towards it sought to be led in the appeal. This court does not have materials before it permitting it to decide the issue. In the court's opinion the issue which emerges from the opposing written submissions arises in consequence of Westpac's success in the appeal but is not part of the appeal and we do not think we should decide it. Recovery should be pursued by Westpac, if it chooses to do so, in independent, first instance proceedings. 15 The court's orders. We therefore do not make orders 4 and 5 or declaration 1 as sought in Westpac's draft minutes and orders. 16 The court accordingly orders as follows: 1. The appeal be allowed 2. The orders made by the court below be set aside and in their place the following orders be made: (a) the plaintiff's statement of claim be dismissed; (b) the plaintiff pay the defendant's and the second cross-defendant's costs of the proceedings; (c) declare that on its proper construction cl 2.02(ii) of the lease dated on or about 10 July 1985 registered No W006367 should be read as if the words underlined below were added to it: " (ii) the amount of the rent payable immediately prior to the Review Date multiplied by X over Y where X is the Consumer Price Index Weighted Average Sydney All Groups Number for the quarter last preceding the Review Date and Y is, for the first Review Date , the Consumer Price Index Weighted Average Sydney All Groups Number for the last quarter preceding the Date of Commencement of the term of this Lease, and for each subsequent Review Date, that Number for the last quarter preceding the immediately preceding Review Date . " 3. The first respondent pay the appellant's, the second respondent's and the third respondents' costs of the appeal. 4. The first respondent be granted an indemnity certificate under the Suitors Fund Act 1951 if not disentitled under s 6(7) of that Act. the court notes : The undertaking given by the first respondent to the court that until either the first respondent gives notice to the appellant that the first respondent will not seek special leave to appeal to the High Court of Australia against the decision of this court or the determination of any application for special leave, the first respondent will not deal in any way with its interest in the land comprised in Folio Identifiers A and B437686 without having first given 21 days' written notice to the appellant of any such proposed dealing such notice to be by letter addressed to Mr Alastair Mackay, Dispute Resolution Group, Westpac Banking Corporation, 60 Martin Place, Sydney, New South Wales and sent by facsimile to number (02) 9226 1447, copied to Allen Allen & Hemsley, attention Lynne Harman to facsimile number (02) 9230 5333. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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