Essington Investments & Ors v Regency Property Group (Judgment on Costs) [2003] NSWSC 1057

New South Wales Supreme Court

CITATION : Essington Investments & Ors v Regency Property Group (Judgment on Costs) [2003] NSWSC 1057 HEARING DATE(S) : 30 October 2003 JUDGMENT DATE : 30 October 2003

JUDGMENT OF : McDougall J at 1 DECISION : Paragraph 12 of judgment

CASES CITED : Gladstone Park Shopping Centre Pty Ltd v Wills (1984) 6 FCR 496 Sanderson v Blyth Theatre Company [1903] 2 KB 523 Essington Investments Pty Ltd Essington Group North Sydney Pty Ltd PARTIES : Essington Asia Pacific Pty Ltd Recency Property Group Pty Ltd Richard Drummond FILE NUMBER(S) : SC 50058/03 J Stoljar (Plaintiffs) COUNSEL : J Stephenson (Defendants) R G Thomas (Cross-Defendant) Gilbert & Tobin (Plaintiffs) SOLICITORS : Watson Mangioni (Defendants) Curwood & Partners/Trevor Barker & Associates (Cross-Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

30 October 2003 (Revised 6 November 2003)

50058/03 ESSINGTON INVESTMENTS PTY LTD & ORS v REGENCY PROPERTY GROUP PTY LTD

JUDGMENT ON COSTS 1 HIS HONOUR: In this matter I gave judgment on 10 October 2003 in which I answered certain preliminary questions as between the plaintiff and the defendant and as between the defendant (cross-claimant) and the cross-defendant. I indicated my view that the answers that I gave would lead to the conclusion that there should be judgment for the defendant on the claim and for the cross-defendant on the cross-claim. The parties today do not dispute that. 2 The substantial dispute is as to costs. It is not disputed that the defendant should have its costs of the claim against it by the plaintiff but there is a dispute as to the costs of the cross-defendant. 3 Since the position that will follow from the making of orders disposing of the claim and the cross-claim is that the defendant will succeed and the cross-defendant will succeed, the prima facie result is that each should have their costs. 4 For the defendant, Mr Stephenson submits that his client should not pay the cross-defendant's costs of the cross-claim because, having regard to my findings, the cross-defendant was in a substantial way the author of the proceedings or the person whose actions gave rise to the dispute. Alternatively, Mr Stephenson submits that if his client is ordered to pay the cross-defendant's costs, then the costs payable to it by the plaintiff should include the costs payable by it to the cross-defendant. There is no dispute but that under s 76 such an order would fall within the wide discretion as to costs that the Court has. 5 Mr Stoljar of Counsel for the plaintiff submits that I should not make an order of the alternative kind proposed by Mr Stephenson. He says in effect, as Mr Stephenson said, that the cross-defendant was the author of the proceedings and should not be rewarded with his costs. He points also to the circumstance that I made adverse findings as to the credit of the cross-defendant and that those findings, as he put it, occupied a considerable space in the judgment. I think it is fair to say that as to this latter point, firstly, that it was the approach taken by Mr Foster SC who appeared with Mr Stoljar for the plaintiff on the hearing, that put Mr Drummond's credit in issue and, secondly, that the examination of his credit that they undertook was undertaken in accordance with submissions put for the plaintiff at the conclusion of the hearing. 6 The more substantial point is whether the cross-defendant was in effect the author of the proceedings. There is no doubt that the plaintiff claimed that it had come into a contractual relationship with the defendant through the agency or alleged agency of the cross-defendant. There is no doubt that the plaintiff's case rested on, for want of a better word, the provision to the plaintiff by the cross-defendant of the Heads of Agreement signed by Mr Johns on behalf of the defendant. There is no doubt that the cross-defendant was not authorised to give the Heads of Agreement to the plaintiff as part of the process of initiation of formation of a contract and there is no doubt that the cross-defendant knew that he was not so authorised. 7 The cross-defendant's actions and motives in providing the signed Heads of Agreement to the plaintiff remain a mystery. I say that because, although they were explored in his cross-examination, he failed to give any explanation that I find comprehensible, let alone credible, of what he did or why he did it. The situation is compounded because, as I noted in my reasons, he did not take any step to define or qualify the basis on which the Heads of Agreement were provided to the plaintiff. The situation is further compounded because for a period of time after, as the plaintiff would have it, the contract was concluded, the cross-defendant took no step to dispel the plaintiff's belief and for a time took no step to bring the plaintiff's belief to the attention of the defendant through its principal, Mr Johns. 8 Nonetheless, the fact is that the plaintiff asserted not only ostensible authority, but also actual authority and relied upon both as a ground for saying that a contractual relationship was concluded between the plaintiff and the defendant through the agency of a cross-defendant. I have found that neither actual authority, nor ostensible authority succeeded. Having regard to the way in which the plaintiff put its case, it was, I think, almost inevitable that the defendant would join the cross-defendant and, in my view at least, it was appropriate that the defendant do so so that all issues of liability could be determined in the one hearing. 9 In the circumstances, although with considerable hesitation having regard to the unsatisfactory features of the cross-defendant's conduct to which I have referred, I am of opinion that the proper order for costs is the alternative version advocated by Mr Stephenson. I note that a similar order was made in not distinctly different circumstances in Gladstone Park Shopping Centre Pty Ltd v Wills (1984) 6 FCR 496, where Jenkinson J made such an order at first instance and where an appeal against that order was dismissed unanimously. 10 A submission was made by Mr Stephenson that if I were minded to follow his alternative course, then I should adopt what he called a Sanderson approach, that is to say an approach of the kind sanctioned by the decision in Sanderson v Blyth Theatre Company [1903] 2 KB 523. The effect of such an order would be that the costs would be payable direct by the plaintiff to the cross-defendant rather than indirectly through the medium to which I have referred. 11 There is nothing in the material before me which suggests that there is any basis other than convenience for making such an order, the effect of which is to transfer the risk of non-payment from one party to another. It does not affect the entitlement of the party in whose favour the costs order is made. I do not think it appropriate to make a Sanderson order. 12 I therefore make the following orders: