New South Wales Court of Appeal CITATION: Furber v. Stacey & Anor. [2005] NSWCA 242 HEARING DATE(S): 4 May 2005 JUDGMENT DATE: 25 July 2005 JUDGMENT OF: Hodgson JA at 1; Basten JA at 56; Einstein J at 88 DECISION: 1. Leave to appeal granted, Notice of Appeal to be filed within 7 days. 2. Appeal allowed to the extent of substituting, for the costs orders made by the primary judge (except that relating to reserved costs) the following order: Mrs. Furber to pay Mr. Stacey's costs of the proceedings and one-quarter of the Canine Council's costs of the cross-claim, these costs in both cases to include the costs of the costs argument before the primary judge and to be on an indemnity basis from 10 November 2003. 3. Appeal otherwise dismissed. 4. The Canine Council to pay Mrs. Furber's costs of the application and appeal, and to have a certificate under the Suitors' Fund Act if otherwise eligible. CATCHWORDS: PROCEDURE - COSTS - Costs of cross-claim - Cross-claimant fails because plaintiff's claim against cross-claimants fails - Whether plaintiff should pay cross-defendant's costs. LEGISLATION CITED: District Court Rules Part 21 rule 8, Part 39A rule 9 Allman v. Daly No.2 [1959] VR 614 Altamura v Victorian Railways Commissioners (1974) VR 33 Earnshaw v Loy (No 2) [1959] VR 52 Elgindata Ltd, In re [No. 2] [1992] 1 WLR 1207 Fennel v Supervision and Engineering Services (1988) 47 SASR 6 GEC Marconi Systems Pty. Ltd. v. BHP Information Technology Pty. Ltd. [2003] FCA 688, 201 ALR 55 Gladstone Park Shopping Centre Pty. Ltd. v. Wills (1984) 6 FCR 496, 59 ALR 109, Gold Coast Bakeries (Qld.) Pty. Ltd. v. Heat Control Pty. Ltd. [1992] 1 QdR 162 Gould v Vaggelas (1985) 157 CLR 215 Johnson Tyne Foundry v Maffra Corporation (1948) 77 CLR 544 CASES CITED: Johnson v. Ribbins [1977] I WLR 1548 Lackersteen v Jones (No.2) (1988) 93 FLR 442 Latoudis v Casey (1990) 170 CLR 534 Leaver v. Golsby [1964-5] NSWR 1833 Lombard Insurance Co. (Australia) Ltd. v. Pastro (1994) 175 LSJS 448 Oshlack v Richmond River Council (1998) 193 CLR 72 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 Salmon, In Re (1889) 42 Ch.D. 351 Statham v. Shephard (No.2) (1974) 23 FLR 244 Helen Munro Furber - claimant PARTIES: Wes Stacey - 1st opponent Rooyal New South Wales Canine Council Limited - 2nd opponent FILE NUMBER(S): CA 40470/04 Mr. T.E.F. Hughes QC with Mr. S. Doctor for the claimant COUNSEL: No appearance for the first opponent Mr. P.W. Gray SC with Mr. M. Richardson for the second opponent Phillips Fox, Sydney for claimant SOLICITORS: Harrington Maguire & O'Brien, Sydney for 1st opponent Gilbert & Tobin, Sydney for 2nd opponent LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 8617/99 LOWER COURT JUDICIAL OFFICER: Christie DCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40470/04 DC 8617/99 HODGSON JA BASTEN JA EINSTEIN J Monday 25 July 2005 FURBER V. STACEY & ANOR Headnote FACTS 1 Mrs. Furber and Mr. Stacey were both directors of the Royal New South Wales Canine Council (Council), Mr. Stacey being the chairman of directors at all material times. The Council published a monthly periodical called the Canine Journal that was circulated among its members. 2 Mrs. Furber brought defamation proceedings against Mr. Stacey in the District Court for comments published in the "Chairman's Report" of the May 1999 edition of the Canine Journal. Mr. Stacey's defence was based on several grounds including truth, qualified privilege, public interest and fair report of court proceedings. 3 Mr. Stacey cross-claimed against the Council, alleging that the Chairman's report was prepared by the Council's solicitors on the instructions of the Council's Board, and that the Council was vicariously liable for the publication. He claimed entitlement to an indemnity or contribution from the Council pursuant to the Law Reform (Miscellaneous Provisions) Act 1946. 4 The Council did not admit that the Chairman's Report was prepared by the Council's solicitors on the instructions of its Board, or that the Council had authorised its publication; it denied it was vicariously liable for its publication and that Mr. Stacey was entitled to indemnity or contribution; and it also raised defences similar to those of Mr. Stacey against Mrs. Furber's claim of defamation. 5 Mrs. Furber's reply to Mr. Stacey's defence alleged malice so as to defeat the defence of qualified privilege. Mr Stacey did not put on a reply to the Council's defence of his cross-claim. 6 The primary judge upheld all of Mr. Stacey's defences apart from that of fair report, and rejected Mrs. Furber's allegation of malice. By consent, he dismissed the cross-claim. He ordered Mrs. Furber to pay the costs of both Mr. Stacey and the Council. 7 In appealing against the costs judgment, Mrs. Furber claimed that she should have to pay only one set of costs as there was no conflict of interest between Mr. Stacey and the Council. HELD (per Hodgson JA, Einstein J agreeing) (1) The prima facie principle that costs follow the event is subject to the ability of the Court to make further or other orders as required to achieve a just result: Lombard Insurance Co. (Australia) Ltd. V. Pastro (1994) 175 LSJS 448; as qualified by GEC Marconi Systems Pty. Ltd. V. BHP Information Technology Pty Ltd. [2003] FCA 688, 201 ALR 55. (2) It was reasonable in the circumstances for Mr. Stacey to seek indemnity or at least contribution from the Council. (3) Prima facie, a defendant and cross-defendant are adversarial parties, and a plaintiff resisting an order for costs on the basis of identity of their interests has an evidentiary onus to negative any conflict of interests. In this case, there was a potential conflict of interests on the issue of malice. However, where there is a substantial identity of interests, and particularly where it is foreseeable that a theoretical conflict is unlikely to develop into an actual conflict in the course of the proceedings, the cross-defendant should co-operate with the defendant to avoid duplication of effort and costs. (4) Having regard to the practical coincidence of interests between Mr. Stacey and the Council in the course of the trial, the substantial costs incurred by the Council in retaining senior and junior counsel to conduct a defence that was substantially the same as that of Mr. Stacey went beyond what Mrs. Furber should reasonably be required to pay; and Mrs. Furber should pay one-quarter of the Council's costs. (Per Basten JA, contra) (5) The opponents joined forces on the only issue capable of giving rise to a conflict between them, so that Ms. Furber should not be required to pay the costs of the Council when she had brought no proceedings and sought no relief against it: Leaver v Golsby NSWR 1833, Allman v Daly (No.2) [1959] VR 614. ORDERS 1. Leave to appeal granted, Notice of Appeal to be filed within 7 days. 2. Appeal allowed to the extent of substituting, for the costs orders made by the primary judge (except that relating to reserved costs) the following order: Mrs. Furber to pay Mr. Stacey's costs of the proceedings and one quarter of the Canine Council's costs of the cross-claim, these costs in both cases to include the costs of the costs argument before the primary judge and to be on an indemnity basis from 10 November 2003. 3. Appeal otherwise dismissed. 4. The Canine Council to pay Mrs. Furber's costs of the application and appeal, and to have a certificate under the Suitors' Fund Act if otherwise eligible. ********** IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40470/04 DC 8617/99 HODGSON JA BASTEN JA EINSTEIN J Monday 25 July 2005 FURBER V. STACEY & ANOR. Judgment 8 HODGSON JA: This application for leave to appeal arises out of proceedings for defamation brought in the District Court by the claimant (Mrs. Furber) against the first opponent (Mr. Stacey). In those proceedings, Mr. Stacey put on a cross-claim against the second opponent (the Canine Council) claiming indemnity or contribution. 9 After a 17-day hearing, Christie DCJ gave judgment on 1 June 2004, in which he said there would be a verdict and judgment in favour of Mr. Stacey against Mrs. Furber, and a verdict and judgment in favour of the Canine Council against Mrs. Furber. 10 There was a further hearing on 21 June 2004, when submissions as to costs were made, and the primary judge gave judgment on the issue of costs on 22 June 2004. On that day, he made orders to the following effect: that there be verdict and judgment for Mr. Stacey against Mrs. Furber; that the cross-claim be dismissed; and that Mrs. Furber pay the costs of Mr. Stacey and the Canine Council, those costs to be on an indemnity basis from 10 November 2003. He also made orders that Mrs. Furber pay the costs of Mr. Stacey and the Canine Council of the costs argument, and orders concerning reserved costs: first, in relation to an adjournment on 4 November 2003, that they be borne by each party, and second, in relation to a matter on 15 November 2002, that they be costs in the cause. 11 Mrs. Furber seeks leave to appeal from the decision as to costs, claiming that she should have to pay only Mr. Stacey's costs and not those of the Canine Council. The application for leave has been argued on the basis that, if leave is granted, the appeal should be decided without further argument. CIRCUMSTANCES 12 At material times, Mr. Stacey was chairman of directors of the Canine Council, and the matter complained of was published as part of the "Chairman's Report" in the Canine Journal of May 1999, the Canine Journal being the Canine Council's monthly periodical sent to its members. 13 Mrs. Furber pleaded 11 defamatory imputations, and a jury found that two of them were conveyed and were defamatory, namely: 1. "That the plaintiff had circulated incorrect and misleading information among the membership of the Royal New South Wales Canine Council". 2. "That the plaintiff had so misconducted herself over a period of five years in unnecessarily disrupting the affairs of the Council as to make her unfit to be a director", 14 Mr. Stacey defended the proceedings on the following grounds: 1. That the first of the imputations was true. 2. That the publication was made on an occasion of qualified privilege at common law and pursuant to s.22 of the Defamation Act. 3. That the imputations amounted to comment relating to a matter of public interest and based on proper material. 4. By reason of the fact that certain contextual imputations were conveyed and were true, Mrs. Furber's reputation was not further injured by publication of the imputations found by the jury. 5. A fair report of court proceedings. 15 Mr. Stacey put on a cross-claim against the Canine Council. In it, he alleged to the effect that the Chairman's Report was prepared by the Canine Council's solicitors, on the instructions of the Canine Council's Board, and that the Canine Council authorised its publication and was vicariously liable for its publication; and on that basis, he claimed that, if Mrs. Further recovered a verdict against him, he was entitled to an indemnity or contribution from the Canine Council pursuant to the Law Reform (Miscellaneous Provisions) Act 1946. 16 In its defence to the cross-claim, the Canine Council did not admit that the Chairman's Report was prepared by its solicitors on the instructions of its Board, or that the Canine Council had authorised its publication; and it denied that it was vicariously liable for its publication and that Mr. Stacey was entitled to indemnity or contribution. The defence to cross-claim also raised similar defences to Mrs. Furber's claim to those raised by Mr. Stacey. 17 Mr. Stacey did not put on a reply to the Canine Council's defence to his cross-claim. Mrs. Furber did put on a reply to Mr. Stacey's defence, inter alia alleging malice against Mr. Stacey so as to defeat the defence of qualified privilege. 18 In his main decision in the case, the primary judge upheld all of Mr. Stacey's defences apart from that of fair report. In relation to the defence of qualified privilege, the primary judge rejected the allegation of malice. Towards the conclusion of his judgment, he said "There will be a verdict and judgment in favour of the defendant against the plaintiff and a verdict and judgment in favour of the cross-defendant in favour of the plaintiff"; and he expressed an initial view "that the plaintiff will pay the costs of the defendant and cross-defendant subject to whatever arguments to the contrary are put". PRIMARY JUDGE'S DECISION ON COSTS 19 Relevantly to this application, it was submitted for Mrs. Furber that she should not have to pay the costs of both Mr. Stacey and the Canine Council, but only one set of costs. She relied on the following grounds: 1. There was no conflict of interest between them. 2. On the case as presented at the trial, there was no basis on which the Canine Council could deny indemnity to Mr. Stacey. 3. According to a Canine Council Board Minute of 8 August 2001 annexed to her submissions, on that day the Board of the Canine Council resolved that the Court and the Canine Council's solicitors be advised that the Canine Council would not mount a defence to Mr. Stacey's cross-claim. 4. According to Mrs. Furber's submissions, the Canine Council through its Counsel Mr. Gray admitted in Court that it would be indemnifying Mr. Stacey. 20 In deciding the question of the Canine Council's costs as he did, the primary judge gave the following reasons, starting with a reference to submissions made for Mrs. Furber: It is said in these submission (sic), and I will turn to a couple of them in a minute, that there was never any real dispute between the defendant and the cross-defendant. That, for what it is worth, accords worth my own perception, and indeed, at the end of this case, the cross-defendant made no submission other than the defendant would be entitled to an indemnity if he were to be unsuccessful. But, as the cross-defendant and I think the defendant pointed out yesterday, there are a number of issues in this litigation that required the cross-defendant to stand separately and apart from the defendant. That is particularly so in relation to the issue of malice because the plaintiff never alleged malice against any person except the defendant, Mr Stacey. And indeed, as was mentioned, I think in the submissions that the plaintiff put forward, the terms of the indemnity under the rules of the cross-defendant required that the person seeking the indemnity did not act other than in good faith. The plaintiff's case here always was that the defendant acted in any manner other than a manner of good faith. Not only that, but once the cross-defendant was joined another, very difficult to understand, and indeed possibly inexplicable forensic decision was made by the plaintiff and her advisers and that was a decision not to join the cross-defendant as a defendant. I do not understand and I am not going to explore it any further. I do not understand why that forensic decision was taken, because it potentially exposed Mrs Furber to the very problem she now faces. That is, that the defendant could not join the cross-defendant as a defendant. That they were separate parties and the plaintiff was treating them entirely separately, and indeed, was at pains throughout this litigation and subsequently as it turns out, to again stress that she was not suing the cross-defendant and never wanted to, never intended to. And I will come to that in a second in relation to one of the offers of compromise. The submissions made by the plaintiff contain quite a number of references to precedent and I will just quote a little bit of it when the plaintiff says this: "The principle espoused in the above extract, i.e. that the examination of conduct leading to the involvement of another party unnecessarily in expensive litigation may lead to setting aside the normal rule." I agree with that whole heartedly. If there was a suggestion that there was conduct leading to the involvement of another party unnecessarily. I shall not quote the rest of that quotation because I don't think it is applicable here. The plaintiff then says that the facts of the initiation and conduct of the action as far as they relate to circumstances leading to and continuing during the separate representation of Wes Stacey and the Royal New South Wales Canine Council showed there was no necessity for separate representation and by reference to Lord Justice Atkins second principle which is quoted, discretion should be exercised to order that one set, not two of assessed costs should be paid. The plaintiff went on to quote from Paren (sic) v Fry in the Queensland Court of Appeal and the reference is contained in the written submissions that I have been reading and which will be available to anybody else who wishes to consider this question. The Queensland Court of Appeal considered the question of appropriate costs orders to be made where third parties join action, they are inappropriately brought in by a defendant. Delivering the judgment of the court, Mr Justice Kelly said, and it is quoted. It was there the view of the court that the third party was inappropriately brought in. There is no suggestion here by the plaintiff that the third party was inappropriately brought in. I think what the suggestion from the plaintiff is here, that once the third party was brought in, obviously appropriately, that there should have been some melding of forces between the defendant and the cross-defendant and some joining of forces and delineation of issues. It seems to me and there is no polite way of saying it, but that situation arose and continued by reason of the plaintiff's absolute refusal it would seem, or otherwise she was advised not to, join the cross-defendant as a defendant. If the cross-defendant had been a defendant in these proceedings, then it is certainly likely that some of the submissions put by the plaintiff would have considerable more force than otherwise might be the case. And indeed, as I pointed out yesterday to Mr Doctor, I think, in para 38 of his submissions, he says: "the plaintiff didn't join the council as a defendant it is true. But given the facts as sworn in court and as evident in the amended cross claim as to how the matter complained of was created separate representation was unwarranted." Well, some of these submissions proceed on the basis it seems to me that the plaintiff must have been completely unaware of the manner in which this case would be presented. I simply cannot accept that, having regard to the enormous volume of the evidentiary material that was in possession of both parties. As I think the cross-defendant pointed out yesterday, and he referred me to para 32 of the plaintiff's written submissions which quoted article 78 or the articles of association of the cross-defendant, and that was the matter to which I made earlier reference. That the indemnity that appears to be given under the articles of association is depended (sic) upon the person seeking that indemnity having acted in his or her capacity as officer or employee or committee member of the association and to a person other than the body or related body, unless the liability arises out of conduct on the part of the officer, employee or committee member that involves a lack of good faith. Now I do not believe that the defendant and the cross-defendant could have predicted, although they might entitled to be quietly confident, as to whether Mr Stacey would have been found to have acted in good faith. Having regard to the enormous history of ill will that existed between Mrs Furber and a number of members of the board, including Mr Stacey, and I do not say that in any derogatory sense of either of them, but there were problems between Mrs Furber and some significant number of members of this board literally within weeks of her joining it. And a long history of that pre-dated this litigation. 21 His order was that Mrs. Furber pay the costs of Mr. Stacey and the Canine Council, some on an indemnity basis, without any further specification of whether these were the costs of the claim, the cross-claim or the proceedings generally. In its context, in my opinion, the order must be read as being for the costs of the proceedings generally. GROUNDS OF APPEAL 22 Mrs. Furber seeks leave to appeal on grounds raising the following questions, set out in par.[10] of her written outline of submissions: 10 The questions involved in the Appeal are: 10.1 Whether his Honour wrongly exercised his discretion in ordering that the plaintiff pay the costs of both the opponents, in circumstances where: 10.1.1 there was in reality no issue between the opponents; 10.1.2 the second opponent presented no case at trial in opposition to the first opponent's claim for indemnity; 10.1.3 The second opponent in fact agreed to provide an indemnity; 10.1.4 There was a tight and apparently trusting relationship between the first opponent and the second opponent, as evidenced by the fact that the first opponent was allied with the dominant faction on the board of the second opponent, and by the fact that the first opponent was sufficiently confident in the indemnity granted to him by the second opponent that he consented to his cross- claim being dismissed; 10.1.5 The first opponent was not the author of the matter complained of, it having been prepared by lawyers, and the first opponent permitting it to be published under his name; 10.1.6 The second opponent had resolved in 2001 not to mount a defence to the first opponent's claim for indemnity; 10.2 Whether in the exercise of the Court's discretion as to costs; 10.2.1 his Honour erred in holding that there were "a number of issues in this litigation that required the cross defendant to stand separately apart from the defendant" (Judgment page 7); 10.2.2 his Honour erred in regarding as a relevant matter that malice was alleged only against the first opponent, and that this was a matter justifying separate representation; 10.3 His Honour erred in regarding as a relevant matter that the plaintiff/claimant had not joined the cross-defendant/second opponent as a defendant once the second opponent had been joined as a cross- defendant, and that this was a "very difficult to understand, and indeed possibly inexplicable forensic decision" (Judgment page eight); 10.4 His Honour erred in apparently taking the view (Judgment pages 8-9) that the need for separate representation of the two opponents would have been obviated if the plaintiff had joined the second opponent as a defendant, when in fact the claimant's failure to do so had no bearing on whether there was a need for separate representation; 10.5 His Honour erred in regarding as a relevant matter article 78 of the Constitution of the second opponent, which required the second opponent to indemnify its office-bearers except in cases of bad faith. That was an issue that was never pleaded or pursued at the trial and was only raised by claimant's counsel at the cost argument to illustrate the fact that they could never in fact have been any issue between the two opponents on the question of indemnity; 10.6 His Honour erred in failing to have regard to the resolution of the second opponent not to defend a claim for indemnity. EVIDENCE ON APPEAL 23 In support of the application for leave to appeal, the claimant relied on an affidavit by her solicitor estimating the Canine Council's costs of the proceedings as being substantially in excess of $200,000.00. I note that the judgment on costs contains a suggestion that Mrs. Furber's own costs were of the order of $300,000.00. I accept that, whether or not these estimates are accurate, there is a very substantial amount involved in this application. 24 I referred earlier to a Canine Council Board minute of 8 August 2001. This minute was before the primary judge, although apparently not formally in evidence, and a question was raised as to whether it was provided to the opponents with their copy of the submissions made to the primary judge. In those circumstances, it was considered appropriate to admit material submitted by the opponents, namely the following subsequent minutes of bodies of the Canine Council: 1. A minute dated 5 October 2001 of the Executive Committee containing a resolution that a defence be filed to Mr. Stacey's cross-claim. 2. A minute dated 10 October 2001 of the Board of the Canine Council ratifying that decision. SUBMISSIONS 25 The written submissions for Mrs. Furber point out that Mr. Stacey did not plead or press a case at the trial that he was entitled to an indemnity by reason of Article 78 of the Canine Council's constitution, this being a matter referred to by the primary judge. The submissions then referred to the Canine Council's defence to the cross-claim, which put in issue its liability to indemnify Mrs. Stacey, and the submissions then continued: 18 However, at no point in the course of the trial did the second opponent present any case, either by its own witnesses, by cross-examination or by the tender of any documents, that indicated that it sought to press its pleaded defences to the cross- claim, or that there was the slightest controversy about the issues joined, or that was directed towards resisting the claim for indemnity. By way of example, the second opponent's cross-examination of the first opponent, which appears at T790/32-T792/19 , was brief and appeared wholly directed towards supporting the first opponent's own case. 19 Such conduct is consistent with the indemnity which the second opponent in fact provided, and in which the first opponent had so much confidence that he agreed to allow his cross-claim to be dismissed. 20 Even without the hard evidence of the resolution referred to above, the inference is strong that the second opponent must have made an early decision not to press its defence to the claim for indemnity. The claimant submits that is wholly unreasonable in such circumstances for the claimant to be made responsible for the costs of the second opponent. 21 This is particularly so when one considers that the cross-claim was dismissed, apparently by consent of the two opponents. Why on earth was it necessary for the second opponent to be represented at the trial at all, when common sense suggested that such representation was unnecessary? The claimant respectfully submits (in conformity with the authorities referred to below) that in such circumstances, parties in the position of the first and second opponents should not generally be entitled to the costs of separate representation if they decline to be jointly represented. 22 The claimant accepts that the discretion conferred by section 148B(1) of the District Court Act 1973 is a wide one and that the section should be given a liberal construction: Oshlack v Richmond River Council [1998] HCA 11 at paragraphs 21and 22; Wentworth v Attorney-General (NSW) (1984) 154 CLR 518 at 527-528. The width of the discretion is reflected in the remarks of Gaudron and Gummow JJ in Oshlack, where their Honours note that even in the absence of disentitling conduct, there is no absolute rule that a successful party is to be compensated by the unsuccessful party, and "nor is there any rule that there is no jurisdiction to order a successful party to bear the cost of the unsuccessful party". 23 As with any discretion, however, the discretion cannot be exercised by reference to irrelevant or extraneous considerations: Latoudis v Casey (1990) 170 CLR 534 at 537 per Dawson J. In this regard, the claimant submits that his Honour's decision was not only a wrong exercise of discretion in itself; but his Honour's discretion was also vitiated by the errors referred to at paragraph 10 above. 24 In Ritter v Godfrey [1920] 2 KB 47 at 60, Atkin LJ said that in the case of a wholly successful defendant, the court must award the defendant costs unless there is evidence that the defendant "has done something connected with the institutional conduct of the suit calculated to occasion and necessary litigation and expense". It should be noted that this view is more restrictive than that stated by Gaudron and Gummow JJ above, but the remarks of Atkin LJ illustrate the general attitude that the common law has taken towards the claim by a successful party to its costs where there has been some disentitling conduct. Moreover, the court is not confined to considering the party's conduct in the actual litigation itself, but can take into consideration matters which led up to and were the occasion of litigation: Bostock v Ramsay Urban Council [1900] 2 OB 616. 25 In Read v Chown (1929) 46 WN(NSW) 154, Harvey CJ in Equity made the following observations: "the primary duty of solicitors is of course to their clients, and it is the duty of solicitors to give their clients such advice as well reduce the costs which will be incurred by the fund which belongs to their client. Human nature is human nature. Of course, solicitors have to live, and it is not unnatural that they should look to the chance of appearing a summons of this sort for the purpose of making legitimate fees from it, but I wish to point out to solicitors that it is their duty under such circumstances, when they find themselves served with proceedings in which there are other persons in exactly the same interest, but they should attempt to reduce the costs and make some arrangement between themselves as to which firms should take the necessary proceedings, and in my judgment the taxing officer would be quite justified in allowing that firm of solicitors which ultimately appears in the proceedings, as a proper disbursement, any charges which some or one of his clients has incurred to the solicitor who drops out for investigating the proceedings and seeing how the position stood, and then coming to an arrangement with the solicitor who ultimately appeared for all parties". 26 The claimant submits that his Honour's remarks apply also to the retaining of counsel. They are directly in point in this case, because at an early stage of proceedings there should have been arrangement between the parties to be jointly represented, especially in view of the resolution not to defend. See also Statham v Shephard (No.2) (1974) 23 FLR 244, where Woodward J considered a number of decisions in which more than one set of costs had been disallowed where defendants have identical interests and said, at 246-247: "the principle which I deduce from these authorities, and which I believe I should follow in spite of the two cases earlier cited, is that the court will not normally allow two sets of costs to defendants were there is no possible conflict of interest between them In the presentation of their cases." 27 His Honour added that there could be circumstances in which although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining an arm's length. His Honour went on to add that even if the co-defendants were acting reasonably, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time. 28 The remarks of Woodward J are significant to the present case because it may be suggested that the cross-defendant was entitled be separately represented because it was entitled to protect its own interests by doing everything it could to defeat the claim of the plaintiff, even if there was no issue between it and the defendant. But that is the very extravagance of which Woodward J disapproved. Two defendants who have not cross-claimed against each other both have an interest in defeating the claim of the plaintiff. But they will not generally be entitled to separate orders for costs merely on that account. And that in fact was the situation in the present case. Although the two opponents were defendant and cross-defendant, in reality there was no issue between them and the only function performed at the trial by the legal representatives of the second opponent was to join in the attack on the plaintiffs case. The second opponent was quite entitled to do that; but it should not be entitled to a separate order for costs. 29 These principles find reflection and a number of other cases; for example, Richard Brady Franks Ltd v Price (1937) 58 CLR 112 at 136; Ex parte McCay, re Consolidated Press, Ex parte Baume, re Consolidated Press (1936) 36 SR(NSW) 592 at 595 per or (sic) Jordan CJ; Downes v Civil Aviation Authority and Ors (1992) 57 SASR 303 at 307; Jamal v Secretary, Department of Health (1988) 14 NSWLR 252 at 272 per Mahoney JA. 26 At the hearing of this application, Mr. Hughes QC for Mrs. Furber submitted that Article 78 of the Canine Council's constitution did not support the primary judge's order, for a number of reasons, including the circumstance that it was not pleaded or relied on at the hearing. Accordingly, the primary judge was in error to the extent that he relied on it. 27 Mr. Hughes submitted that the primary judge erred in principle in awarding two sets of costs, where the only role played by the Canine Council at the trial was to support defences raised by Mr. Stacey, and where it did nothing to negate Mr. Stacey's entitlement to indemnity from it and indeed consented to the dismissal of the cross-claim. The primary judge correctly found that there was never any real dispute between Mr. Stacey and the Canine Coundil, and then erred in principle by dismissing this consideration by the words "for what it is worth". He erroneously gave weight to the theoretical possibility of a conflict which never eventuated, and was always too remote to justify burdening Mrs. Furber with the costs of the Canine Council. This error of principle was compounded by his attaching importance on Mrs. Furber's abstaining from suing the Canine Council herself, this being an irrelevant consideration. 28 Mr. Gray SC for the Canine Council submitted that this was not a case for the grant of leave in a matter of practice and procedure. The primary judge's decision was not clearly wrong, but indeed was an exercise of discretion entirely open to him. 29 He further submitted that although in hindsight no significant conflict emerged, there was a potential for conflict on the issue of malice alleged against Mr. Stacey; and it was reasonable for each party to be separately represented. PRINCIPLES 30 The prima facie principle to be applied in relation to cross-claims, as in relation to other matters, is that costs follow the event. Accordingly, the prima facie position in the event that a plaintiff's claim against a defendant fails, and this defendant's cross-claim against a cross-defendant fails, is that the plaintiff pay the defendant's costs of the plaintiff's claim, and the defendant pays the cross-defendant's costs of the cross-claim: Leaver v. Golsby [1964-5] NSWR 1833, Johnson v. Ribbins [1977] I WLR 1548, Gladstone Park Shopping Centre Pty. Ltd. v. Wills (1984) 6 FCR 496, 59 ALR 109, Gold Coast Bakeries (Qld.) Pty. Ltd. v. Heat Control Pty. Ltd. [1992] 1 QdR 162. This prima facie principle is expressed in the District Court Rules Part 39A rule 9 and Part 21 rule 8. 31 However, this principle is subject to the ability of the Court, referred to in those rules, to make such orders as it appears to the Court should be made, as the justice of the case may require. In relation to third party proceedings, particularly as regards a possible liability of a plaintiff for a cross-defendant's costs, it may be appropriate to make further or other orders. There is a useful discussion of this matter by King CJ in Lombard Insurance Co. (Australia) Ltd. v. Pastro (1994) 175 LSJS 448, as follows: As the discretion to award costs, like other judicial discretions, must be exercised judicially, the courts have developed principles for the guidance of judges in exercising the discretion. The basic guiding principle is that costs ordinarily follow the event. The application of that principle to unsuccessful third party proceedings presents difficulties as the diverse outcomes of the decided cases indicate. There is no great difficulty where a third party claim by a defendant is unsuccessful because the defendant has failed to establish its right to recover from the third party the amount which it is required to pay to the plaintiff, or the amount which it would have been required to pay if the plaintiff's claim had been successful. In such cases the defendant is ordinarily required to pay the costs of the third party and cannot recoup them from the plaintiff. Where, however, the third party claim fails solely because the plaintiff has failed in its claim against the defendant, the position is more complex. The principle that costs follow the event dictates that ordinarily the defendant is liable for the costs of the successful third party. It does not assist, however, in my opinion, to resolve the question whether the defendant is to be allowed to recoup those costs from the plaintiff. The third party claim has not been an issue between the plaintiff and the defendant and there has therefore been no "event" in relation to it as between the plaintiff and defendant. Other guiding principles must be sought. It is helpful to recall the objects of the third party procedure established by the Rules. They were stated in Barclays Bank v Tom [1923] 1 KB 221 at 224 as follows: "The object of the third party procedure is then in the first place to get the third party bound by the decision between the plaintiff and the defendant. In the next place it is directed to getting the question between the defendant and the third party decided as soon as possible after the decision between the plaintiff and the defendant, so that the defendant may not be in the position of having to wait a considerable time before he establishes his right of indemnity against the third party while all the time the plaintiff is enforcing his judgment against the defendant. And thirdly, it is directed to saving the extra expense which would be involved by two independent actions. With these objects in view the third party order usually provides that the third party may appear at the trial between the plaintiff and the defendant." It is the policy of the Court to avoid multiplicity of proceedings (s27 Supreme Court Act 1935) and third party proceedings are conclusive to the avoidance of multiplicity. In many cases, the nature of the plaintiff's claim or the allegations in support of it make it reasonable, even necessary, for the defendant to bring in the third party. The plaintiff's case, if established, would be the foundation of a successful claim against the third party. It is essential, in such circumstances, for the defendant to have the third party bound by findings in favour of the plaintiff. If it is not so bound, the defendant might be unable, perhaps due to non co-operation of the plaintiffs in the first proceedings, to establish the plaintiff's allegations in subsequent proceedings against the third party. The defendant might be left in the position of being found liable to the plaintiff, but of being unable, in subsequent proceedings, to recover from the third party, notwithstanding that the foundation of the defendant's liability to the plaintiff would also establish the third party's liability to the defendant. Such a prospect makes it entirely reasonable, even necessary, for the defendant to institute third party proceedings. The defendant, in such cases, is virtually forced by the plaintiff's allegations, in order to protect itself, to bring in the third party If in the circumstances postulated, the plaintiff fails to sustain its allegations, in consequence of which the third party claim is dismissed with costs, the defendant has incurred the costs of the third party claim by reason of the unfounded allegations of the plaintiff. It seems to be fair and just, in those circumstances, that the plaintiff should be required to indemnify the defendant in respect of those costs. I think that a guiding principle for the exercise of the discretion in such cases may be formulated as follows. Where the nature of the plaintiff's claim, or allegations in support thereof, render it reasonable, having regard to the purposes of third party procedure, to bring in the third party, and the third party claim is unsuccessful solely by reason of the failure of the plaintiff to sustain its claim or the relevant allegations, the defendant should ordinarily recover from the plaintiff the costs of the third party claim including those which the defendant is ordered to pay to the third party. The emphasis is on the word "ordinarily". The discretion is unfettered and a variety of factors may properly enter into the exercise of it. This appears to be the principle which underlies a number of the decisions in which the defendant has been awarded such costs; Edginton v Clark [1964] 1 QB 367; Thomas v The Times Book Co Ltd [1966] 2 All ER 241; Cattan Ltd v Michaelides and Co [1958] 2 All ER 125; Henry v AGC Ltd [1985] WAR 137. 32 It is to be noted that the principle formulated in the second-last paragraph of this discussion by King CJ is said to be "a" guiding principle, not "the" guiding principle; and in my opinion, it may be stating it too highly to say that the result indicated there is the one that "ordinarily" should follow. Certainly, in my opinion the "guiding principle" stated by King CJ needs to be qualified to the extent suggested by Finn J in GEC Marconi Systems Pty. Ltd. v. BHP Information Technology Pty. Ltd. [2003] FCA 688, 201 ALR 55, where, having referred to King CJ's reference to the need for other guiding principles, Finn J continued at [72]-[75]: 72 Accepting that the ultimate question is whether in the circumstances the costs of the successful third party "ought fairly to be borne" by the unsuccessful applicant: Johnson v Ribbins [1977] 1 WLR 1458 at 1464; a variety of factors has been relied upon as being indicative of whether or not such is the case. Care, though, needs to be taken with several of these in that they are capable of misleading. 73 A common consideration in the cases is whether it was "reasonable" or "appropriate" for a respondent to make the third party claim: cf Victoria University of Technology v Tulleth and Tokyo (Victoria) Ltd (unreported, SC of Vic, Beach J, 29 August 1994); Lombard Insurance Co (Australia) Ltd v Pastro (above) per Bollen J. The care that needs to be taken with this is that, while the making of the third party claim may have been justifiable, it may nonetheless be quite inappropriate to pass on the costs of a successful third party to the original applicant. As was observed by Tadgell J in Australian Guarantee Corporation Ltd v De Jager [1994] VR 483 at 500, "[i]t cannot be the inevitable rule that every successful plaintiff will be required to bear the costs of any third party the defendant sees fit to join". A common instance of where the third party costs will not be passed on is where the third party claim raised "private issues" and the third party was not necessarily joined because of the applicant's claim: eg Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162 at 175; see also Paron v Fry (No 2) [1990] 1 Qd R 550. 74 A distinct consideration has been whether the applicant's claim was the catalyst for the third party claim. In Thomas v Times Book Co Ltd [1966] 1 WLR 911 at 920, Plowman J considered that the plaintiff's claim rendered the third party proceedings "inevitable": see also Fertinova Australia Pty Ltd v Samardzija (unreported, SC of Qld, MacKenzie J, 10 July 1995). The caution to be sounded with this consideration is that causation alone without regard to the nature of the cross-claim itself seems hardly sufficient to justify a pass on order. 75 The third, and perhaps the most significant, consideration is the relationship of the nature of the original application to that of the cross-claim being brought. This nexus has been expressed in various ways: for example, does the nature of an applicant's claim, or do allegations in support of it render it reasonable for the respondent to make in turn the cross-claim that it does: cf the Lombard Insurance Co (Australia) Ltd case, per King CJ; or does the third party claim raise issues private to the parties to it: Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd (above). Illustrative of the significance of this consideration are the observations made about "string of contracts cases" in L E Cattan Ltd v A Michaelides & Co [1958] 2 All ER 125 at 128: "In the ordinary way, however, where damages are claimed for breach of contract on one contract in a string of contracts, and the seller brings in his immediate seller as a third party, and the third party brings in his immediate seller as a fourth party, then, provided that the contracts are the same or substantially the same so that the issue whether the goods comply with a description is the same, the defendant (in this case it was the plaintiffs, because it was a counterclaim), if successful, should recover against the plaintiffs not only his costs but any costs of the third party which he has been ordered to pay: the third party in like manner should recover from the defendant his own costs and any costs of the fourth party which he has been compelled to pay, and so on down the string. That is the normal way in which costs should be dealt with in this kind of action where there is a string of contracts in substantially the same terms." See also Henry v Australian Guarantee Corporation Ltd [1985] WAR 137. 33 I would also add that a cross-defendant may be left to bear some or all of its own costs, for example if it chooses to contest the plaintiff's claim where it would have been reasonable to leave this entirely to the defendant (In Re Salmon (1889) 42 Ch.D. 351) or incurs costs only on issues raised against the defendant which it loses (Gold Coast Bakeries). There may also be cases in which the considerations discussed by Woodward J in Statham v. Shephard (No.2) (1974) 23 FLR 244 at 246-7 (see pars.[26] and [27] of the written submissions for Mrs. Furber set out above) apply in relation to a defendant and cross-defendant, as well as to multiple defendants. 34 In my opinion, the approach of King CJ and of Finn J, so understood, is to be preferred to that suggested in Leaver v. Golsby [1964-5] NSWR 1833 and Allman v. Daly No.2 [1959] VR 614, referred to by Basten JA. In particular, I respectfully disagree with the view expressed by Moffit J that a defendant must be presumed to know his liability to the plaintiff and must bear the costs involved in making a claim for contribution which was, in the event, unnecessary. In my opinion, the reasonableness of a defendant's conduct, at the time, is of more importance in determining issues concerning an unsuccessful plaintiff's liability for its costs, than the circumstance that the plaintiff's claim has, in the event, failed. DECISION 35 I would first say that, particularly in the light of the later minutes introduced by the Canine Council, the Board minute of August 2001 was not given effect to as precluding the Canine Council defending the cross-claim on any basis available to it so as to deny Mrs. Furber success against Mr. Stacey, or so as to deny that it was a tortfeasor who would if sued have been liable in terms of s.5 of the Law Reform (Miscellaneous Provisions) Act 1946. Further, in circumstances where the only claim brought against the Canine Council in the cross-claim was under that provision, even in an undefended cross-claim a court would have to be satisfied, on the balance of probabilities, that the Canine Council was a tortfeasor who would if sued have been liable, and if so would have to determine whether in the circumstances there should be indemnity or contribution, and if contribution, in what amount. 36 In those circumstances, I accept Mr. Gray's submission that there was, at least theoretically, an issue in the case between Mr. Stacey and the Canine Council which could have given rise to an actual conflict of interests. If Mrs. Furber had established malice against Mr. Stacey so as to defeat his defence of qualified privilege, and if Mr. Stacey's other defences had failed, there would have been an issue as to whether, through vicarious liability for Mr. Stacey's conduct, the Canine Council was a tortfeasor that would if sued have been liable; and if so, whether its authorship through other agents of the defamatory material meant that it should indemnify Mr. Stacey or contribute, and if it was to contribute, in what amount. One substantial matter to be considered in this application is whether that possible conflict of interests was such as to justify the separate representation and the fixing of Mrs. Furber with liability for the Canine Council's costs. 37 Next, in my opinion there are errors of principle by the primary judge such as to make it appropriate, in considering whether leave to appeal be granted, to consider the merits of the case, particularly having regard to the substantial amount involved. 38 Those errors of principle are as follows. 39 Firstly, in various places, he approached the matter as if there were proceedings on foot between Mrs. Furber and the Canine Council, so as to engage the primary facie position as to costs as between those parties: this appears from the words quoted from towards the end of the main judgment, from the circumstance that the primary judge made no reference to the prima facie position, arising from his decision of the case, that Mrs. Furber pay Mr. Stacey's costs and Mr. Stacey pay the Canine Council's costs, and from the absence of any consideration of circumstances required to displace or supplement that prima facie position. 40 Secondly, he was in error in treating it as unreasonable for Mrs. Furber to sue Mr. Stacey alone, and treating that unreasonableness as supporting an order for costs against her; and in treating that as sufficient to justify the order made, in combination with what he saw as the reasonableness of Mr. Stacey joining the Canine Council, together with a mere possibility of a conflict of interest. 41 Thirdly, associated with the second error, there is the failure to squarely address the question whether, given the prima facie principle that costs follow the event, the mere possibility of a conflict made it reasonable to place on Mrs. Furber the burden of all the costs prima facie payable by Mr. Stacey. 42 It is therefore appropriate to consider the merits of the case. 43 I start from the prima facie position that costs follow the event, which in this case would mean that Mrs. Furber pays Mr. Stacey's costs of her claim against him, and Mr. Stacey pays the Canine Council's costs of the cross-claim. 44 Next, in my opinion it was plainly reasonable for Mr. Stacey to bring the cross-claim against the Canine Council, particularly in circumstances where he was not the author of the material which was the subject of Mrs. Furber's claim. That material had been drafted and vetted, for the purposes of defamation considerations, by solicitors acting on the instructions of the Canine Council. It was accordingly reasonable, indeed virtually inevitable, that Mr. Stacey would seek indemnity or at least contribution from a party responsible for the authorship and legal approval of the article, where his role in the publication was merely to put his name to the article and to authorise its publication under his name. 45 In my opinion also, the issues raised as between Mr. Stacey and the Canine Council cannot in any sense be considered "private" as between Mr. Stacey and the Canine Council, as that idea is used in the qualification discussed by Finn J and the cases to which he refers. It is not merely the case that the Canine Council was as much a tortfeasor as Mr. Stacey, unless the plaintiff succeeded solely on the basis of proving malice in Mr. Stacey. In addition to this is the circumstance referred to above, that it was the Canine Council and not Mr. Stacey that was responsible for the authorship and vetting of the article, and that this was a matter that Mrs. Furber knew or at least was in a position to know. Mrs. Furber was present at a Board meeting which resolved to instruct the Canine Council's solicitors to draft the relevant article. 46 I respectfully disagree with the view expressed by Basten JA that the Canine Council's defence to the cross-claim, insofar as it raised defences to Mrs. Furber's claim, did not raise any issue as between the Canine Council and Mr. Stacey. Mr. Stacey could only succeed against the Canine Council if it were shown that both of them were tortfeasors; and although Mr. Stacey was maintaining, as against Mrs. Furber, that he was not a tortfeasor, success on his cross-claim depended upon the opposite being shown and, in addition, upon the Canine Council also being shown to be a tortfeasor. The costs of the Canine Council in resisting an allegation that both it and Mr. Stacey were tortfeasors were, in my opinion, plainly costs of defending the cross-claim. There is a separate question as to whether, because of the practical coincidence of interests in defeating Mrs. Furber's claim against Mr. Stacey, there should have been co-operation so as to minimise costs. 47 A further consideration is that because Mrs. Furber had not joined both Mr. Stacey and the Canine Council as defendants, there was not the prima facie coincidence of interests that exists between defendants who are jointly sued, so that the considerations discussed in Statham v. Shephard do not arise directly, and are of less force. Because Mr. Stacey had to bring the Canine Council into the proceedings by way of a cross-claim, he was put into an adversarial position as regards the Canine Council, and therefore at least prima facie in a position of a conflict of interests with them. Furthermore, the structure of the proceedings meant that any judgment obtained by Mrs. Furber would be only against Mr. Stacey, and not against the Canine Council, throwing into stark relief the question whether the Canine Council should voluntarily make itself liable for the amount of such a judgment: this would be a question that would need to be addressed by the Board of the Canine Council, having regard to its duty to the Council. Furthermore, from Mr. Stacey's point of view, any abandonment by him of the conduct of the defence would need to be supported by some assurance that the Canine Council, if it conducted the defence of the proceedings, would protect his interests in circumstances where the Canine Council's interests were not themselves under threat from Mrs. Furber. Thus, although I do not think Mrs. Stacey should be penalised for being "unreasonable" in choosing to sue Mr. Stacey alone, the fact that she did so, and its consequences, were relevant to the costs decision. 48 The main submission on behalf of Mrs. Furber was to the effect that any theoretical conflict of interests was of no practical significance, because there never was any real possibility that this theoretical potential conflict would develop into an actual conflict. 49 However, in assessing this submission it is to be kept in mind that Mrs. Furber did allege malice against Mr. Stacey, and maintained that allegation right up to closing submissions in the case. From her point of view, therefore, that was an allegation that had a chance of success. As it turned out, all but one of the defences other than qualified privilege succeeded, so in the result it would not have assisted Mrs. Furber even if she had established malice. But nevertheless, having regard to the possibility that the other defences might fail, and having regard to the strength of the contention that the publication was on an occasion of qualified privilege, it could reasonably have been thought that the allegation of malice gave Mrs. Furber her best chance of success in the proceedings. 50 Had the proceedings succeeded on that basis, that would be the precise circumstance which would cause the theoretical potential conflict to become an actual conflict, in the ways referred to earlier: that is, it would squarely raise the question whether the Canine Council would be liable as a joint tortfeasor by reason of vicarious liability based on Mr. Stacey's malice, and it would squarely raise the question of the appropriate apportionment of any contribution, having regard to the competing considerations of the malice of Mr. Stacey and the authorship and vetting of the article by the Canine Council. 51 In effect, the submission now made for Mrs. Furber is that Mr. Stacey and the Canine Council should have appreciated that Mrs. Furber's claim of malice had no chance of success, even though Mrs. Furber never appreciated this and indeed pressed this claim to the end of the case; whereas the Canine Council's submission is to the effect that it was reasonable for it not to have appreciated this at any time before the conclusion of the cross-examination of Mr. Stacey. In my opinion, it is not shown to have been unreasonable for the Canine Council to have regarded the question of malice as a significant issue, at least until that time. (Because Mr. Stacey and the Canine Council were on opposing sides of the cross-claim, I think there was an evidentiary onus on Mrs. Furber to negative any conflict of interests; whereas if they had been joined as defendants, they would have had an evidentiary onus to establish a conflict of interests.) 52 Mr. Hughes submitted to the effect that, even though Article 78 was not referred to in the pleadings, it did in fact assure Mr. Stacey of a complete indemnity, irrespective of the result of the proceedings. He submitted that although Article 78(b) gave an indemnity only in the event of a judgment being in favour of the officer in question, Article 78(a) applied whatever the result of the proceedings. Article 78(a) is as follows: 78(a) To the extent permitted by law, RNSWCC indemnifies every officer and employee of RNSWCC and every member of any committee constituted under these Articles against any liability incurred by that person: (a) in his or her capacity as officer or employee or committee member of RNSWCC; and (b) to a person other than RNSWCC or a related body corporation of RNSWCC, unless the liability arises out of conduct on the part of the officer, employee or committee member that involves a lack of good faith. 53 Mr. Hughes submitted that, even if Mrs. Furber proved malice, that would not mean that Mr. Stacey's conduct involved a lack of good faith, because that expression referred to a lack of good faith towards the Canine Council, and that would not be involved in malice against Mrs. Furber. The absolute identity of interests guaranteed by this article was, Mr. Hughes submitted, confirmed by the conduct of the case, and in particular by the Canine Council's consent to dismissal of the cross-claim. 54 In my opinion, if Mrs. Furber established malice against Mr. Stacey, to the effect that he used the opportunity to publish material defamatory of her in circumstances of qualified privilege in order to damage her, because of malice towards her, it would be strongly arguable that this would involve a lack of good faith within Article 78(a). In my opinion, even if one accepts that "lack of good faith" in that article is restricted to a lack of good faith towards the Canine Council, for an officer to use his or her position in the Canine Council to harm another out of malice could well involve a lack of good faith towards the Canine Council. 55 I respectfully disagree with the view expressed by Basten JA that Mr. Stacey's failure to plead Article 78(a) disposes of any conflict of interest at a legal level: indeed, as Basten JA points out, that failure may have precluded Mr. Stacey from relying on it later, had an issue arisen. However, on a practical level, Mr. Stacey's failure to plead it could suggest that he was confident that he would be indemnified. However, I would not infer that either Mr. Stacey or the Canine Council believed there was no realistic possibility of a conflict of interests. 56 In my opinion also, the consent to dismissal of the cross-claim is of itself not significant. That occurred only after the primary judge had determined that Mrs. Furber's claim failed against Mr. Stacey, and this made dismissal of the cross-claim inevitable. However, the circumstance that the consent was to dismissal without any order for costs is another factor supporting practical coincidence of interests, in the circumstances that actually occurred. 57 Thus, in my opinion, the question of the appropriate costs order should be approached having regard particularly to the following considerations: (1) It was reasonable for Mr. Stacey to bring and maintain a cross-claim against the Canine Council. (2) This claim did not raise issues private as between Mr. Stacey and the Canine Council. (3) It was reasonable for both Mr. Stacey and the Canine Council to maintain separate representation. (4) The contesting by the Canine Council of Mrs. Furber's claims was an essential part of its defence to Mr. Stacey's cross-claim 58 However, it was foreseeable that, as actually occurred, the theoretical conflict of interests that justified the maintenance of separate representation might not become an actual conflict, and also that even if it did, there would be an actual coincidence of interests in respect of most of the issues in the case. In those circumstances, in my opinion, the Canine Council should have sought to avoid unnecessary costs by co-operating so far as possible with Mr. Stacey so as to avoid duplication of effort and costs in contesting Mrs. Furber's claim. In my opinion, it did not do this: this is made clear, for example, by the circumstance that the Canine Council was represented by senior and junior counsel throughout a 17-day hearing, at which in the event it contested only the same issues as were contested by Mr. Stacey, who was himself represented by counsel. 59 Had the Canine Council sought costs against Mr. Stacey, prima facie, it would have been entitled to the costs of the cross-claim, subject to the effect of Article 78 (see Johnson v. Ribbins [1977] 1 WLR 1548); but in my opinion, although it was part of its defence to the cross-claim to contest Mrs. Furber's claim, it would not have been entitled to costs against Mr. Stacey insofar as its costs of contesting Mrs. Furber's claim went beyond what was reasonable, having regard to this practical coincidence of interests. Similarly, although I accept that where the Canine Council did not seek an order against Mr. Stacey, it was open to make an order against Mrs. Furber to pay the Canine Council's costs (see Dal Pont Law of Costs Butterworths 2003), I do not think Mrs. Furber should be required to pay its costs beyond what was reasonable in that respect. 60 It is very difficult to quantify the appropriate amount. I think it is correct to infer that the Canine Council incurred costs, including those of senior and junior council, for a 17-day hearing, without a significant attempt to avoid duplication of effort. If there had been a strategy in place to avoid duplication of effort and costs, the Court may well have accepted that strategy as reasonable and therefore awarded full costs. In the absence of such a strategy, the Court is left to do its best. On that basis, I think it appropriate to award the Canine Council one-quarter of its costs of the cross-claim. 61 In my opinion, in a case such as this where there is a practical coincidence of interests between a defendant and a cross-claimant, a cross-claimant wishing to have all its costs paid by the plaintiff should be able to show that it did follow a reasonable strategy with a view to ensuring that there was a minimum of duplication of effort and costs. CONCLUSION 62 Accordingly, I propose the following orders: 1. Leave to appeal granted, Notice of Appeal to be filed within 7 days. 2. Appeal allowed to the extent of substituting, for the costs orders made by the primary judge (except that relating to reserved costs) the following order: Mrs. Furber to pay Mr. Stacey's costs of the proceedings and one-quarter of the Canine Council's costs of the cross-claim, these costs in both cases to include the costs of the costs argument before the primary judge and to be on an indemnity basis from 10 November 2003. 3. Appeal otherwise dismissed. 4. The Canine Council to pay Mrs. Furber's costs of the application and appeal, and to have a certificate under the Suitors' Fund Act if otherwise eligible. 63 BASTEN JA: In the District Court, the present Claimant brought proceedings in defamation against the First Opponent in this Court, Mr W. Stacey. The First Opponent was an officer of the Second Opponent, the Royal New South Wales Canine Council. The First Opponent brought proceedings against the Second Opponent, by way of cross-claim, seeking from it an indemnity or contribution in relation to any amount of damages which he might be ordered to pay to the Claimant. The Claimant was unsuccessful and her claim against the First Opponent was dismissed with costs. That result rendered the cross-claim unnecessary and it too was dismissed, with the consent of the First Opponent and the Second Opponent. No order was made as to costs of the cross-claim. The issue in this Court is whether the trial judge erred in ordering the Claimant to pay the costs of the Second Opponent. 64 While I agree with both Hodgson JA and Einstein J that assistance may be derived from the judgment of King CJ in Lombard Insurance Co (Australia) Ltd v Pastro, supra at [24], and the comments by Finn J in GEC Marconi (supra at [25]), the primary source of guidance in determining this issue must be the statutory regime applicable in the District Court with respect to costs. Principles derived from cases dealing with different statutory provisions, or which do not appear to have any statutory underpinning, can only be given effect subject to the relevant statutory regime. Little (if any) attention appears to have been paid to the governing statutory regime at trial. The judgment of the trial judge in relation to costs does not refer to the relevant statutory provisions. For this reason, and because the reasons of the trial judge demonstrate error in the ways identified by Einstein J, the judgment of the District Court with respect to costs must be set aside 65 For the reasons set out below I agree that the appeal should be allowed: I would substitute orders which differ in some degree from those proposed by Hodgson JA. However, before outlining those reasons, it is necessary to note a difficulty in identifying precisely the orders made, in relation to costs, by the District Court. Orders made 66 Pursuant to s.127(2)(b) of the District Court Act 1973 (NSW), the Claimant requires leave to appeal from an order as to costs. In common with most statutory rights of appeal, the right is given in relation to a "judgment or order". Unfortunately, the papers in this matter do not contain a copy of the order made by the trial judge. As a result, the Court is left to divine the terms of the order from the reasons for judgment. That is unfortunate because it is commonplace for the terms of an order not to reflect precisely the language adopted in the reasons. Nor is the point a mere technicality in this case. At the end of lengthy reasons on the question of liability, the trial judge concluded: "Subject to any further remarks that I might wish to make upon reading the draft of these remarks there will be a verdict and judgment in favour of the First Opponent against the plaintiff and a verdict and judgment in favour of the cross-defendant against the plaintiff. The form of that second verdict might require some brief discussion with the parties and I can deal with that at the same time as I deal with the question of costs. I initially express the view that the plaintiff will pay the costs of the defendant and the cross-defendant subject to whatever arguments to the contrary are put." 67 The principal judgment was delivered on 1 June 2004: the matter came back before the trial judge on 22 June 2004 when his Honour gave a further judgment as to costs. It does not appear that anything was said on the latter occasion as to the form of orders in relation to the dismissal of the claim. At the end of this second judgment, the trial judge stated: "There will be verdict and judgment for the defendant against the plaintiff. I think I had already indicated that. The cross-claim will be dismissed and the plaintiff is to pay the costs of the defendant and the cross-defendant. Those costs are to be paid on an indemnity basis from 10 November 2003." 68 The purpose of a costs order is to provide at least a partial indemnity in relation to the legal costs reasonably incurred by a successful party in civil litigation. Where the plaintiff sues a defendant who acts reasonably in joining a possible joint tortfeasor, from whom contribution can appropriately be sought, the costs to which the defendant is entitled, if successful, from the plaintiff may include costs which he or she is required to pay to the Second Opponent. In the present case, the First Opponent had no such liability: accordingly, an order that the Claimant pay his costs would not result in the Claimant meeting any part of the costs of the Second Opponent. The question is whether the Claimant can and should have been required to pay directly the legal costs of the Second Opponent. The Claimant did not join it as a second defendant in the proceedings, either before or after the filing of the cross-claim. Accordingly, the Claimant made no claim against the Second Opponent and could not have obtained a judgment against it in the proceedings as constituted. The trial judge noted this fact on a number of occasions and expressed surprise at the strategy adopted by the Claimant. Subject to one question dealt with below, the reason why the Claimant adopted that course is not material for present purposes. However, it is relevant to note that the Second Opponent likewise could not have obtained a judgment against the Claimant and, to the extent that the trial judge suggested otherwise in his judgment on liability, that suggestion was wrong. The suggestion was not repeated in the second judgment and it may well be that no such order was made. Statutory provisions 69 The power of the District Court to award costs in its civil jurisdiction is contained in s.148B of the District Court Act. " 148B Costs to be in the discretion of the Court (1) Subject to this Act and the rules and subject to any other Act: (a) costs in or in relation to any proceedings shall be in the discretion of the Court, (b) the Court has full power to determine by whom, to whom and to what extent costs are to be paid in or in relation to any proceedings …" 70 Until 30 June 1994 the District Court Rules, 1973 made provision in relation to costs in Part 39. Rule 1A provided as follows: "1A. Subject to the rules, the costs of any action, including the costs of any proceedings ancillary to the action, shall, except where otherwise ordered by the Court, follow the event of the action." The opening words of this rule drew attention to the possibility of other specific rules having a different effect. The current statement of the general principle is found in Part 39A, rule 9, which reads as follows: "9. If the Court makes an order as to costs, the Court shall, subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs." Although the express provision for a contrary indication refers to other provisions "in this Part", that change appears to have resulted from adoption of uniform language with Part 52A, rule 11 of the Supreme Court Rules. The general rule must be read subject to a specific provision to other effect elsewhere in the Rules. 71 In relation to proceedings against a third party other provision is made in Part 21, r 8 of the District Court rules: "8(1) Where a third party has been joined in an action the Court – (a) may order any party to pay the costs incurred by any other party; (b) may order any party to pay any costs which would otherwise be payable by any other party; and (c) may make such other order as to costs as the justice of the case may require; (2) Costs in an action in which a third party has been joined shall, subject to any order or direction of the Court under sub-rule (1) – (a) follow, as between a party and another party joined by that party, the event of the issues between those parties; and … (c) be recoverable by a party against another party only to the extent of the costs of the issues between those parties, and not to the extent of any costs payable by the first mentioned party." Accordingly, where an order with respect to the costs of a third party is sought, it is necessary to consider the specific proceeding to which the order relates. 72 If the cross-claim involved a dispute between the First Opponent and the Second Opponent as to their respective liabilities, as, for example, pursuant to a contract of indemnity, a real question would arise as to whether the Claimant should properly bear any part of those costs. On the other hand, if the First Opponent and Second Opponent simply joined in resisting the claim by the Claimant, the question may be whether they acted reasonably in each incurring costs in the same interest, and whether the Claimant should properly be ordered to pay more than one set of costs. In this respect the operation of r 8(2) is important. Paragraph (a) identifies, consistently with principle, that as between a defendant and a third party, the costs shall follow the event of the issues between those parties. If the third party is successful, it should obtain its costs of the cross-claim from the defendant. Paragraph (b) covers a claim for costs by the defendant as against an unsuccessful plaintiff. It does not permit a claim by the defendant against the plaintiff "to the extent of any costs payable by the defendant (to the third party)". Accordingly, if there is no issue between the third party and the plaintiff, subject to a different order being made by the Court under sub-rule (1), the plaintiff is not liable to pay the costs of the third party, payable by the defendant. Subject to that presumption, it is convenient next to consider the principles established by the cases in relation to circumstances where a Court might order a different result from that identified by the rule. However, to the extent that those cases simply identify general principles, it will be important to maintain a clear focus on the primary effect of the District Court rules here in issue. General principles 73 A cross-claim made by a defendant against a third party is a separate proceeding from the claim made by the plaintiff against the defendant: see Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496, 499-500 (Jenkinson J). That fact would not preclude an order directing a plaintiff to pay the costs of the third party. The power conferred on the District Court is not limited to an order that the costs of proceedings be paid by another party to the proceedings: c.f. Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at [2], Gaudron J; [11], Gummow J; and [41], [62], Kirby J. Accordingly, the District Court has power to order a plaintiff to pay the costs of a cross-defendant, even though she brought no claim against the cross-defendants. 74 In Leaver v Golsby [1964-5] NSWR 1833, Moffitt J considered an application for costs by a third party against a plaintiff who had, on his own application, been non-suited at the beginning of a trial. The plaintiff had sued the defendant for damages caused by a collision between two aeroplanes, whilst on the ground. The defendant had joined the supplier of his plane as a third party, seeking an indemnity or contribution for breach of warranty causally connected to the collision. The plaintiff said that the issue between the defendant and the cross-defendant was of no interest to him. Whilst accepting that he had power to order the plaintiff to pay the costs of both other parties, and ordering that he should do so in the regard, his Honour noted that that was not the necessary result with respect to an unsuccessful plaintiff at trial. The rule to be applied appears to have been to similar effect to the present rule 8(2) In those circumstances Moffitt J stated (at 1836-7): "For example, the effect of r 17 is that, where a defendant has added a third party and a verdict has been found in favour of the defendant against the plaintiff, the prescribed form of the judgment signed provides that the defendant gets his costs against the plaintiff but has to pay and bear the third parties costs himself. This is logical, because, in the events which have occurred, it was unnecessary to join the third party. This cost rule proceeds on the principle that the defendant must be presumed to know his liability to the plaintiff and if he choose to join an unnecessary claim for contribution he must bear the cost of such an issue which, on the true view of the case, did not arise." 75 A similar approach was adopted in Allman v Daly (No. 2) [1959] VR 614 at 618-9, Pape J holding that it would be "contrary to principle" to hold that a third party should be ordered to pay the successful defendant's costs. His Honour continued: "There is in this action no issue between the plaintiff and the third party. It is true that in cases of indemnity, and perhaps in other cases as well, the interest of the third party is two-fold – his first interest is to resist the claim of the plaintiff, so that the situation will never arise in which the defendant can look to him for indemnity or contribution. To this end he may be permitted to take part in the trial and oppose the plaintiff's claim against the defendant … . His second interest arises only after the defendant's liability has been determined, and is one of no concern to the plaintiff. It is merely to establish that he is under no liability to indemnify the defendant, or to contribute to the amount of the judgment entered against him." 76 In Statham v Shephard (No. 2) (1974) 23 FLR 244 at 246-7, Woodward J, after noting that there have been a number of decisions in which only one set of costs was allowed, where defendants had identical interests, continued: "The principle which I deduce from these authorities, … is that the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. I would add to this basic proposition three provisos. In the first place, if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquires from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between the defendants … . Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, there relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation. Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time." These principles were the subject of debate in this Court. The Second Opponent argued that some caution should be attached to their application, as the general principle stated was restricted to the case where there was "no possible conflict", whereas at least the first proviso was in effect an extension of the principle to a case where a conflict was possible, but unlikely. The second proviso was a true qualification, in that it envisaged two sets of costs being ordered where the defendants acted reasonably in remaining at arm's length. The third proviso was really a qualification of the second. The Second Opponent's position was that the First Opponent had acted reasonably in joining it and that, had the Claimant succeeded, there would have been a conflict as to their respective liabilities between themselves. That fact justified each maintaining separate representation. 77 Clearly some further refinement of the principle stated above is required in the present case. First, the Claimant argues that it may be inappropriate to order her to pay the Second Opponent's costs, even if the general principle stated by Woodward J is not satisfied. In other words, the principle is not exhaustive of the cases where the same result may follow. A level of further refinement was developed by Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688 at [70]-[75]. His Honour noted at [72] that there may be a "variety of factors" requiring consideration and that care must be taken in identifying precisely how each operates in the particular circumstances. 78 Hodgson JA has set out at [24] a lengthy extract from the judgment of King CJ in Lombard Insurance. The following passage in that judgment accords generally with Part 21, r 8(2) of the District Court Rules: "The principle that costs follow the event dictates that ordinarily the defendant is liable for the costs of the successful third party. It does not assist, however, in my opinion, to resolve the question whether the defendant is allowed to recoup those costs from the plaintiff. The third party claim has not been an issue between the plaintiff and the defendant and there has therefore been no 'event' in relation to it as between the plaintiff and the defendant." His Honour then identified factors which might make it "entirely reasonable, even necessary" for the defendant to institute third party proceedings. King CJ then stated: "If in the circumstances postulated, the plaintiff fails to sustain its allegations, in consequence of which the third party claim is dismissed with costs, the defendant has incurred the costs of the third party claim by reason of the unfounded allegations of the plaintiff. It seems to be fair and just, in those circumstances, that the plaintiff should be required to indemnify the defendant in respect of those costs." That conclusion appears to have been reached without reference to any specific statutory provision. In the present case, the guiding principle must be derived from Part 21, r 8. That rule would permit such a result, but presents a different starting point, from which departure must be justified. 79 In addition, it is important to identify the costs which the defendant has incurred and which it can recover from the plaintiff, namely "the costs of the third party claim". It will be necessary to return below to the identification of those costs in the present case. Application of principles 80 The effect of the cross-claim instituted by the First Opponent is summarised by Hodgson JA at [8]. It was, as his Honour notes, a claim for indemnity or contribution pursuant to the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ("the 1946 Act"). His Honour also summarises the defence to the cross-claim filed on behalf of the Second Opponent. Three points should be made in relation to this material. 81 First, there is no evidence that the claim by the First Opponent based on the 1946 Act was effectively litigated in the District Court proceedings. In other words, the costs of that cross-claim will, for the most part, be limited to the preparation of the claim. 82 Secondly, as Hodgson JA notes, the defence to the cross-claim purported to raise defences similar to those of the First Opponent, in relation to the Claimant's claim. That was an attempt by the Second Opponent to answer a claim made by the Claimant against the First Opponent and not against it. Of course it is true that the First Opponent relied in paragraph 1 of his cross-claim on the Claimant's allegations made against him. But he did not assert that they were correct: he also pleaded his right to contest them. Not surprisingly, the Second Opponent in its defence to the cross-claim, expressly stated that it 'did not plead' to the matters raised in paragraph 1 of the cross-claim. The 'alternative' plea in response to the Claimant's statement of claim raised no issue as against the Second Opponent but rather demonstrated the commonality of their interests. If it wished to take over the defence of the primary claim, there were no doubt means available to it, arising from the fact that it had a contractual obligation to indemnify the First Opponent in relation to that claim. That, however, it did not do. That part of the so-called "defence to the cross-claim" as sought to join issue with the Claimant, was not in truth a defence to the cross-claim at all. Accordingly, in my view, the costs of the cross-claim did not include the costs incurred by the Second Opponent in helping the First Opponent to defend himself. 83 Thirdly, there is a question as to whether there ever was a real issue between the First and Second Opponents, given the fact of the contractual indemnity. The indemnity arose from the provisions of Article 78(a) of the Articles of Association of the Second Opponent. The article is set out by Hodgson JA at [45] above. In its terms, the indemnity would not have arisen if the First Opponent were not acting in his capacity as an officer or employee or committee member of the Second Opponent, or if his conduct involved a lack of good faith. The first exception had no relevance in the present case: the complaint about the failure of the Claimant to join the Opponent as a defendant in the proceedings was based on the evidence that the First Opponent was a mere mouthpiece for the Council, members of which had prepared the offending statement and the solicitor for which had approved it for publication. 84 In relation to the second exception, it is said that if the First Opponent had been found liable to the Claimant, it would have been in the interest of the Second Opponent to show that he was not acting in good faith and for the First Opponent to resist that allegation. There would, so it is said, then be a conflict of interest between the First and Second Opponents. However this theoretical conflict has nothing to do with this case for two separate reasons. First, as appears from the summary of the cross-claim and defence to the cross-claim, the terms of the indemnity were not put in issue, even by way of the cross-claim. If there were a dispute between the First and Second Opponents in relation to the indemnity, it would not have been open to the First Opponent to rely upon it in subsequent proceedings, his failure to plead in the existing proceedings falling squarely within the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. This disposes of any alleged conflict at a legal level. The second consideration operates at a practical level. 85 The other reason for disregarding the theoretical conflict of interest is that, to the extent that good faith arose at all, it did so tangentially, because the Claimant asserted malice on the part of the First Opponent, in order to resist a defence of publication in circumstances of qualified privilege. It was put on behalf of the Claimant in this Court that the exception to the indemnity only arose from a lack of good faith towards to the Second Opponent, a matter which was not demonstrated by proving malice as against the Claimant. Be that as it may, the fact is that the Opponents joined in resisting the allegation of malice. In other words, on the sole issue litigated which might have given rise to a conflict of interest between the Opponents, they joined forces. 86 In these circumstances I would draw two inferences: the first is that questions arising from reliance on the 1946 Act in the cross-claim were not litigated at trial. The second inference is that whatever theoretical conflict of interest may have existed between the First and Second Opponents, it had no bearing on the conduct of the trial, as between the Claimant and the Opponents and remained a private matter between the Opponents. 87 This conclusion is reinforced by the views expressed by the trial judge in relation to this matter. His Honour accepted that the First and Second Opponents enjoyed a common interest in resisting the Claimant's case. His Honour stated: "It is said in these submission[s], and I will turn to a couple of them in a minute, that there was never any real dispute between the defendant and the cross-defendant. That, for what it is worth, accords with my own perception, and indeed, at the end of this case, the cross-defendant made no submission other than [that] the defendant would be entitled to an indemnity if he were to be unsuccessful." His Honour continued, however, holding that there were issues, of which malice was one, "that required the cross-defendant to stand separately and apart from the defendant". For the reasons noted above, it is not clear why that factor justified an order that the Claimant bear the Second Opponent's costs of the trial. The Claimant alleged malice only against the First Opponent, who clearly had an interest in resisting that allegation, and did so successfully. The argument put before his Honour was summarised by him in the following terms: "There is no suggestion here by the plaintiff that the third party was inappropriately brought in. I think what the suggestion from the plaintiff is here, that once the third party was brought in, obviously appropriately, that there should have been some melding of forces between the defendant and the cross-defendant and some joining of forces and delineation of issues." In answering that proposition, his Honour was diverted to consider why the Claimant had not joined the Second Opponent herself. He continued: "If the cross-defendant had been a defendant in these proceedings, then it is certainly likely that some of the submissions put by the plaintiff would have considerable (sic) more force than otherwise might be case." With respect, it is difficult to see why the Claimant would have been better placed to resist an order for costs in favour of the Second Opponent if it had been joined by her as a defendant against whom she was unsuccessful. 88 In circumstances where his Honour had found that there was no real issue between the Second Opponent and the First Opponent, and gave no reason why the Claimant was not correct in suggesting, at least from her perspective, that a single joint defence could have been mounted to her claims against the First Opponent, it is inappropriate for her to be required to pay the costs of both the First Opponent and Second Opponent in resisting her claim against the First Opponent. 89 Consistently with Part 21, r 8, there would be sufficient reason to order the Claimant to pay the First Opponents costs in relation to the commencement of the cross-claim. To the extent that the First Opponent was liable for the Second Opponent's costs of filing a defence to the cross-claim, it would also be appropriate to order the Claimant to indemnify the First Opponent in relation to those costs. That is because it was not shown to be unreasonable for the First Opponent to seek an indemnity or contribution under the 1946 Act against the Second Opponent, although the existence of the contractual indemnity makes the form of the pleading curious. In order to avoid the institution of further and separate proceedings and in order to ensure that the Second Opponent was bound by any judgment adverse to the First Opponent obtained by the Claimant, the costs incurred by the First Opponent in joining the Second Opponent formed part of an appropriate and reasonable defence to the Claimant's proceeding. Conclusions 90 For reasons noted above, I am not persuaded that the steps taken by the Second Opponent in resisting the Claimant's allegations constituted part of the cross-claim proceeding. If the Second Opponent had accepted its obligation to indemnify the First Opponent, including as to the costs of the proceedings brought by the Claimant, but wished to have control of the defence, it should have reached some agreement with the First Opponent in that regard. It was neither reasonable nor appropriate to require the Claimant to pay the costs of the Second Opponent in resisting her claim, when she had brought no proceedings against it and sought no relief against it. 91 The reasons for judgment of the trial judge excepted from the general costs order the costs of an adjournment on 4 November 2003 and other interlocutory proceedings of 15 November 2002. Because, in accordance with the conclusions reached above, the Claimant is not required to pay the costs of the Second Opponent of any part of the trial, separate allowance needs to be made in relation to those costs, but only in relation to the First Opponent. 92 As noted at [59] and [60] above, the trial judge did not order that the First Opponent bear the Second Opponent's costs of the cross-claim. Accordingly, an order that the Claimant pay the First Opponent's costs of instituting the cross-claim would not result in the Claimant being liable for the costs of the Second Opponent in filing a defence to the cross-claim. Because the First Opponent did not appear in these proceedings, it is not appropriate that this Court make an order that he bear primary responsibility for the relevant costs of the cross-claim, the cross-claim apparently having been dismissed by consent without any order as to costs. That leaves the question as to whether it is appropriate in the circumstances for the Claimant to be ordered to bear direct responsibility to the Second Opponent for its costs in filing a defence to the cross-claim. There may be circumstances in which such a direct liability should be imposed: however, the relevant circumstance in the present case, namely the absence of the First Opponent from the proceedings, does not appear to me to be such a circumstance. 93 The order made by the trial judge required that the Claimant pay the costs incurred by the Opponents after 10 November 2003 on an indemnity basis. If the Second Opponent is not entitled to be paid its costs by the Claimant, the basis of calculation falls away. In relation to the First Opponent, the Claimant made no challenge either in relation to her liability to pay costs, or as to the basis on which costs should be assessed after 10 November 2003. The orders suggested below accordingly reflect that part of his Honour's order. 94 The orders I would proposed are as follows: (1) Grant leave to appeal and direct that the proposed notice of appeal be filed within 7 days. (2) Allow the appeal and set aside the orders of the primary judge in relation to the costs of the trial. (3) In place of the order made by the primary judge in relation to costs, order that: (a) the plaintiff pay the costs of the defendant in relation to the claim, other than the costs of the interlocutory proceedings on 15 November 2002 and on 4 November 2003, such costs to be assessed, as from 10 November 2003 on an indemnity basis; (b) the plaintiff pay the defendant's costs of the cross-claim against the cross-defendant; (c) the plaintiff pay the defendant's costs of the submissions and judgment of 22 June 2004 in relation to costs; (d) in relation to so much of the submissions and judgment as related to the costs of the cross-claim, each party shall bear its own costs; and (e) the cross-defendant bear its own costs of the proceedings. (4) The Second Opponent pay the Claimant's costs in this Court and have a certificate under the Suitor's Fund Act 1951 (NSW) if in other respects so entitled. 95 EINSTEIN J: The central issue for consideration on the application for leave to appeal concerns the principled exercise of the discretion to make orders with respect to costs conferred by section 148B (1) of the District Court Act 1973. That section provides as follows: "148B Costs to be in discretion of the Court (1) Subject to this Act and the rules and subject to any other Act: (a) costs in or in relation to any proceedings shall be in the discretion of the Court, (b) the Court has full power to determine by whom, to whom and to what extent costs are to be paid in or in relation to any proceedings, and (c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis." 96 Until 30 June 1994, the District Court Rules 1973 included Part 39 Rule 1A providing as follows: "Subject to the rules, the costs of any action, including the costs of the proceedings ancillary to the action, shall, except where otherwise ordered by the Court, follow the event of the action." 97 The current statement of the general principle in Part 39A, Rule 9 provides: "9. If the Court makes an order as to costs, the Court shall subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs." 98 As Basten JA has observed: "Although the express provision for a contrary indication refers to other provisions 'in this Part', that change appears to have resulted from adoption of uniform language with Part 52A, rule 11 of the Supreme Court Rules. The general rule must be read subject to a specific provision to other effect elsewhere in the Rules." 99 Part 21 Rule 8 of the District Court Rules provides: "8(1) Where a third party has been joined in an action the Court - (a) may order any party to pay the costs incurred by any other party; (b) may order any party to pay any costs which would otherwise be payable by any other party; and (c) may make such other order as to costs as the justice of the case may require; (2) Costs in an action in which a third party has been joined shall, subject to any order or direction of the Court under sub-rule (1) - (a) follow, as between a party and another party joined by that party, the event of the issues between those parties; and … (c) be recoverable by a party against another party only to the extent of the costs of the issues between those parties, and not to the extent of any costs payable by the first mentioned party." 100 The general background circumstances have been carefully outlined in the reasons for judgment given by Hodgson and Basten JJA. 101 It is appropriate to commence by considering the questions of principle. The width of the discretion 102 There is ample authority that provisions analogous to section 14B(1) confer a broad discretion to award costs which must however be exercised judicially in accordance with established principle in terms of factors directly connected with the litigation: Oshlack v Richmond River Council (1998) 193 CLR 72 per McHugh J (at [63], [65]; In re Elgindata Ltd [No. 2] [1992] 1 WLR 1207. The width of the Court's power under District Court Act section 148B (1) and Part 21 Rule 8 makes clear that these principles inform the exercise of that power. Nonetheless in exercising that power particular care requires to be paid to the rules [made pursuant to the statutory rule making power - cf District Court Act 1973 section 161]. 103 The most significant basal principle guiding the proper exercise of the costs discretion is the result of the litigation, a successful litigant being generally entitled to an award of costs in its favour [Oshlack supra per McHugh J (at [66]). 104 The catchment area of considerations appropriate to be taken into account in the principled exercise of the jurisdiction to order costs is wide indeed embracing a very close examination of the circumstances directly connected with (1) the bringing of the litigation and (2) the conduct of the litigation. 105 It is of course vital that close attention be paid in terms of the pleaded cases: · to which is the moving party in the principal proceedings ; · to the nature of the issues pursued by that moving party against one or more respondent parties; · to such interrelationship as is apparent between on the one hand, the causes of action and issues arising in the principal proceedings and on the other hand, the causes of action and issues arising in third party cross-claim proceedings. 106 Whilst plainly the decision in Oshlack v Richmond River Council sets the overarching parameters underpinning a principled approach to exercise of the costs discretion, the myriad of circumstances presenting themselves in the institution and conduct of litigation in which the discretion falls to be exercised will often require the closest of attention to the very particular special facts material to the exercise of that discretion. The present proceedings present a prime example of precisely that requirement. 107 This is not to suggest that the gradual development of principles to guide the proper exercise of the discretion is inappropriate. The point was made by Mason CJ in Latoudis v Casey (1990) 170 CLR 534 at 541: "[I]t does not follow that any attempt to formulate a principle or a guideline according to which the discretion should be exercised would constitute a fetter upon the discretion not intended by the legislature. Indeed, a refusal to formulate a principle or guideline can only lead to exercises of discretion which are seen to be inconsistent, a result which would not have been contemplated by the legislature with any degree of equanimity." Third Party claims 108 The issue presently before the Court concerns a third-party claim having failed solely by reason that the claim by the plaintiff against the principal defendant has failed. 109 The authorities dealing with this type of issue are sparse. 110 They include Lombard Insurance v Mara Pastro (1994) 175 LSJS 448 which dealt with an unsuccessful plaintiff, a principal defendant and a third-party defendant. Costs were awarded against the plaintiff in favour of the principal defendant, and against the principal defendant in favour of the third-party defendant. The trial judge had refused an order that the principal defendant recover against the plaintiff the costs that it was required to pay to the third-party defendant. 111 On appeal, King CJ of the Supreme Court of South Australia put the matter (at 449) as follows: "The general rule as to costs is that they are in the discretion of the Court; R101.01. R37.12 provides that "the Court may give such directions as to costs as between a third party and other parties to the action as the justice of the case may require." The discretion as to costs is wide and subject only to the limitation that it must be exercised judicially and on grounds connected with the litigation; Donald Campbell and Co v Pollak [ 1927] AC 732, Cretazzo v Lombardi (1975) 13 SASR 4, Potts v Moran (1976) 16 SASR 284 per Bray CJ at 307. As the discretion to award costs, like other judicial discretions, must be exercised judicially, the courts have developed principles for the guidance of judges in exercising the discretion. The basic guiding principle is that costs ordinarily follow the event. The application of that principle to unsuccessful third party proceedings presents difficulties as the diverse outcomes of the decided cases indicate. There is no great difficulty where a third party claim by a defendant is unsuccessful because the defendant has failed to establish its right to recover from the third party the amount which it is required to pay to the plaintiff, or the amount which it would have been required to pay if the plaintiff's claim had been successful. In such cases the defendant is ordinarily required to pay the costs of the third party and cannot recoup them from the plaintiff. Where, however, the third party claim fails solely because the plaintiff has failed in its claim against the defendant, the position is more complex. The principle that costs follow the event dictates that ordinarily the defendant is liable for the costs of the successful third party. It does not assist, however, in my opinion, to resolve the question whether the defendant is to be allowed to recoup those costs from the plaintiff. The third party claim has not been an issue between the plaintiff and the defendant and there has therefore been no "event" in relation to it as between the plaintiff and defendant. Other guiding principles must be sought." [Emphasis added] 112 King CJ went on to express a view as to the guiding principle for the exercise of the subject discretion. That view is referred to below. 113 In my view an illuminating analysis of the uncertain body of case law principle bearing on this issue is that set out by Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55 inter alia as follows: [70] I have foreshadowed there is a body of somewhat complex principle dealing with the incidence of costs in unsuccessful third party proceedings: see generally Dal Pont (above) at [11.31]ff. They start with the basic guiding principle that costs ordinarily follow the event: Gladstone Park Shopping Centre Pty Ltd v Wills (above). But as King CJ observed in Lombard Insurance Co (Aust) Ltd v Pastro (1994) 175 LSJS 448: [Finn J then repeated that section of King CJ's analysis in Lombard italicised above] [71] Divining those other guiding principles is by no means a straightforward task — the more so because inconsistent outcomes can reflect either or both differing evaluations of discretionary considerations or differing appreciations of the applicable principles: see, for example, Allman v Daly (No 2) [1959] VR 614 and its treatment in Mifsud v ICT Pty Ltd (above) at 150ff. [72] Accepting that the ultimate question is whether in the circumstances the costs of the successful third party "ought fairly to be borne" by the unsuccessful applicant ( Johnson v Ribbins [1977] 1 WLR 1458 at 1464; [1977] 1 All ER 806 at 811 ), a variety of factors has been relied upon as being indicative of whether or not such is the case. Care, though, needs to be taken with several of these in that they are capable of misleading. [73] A common consideration in the cases is whether it was "reasonable" or "appropriate" for a respondent to make the third party claim: cf Victoria University of Technology v Tullett and Tokyo (Vic) Pty Ltd (unreported, SC(Vic), Beach J, 29 August 1994, BC9401116); Lombard Insurance Co (Aust) Ltd v Pastro (above) per Bollen J. The care that needs to be taken with this is that, while the making of the third party claim may have been justifiable, it may nonetheless be quite inappropriate to pass on the costs of a successful third party to the original applicant . As was observed by Tadgell J in Australian Guarantee Corp Ltd v De Jager [1984] VR 483 at 500 , "[i]t cannot be an inevitable rule that every unsuccessful plaintiff will be required to bear the costs of any third party the defendant sees fit to join". A common instance of where the third party costs will not be passed on is where the third party claim raised "private issues" and the third party was not necessarily joined because of the applicant's claim: for example, Gold Coast Bakeries (Qld) Pty Ltd v Heat & Control Pty Ltd [1992] 1 Qd R 162 at 175 ; see also Paron v Fry (No 2) [1990] 1 Qd R 550 . [74] A distinct consideration has been whether the applicant's claim was the catalyst for the third party claim. In Thomas v Times Book Co Ltd [1966] 1 WLR 911 at 920; [1966] 2 All ER 241 at 247 , Plowman J considered that the plaintiff's claim rendered the third party proceedings "inevitable": see also Fertinova Australia Pty Ltd v Samardzija (unreported, SC(Qld), MacKenzie J, 10 July 1995, BC9507174). The caution to be sounded with this consideration is that causation alone without regard to the nature of the cross-claim itself seems hardly sufficient to justify a pass on order. [75] The third, and perhaps the most significant, consideration is the relationship of the nature of the original application to that of the cross-claim being brought. This nexus has been expressed in various ways: for example, does the nature of an applicant's claim, or do allegations in support of it render it reasonable for the respondent to make in turn the cross-claim that it does (cf the Lombard Insurance Co (Aust) Ltd case per King CJ) or does the third party claim raise issues private to the parties to it ( Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd (above))…." [emphasis added] 114 For the reason that the principled exercise of the discretion is reflected in the above extract from the decision of Finn J in GEC Marconi, it does not seem to me that there can be said to be a "guiding principle" for the exercise of the discretion in the third party cases in terms of that expressed by King CJ in Lombard Insurance in the following terms: "Where the nature of the plaintiff's claim, or allegations in support thereof, render it reasonable, having regard to the purposes of third party procedure, to bring in the third party, and the third party claim is unsuccessful solely by reason of the failure of the plaintiff to sustain its claim or the relevant allegations, the defendant should ordinarily recover from the plaintiff the costs of the third party claim including those which the defendant is ordered to pay to the third party. The emphasis is on the word "ordinarily". The discretion is unfettered and a variety of factors may properly enter into the exercise of it." 115 Hence I am in agreement with Hodgson JA that the so-called "guiding principle" stated by King CJ requires to be read with the qualifications suggested by Finn J. I would however emphasize that whilst the reasonableness of the joinder of the third party may be a necessary pre-condition to the plaintiff being ordered to pay the costs of the third party claim, reasonableness is not to be regarded as a sufficient pre-condition to justify the making of such an order. The matter sounds in what is fair and just between the parties by reference to their conduct in connection with the litigation. Bullock orders 116 To a certain extent analogous considerations to those requisite to be taken into account in relation to the present proceedings have fallen for analysis in terms of the principled approach to the making of Bullock orders [where a plaintiff succeeds against one defendant but fails against another]. Such an order is for the unsuccessful defendant to bear the costs payable by the plaintiff to the successful defendant: · It is insufficient to justify the making of a Bullock order, to show that it was reasonable for the plaintiff to bring the proceedings against both defendants; · It is sufficient to justify the making of such an order if: (a) the costs have been reasonably and properly incurred by the plaintiff as between it and the unsuccessful defendant: Johnson Tyne Foundry v Maffra Corporation (1948) 77 CLR 544 at 572-573 per Williams J and Gould v Vaggelas (1985) 157 CLR 215 at 229-230 per Gibbs CJ; and (b) the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant or the conduct of the unsuccessful defendant shows that the joinder of the successful defendant was reasonable and proper to ensure the recovery of the damages sought: Fennel v Supervision and Engineering Services (1988) 47 SASR 6 at 7-8, 15. 117 A Bullock order may for example be made in circumstances in which a defendant (who was ultimately successful) can be seen to have been properly joined [as in Lackersteen v Jones (No.2) (1988) 93 FLR 442 where the unsuccessful defendant was a principal who denied the authority of its agent who was then joined and became the successful defendant or if the unsuccessful defendant informed the plaintiff that it should look to the successful defendant for its remedy: cf Altamura v Victorian Railways Commissioners (1974) VR 33; Gould v Vaggelas; Fennel v Supervision and Engineering Services]. 118 The other approach capable of being taken [where a plaintiff succeeds against one defendant but fails against the other and is to pay the costs of the successful defendant] is by a 'Sanderson' order. The difference is that in a Sanderson order, the unsuccessful defendant is ordered to pay the costs of the successful defendant direct to that defendant, whereas by a Bullock order, the plaintiff recovers from the unsuccessful defendant, the costs of the successful defendant which he has been ordered to pay. Distillation of the proper approach 119 In my view the following propositions may be usefully distilled from the authorities: Judicial discretion · the touchstone of the exercise of judicial discretion is: "the requirement of doing justice to the parties in each particular case, the court having regard to the particular circumstances, including the evidence adduced, the parties' conduct and the ultimate result": Howitt v W Alexander & Sons Ltd [1948] SC 154 at 159 per Lord Russell. Discretion to award costs · in terms of the exercise of the discretion to award costs, the test is what is fair and just between the parties by reference to their conduct in connection with the litigation [permitting regard to be had to their conduct antecedent to the litigation insofar as it bears on matters leading up to that litigation]: cf Earnshaw v Loy (No 2) [1959] VR 52 per Sholl J at 253; Third party procedure · as explained in GE Dal Pont 'Law of Costs' LexisNexis Butterworths 2003 (at [11.28]: "The third party procedure is directed at avoiding multiplicity of proceedings. To this end, its objects are: first, to get the third party bound by the decision between the plaintiff and the defendant; second, to get the question between the defendant and the third party decided as soon as possible after the decision between the plaintiff and the defendant, so that the defendant may not be in the position of having to wait before establishing his or her right of indemnity against the third party at a time when the plaintiff is enforcing judgement against the defendant; and third, to save the extra expense that would be involved in two independent actions." · even where the making of a third party claim can be seen to have been justifiable this is not necessarily sufficient to make it appropriate to pass the costs of a successful third party on to the plaintiff [It is reasonably common to find an insured defendant making a third party claim against an insurer. Such a claim will often raise what has been regarded as "private issues". Notwithstanding that the insurer has an interest in the proceedings between plaintiff and defendant in terms of it is likely liability to provide, should the insurer be found liable, it will also obviously have another interest in terms of whether or not the policy response in the particular circumstances]; · the fact that plaintiff's claim may be seen to have been causative in terms of the making of the third party claim may have some relevance that in itself likely be insufficient to justify passing the costs of the successful third party on to the plaintiff; Misconduct of plaintiff · any suggested misconduct by the plaintiff requires to be carefully assessed as where such conduct may make it fair to impose some liability on the plaintiff for the costs burden otherwise shouldered by the defendant in terms of its obligation to pay the costs of a successful cross defendant; Conflicts of interest · where questions of the possibility of a conflict of interest arise: - as between two defendants who have been joined to proceedings or - as between a defendant and a cross defendant it is reasonable to require the two defendants or the defendant and cross defendant to take such steps as are open to them in an endeavour to ascertain: (1) the degree of likelihood that any and if so what conflict of interest will exist in terms of the issues to be litigated; (2) the extent to which [albeit acting consistently with a perceived necessity that they remain at arms length in relation to certain issues which separate them] it may nonetheless be reasonable for them to act in concert in litigating certain issues so as to avoid unnecessary duplication of costs; [In this respect I am in agreement with Hodgson JA in relation to the proposition that a cross-defendant may be left to bear some or all of its own costs if for example, it chooses to contest the plaintiff's claim where it would have been reasonable to leave this entirely to the defendant or if it incurs costs only on issues raised against the defendant which it loses]; Mode of litigating issues · the reasonableness of separate representation at trial requires careful consideration in terms of the precise manner in which the parties have elected to litigate particular issues. Dealing with the issues 120 The reasons for judgment of Hodgson JA carefully address a number of what his Honour suggests are errors of principle by the primary judge. These were material errors: · the trial judge approached the matter as if there were proceedings on foot between the plaintiff and the Canine Council in fashion such as to engage the prima facie position as to costs as between those parties - [The words used were "[t]here will be a verdict and judgment in favour of the defendant against the plaintiff and a verdict and judgment in favour of the cross-defendant in favour of the plaintiff" and the initial view expressed was "that the plaintiff will pay the costs of the defendant and cross-defendant subject to whatever arguments to the contrary are put"; - the trial judge made no reference to the prima facie position arising from his decision of the case, that the plaintiff pay the defendant's costs and the defendant pay the Canine Council's costs; - the trial judge appears not to have considered circumstances required to displace or supplement that prima facie position]; · the trial judge treated it as unreasonable for the plaintiff to sue the defendant alone and appears to have treated that unreasonableness as supporting an order for costs against her, and in treating that as sufficient to justify the order made, in combination with what he saw as the reasonableness of the defendant joining the Canine Council, together with a mere possibility of a conflict of interest; · the trial Judge failed to squarely address the question whether, given the prima facie principle that costs follow the event, the mere possibility of a conflict made it reasonable to place on the plaintiff the burden of all the costs prima facie payable by the defendant. 121 These errors plainly make it appropriate in considering whether leave to appeal be granted, to consider the merits of the case. 122 I further agree with the conclusion of Basten JA that given the nature of the allegations and the circumstances in which the matter complained of was published, joinder of the cross-defendant was appropriate. The trial judge so held. It seems clearly to have been reasonable to join the cross-defendant if only to ensure that it would be bound by any adverse finding in favour of the plaintiff. 123 The central issue addressed by Hodgson and Basten JJA and in respect of which their Honours have come to differing conclusions, concerns the parameter of possibility of conflict between the defendant and cross-defendant. 124 To my mind two signal sentences in the trial judges costs judgment are those which read: "I think what the suggestion from the plaintiff is here, that once the third party was brought in, obviously appropriately, that there should have been some melding of forces between the defendant and the cross-defendant and some joining of forces and delineation of issues. It seems to me and there is no polite way of saying it, but that situation arose and continued by reason of the plaintiff's absolute refusal it would seem, or otherwise she was advised not to, join the cross-defendant as a defendant." [emphasis added] 125 Earlier in the same judgment the trial judge expressed himself as follows: "It is said in these [submissions]…that there was never any real dispute between the defendant and the cross-defendant. That, for what it is worth, accords [with] my own perception , and indeed, at the end of this case, the cross-defendant made no submission other than the defendant would be entitled to an indemnity if he were to be unsuccessful." [emphasis added] 126 In circumstances where the trial judge was best placed to see through and identify what were the situations where a joining of forces between the defendant and the cross-defendant was reasonable and the situations where the potential of conflict of interest meant that it was reasonable to for them to act at arms length from one another, this Court should be slow to interfere with the trial judge's assessment on that matter reached over a 17 day hearing. It does seem that the trial judge formed the view that to a very considerable extent a reasonable approach would have been for the defendant and the cross-defendant to act in concert. Yet no reason has been given by the trial judge for not accommodating that consideration or including it as an integer in the exercise of the discretion to order costs. The trial judge appears to have quite incorrectly laid the blame on the plaintiff for not having herself joined the Cancer Council as a defendant. 127 The difficulty facing this Court concerns the lack of precision in the trial judges reasons where his Honour at one and the same time emphasised that there should have been some "melding of forces" between the defendant and cross-defendant, yet also stated that there were a number of issues that required the cross-defendant to stand separately and apart from the defendant. 128 There may be cases where the sole reference point for analysis concerns the pleaded issues, in which event a careful analysis of those issues may throw up any number of possible conflicts between a defendant and a cross-defendant. Far more commonly the task would involve a combination of focus on the pleadings as well as the course of the trial. 129 Other cases may require a degree of further sophistication in that the actual stances adopted by the parties [on the ground as it were], can uncover an important truth: vide that what may at first blush be perceived by a bald examination of the pleadings as a theoretical conflict of interests will, on more detailed examination, be seen not to have been litigated otherwise than "tongue in cheek". 130 This clearly being a case requiring that form of degree of further sophistication, the problem facing this Court inheres in the extent to which it is possible to glean from a combination of the pleadings, transcript, documentary evidence and the trial judge's reasons that, notwithstanding the theoretical possible conflicts thrown up by the pleadings, the defendant and the cross-defendant are seen to have conducted the proceedings in concert to such an extent that a principled exercise of the costs discretion could not have visited either all or alternatively some of the costs of the cross-defendant upon the plaintiff. 131 It does seem clear that from the vantage point of the pleadings, there were clearly possible conflicts between the defendant and the cross-defendant which would arise in the event that the plaintiff established her case against the defendant. 132 Hodgson JA has, at least in part, approached the matter by reference to considering the extent to which the particular way in which the proceedings were run could have given rise to a theoretical potential conflict escalating into an actual conflict: · Hodgson JA's conclusion is that it could reasonably have been thought by the defendant and cross defendant that the allegation of malice gave the plaintiff her best chance of success in the proceedings. · Hodgson JA then makes the point that had the proceedings succeeded on that basis, the actual conflict which would have arisen would squarely raise the questions - whether the cross defendant would be liable as a joint tortfeasor by reason of vicarious liability based on the defendant's malice, - as to the appropriate apportionment of any contribution, having regard to the competing considerations of the malice of the defendant and the authorship and vetting of the article by the cross defendant. 133 On the very particular circumstances thrown up in this case, my emphasis is on the manner in which the trial judge appears to have clearly formed the view during the actual presentation of the respective cases at trial, that to a very real extent there was only in small part, a real dispute between the defendant and the cross-defendant. The materials presently before the Court which point to the validity of that conclusion at least include the following: · there was plainly a tight and apparently trusting relationship between the defendant and the cross-defendant, the defendant being allied with the dominant faction on the board of the cross-defendant; · a very clear indication of that form of relationship may be discerned from the Canine Council Board Minute of early August 2001 where the Board resolved that the Court and the Canine Council's solicitors be advised that the Council would not mount a defence to the cross claim [the later minutes of the Board admitted on the application before this Court resolving to file a defence to the cross-claim do not appear to have been placed before the trial judge and to my mind in no way negative the proper inference being drawn from the transcript that the above described close relationship continued through the trial]; · the cross-defendant presented no case at trial in opposition to the defendant's claim for indemnity; · the only case put by the cross-respondent was a positive case in support of the defendant's defence; · the cross-claim was dismissed by consent. 134 It is convenient to note that during the hearing of the application for leave to appeal Mr Gray SC did not challenge the proposition that the appropriate exercise of discretion required the trial judge to extremely closely examine the forensic tactics and exact manner in which the proceedings were run. [Transcript 35.5]. 135 Whilst in my view the cross-defendant and the defendant are seen to have joined forces to a considerable extent on the sole issue litigated which might have given rise to a conflict of interest between them, I am not in agreement with Basten JA that they enjoyed commonality in every parameter concerning that issue. 136 The trial judges exercise of the costs discretion cannot be justified by reasons to be found in the judgment. The reasons are both confused as well as inconsistent. All that may be fairly gleaned from the judgment is that the way in which the proceedings had been litigated by the defendant and cross-defendant made it apparent that to a very considerable extent a reasonable approach would have been for those parties to act in concert. 137 In my view there was no basis for the making of the order that the plaintiff pay all of the cross-defendant's costs. It has been difficult to determine what precise order should be made in lieu of the orders made by the trial judge. I have given close consideration to whether or not a proper exercise of the Court's discretion was to order that the plaintiff pay a particular percentage of the cross-defendant's costs. Ultimately I have reached the conclusion that a principled exercise of the discretion was to order that the plaintiff pay 25% of the cross defendants costs. 138 The orders proposed by Hodgson JA should be made. ********** 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.