Karacominakis v Big Country Developments Pty Ltd & Big Country Developments Pty Ltd v Chadlace Pty Ltd & Ors J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors Hollingsworth & v Big Country Developments Pty Ltd & Ors [2001] NSWCA 2 (5 February 2001)

Last Updated: 5 February 2001

NEW SOUTH WALES COURT OF APPEAL

CITATION: Karacominakis v Big Country Developments Pty Ltd & Ors Big Country Developments Pty Ltd v Chadlace Pty Ltd & Ors J W Wall Investment Co Pty Ltd & Ors v Big Country Developments Pty Ltd & Ors Hollingsworth & Anor v Big Country Developments Pty Ltd & Ors [2001] NSWCA 2

FILE NUMBER(S):

40696/97

40698/97

40702/97

40877/97

HEARING DATE(S): On written submissions

JUDGMENT DATE: 05/02/2001

PARTIES:

Nicholas Karacominakis - Appellant in 40696/97, Fourth Respondent in 40702/97, Fifth Respondent in 40877/97; Big Country Developments Pty Ltd - First Respondent in 40696/97, Appellant/First Cross-Respondent in 40698/97, First Respondent in 40702/97 & First Respondent in 40877/97; Peter Herman Hesky - Second Cross-Respondent in 40698/97; J W Wall Investment Co Pty Ltd, John William Wall & Cecilia Ellen Wall - Second, Third and Fourth Respondents in 40696/97, First, Second & Third Appellants in 40702/97, Second, Third & Fourth Respondents in 40877/97; Jeffrey Hollingsworth & Gillian Gai Hollingsworth - Fifth & Sixth Respondents in 40696/97, Second & Third Respondents in 40702/97, First & Second Appellants in 40877/97; Chadlace Pty Ltd, Glen Johnston & Karen Schmitz - Seventh, Eighth & Ninth Respondents in 40696/97, First & Second Respondents/Cross Appellants in 40698/97, Fifth, Sixth & Seventh Respondents in 40702/97, Sixth, Seventh & Eighth Respondents in 40877/97.

JUDGMENT OF: Handley JA Stein JA Giles JA

LOWER COURT JURISDICTION: Compensation Court

LOWER COURT FILE NUMBER(S): 50306/94

LOWER COURT JUDICIAL OFFICER: Bainton J

COUNSEL:

G C Lindsay SC & C A Marlow - Nicholas Karacominakis

B A Coles QC & P P Strasser - Big Country Developments Pty Ltd & P H Hesky

J C Kelly SC - J W Wall Investment Co Pty Ltd, J W Wall & C E Wall

V Stefano - J Hollingsworth & G G Hollingsworth

C M Harris - Chadlace Pty Ltd, G Johnston & K Schmitz

SOLICITORS:

James Soulos, Ashfield - N Karacominakis

Denes Ebner, Sydney - Big Country Developments Pty Ltd & P H Hesky

David Hand, Hurstville - J W Wall Investment Co Pty Ltd, J W Wall & C E Wall

Shaddock Baker & Paul, Richmond - J Hollingsworth & G G Hollingsworth

Matthew Folbigg, Blacktown - Chadlace Pty Ltd, G Johnston & K Schmitz

CATCHWORDS:

COSTS - complex appeals - orders as to costs of trial and appeals - no question of principle.

LEGISLATION CITED:

DECISION:

See paras 2 & 31.

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40696/97, 40698/97,

40702/97, 40877,97

Comm Div 50306/94

HANDLEY JA

STEIN JA

GILES JA

Monday, 5 February 2001

KARACOMINAKIS v BIG COUNTRY DEVELOPMENTS PTY LTD & ORS

BIG COUNTRY DEVELOPMENTS PTY LTD v CHADLACE PTY LTD & ORS

J W WALL INVESTMENT CO PTY LTD & ORS v BIG COUNTRY DEVELOPMENTS PTY LTD & ORS

HOLLINGSWORTH & ANOR v BIG COUNTRY DEVELOPMENTS PTY LTD & ORS

JUDGMENT

(On costs)

1    THE COURT: Judgment in these appeals was given on 17 November 2000. Orders were made save as to the costs of the proceedings before Bainton J and of the appeals, and provision was made for delivery of written submissions on the basis of which orders as to costs would be made. Written submissions were duly delivered and these reasons deal with costs.

2    It is necessary first to correct a formal error in the orders made on 17 November 2000. Orders 8, 11, 13 and 16 gave liberty to apply to "the Commercial Division" for consequential relief pursuant to the numerically preceding orders. Between the decision at first instance and the appeals the Commercial Division of the Court was subsumed into the Equity Division as the Commercial List within that Division. We amend the orders abovementioned to provide for liberty to apply to "the Equity Division" in lieu of "the Commercial Division".

3    Bainton J made costs orders by reference to the separate claims or cross-claims in the proceedings. In summary, he ordered -

(i) that Wall Investment pay Big Country's costs of Big Country's claim against it;

(ii) that the Walls pay Big Country's costs of Big Country's claim against them;

(iii) that the Hollingsworths pay Big Country's costs of Big Country's claim against them;

(iv) that Mr Karacominakis pay Big Country's costs of Big Country's claim against him;

(v) that Big Country pay the Chadlace parties' costs of Big Country's claims against them;

(vi) that the Wall parties pay the costs of the Hollingsworths, Mr Karacominakis and Chadlace of the Wall parties' claims against them for indemnity;

(vii) that the Hollingsworths and Mr Karacominakis pay the Wall parties' costs of the Wall parties' claim against him for contribution;

(viii) that the Wall parties pay Chadlace's costs of the Wall parties' claim against it for contribution;

(ix) that there be no order in respect of the Hollingsworths' cross-claim against Big Country. (This cross-claim is not referred to in the reasons of 17 November 2000; it was described by Bainton J as one propounding an untenable claim answered by an irrelevant answer, and was consigned to the oblivion it deserved);

(x) that the Hollingsworths pay the costs of Mr Karacominakis and Chadlace of the claims against them for indemnity;

(xi) that Mr Karacominakis pay the Chadlace parties' costs of his cross-claim against them for indemnity;

(xii) that there be no order in respect of the costs of Mr Karacominakis' cross-claim against the Chadlace parties for the relief to do with fitness equipment;

(xiii) that Mr Karacominakis pay the Chadlace parties' costs of their false representation claims against him;

(xiv) that the Chadlace parties pay the costs of Big Country and Mr Hesky of the Chadlace parties' false representation claims against them.

4    Bainton J also made an order in relation to the costs of a reference through which the amount for which Big Country was entitled to judgment was established, namely, that the defendants other than the Chadlace parties "be jointly and severally liable to [Big Country] and pay for any amount incurred by [Big Country] in relation to the report prepared by the referee".

5    These orders reflected Big Country's success against the defendants other than the Chadlace parties but failure against those parties, the failure of the claims for indemnity but acceptance of entitlement to contribution between the defendant's found liable to Big Country, and the failure of the false representation claims by the Chadlace parties against Big Country and Mr Hesky but success of the false representation claims by the Chadlace parties against Mr Karacominakis. The appeals left intact Big Country's success against Wall Investment and Mr Karacominakis, but overturned its success against the Walls and the Hollingsworths; overturned Big Country's failure against the Chadlace parties; significantly re-worked the outcome as to indemnity and contribution, both consequentially and in substance; and overturned the failure of the false representation claims by the Chadlace parties against Big Country and Mr Hesky but left intact and extended the Chadlace parties' success in their false representation claims against Mr Karacominakis. It will therefore be necessary to vary the costs orders made by Bainton J.

6    There were four appeals, by each of Big Country, the Wall parties, the Hollingsworths and Mr Karacominakis, and a cross-appeal by the Chadlace parties in Big Country's appeal. Given the complexity of the appeals, it would not be appropriate to order payment of the costs of "the appeals", meaning the appeals and cross-appeal taken globally - for example, the Wall parties had no legal interest in the false representation claims. Orders as to the costs of the appeals should again be made by reference to the separate claims or cross-claims in the proceedings.

7    It must be recognised that this will impose a significant burden on the parties in the assessment of costs. The attribution of documents, time, and care and attention to the separate claims or cross-claims in the proceedings before Bainton J and on appeal will not be easy, and in the absence of a real measure of analysis and agreement (for which the proceedings thus far have not been noted) will be time consuming and hence expensive. We do not think, however, that there is any acceptable alternative, nor have the parties' submissions taken an alternative approach. We are not in a position to essay even a rough global apportionment between the parties of the costs of the proceedings before Bainton J and on appeal in a manner which would be likely to do justice between them.

Costs in relation to Big Country's claims

8    Big Country succeeded against Wall Investment both at first instance and on appeal. There is no reason why the relevant order made by Bainton J should be disturbed, and Wall Investment should pay Big Country's costs of the appeal by Wall Investment.

9    Big Country succeeded against the Walls at first instance but failed on appeal. The relevant order made by Bainton J should be set aside, and Big Country should pay the Walls' costs of its claim against them in the proceedings against Bainton J and in their appeal.

10    The Walls submitted that Big Country should also be ordered to pay the costs of the parties against whom and which they cross-claimed for indemnity or contribution, that is, the Hollingsworths, Mr Karacominakis and Chadlace, "so far as the Walls made claim against those parties in that cross-claim". They referred to Edgington v Clark (1964) 1 QB 367 and Thomas v Times Book Co Ltd (1966) 2 All ER 241. We see no reason why in the present case the Walls should have Big Country bear any costs which they might have to pay or bear as a result of their endeavour to pass on to other defendants the burden of any liability they might have had to Big Country.

11    Big Country succeeded against the Hollingsworths at first instance but failed on appeal. The relevant order made by Bainton J should be set aside, and Big Country should pay the Hollingsworths' costs of its claim against them in the proceedings before Bainton J and in their appeal.

12    Like the Walls, the Hollingsworths submitted that Big Country should also be ordered to pay the costs of the parties against whom and which they cross-claimed for indemnity or contribution, that is, Mr Karacominakis and Chadlace, and as well they submitted that Big Country should also be ordered to pay the costs of the cross-claim by the Wall parties against them for indemnity. We repeat the response to the Walls' submission, and there is equally no reason why the Hollingsworths should have Big Country bear any costs which the Hollingsworths might have to bear as a result of the Walls' endeavour to pass on to the Hollingsworths the burden of any liability the Walls might have had to Big Country.

13    Big Country succeeded against Mr Karacominakis both at first instance and on appeal. Mr Karacominakis submitted that the case of Big Country was substantially recast on appeal, and was not the case advanced at the trial, so that he should not have to pay the costs of the proceedings before Bainton J. He submitted also that he had succeeded on some matters in the appeals, and that his liability for costs of the appeals should be moderated.

14    The divergences between the trial and the appeals have been described in the reasons of 17 November 2000. Our reasons for ruling that leave should be given to amend the summons recorded our understanding that the amendments made the summons accord with the evidence and issues which in substance were litigated before Bainton J. We do not think that there was a substantial recasting of Big Country's case on appeal such as to provide ground for relieving Mr Karacominakis of the ordinary cost consequence of Big Country's success.

15    The matters on which it was said Mr Karacominakis had succeeded in the appeals were his complaints that Bainton J has treated the summons as amended to assert his repudiation by Chadlace let into possession by him and that Bainton J had regarded the deed of 13 August 1993 as ineffective. We considered that there was substance in the complaints, see para [112] to [115] of the reasons of 17 November 2000. But the course then taken on appeal, see in particular paras [116] and [117] of the reasons, and the fact that Mr Karacominakis was unsuccessful in the appeals even when the inappropriate course taken by Bainton J was corrected seems to us to make this of no assistance to Mr Karacominakis in relation to costs.

16    There is no reason why the relevant order made by Bainton J should be disturbed, and Mr Karacominakis should pay Big Country's costs of his appeal.

17    Big Country failed against the Chadlace parties at first instance but succeeded on appeal. Ordinarily the relevant order made by Bainton J would be set aside, and the Chadlace parties would pay Big Country's costs of its claims against them in the proceedings before Bainton J and in the appeals as against them. In the present case, however, regard must also be had to the (now) success of the Chadlace parties' false representation claims against Big Country. That success effectively neutralised Big Country's success on its claims against the Chadlace parties - if Big Country were to enforce its judgment, the damages in the false representation claims are correspondingly increased. In those circumstances, we do not think the costs of Big Country's claims against the Chadlace parties should be paid by the Chadlace parties to Big Country, but rather they should be paid by Big Country to the Chadlace parties. The relevant order made by Bainton J should stand, and Big Country should be ordered to pay to the Chadlace parties the costs of its appeal as against those parties.

18    The Chadlace parties submitted that the orders in their favour should include "any costs payable by the Chadlace interests to the Wall interests, the Hollingsworths or Mr Karacominakis". The submission was not embellished by argument. Conformably with what we have earlier said, we see no reason why such an order should be made.

Costs as between the defendants

19    The re-working of the outcome as to indemnity and contribution was such that we consider the slate should be wiped clean by setting aside the relevant orders made by Bainton J. Just as contribution and indemnity had to be considered afresh in the appeals, so should costs be considered afresh.

20    At first instance contractual indemnities and common law indemnity down the line of assignees were rejected, but contribution between the original lessee and those of the assignees who were liable to Big Country was accepted. The effective result on appeal was one of indemnity by the Chadlace parties, by way of recoupment, in favour of Wall Investment and Mr Karacominakis.

21    So far as this result turned on who of the original lessee and the assignees was liable to Big Country, with one exception the costs as between the defendants are adequately dealt with by the costs orders already considered. So far as it turned on entitlement to indemnity or contribution, we consider that the orders to which we now refer for the costs of the claims to be entitled to indemnity and/or contribution are appropriate. We will refer to these as the contribution costs.

22    The Wall parties failed at first instance in their claim to indemnity from the Hollingsworths, but obtained a declaration as to contribution from the Hollingsworths and Mr Karacominakis. On appeal Wall Investment failed entirely against the Hollingsworths because the Hollingsworths were held to have no liability to Big Country. The Wall parties should pay the contribution costs as between themselves and the Hollingsworths in the proceedings before Bainton J and in the appeals. Wall Investment submitted that there should not be such an order in the appeals "because there was no contest between Wall Investment and the Hollingsworths in the appeal", but they did not concede in the appeals that the Hollingsworths were not liable to Big Country. Their submission went to identifying contribution costs, rather than to the order for costs.

23    The Wall parties failed at first instance in their claim to indemnity from Mr Karacominakis but obtained a declaration as to contribution from Mr Karacominakis and the Hollingsworths. On appeal Wall Investment obtained a declaration as to recoupment. Bainton J noted that Wall Investment's written submissions did not seek to support its claim for indemnity from Mr Karacominakis, and there is no appeal on that matter. The declaration as to recoupment was nonetheless made in the circumstances recounted in the reasons of 17 November 2000. We consider that in the particular circumstances there should be no order as to the contribution costs in the proceedings before Bainton J or in the appeals as between the Wall parties and Mr Karacominakis.

24    The Wall parties failed at first instance in their claim to indemnity from Chadlace, but obtained a declaration as to contribution from the other assignees. Their appeal was only in relation to contribution from Chadlace, on the ground that Chadlace was liable to Big Country rather than on a ground going to contribution costs. It is here that the exception arises. Wall Investment should have the costs of its appeal so far as concerned with the liability of Chadlace to Big Country, but otherwise we consider that there should be no order as to the contribution costs as between the Wall parties and the Chadlace parties.

25    The Hollingsworths now have no need for indemnity or contribution. For that reason alone their claims against Mr Karacominakis and Chadlace must fail, and (even though there may be minimal identifiable costs) they should pay the contribution costs as between themselves and Mr Karacominakis and Chadlace in the proceedings before Bainton J and in the appeals.

26    Mr Karacominakis failed at first instance in his claims to indemnity from the Chadlace parties, but obtained a declaration as to contribution from the other assignees. He did not appeal in relation to that matter. Again we consider that there should be no order as to the contribution costs as between Mr Karacominakis and the Chadlace parties.

The false representation claims

27    Mr Karacominakis was found liable on the false representation claims by the Chadlace parties, and his appeal failed. There is no reason to disturb the relevant order made by Bainton J, and Mr Karacominakis should pay the Chadlace parties' costs of his appeal. The Chadlace parties submitted that the costs should include any costs payable by them to Big Country, the Wall parties, the Hollingsworths or Mr Karacominakis, apparently on the basis that such costs should be regarded as part of their loss suffered by Mr Karacominakis' misleading conduct. If at all appropriate, that would only be under a substantive claim, not by an order for costs, and we do not accept the submission.

28    The false representation claims by the Chadlace parties against Big Country and Mr Hesky failed at first instance, but succeeded on appeal. The relevant order made by Bainton J should be set aside, and Big Country and Mr Hesky should pay the Chadlace parties' costs of their claim against Big Country and Mr Hesky in the proceedings before Bainton J and in the appeals.

29    We are of this view despite the submission that the Chadlace parties had relied primarily on Mr Karacominakis' representations, that the reliance on Mr Hesky's misleading conduct "was minor but nonetheless sufficient to attach a liability for damages pursuant to s 52", and that "it would be unfair to visit the entire consequences as to costs upon the shoulders of Big Country". It was said that there should be no order as to the costs as between Big Country and Chadlace, no doubt intending to include Mr Hesky and the Johnstons as interested parties. The submission must be rejected. A defendant is not only a little bit liable. If there is liability for misleading conduct by which loss was suffered, costs will normally follow the event, and the fact that misleading conduct of a third party contributed to the suffering of loss does not somehow lessen the liability or provide reason to alleviate the normal cost consequence.

The reference

30    It was not in dispute that the Walls and the Hollingsworths should be removed from the defendants the subject of the order and the Chadlace parties should be added.

Orders

31    The more formal orders to give effect to these reasons are orders that -

(1) Wall Investment pay Big Country's costs of the appeal by Wall Investment.

(2) (i) Order 2(iv) made on 22 September 1997 be set aside;

(ii) Big Country pay the Walls' costs of Big Country's claim against them in the proceedings before Bainton J and in their appeal.

(3) (i) Order 3(iii) made on 22 September 1997 so far as it relates to costs be set aside;

(ii) Big Country pay the Hollingsworths' costs of Big Country's claim against them in the proceedings before Bainton J and in their appeal.

(4) Mr Karacominakis pay Big Country's costs of his appeal.

(5) Big Country pay the Chadlace parties' costs of its appeal as against them.

(6) Orders 7(i), 7(iv), 9(i) and 10(ii) made on 22 September 1997 so far as they relate to costs and order 7(iii) made on 22 September 1997 be set aside.

(7) Chadlace pay Wall Investment's costs of the proceedings before Bainton J and of Wall Investment's appeal so far as concerned with the liability of Chadlace to Big Country.

(8) As to the costs of the claims to be entitled to indemnity and/or contribution -

(i) The Wall parties pay the costs as between themselves and the Hollingsworths in the proceedings before Bainton J and in the appeals;

(ii) The Hollingsworths pay the costs as between themselves and Mr Karacominakis and Chadlace in the proceedings before Bainton J and in the appeals;

(iii) Otherwise there be no order as to costs.

(9) (i) Order 12(i) made on 22 September 1997 be set aside.

(ii) Big Country and Mr Hesky pay the Chadlace parties' costs of the cross-claim against them by the Chadlace parties.

(10) Mr Karacominakis pay the Chadlace parties' costs of his appeal.

(11) Order 2 made on 5 December 1997 be varied so as to refer to "the First, Sixth, Seventh, Eighth, and Ninth defendants" in lieu of "the First, Second, Third, Fourth, Fifth and Sixth defendants".

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LAST UPDATED: 05/02/2001