Steele-Smith v Liberty Financial Pty Ltd (No 2)

[2005] NSWSC 487

CITATION:	Steele-Smith & Ors v Liberty Financial Pty Ltd & Anor (No 2) [2005] NSWSC 487
HEARING DATE(S):	28 April, 2005; written submissions 16 May 2005
JUDGMENT DATE :	23 May 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Plaintiffs ordered to pay the Defendants' costs of the Statement of Claim and the costs of the Defendants and the third party of the First and Second Cross Claims.

CATCHWORDS:	COSTS - DISCRETION - The Plaintiffs unjustifiably commenced proceedings against the Defendants - the Defendants cross claimed against a third party - neither the Defendants nor the third party should have been put to the expense of the proceedings - scope of discretion as to costs discussed. - COSTS - LITIGANT IN PERSON - Held: a litigant who chooses not to obtain legal representation should not be given any special consideration in the making of costs orders.
LEGISLATION CITED:	Supreme Court Act 1970 (NSW) - s.76
CASES CITED:	- Edginton v Clark [1964] 1 QB 367 - Oshlack v Richmond River Council (1998) 193 CLR 72 - Sanderson v Blyth Theatre Co [1903] 2 KB 533 - Thomas v Times Book Co Ltd [1966] 2 All ER 241
PARTIES:	Doreen Steele-Smith - First Plaintiff/First Cross Defendant to 2nd Cross Claim Tony Steele - Second Plaintiff/Second Cross Defendant to 2nd Cross Claim Maxwell Developments Pty Ltd - Third Plaintiff/Third Cross Defendant to 2nd Cross Claim Liberty Financial Pty Ltd - First Defendant/First Cross Claimant to 1st Cross Claim Liberty Funding Pty Ltd - Second Defendant/Second Cross Claimant to 1st Cross Claim Vestecorp Financial Services Pty Ltd - Cross Defendant to 1st Cross Claim/Cross Claimant to 2nd Cross Claim
FILE NUMBER(S):	SC 4778/04
COUNSEL:	- Trevor Steele (litigant in person) appeared by leave, pursuant to Power of Attorney, for the First and Second Plaintiffs - E. Hodgman (Sol) - First and Second Defendants/First and Second Cross Claimants to 1st Cross Claim - C. Bavin (Sol) - Cross Defendant to 1st Cross Claim/Cross Claimant to 2nd Cross Claim
SOLICITORS:	Dibbs Barker Gosling - First and Second - Defendants/First and Second Cross Claimants to 1st Cross Claim - Hunt & Hunt - Cross Defendant to 1st Cross Claim/Cross Claimant to 2nd Cross Claim

LOWER COURT JURISDICTION:

1    On 28 April 2005 I delivered judgment in this matter (“the first judgment”) and reserved for argument the question of costs. The parties agreed that their submissions on costs should be made in writing, without further oral argument. This judgment assumes that the reader is familiar with the first judgment.

2    All parties have now delivered written submissions. Those of Mr Trevor Steele are difficult to follow. I gather, however, that Mr Steele submits that the first judgment is wrong and that the Plaintiffs should have succeeded in their claims against the Defendants, so that, at the least, there should be no order that the Plaintiffs pay the Defendants’ costs, each party being left to pay his, her or its respective costs. Alternatively, he says that the Plaintiffs should not have to pay the Defendants’ costs because Vestecorp was guilty of wrongdoing in relation to the transaction with Mr Tony Steele.

3    The Defendants submit that no reason has been shown to depart from the usual order that the unsuccessful party pay the successful party’s costs. I agree. As I have found in the first judgment, the Defendants have not committed any wrong against the Plaintiffs. The Plaintiffs’ case, as it was presented by Mr Trevor Steele, was bound to fail. Accordingly, I order that the Plaintiffs pay the Defendants’ costs of the Statement of Claim.

4    In their First Cross Claim against Vestecorp, the Defendants succeeded in recovering their costs in relation to the claim of Mr Tony Steele pursuant to an indemnity provision in the Introducer Agreement; the Defendants did not succeed in recovering their costs in respect of the claim brought by Mrs Steele-Smith. If I were to consider the First Cross Claim in isolation from the rest of the proceedings, I would order Vestecorp to pay half of the Defendants’ costs of the First Cross Claim.

5    However, the Defendants only joined Vestecorp as a party to the proceedings because, if the Plaintiffs succeeded against the Defendants, it could only have been because of wrongdoing on the part of Vestecorp for which Vestecorp would be liable to indemnify the Defendants under the Introducer Agreement.

6    In fact, however, no wrongdoing by Vestecorp in relation to Mrs Steele-Smith’s and Maxwell Developments’ transactions was established. The wrongdoing by Vestecorp in relation to Mr Tony Steele’s transaction was not a wrong for which the Defendants were answerable to the Plaintiffs. The wrong did not cause any loss or damage to Mr Steele; rather, the wrong consisted of a breach by Vestecorp of its contractual duty of good faith to the Defendants under the Introducer Agreement in failing to inform the Defendants that Mr Tony Steele was so intellectually disabled that he could not understand the nature of the loan transactions with the Defendants into which Mrs Steele-Smith and Mr Trevor Steele were inducing him to enter.

7    In other words, although Vestecorp has committed a breach of the Introducer Agreement which has been exposed in these proceedings, that wrong must have been initiated and encouraged by Mrs Steele-Smith and Mr Trevor Steele, who both must have desired that the Defendants should enter into the loan transactions with Mr Tony Steele despite his intellectual disability.

8 The Court has a very wide discretion as to costs under s.76 Supreme Court Act 1970 (NSW): Oshlack v Richmond River Council (1998) 193 CLR 72, at para.21ff. The discretion may be exercised in order to do justice in respect of costs orders not only as between parties directly opposed on the record of the pleading, such as between plaintiff and defendant or as between cross claimant and cross defendant; it may be exercised so as to distribute the burden of costs amongst all parties to the proceedings, as justice requires, however those parties come to be joined. So, for example, the Court may make costs orders as between co-defendants – a “Sanderson order”: Sanderson v Blyth Theatre Co [1903] 2 KB 533. Again, the Court may require an unsuccessful plaintiff to pay the costs of third parties joined to the proceedings by a successful defendant: Edginton v Clark [1964] 1 QB 367; Thomas v Times Book Co Ltd [1966] 2 All ER 241.

9    The Plaintiffs should never have commenced these proceedings at all. They deliberately withheld essential evidence; the relief which they sought was misconceived in law; their proceedings against the Defendants were bound to fail, and the breach of the Introducer Agreement committed by Vestecorp must have been instigated and encouraged by Mrs Steele-Smith and Mr Trevor Steele. Nevertheless, the Defendants and Vestecorp were forced to incur the expense of the litigation. In my opinion, justice requires that all of the costs of the litigation visited on the Defendants and Vestecorp should be borne by the Plaintiffs.

10    I have no doubt that the costs orders which the Plaintiffs now face are due to the fact that the Plaintiffs have been represented by Mr Trevor Steele, who is not a lawyer and who clearly was a direct participant in at least some of the transactions the subject of the proceedings. However, I do not consider that the fact that Mr Trevor Steele is not a lawyer has any significance in the exercise of the Court’s discretion as to costs. There is no evidence or suggestion that the Plaintiffs could not afford competent legal representation. As I have noted in the first judgment, in the course of directions hearings I repeatedly urged Mr Trevor Steele to seek pro bono legal assistance in the conduct of this case but he resolutely declined such assistance on the expressed ground that he did not want to have anything to do with lawyers.

11    If a litigant positively refuses to have legal representation which would otherwise be available, he or she cannot later claim any indulgence when it comes to costs orders on the ground that he or she was at a disadvantage as against a legally represented party. To allow special treatment of litigants in person in such a circumstance would be to reward ignorance of the law and its procedures and to penalise a party’s proper reliance upon legal representation. Our system of justice and the confidence of the community in that system are founded upon the principle that all litigants who come into Court are to be treated equally, none receiving any preferential consideration over any other. No Judge can depart from that principle by so much as a hair’s breadth without undermining the entire structure of the law.

12    For these reasons, I make the following orders as to costs:

a) the Plaintiffs will pay the costs of the Defendants on the Statement of Claim;

b) the Plaintiffs will pay the costs of the Defendants and of Vestecorp of the First and Second Cross Claims;

c) to the extent that the Defendants recover any costs from Vestecorp under the First Cross Claim pursuant to the order in paragraph 126(b) of the first judgment, the Defendants will not be entitled to recover the same amount again from the Plaintiffs by virtue of these costs orders;

d) to the extent that Vestecorp recovers any costs from the Plaintiffs under the Second Cross Claim pursuant to the order in paragraph 126(d) of the first judgment, Vestecorp will not be entitled to recover the same amount again from the Plaintiffs by virtue of these costs orders.

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