Acquista Investments Pty Ltd v The Urban Renewal Authority (No 2) - [2015] SASCFC 117

Supreme Court of South Australia
(Full Court: Civil)
ACQUISTA INVESTMENTS PTY LTD & ANOR v THE URBAN RENEWAL AUTHORITY & ORS (No 2)
[2015] SASCFC 117
Judgment of The Full Court
(The Honourable Justice Vanstone, The Honourable Justice Lovell and The Honourable Auxiliary Justice Debelle)
18 August 2015
ADMINISTRATIVE LAW - JUDICIAL REVIEW - PROCEDURE AND EVIDENCE - COSTS
Application by the successful respondents for costs of the appeal and of the trial - appellants opposing order that they pay any of the third respondent's costs and opposing any interference with trial Judge's decision to make no order as to costs.
Held: (Vanstone and Lovell JJ).
All respondents should have their costs both at trial and upon appeal.
The respondents ultimately succeeded on almost every issue and therefore the trial Judge's decision on costs should be revisited.
Although there was a good deal of commonality of interests between the first and second respondents, and the third respondent, it could not be said that their separate representation was unnecessary.
Debelle AJ: (dissenting).
The conclusions of the trial Judge have not been sufficiently altered to warrant setting aside his costs order. The issues raised by all respondents were so identical as not to justify separate representation.
Supreme Court Act 1935 (SA) 40(1), referred to.
Kidd v The State of Western Australia [2014] WASC 99, applied.
Cretazzo v Lombardi (1975) 13 SASR 4; Rasch Nominees Pty Ltd & Anor v Bartholomaeus & Anor [2013] SASCFC 105; Stubing & Anor v Halling & Anor [2012] SASCFC 123; Foti v Foti & Ors [2009] SASC 177; Acquista Investments Pty Ltd & Anor v The Urban Renewal Authority & Ors [2015] SASCFC 91; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107, discussed.
Oshlack v Richmond River Council (1998) 193 CLR 72; Statham v Shephard (No 2) (1974) 23 FLR 244; Credit Lyonnais Australia Ltd v Darling and Anor (1991) 5 ACSR 703; Re Octaviar (No 8) [2010] QCA 57, considered.

ACQUISTA INVESTMENTS PTY LTD & ANOR v THE URBAN RENEWAL AUTHORITY & ORS (No 2)
[2015] SASCFC 117
Full Court: Vanstone, Lovell JJ, Debelle AJ
VANSTONE AND LOVELL JJ:
Background

On 20 July 2015 this Court delivered its reasons for dismissing (by majority) the appeal. The respondents succeeded on appeal on a number of grounds in their Notices of Contention.
Despite dismissing the appellants’ (plaintiffs’) claim, the trial Judge ordered that “there be no order as to costs of the action”. The Judge delivered reasons for taking that position. The Judge considered that at trial there was a “great preponderance of issues upon which the plaintiffs succeeded, that those issues were distinct and severable and that, because of that preponderance, that does outweigh the success of the defendants on the lesser number of issues on which they succeeded coupled with their overall success in the action”.[1]
[1] Reasons 7 January 2015.
Whilst the Judge’s order applied to all parties he indicated that, had he been disposed to order that the third defendant recover costs, he “would have ordered that they be recovered from the plaintiffs and not from the first and second defendants”.
After this Court delivered its judgment the question of the costs of the appeal and trial was deferred pending the receipt of written submissions from the parties.
The Law
The Court has an absolute and unfettered discretion as to costs, subject only to the requirement that the discretion be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.[2]
[2] Cretazzo v Lombardi (1975) 13 SASR 4 at 11 per Bray CJ.
Section 40(1) of the Supreme Court Act 1935 (SA) provides:
(1) Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
Rule 263(1) of the Supreme Court Civil Rules 2006 (SA) provides that as a general rule, costs follow the event. It then prescribes exceptions to the general rule.
Rule 263 is to be construed as identifying the general approach to awarding costs and identifying specific exceptions to the general approach; it is not to be construed as exhaustively defining the exceptions to the general rule.[3] Although guiding principles and rules of practice have developed,[4] the discretion remains unfettered and each case must be decided on its own facts. The general principles should not be treated as rules of law.[5]
[3]    Rasch Nominees Pty Ltd & Anor v Bartholomaeus & Anor [2013] SASCFC 105 at [22].
[4]    Stubing & Anor v Halling & Anor [2012] SASCFC 123 at 7-8 (Gray J).
[5]    Oshlack v Richmond River Council (1998) 193 CLR 72, 96.
By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs unless there is good reason to order otherwise.[6] The purpose of an order is to compensate the person in whose favour it is made, not to punish the person against whom it is made.
6 Oshlack v Richmond River Council (1998) 193 CLR 72, 96.
While the usual rule is that costs follow the event, courts do not usually make costs orders on an issue by issue basis; rather the relevant “event” is the ultimate judgment of the court.[7] Of course, the usual practice cannot circumscribe the court’s unfettered discretion which is to be exercised by reference to the facts and circumstances of each case.[8]
[7] Cretazzo v Lombardi (1975) 13 SASR 4, 16 (Jacobs J).
[8] Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No. 2) [2008] FCAFC 107.
Appellants’ Submissions
All respondents sought their costs for the appeal and trial. The appellants accepted that they should be required to pay the first and second respondents’ costs of appeal but opposed any order in favour of the third respondent in respect of the appeal. Relying on Rule 269 of the Supreme Court Civil Rules 2006 (SA), the appellants submitted that, given the commonality of interests between the third respondent and the first and second respondents only one set of costs should be awarded for the appeal. They submitted that the costs order of the trial Judge should either not be disturbed at all or only minimally.
Rule 269 provides relevantly:
If two or more parties have identical or similar interests but are separately represented and, in the Courts opinion, unnecessarily so, the Court may exercise either or both of the following powers—
(a) the Court may order that costs to which the parties are entitled be determined on a basis that would be appropriate if they had common legal representation;
(b) ...
Rule 269 reflects the Court’s concern about costs being incurred unnecessarily by the over-representation of parties with a common interest.[9] The appellants submit that despite being joined in the action the third respondent could have elected to “abide the event”. They submitted that no cause of action was specifically pleaded against the third respondent and that in essence the third respondent adopted and supported all of the first and second respondents’ defences and submissions.
[9] Foti v Foti &Ors [2009] SASC 177.
Analysis
The respondents were ultimately successful at trial. In making his decision on costs the Judge found that reasons existed for departing from the usual rule. The reasons relied on by the Judge namely the success of the appellants on the preponderance of severable issues, no longer exist, or not to the extent that existed before the Judge. In those circumstances, this Court should exercise afresh the costs discretion, in relation to the trial.
This Court has overturned a number of the findings of the trial Judge. The appellants point to the fact that not all of the findings of the Judge were overturned and that they remain successful on some points. So much can be accepted. However, the position has now fundamentally changed.
The respondents were successful on appeal on the substantial issues at trial. This Court found that neither the decision to enter into the contract nor the contract itself was amenable to judicial review. It also overturned the finding of legal unreasonableness. There is no longer a basis for approaching the question of costs on an issue by issue basis.
In our view at least the first and second respondents should receive their costs, both of the trial and of the appeal on a party/party basis.
We turn to Rule 269. A 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. However each case must be decided on its own facts. It has been accepted that even where parties are united in their opposition to a plaintiff their 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.[10]
[10] Statham v Shephard (No 2) (1974) 23 FLR 244, 246.
That the third respondent had similar interests to that of the first and second respondents can be accepted. It also took a substantially similar, but not identical, approach at trial. The third respondent argued, without support from the first and second respondents, the issues of actual or ostensible authority and also ratification both at trial and on appeal. They also called evidence at trial. However, such observations are not decisive of the issue.
The third respondent was the contracting counter party to the first and second respondents. Part of the case at trial involved information within the possession only of the first and second respondents. Claims of public interest immunity and legal professional privilege were made over some of that information by the first and second respondents. Clearly, separate representation was required in relation to those issues. As submitted by the third respondent the process of taking instructions, making discovery and other pre-trial procedures could not have been completed by one set of solicitors.[11] Courts must consider the fiduciary rule that lawyers must not concurrently represent clients with potentially conflicting interests.
[11] Kidd v The State of Western Australia [2014] WASC 99.
Further, conflicting commercial considerations also could have arisen both pre-trial and at trial. As mentioned, the third respondent raised on appeal some different grounds of appeal, and they were reasonably arguable.
Finally, it should be noted that the appellants did not raise the operation of this rule until after the appeal judgment was delivered. The point was not taken at trial. Whilst not decisive the appropriate time to raise such an objection is in advance of, or at, the time of the hearing.[12]
[12] Credit Lyonnais Australia Ltd v Darling and Anor (1991) 5 ACSR 703, 710; Re Octaviar(No 8) [2010] QCA 57.
The appellants do not point to any unreasonable lengthening of proceedings by the participation of the third respondent; they rely almost entirely on the commonality of interests.
The onus of establishing that Rule 269 should apply is on the appellants. The Court would need to be of the opinion that the respondents’ separate representation was unnecessary. In our opinion there are, here, compelling reasons why, despite the commonality of interests, separate representation was necessary. The appellants should pay both the first and second respondents’ costs and the third respondent’s costs of the trial and appeal.
Conclusion
There is good reason to reconsider the trial Judge’s decision to make no order for the costs of the trial. The appellants’ argument that the respondents should receive only one set of costs is not made good.
We would order as follows:
1.the order of the trial Judge of 7 January 2015 that there be no order as to costs of the action is set aside;
2.in its place this Court orders that the plaintiffs/appellants are to pay the costs of the trial and of the appeal of all respondents.
DEBELLE AJ: I respectfully disagree with the orders proposed by Vanstone and Lovell JJ both as to the costs of the trial and the costs of the appeal.
I deal first with the costs of the trial. Notwithstanding that the respondents succeeded at the trial, the trial Judge ordered that the parties should each bear their own costs. He did so after carefully reviewing the manner in which the issues had been argued at the trial. The fact that the appellants failed on this appeal does not mean that this Court is justified in interfering with the trial Judge’s order as to costs. The conclusions of the trial Judge have not been sufficiently altered on this appeal to warrant setting aside that order.
Furthermore, the trial Judge had the distinct advantage over this Court in being able to note at first hand the time spent on issues on which the respondent had failed and the conduct of the respondents on the trial which ultimately led him to his decision. He carefully considered the issue as to costs and, in the exercise of his discretion, made the order that each party bear its own costs. It has not been demonstrated that the exercise of his discretion miscarried in any respect. There is no justifiable basis for interfering with the discretion exercised by the trial Judge.
I turn to the costs of the appeal. Rule 269 provides:
269—Over-representation of parties with common interest
If two or more parties have identical or similar interests but are separately represented and, in the Court's opinion, unnecessarily so, the Court may exercise either or both of the following powers—
(a)the Court may order that costs to which the parties are entitled be determined on a basis that would be appropriate if they had common legal representation;
(b)the Court may order the over-represented parties to compensate other parties to the action for additional costs incurred by them as a result of the over-representation.
The exercise of the discretion vested in the Court by this rule is not expressed to depend on a party objecting before the hearing that his opponents should not be separately represented because they have identical or similar interests. A party will certainly improve his position on the issue of costs if he does object before the hearing. However, to impose a requirement that a party must object before the hearing if he seeks to rely on this rule is to alter the terms of the rule.
Given the current concerns that the cost of litigation is a real impediment to access to justice, this Court should examine with real care claims for costs where parties have identical or similar interests. The notices of contention of the respondents raised very similar issues and demonstrated that their interests were to all intents and purposes identical. They were, in my view, so identical that they did not justify separate representation. Furthermore, on the hearing of this appeal, the arguments of the third respondent recapitulated most of what had already been addressed by counsel for the first and second respondents. In these circumstances, I would order that the respondents are entitled to one half of their costs. As the first and second respondents were represented by the same solicitor and same counsel, the orders as to the costs of the appeal should be that the appellants pay one half of the costs of the first and second respondents and one half of the costs of the third respondent.
I add that there was an overrepresentation of the first and second respondents at the bar table. The first and second respondents should be entitled only to the costs of the Solicitor General and one junior counsel.
For these reasons, the order as to costs made by the trial Judge should stand. As to the costs of the appeal, the appellants should pay one half of the costs of the first and second respondents and one half of the costs of the third respondent.