Associated Forest Holdings Pty Ltd v Gordian Runoff Limited (No 2)

[2014] TASSC 21

[2014] TASSC 21

COURT:                 SUPREME COURT OF TASMANIA

CITATION:            Associated Forest Holdings Pty Ltd v Gordian Runoff Limited (No 2)

[2014] TASSC 21

PARTIES:  ASSOCIATED FOREST HOLDINGS PTY LTD  (RECEIVERS AND MANAGERS APPOINTED) (ACN        004 352 078)
  NORTH LIMITED (ACN 005 233 689)
  LOWRIE, Stephen John (by his Administrator The Public   Trustee)
  v
  GORDIAN RUNOFF LIMITED (ACN 052 179 647)

FILE NO:  694/2010

DELIVERED ON:  15 April 2014
DELIVERED AT:  Hobart
HEARING DATE/S:  4 April 2014
JUDGMENT OF:  Tennent J

CATCHWORDS:

Procedure – Costs – General rule – Costs follow the event – Costs of issues – Application by plaintiffs to reduce costs obligation because of success on particular issue – Undesirable to award costs on separate issue unless good reason to do so.

Supreme Court Rules 2000 (Tas), r401.
Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; Cretazzo v Lombardi (1975) 13 SASR 4; Burnie Port Corporation Pty Ltd v Bank of Western Australia Ltd (No 3) (2003) 12 Tas R 325, followed.
Aust Dig Procedure [574]

REPRESENTATION:

Counsel:
           Plaintiffs:  N Munting
           Defendant:  K E Read SC

Solicitors:
           Plaintiffs:  Wallace Wilkinson & Webster
           Defendant:  HWL Ebsworth Lawyers

Judgment Number:  [2014] TASSC 21
Number of paragraphs:     15

Serial No 21/2014

File No 694/2010

ASSOCIATED FOREST HOLDINGS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) and NORTH LIMITED and STEPHEN JOHN LOWRIE (By his Administrator The Public Trustee) v GORDIAN RUNOFF LIMITED (No 2)

REASONS FOR JUDGMENT  TENNENT J

15 April 2014

1. Following a trial in this action, judgment was ordered for the defendant against the plaintiffs. The plaintiffs were, to all intents and purposes, wholly unsuccessful. The parties have been unable to agree on the appropriate orders which should be made as to costs. While the plaintiffs do not dispute that there should be an order that they pay the defendant's costs of the action, they submit that they should not be obliged to pay the entirety of those costs, only a percentage.

2. When the costs issue was first sought to be listed, counsel for the plaintiffs advised the Court that the plaintiffs sought the following:

   "1.Pursuant to Rule 401(2) of the Supreme Court Rules 2000 (Tas), the Defendant pay the Plaintiffs' costs, as agreed or taxed, of proving that the Second Plaintiff was, at the date of his accident on 22 May 1987, a 'worker' within the meaning given to that term by section 3 of the Workers' Compensation Act 1927 (Tas) as set out in paragraph 8 of the Plaintiffs' Notice to Admit dated 8 March 2012.

   2.The Defendant pay Rio Tinto Limited's reasonable costs of complying with the subpoena issued to it in the proceeding as agreed or taxed."

   Pursuit of the first order was abandoned at the commencement of the hearing. As to the second order sought, that was left in abeyance because of difficulties identified in pursuing it in the context of this application.

3. Nevertheless, counsel for the plaintiffs pursued an order which provided it only pay a portion of the defendant's costs, requesting that the Court determine what that portion should be. The basis of the submission was that the plaintiffs succeeded in what was a significant issue on the trial. That issue was whether or not Stephen Lowrie was a worker. While it is fair to say that the issue of whether Mr Lowrie was a worker underpinned a number of other issues raised by the plaintiffs, it did not underpin all and, save for the plaintiffs being successful on that discrete issue in that I found the Mr Lowrie was a worker, the plaintiffs were unsuccessful on all the interrelated issues.

4. In respect of the issue relating to Mr Lowrie's status, there was no dispute as to the law to be applied and all parties agreed it was a question to be determined on the particular facts of this case. The evidence was not extensive. The issue was determined in eight paragraphs in a judgment which occupied 153 paragraphs covering numerous issues.

5. There is no dispute that costs are in the discretion of the Court, but that the "usual" rule is that costs follow the event.

Submissions by counsel for the plaintiffs

1. Counsel commenced his submissions by referring to [9] of the decision of Toohey J in Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382, where his Honour said:

   "9. The discretion must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.

   1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v. Godfrey (1920) 2 KB 47.

   2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v. Farquhar (1893) 1 QB 564.

   3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, 'issue' does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v. Lombardi (1975) 13 SASR 4 at 12."

2. Counsel went on to refer to the decision of Cretazzo v Lombardi (above) where at 16, Jacobs J said:

   "Having said that, I would wish to sound a note of cautious disapproval of applications, which are being made with increasing frequency, to apportion costs according only to the success or failure of one party or the other on the various issues of fact or law, which arise in the course of a trial.  It is true that in the case of Foster v Farquhar, which is often relied upon, a successful plaintiff, acting throughout in good faith, was deprived of his costs and ordered to pay the defendant's costs on certain issues.  But there are two things to notice about that case.  In the first place, it was a jury trial, and the relevant rule (Order LXV, rule 1) under which the general discretion was conferred carried a proviso, that 'where any action … is tried by a jury, the costs shall follow the event unless the judge … shall for good cause otherwise order.'  The general discretion of the Court was not being invoked.  Secondly, the plaintiff claimed damages for breach of contract under four distinct heads, in total some three hundred and ninety-four pounds, but his verdict was for only twelve guineas, being less than half the claim under one head of damage.  The three severable heads of damage, in respect of which the defendant was awarded costs, did not flow from the defendant's breach, and in respect of those severable items the claim was misconceived.  But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law.  The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.  There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike.  I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues." 

3. In Burnie Port Corporation Pty Ltd v Bank of Western Australia Ltd (No 3) (2003) 12 Tas R 325, Underwood J (as he then was) dealing with a costs application referred to both Hughes and Cretazzo. He then said at[27]:

   "27 In J D M Investments Pty Ltd v Toddern Pty Ltd [2000] NSWSC 432, Hamilton J at par4 adopted the following passage from Ritchie's Supreme Court Procedure [52A.11.2]:

   'The general approach taken by the courts in these situations is that it will ordinarily be appropriate to award the costs of proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed - unless a particular issue or group of issues is clearly dominant or separable: Waters v P C Henderson (Aust) Pty Ltd (CA(NSW), 6 July 1994, unreported) (which approved the proposition stated in this note) ...'."

4. Counsel submitted that the issue of whether or not Mr Lowrie was a worker was fundamental to the plaintiffs' action, and therefore any award of costs against the plaintiffs should be reduced by such amount as reflects the plaintiff's costs of establishing Mr Lowrie was a worker.

Defendant's submissions

1. Counsel for the defendant submitted there was no fundamental disagreement as to the facts of this matter or the law. It was a question of emphasis. As Toohey J said in Hughes (above) at [9], costs will ordinarily follow the event and a successful litigant should receive his costs in the absence of special circumstances justifying some other order.

2. Counsel submitted that the defendant had no option but to litigate the issue because it fed into a number of other issues to be determined on the trial. It was not an issue which was "separable". The comments of Jacobs J at 16 in Creatazzo (above) were apposite.

3. Counsel further submitted that the plaintiffs had sought to utilise the mechanism provided for in the Supreme Court Rules 2000, r401, but had "got it wrong". By this application they were effectively trying to have a second bite of the cherry.

Conclusion

1. The plaintiffs should, in my view, fail in this application.  The defendant was ultimately wholly successful in the action. It succeeded in respect of almost all the issues raised. The action involved a significant amount of money. It was not a matter where the defendant should have been expected to capitulate in respect of an issue which depended on a finding of fact which was not a finding which would be made in favour of the plaintiffs with any certainty where the finding underpinned a number of other issues. The issue was not separable.

2. There was no circumstance of any special nature which justified departure from the usual rule.

3. There is an order that the plaintiffs pay the defendant's costs of the action.