Ausbulk Ltd v Evison (Trading as Evison Grain & Transport) (No 2) - [2010] SADC 165

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
AUSBULK LTD v EVISON (TRADING AS EVISON GRAIN & TRANSPORT) (NO 2)
[2010] SADC 165
Decision of His Honour Judge Barrett
22 December 2010
PROCEDURE - COSTS
Judgment was entered in favour of the defendant on one of three defences he pleaded to the plaintiff's claim. The other two were dismissed. The plaintiff submits the defendant is not entitled to costs on the two losing defences.
Held: One of the two unsuccessful defences overlapped considerably with the successful defence. The other losing defence was severable. It was unmeritorious and unnecessarily prolonged the proceedings. The defendant will have his costs on the first, but not the second unsuccessful defence.
District Court Civil Rules 2006 r 263(1); r 87; Trade Practices Act 1974 s 52, referred to.
Cretazzo v Lombardi (1975) 13 SASR 4; Hansen Yunken (SA) Pty Ltd v Russell and Ors (1992) 168 LSJS 101; Forlyle Pty Ltd v Tiver and Ano [2007] SASC 464; Oshlack v Richmond River Council (1998) 193 CLR 72; Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261; Deacon Pty Ltd v Sebel Furniture Ltd [2003] FCA 282, considered.

AUSBULK LTD v EVISON (TRADING AS EVISON GRAIN & TRANSPORT) (NO 2)
[2010] SADC 165

I delivered judgment for the defendant in this matter on 24 June 2009. I dismissed the plaintiff’s claim for payment for losses suffered by it when the defendant failed to perform two contracts. On the same day I ordered the plaintiff to pay the defendant’s costs to be taxed or agreed.
There has arisen a dispute between the parties about the costs that the plaintiff should pay. The plaintiff asserts that, while judgment has been entered in favour of the defendant, that judgment is based upon a finding favourable to the defendant on only one of three defences it raised. On the other two defences the judgment was favourable to the plaintiff. The plaintiff submits that the raising of the two unsuccessful defences took up a substantial part of the plaintiff’s preparation for trial and a substantial part of the time during the trial.
The defendant submits that it has received judgment in its favour. It did not initiate the litigation. The general rule is that costs follow the event. The defendant litigated his defences bona fide. He should not suffer in costs because two of his defences failed.
Rule 263(1) of the District Court Rules provides, “As a general rule, costs follow the event”.
Factual background at trial
The plaintiff is a large scale grain merchant. The defendant is a road transport carrier who also traded in grain. The parties entered two contracts for the supply and purchase of grain. The defendant did not complete the contracts. As a result the plaintiff suffered loss. The plaintiff sought to recover its monetary loss from the defendant. The defendant denied he was liable to pay. He did so on three grounds.
First, he claimed that he entered the agreements in reliance on a collateral promise that the plaintiff would extend him sufficient credit to enable him to complete the contracts (the “collateral promise” defence).
Second, the defendant claimed that the plaintiff rendered it impossible for him to perform his part of the contracts because it refused to load his trucks with grain (the “refusal to load” defence).
Third, he claimed that the plaintiff engaged in misleading and deceptive conduct contrary to s 52 of the Trade Practices Act, and, by such conduct, induced him to enter into the contracts (the “Trade Practices Act” claim).
I found in the defendant’s favour on the third ground only. I rejected the first two defences.
How the issues were presented at trial
For convenience I will refer first to the second defence, the “refusal to load” defence. The defendant asserted that the plaintiff had refused to load his “convertible” trucks with grain. Convertible trucks are flatbed trucks which can be converted to carry grain. Gates are raised at the perimeters of the flatbeds and material then lines the cargo area so that the grain can be poured in. The plaintiff had adopted a policy of not permitting the carriage of grain in these sorts of trucks. It had plainly done so for safety reasons. There had been the death of a worker caused by the use of such trucks. I found that the plaintiff had not treated the defendant in a discriminatory fashion in adopting that practice. There was evidence of a notification by the plaintiff to transport operators of the change in practice. However there may have been some latitude allowed because at times the defendant had been permitted to carry grain on his convertible trucks. Nevertheless it was clear early in the trial that this defence had no foundation. Counsel for the defendant abandoned that defence. In my view it should have been clear to the defendant before trial that this defence lacked merit. There is no suggestion that the defendant deliberately persisted to trial with this defence for any ulterior motive, such as seeking revenge, or dragging out the trial. However, I think that it should have been clear to the defendant and his legal advisors before trial that the plaintiff was not seeking to prevent him from performing his contracts by refusing to load his convertible trucks. That defence never had any merit and should never have been raised, or at least not persisted in at trial.
The first defence, the “collateral promise” defence, was somewhat more complicated. Essentially all relevant communications bearing on this and the third defence were between the defendant himself and Mr Wilsden, a grain trader employed by the plaintiff. In particular I found that the defendant communicated only with Mr Wilsden on the topic of what credit he would be granted by the plaintiff so that he could carry out his part of the contracts. The finance section of the plaintiff had the only authority to grant credit and that section dealt with the paperwork, but all relevant communications between the parties on the topic of credit were between Mr Wilsden and the defendant. As the trial proceeded it became relatively clear that there had never actually been a promise by Mr Wilsden to the defendant that the credit he needed would be extended. It became clear after Mr Wilsden’s evidence that the defendant could not suggest that Wilsden had made a promise to grant credit. It became clear that there had been no contract for the required credit between the plaintiff and the defendant. There had been a contract for a lesser sum but not one for the amount required by the defendant to perform the contract.
The plaintiff concedes that there is an overlap in the evidence relating to the collateral contract and the Trade Practices Act defences. I think it is a substantial overlap. Without being able to be precise, I think that most of the evidence led on the Trade Practices Act defence would have had to be led on the collateral contract defence. All the communications between Mr Evison and Mr Wilsden were relevant to both defences. I think that most of the documentation relating to the credit given by the plaintiff to the defendant was relevant to both defences. I recognise that the Trade Practices Act defence was one pleased late in the history of the litigation. Nevertheless the plaintiff succeeded on that defence. Where the defendant has been successful on the Trade Practices Act defence I do not think he could be denied his costs on the collateral contract defence. I so find.
The question remains whether the defendant should be denied his costs on the refusal to load defence.
When I delivered judgment on the substantive case I ordered the plaintiff to pay the defendant’s costs. At the time there was no argument put by either party that there should be any exception to the general rule. I made the costs order at the time I delivered judgment and the plaintiff’s counsel had not had time to digest the judgment. The defendant submits that the plaintiff should not now be able to seek qualifications to the costs order. I reject that submission. The District Court Rules provide for just this sort of application. Rule 87DCR 84.12 says,
The court may vary or set aside a judgment and order at any time if the justice of the case so requires”.
Rule 87DCR 101.01(4) says,
The court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding and after conclusion of the proceeding.
Of course it is an exercise of the judicial discretion whether an order should be made qualifying the original order. The discretion is unfettered but must be exercised only in relation to the litigation[1].
[1] Hansen Yunken (SA) Pty Ltd v Russell and Ors (1992) 168 LSJS 99 at 102 per Debelle J.
The defendant relies on dicta of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16. His Honour said,
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.
Dicta in more recent cases suggest a different approach. For example, in Baulderstone Hornybrook Pty Ltd v Qantas Airways Ltd [2003] FCA 324 at [4]. Finklestein J said:
The days when a plaintiff could, with impunity, mount an attack on several fronts, some with little prospect of victory, in the hope of a direct hit in the recovery of all costs must be put behind us[2].
[2] See also Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 (Full Federal Court of Australia) and Deacon Pty Ltd v Sebel Furniture Ltd [2003] FCA 282 at [13] per Alsopp J.
Mr Riggall for the defendant submits that the defendant should only be denied its costs if it is guilty of misconduct. In support of that proposition he cites the judgment of Debelle J in Forlyle Pty Ltd v Tiver and Ano [2007] SASC 464 particularly at [29]. His Honour referred to remarks of McHugh J in Oshlak v Richmond River Council who in turn relied upon the principle annunciated by Devlin J in Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, to this effect:
No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.
McHugh J went on to describe misconduct as including circumstances where a party had invited the litigation, unnecessarily protracted the proceedings or prosecuted the matter solely for the purpose of increasing costs.
I do not take Debelle J to be saying that a successful party’s behaviour warranting a denial of costs must amount to misconduct exclusively of the type referred to. The costs discretion is a wide one. However I note that one of the behaviours amounting to misconduct is unnecessarily protracting the proceedings. I think that Forlyle v Tiver is distinguishable from the present case. In that case the trial judge had ordered a successful party to pay the defendant’s costs in respect of one issue which it lost. I note also that Devlin J appears to qualify his reference to misconduct by the remark that a successful party ought not be required to pay the costs of the other side. In this case the unsuccessful plaintiff is not seeking its own costs in respect of the refusal to load defence. It is merely seeking to have the defendant denied his costs on that point.
Returning to the facts of this case, I think the refusal to load defence was unmeritorious from the beginning. I think it should have been obvious before the trial began that there would be no evidence to support it. The refusal to load defence was quite separate from the other two defences. No evidence relevant to that point was relevant to any other defence.
At trial this defence required the calling of two witnesses (Gale and Standen) and the defendant gave evidence of it. From the affidavit of Marco Runjajic sworn on 12 July 2010 and filed by the plaintiff on the costs argument, the defence does seem to have assumed some importance in the pleadings and pre-trial preparation. It is difficult to be precise about what proportion of the overall legal work done in the litigation was devoted to this defence. It is not realistic to attempt an arithmetic exercise to arrive at the proportion. Doing the best I can with the available information I determine that the refusal to load defence required 10 per cent of the plaintiff’s lawyer’s attendances. I would deny the defendant 10 per cent of its costs.
Conclusion
I vary the order for costs made on 24 June 2009 by ordering that the plaintiff pay the defendant’s costs except in respect of attendances related to the refusal to load defence which I fix at 10 per cent. The plaintiff must pay 90 per cent of the defendant’s costs.