Blackburn v Logos Research Pty Ltd (No 2) - [2016] SADC 19

District Court of South Australia
(Civil)
BLACKBURN & ANOR v LOGOS RESEARCH PTY LTD & ORS (No 2)
[2016] SADC 19
Judgment of His Honour Judge Slattery (ex tempore)
9 February 2016
PROCEDURE - COSTS
The plaintiffs obtained a summary judgment on 23 December 2015 based on a settlement agreement made between the parties on 12 September 2014. One term of the settlement agreement was that the parties agreed to ask the Court to decide the question of costs. The plaintiffs seek an order for the costs of the commencement of the action from 17 September 2013 to date. The first and third defendant contend that in the absence of a decision by the Court on the merits, the only appropriate order is “no order as to costs”.
Whether either of the parties were entitled to costs of any portion of the proceedings.
Whether plaintiffs were entitled to costs of the proceedings after the settlement of the proceedings (from 18 September 2013 to date).
Whether the plaintiffs were entitled to costs of the hearing on 18 January 2016.
Held:
1. That all extant orders for costs should stand.
2. That for the period between 17 September 2013 to 17 September 2014, no order for costs should be made.
3. That the plaintiffs have the costs of the proceedings from 18 September 2014 to date.
4. In relation to the argument on costs, an order for costs in favour of the plaintiff including a certificate for Counsel.
Boscaini Investments Pty Ltd & Ors v Corporation of the City of Kensington and Norwood [1999] SASC 327; Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283; Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, considered.

BLACKBURN & ANOR v LOGOS RESEARCH PTY LTD & ORS (No 2)
[2016] SADC 19
JUDGE SLATTERY

The plaintiffs made claims against the first defendant under an action for private nuisance and for other associated remedies. The parties resolved the plaintiffs’ claim by an agreement that was recorded in an exchange of correspondence and was announced to the Court on 17 September 2014. The first defendant then purported to deny the existence of the settlement agreement and filed further Defences and cross actions against the second defendant. By judgment of 23 December 2015 the Court made an order for summary judgment under 6R 232 and 6R 233 of the District Court Civil Rules of the settlement agreement. The Court found that the plaintiffs and the first defendant had resolved the legal issues arising between them under the terms of their settlement agreement.
The other extant issues in the action were then set for hearing in January 2016.
Under the settlement agreement which the Court found had a binding effect on the parties, there was a term that the issue of costs between those parties should be resolved by the Court. This judgment resolves this issue of costs as between plaintiff and the first defendant in the action. The plaintiffs now seek an order for costs from the commencement of the action (17 September 2013) to date.
Background to the proceedings
Notwithstanding the content of the submissions that have been made to me, I can see no benefit in taking time any further to consider my decision in this matter. By my orders of 23 December 2015, I gave judgment in relation to an application by the plaintiffs under Rules 232(1), (2) and 233 of the District Court Rules 2006 for summary judgment. The plaintiffs also sought specific performance of the settlement agreement.
The summary judgment application was in relation to the settlement agreement alleged to have been made between the plaintiffs and the first defendant on 12 September 2014. That agreement was alleged to have compromised the whole of the plaintiffs' claim against the defendant.
My judgment of 23 December 2015
In my judgment I found in favour of the plaintiffs. I found that the plaintiffs were entitled to an order for summary judgment on those terms. In my orders I found that the plaintiffs and the first defendant had made an enforceable contract on 12 September 2014, reflected in an exchange of correspondence from the first defendant's solicitor to the plaintiffs' solicitor dated 11 September 2014, and a letter of acceptance from the plaintiffs' solicitor to the first defendant's solicitor dated 12 September 2014. I also found that there was no reasonable basis for the first defendant to defend the claim of the plaintiffs.
In my judgment I set out in greater detail than would usually be the case the background of the matter. I did that for a number of reasons including that in the hearing before me there was no appearance for the first and third defendants. The issue in relation to the judgment arose out of an exchange of correspondence which I set out at paragraphs [81] and following of my decision.
The letter of offer
Paragraphs 8 and 9 of the letter of offer by the first defendant to the plaintiffs read as follows:-
8. That the plaintiffs pay the first defendant costs of and incidental to the proceedings on a party/party basis as agreed or taxed save as to the costs order made in relation to the vacation of the hearing in December 2013 (Vacated Hearing). That the first defendant pays to the plaintiffs the costs of the Vacated Hearing in the amount of $5,000 or as taxed on a party/party basis.
9. This offer can be accepted in writing up to 2.00 pm on 12 September 2014 and after this time the offer will lapse. This offer can be accepted with or without paragraph 8. If paragraph 8 is not accepted then the matter of costs can be listed for argument.
Paragraph 8 of the letter of offer of the first defendant to the plaintiffs was that the plaintiffs should pay the first defendant's costs of and incidental to the proceedings on a party-party basis as agreed or taxed, save as to costs orders made in relation to the vacation of a hearing date in December 2013.
Paragraph 9 of the offer stipulated that the offer could be accepted in writing up to 2 p.m. on 12 September 2014, and after that time the offer would lapse. It then said that the offer could be accepted with or without paragraph 8. If paragraph 8 is not accepted, then the matter of costs could be listed for argument.
By letter of 12 September 2014, which I have set out in paragraph [82] of my judgment, the plaintiffs accepted the offer except paragraph 8, and contended that they were entitled to an order for costs in their favour of $72,000 (as a compromise), but in the event that that position was not accepted by the first defendant the matter could be determined once the agreed terms have been put into effect.
The directions hearing on 18 January 2016
The hearing before me today arises out of the fact that following the delivery of my judgment on 23 December 2015, a hearing took place in this court on 18 January 2016. At that time all issues between the parties, save and except this question of costs, was resolved as between the plaintiffs and the first defendant. The first defendant submitted to an order for specific performance of the contract made between the parties by their exchange of correspondence of 11 and 12 September 2014. I refer in particular to paragraph [157] of my judgment of 23 December 2015. It is necessary to have regard to that paragraph when considering the resolution of the issues before me today.
The remedy of specific performance
In my judgment of 23 December 2015 I considered the question of specific performance as part of the orders that had been sought by the plaintiffs in the application for summary judgment under Rules 232 and 233.
I came to the conclusion that although the principles were well settled, I had not received sufficient submissions on that issue in order for me to come to a conclusion about the request for an order for specific performance. I reserved that question for further consideration.
It was anticipated that on 18 January 2016, the plaintiffs would address the question of specific performance sought by them. Prior to 18 January 2016, the plaintiffs had filed further detailed written submissions and further affidavit material. Preparatory to the scheduled hearing, I had closely read this further material and I was familiar with its content. In the end, it was not necessary for me to finally decide that issue as the first defendant consented to an order of the Court for specific performance of the settlement agreement. I made those orders by consent. On the materials before me at the time, such an order was appropriate in all of the circumstances.
I have therefore now made an order for specific performance following an agreement between the parties dated 12 September 2014 for the construction of a retaining wall on the Blackwood property.
Another issue to be ventilated on 18 January 2016 was the issue of the counterclaim as between the first defendant and the second defendant, SA Water. That matter was resolved prior to 18 January 2016 and no further issues arise for resolution in that action.
The main issue: the costs arising out of the settlement
The issue that remains is the question of costs of the action that are to be dealt with by the Court arising out of the settlement reached between the parties. The plaintiffs now seek an order for the costs of the action from commencement on 17 September 2013. The first defendant resists that application.
I think that the plaintiffs' costs fall into two categories. The first is the costs up to and including 17 September 2014 which was the date upon which the settlement between the parties was announced to the court. On that date the court adjourned the matter to February 2015 to allow the terms of settlement to be carried into effect.
The second period in relation to costs is the period from 17 January 2014 to date. The plaintiffs seek an elevated order for costs on the basis that the actions of the first defendant in refusing to comply with the terms of settlement were unreasonable. The first defendant concedes that the costs of the summary judgment application should be the costs of the plaintiffs in any event. Otherwise the first defendant contends that there should be no order as to costs. There has been no judicial resolution of the legal issues between the parties and it is not appropriate for the Court to make an order as to costs as a result.
Principles for the award of costs
I will deal with the two periods separately.[1] The relevant principles that guide me in the exercise of my unfettered discretion, are summarised in the decision of Debelle J in Boscaini Investments Pty Ltd & Ors v Corporation of the City of Kensington and Norwood.[2] In paragraph [1] Debelle J summarised the position in those proceedings as follows:-
[1]In these proceedings, the plaintiff had applied for orders invalidating and setting aside certain resolutions of the defendant Council. Before the applications were heard, the Council rescinded the resolutions with the consequence that no issues remained for determination. The plaintiff now applies for an order that it recover its costs. Neither party wishes to prosecute the matter given that the only outcome would be an order as to costs. In order to determine the application for costs, it is necessary to note briefly the history of the action and related events.
[1] The two relevant periods are 18 September 2013 to 17 September 2014 and from 17 September 2014 to date.
[2] [1999] SASC 327.
When considering issues of costs in those particular factual circumstances, Debelle J addressed the relevant principles commencing at paragraph [14] of his Honour's decision, which reads as follows:-
[14]The court has a discretion whether to order costs and that discretion must be exercised judicially. There is no ready answer to the question whether an order for costs should be made in circumstances such as these. Several decisions illustrate the relevant principles. As will be seen, much will depend on the facts and circumstances of each individual case.
At paragraph [21] of his decision, Debelle J discussed the decision of Hill J in Australian Securities Commission v Aust-Home Investments Ltd[3] and in particular the summary of principles set out by Hill J at page 530, as follows:-
[3] (1993) 116 ALR 523.
[21]In Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523 Hill J referred to these authorities and extracted certain propositions. In that case, the Australian Securities Commission had, in the course of an investigation, obtained orders that receivers be appointed to the assets of several corporations and individuals then under investigation. When the investigation was complete, applications were made to determine who should bear the costs of the parties and the costs of the receivers. With one exception, which need not be noted, Hill J made no order as to costs. Hill J extracted the following principles from the cases (at 530).
"(1)    Where neither party desires to proceed with litigation the court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford and the SEQEB case.
(2)     It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial: Stratford, supra. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.
(3)     In determining the question of costs it would be appropriate, however, for the court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB).
(4) In a particular case it might be appropriate for the court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371.
(5) Where the proceedings terminate after interlocutory relief has been granted, the court may take into account the fact that that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd (in liq) [1973] 1 NSWLR 603 at 606, a case which, however, depended upon the specific wording of the statute under consideration."
These propositions have been followed and applied in Booth v Helensvale Gold Club Ltd [1997] 2 Qd R 141 and in Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283. In the latter case Finkelstein J added (at 287):
"For my own part I should wish to emphasise that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in special circumstances. To do otherwise would require some prediction of the outcome of the case. It seems to me that the third proposition stated by Hill J was intended to cover the situation where the Court was in fact able to form a clear view about the merits of a case without a trial. So, if a claim is patently hopeless that would be a good reason to make an order for costs against the claimant. Likewise if a defence was bound to fail that would be good reason for awarding costs in favour of the claimant. But I venture to suggest that there will be very few cases where the issues will be sufficiently clear, in the absence of a hearing, for an order for costs to be made in favour of a party."
I respectfully agree.
Debelle J identified that the propositions from the decision of Hill J had been applied in a number of cases. In particular, reference was made to the decision of Finkelstein J in Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283 at 287. Debelle J agreed with what fell from Finkelstein J in Gribbles that:-
... In the absence of a hearing on the merits, it is difficult to see how any order, other than an order that each party bear its own costs can be made except in special circumstances.
Debelle J did not attempt to define what would constitute special circumstances except to say:-
If a court was able to form a clear view about the merits of a case without a trial, so that if a claim was for example patently hopeless, that might be a good reason to make an order for costs against the defendant, likewise if the defence was bound to fail, that would be a good reason for awarding costs in favour of the claimant, however I have said that those matters are of only limited assistance because they are all questions of fact to be determined according to the relative merits of the matter.
In Gribbles Finkelstein J suggested that there would be very few cases where the issues would be sufficiently clear in the absence of a hearing for an order for costs to be made in favour of a party. Debelle J agreed with those comments which are reflected in principle number 2 set out by Debelle J in paragraph [21] of his Honour's judgment.
Reference was also made to the decision of Goldberg J in Yates Property Corporations Pty Ltd v Boland.[4] Goldberg J referred to Australian Securities Commission v Aust-Home Investments Ltd and Gribbles Pathology as the appropriate authorities where a Court is asked to determine the issue of costs although the matter did not proceed to determination on the substantive issue before the Court. In Yates, the costs issue arose out of an amended cross-claim by Abbott Tout (represented by Boland) against Mr Simos and a second cross-respondent filed on 13 October 1995, a motion filed by Abbott Tout on 25 January 1999 for leave to further amend its cross-claim and an application by Mr Simos to dismiss Abbott Tout’s cross-claim.
[4] [2000] FCA 1106 .
The actions did not have to be determined by Goldberg J because the High Court dismissed the principal claim initiated by Yates on 9 December 1999.
Goldberg J held in paragraph [7] that he could determine the relevant costs issues based on the anticipated outcome of the applications because his Honour was well advanced in the preparation of his reasons for judgment. His Honour explained that a hearing on the merits [for the applications] had occurred and all relevant matters were fully argued. He was familiar with the cases of the parties and was well advanced in writing his decision after the close of the parties’ cases. He was therefore in a different position than Debelle J in Boscaini and Finkelstein J in Gribbles.
Goldberg J held in paragraph [9] that he would have granted Abbott Tout leave to amend its cross-claim and he would have dismissed Mr Simos’ application to dismiss the cross-claim. His Honour accordingly made costs orders.
Application of the principles to this matter
The first defendant placed special emphasis upon the fact that the principle that no order for costs should be made particularly applied where a trial on the merits would involve complex factual matters and where credit could be an issue. I am unable to say in this matter whether credit could be an issue but I am satisfied from what I know of the matter, and this is reflected in my judgment of 23 December 2015, that there would be complex factual matters involved and certainly complex matters of law.
The first period: 17 September 2013 to 17 September 2014
I am satisfied that in the period between the commencement of the proceedings and the settlement of the proceedings, I am not in a position to make an order as to costs absent a hearing on the merits based upon the factual position as it pertained prior to 17 September 2014 and applying the authorities discussed above. In those circumstances, the appropriate order is that each party bear own costs. I turn to the second period.
The second period: 17 September 2014 to date

I am satisfied that by no later than 17 September 2014 and, more accurately, 12 September 2014, the first defendant was bound by a contract which it had entered with the plaintiffs. That contract was announced to the court on 17 September 2014 and the first defendant had the benefit of an adjournment of the trial at that time to allow the terms of settlement to be carried into effect. As is reflected in my judgment, there is no doubt that the parties were treating the matter as resolved, that the binding contract had been entered into between them, that the binding contract would be carried into effect and that the matter could be adjourned for that purpose.
The first defendant then attempted to avoid the contract that it had made. It attended court through a number of solicitors and counsel, filed pleadings which purported to challenge the existence of the agreement and joined issue with the existence of the agreement and the enforceability of it against the first defendant. I have resolved that matter. In my judgment of 23 December 2015 I have found there was no proper basis for the defendant to take that stance.
In those circumstances, for the period after 17 December 2014, I am in a similar, but not identical position, to that faced by Goldberg J in Yates Property Corporation Pty Ltd v Boland.[5] I have heard the merits of the application for summary judgment and, different to Goldberg J in Yates I have also determined that issue. I am therefore in a stronger position than Goldberg J in Yates, to determine this issue.
[5] [2000] FCA 1106.
I am satisfied that in those circumstances the plaintiffs should have their costs of the proceedings on and from 17 September 2014. That also includes the question of the order for specific performance. In summary, the contentions of the first defendant in relation to that matter are that as that matter has not been resolved by a contested hearing, that no order for costs should be made in relation to it. I am unable to agree with that submission.
The difficulty that I faced in the judgment delivered on 23 December 2015 was complicated by a number of issues: one was the defendants were unrepresented and the second was that having regards to the material before me I had not received sufficient submissions on the matter to enable me making an order for specific performance. I was not satisfied that all of the relevant principles had been properly addressed. In the position which I found myself, I was satisfied that it was necessary for the plaintiffs to further address those matters. I gave leave to the parties to bring further submissions and place further evidence before the Court.
Costs of the hearing on 18 January 2016 regarding specific performance
I have had regard to the further material files and the submissions made by the plaintiffs in writing tendered before me today in relation to the question of specific performance. Having regard to the material before me at the hearing of the application for summary judgment, and having regard to the further material filed with the Court by the plaintiffs, I am satisfied that the plaintiffs should have the costs of the hearing on 18 January 2016 in relation to the aspect of specific performance.
Indemnity costs
The plaintiffs sought indemnity costs for proceedings relating to the enforcement of the agreement dated 12 September 2014. I reject that submission on the basis that I do not find it was so unreasonable for the defendant to refuse the plaintiffs’ request to honour its obligations arising from the 12 September agreement that an order for indemnity costs should be made in their favour.
The principles which guide the award of indemnity costs are expressed by his Honour Sheppard J in the case of Colgate-Palmolive Company v Cussons Pty Ltd[6] at pages 232 – 234. His Honour held that generally the Court would only order costs on a party-party basis. The circumstances of a case must be such as to warrant the Court to depart from the norm. The award of indemnity costs depends on the particular facts and circumstances of each case. The question must always be whether the particular circumstances warrant the making of an order for indemnity costs rather than the usual party-party basis. His Honour stressed that in any case, the award of such costs are always in the discretion of the trial Judge.
[6] (1993) 46 FCR 225.
In my judgment of 23 December 2015 I have canvassed at length the factual assertions of the first defendant that stood behind the first defendant’s refusal to comply with the contract of settlement. Although those reasons were not sufficient to withstand the R232/R233 application of the plaintiffs, I am unable to say that the failure of them was sufficient to warrant an elevated costs order.
Taking into account the authorities that bind me, I find that there were no or no sufficient facts and circumstances that warranted the exercise of my discretion to award indemnity costs.
Party-party costs
The plaintiffs argue that if they were unsuccessful in their application for indemnity costs, they seek party-party costs against the defendant. I am satisfied in the exercise of my discretion, that the plaintiffs should have their costs on a party/party basis including the further costs of the application for specific performance.
The third defendant
One issue remains extant. Interlocutory orders have been made against the third defendant. No final orders have been made so the earlier interlocutory orders remain. For the sake of completeness this final issue must be dealt with by the parties. The court will accommodate any application concerning the third defendant under the general liberty to apply.
Orders
The formal orders as to costs are as follows:-
1.   That all extant orders for costs made by the Court in favour of any party should stand;
2.   That for the period between 17 September 2013 to 17 September 2014, there be no order for costs;
3.   That the plaintiffs have the costs of the proceedings from 18 September 2014 to date on a party/party basis;
4.   In relation to the argument today I make an order for costs in favour of the plaintiff. Certified fit for counsel.