Cosenza v Roy Morgan Interviewing Services Pty Ltd (No 2) - [2019] SASC 110

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
COSENZA v ROY MORGAN INTERVIEWING SERVICES PTY LTD (No 2)
[2019] SASC 110
Judgment of The Honourable Justice Parker
28 June 2019
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - COSTS
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE
This judgment concerns the costs of an appeal.
The appellant appealed against an order of the Magistrates Court setting aside a default judgment which had been issued in favour of the respondent in an action for trespass. The appeal was dismissed on all grounds.
The appellant concedes that the Court should order that he pay the respondent’s costs of the appeal, but resists the respondent’s application for costs to be awarded on a solicitor/client basis.
Held, per Parker J, awarding costs of and incidental to the appeal to the respondent on a party/party basis:
1. To depart from the general rule in r 264(2) of the Supreme Court Civil Rules 2006 (SA) and award costs on a solicitor/client or indemnity basis under r 264(5), the Court must be satisfied of some unreasonable conduct by the party ordered to pay costs, albeit that the impugned conduct need not necessarily rise as high as vexation (at [14]).
2. The unreasonable conduct by the party ordered to pay costs may relate to the refusal of a settlement offer (at [14]).
3. If the Magistrates Court found that the claim was vexatious, and/or that the claim was not properly served upon the respondent, those matters would be relevant considerations in the exercise of the costs discretion in that Court, but are not relevant to the costs of the appeal to this Court (at [16]).
4. The action of warning of an intention to seek indemnity costs is not of itself so unreasonable as to justify departure from the general rule as to party/party costs (at [17]).
5. The appellant’s decision to reject a settlement offer was not so unreasonable as to justify departure from the general rule as to party/party costs, as although his appeal was unsuccessful it was not devoid of merit nor clearly unarguable (at [19]-[21]).
6. It is not appropriate to make any order as to the costs incurred in arguing the basis upon which the costs of the appeal should be determined (at [23], [24]).
Supreme Court Civil Rules 2006 (SA) rr 263, 264, referred to.
Rosniak v Government Insurance Office (1997) 41 NSWLR 608, applied.
Cosenza v Roy Morgan Interviewing Services Pty Ltd [2019] SASC 95, considered.

COSENZA v ROY MORGAN INTERVIEWING SERVICES PTY LTD (No 2)
[2019] SASC 110

PARKER J: This judgment concerns the costs of an appeal.
For the reasons that follow, I order that the appellant pay the respondent’s costs of and incidental to the appeal, on a party/party basis.
Background
The appellant appealed against an order of the Magistrates Court setting aside a default judgment which had been issued in favour of the respondent in an action for trespass. On 6 June 2019, I dismissed the appeal on all grounds.[1] I published the judgment administratively in Chambers and granted both parties leave to make written submissions as to costs. [2]
[1] Cosenza v Roy Morgan Interviewing Services Pty Ltd [2019] SASC 95 at [51] (Parker J).
[2] At the hearing of the appeal, I indicated that because counsel and solicitor for the respondent had travelled from Melbourne and so as to avoid exposing the respondent to unnecessary expense, judgment would be delivered administratively in Chambers.
Both parties accept that the respondent is entitled to an order that the appellant pay the costs of the appeal.[3] However, the parties disagree as to the basis upon which costs should be awarded.
[3] Supreme Court Civil Rules 2006 (SA) r 263(1).
The respondent’s submissions
The respondent submits that the costs of the appeal should be awarded against the appellant on a solicitor/client basis. The respondent advances that submission on four grounds:
1The appellant’s claim is inherently vexatious, in that it is a claim for $100,000 for a brief alleged trespass, a sum which bears no resemblance to any actual damage or loss;
2There is a real question as to whether the respondent was actually served with the Magistrates Court claim;
3The appellant has made numerous threats to the respondent that he would seek indemnity costs if successful;
4The appellant unreasonably rejected a settlement offer made by the respondent the day prior to the hearing of the appeal.
In light of these matters, the respondent submits that costs should be awarded on a solicitor/client basis from 5 February 2019, being the day on which the settlement offer was made. The respondent suggests that its overall costs are likely to be modest as its in-house counsel acted as the instructing solicitor for the appeal.
The appellant’s submissions
The appellant concedes that the respondent should be awarded the costs of the appeal. However, he also submits that the respondent should not be awarded costs in respect of the present dispute as to the basis upon which costs are to be determined. He submits that the respondent should pay his costs of the argument as to costs.
The appellant notes that he had already, prior to the respondent preparing its submissions as to costs, consented to an order to pay the costs of the appeal (to be agreed or taxed). This was rejected by the respondent, who proceeded with the preparation of its submissions as to costs. The appellant suggests that the respondent has put him to the expense of preparing submissions as to costs out of “revenge” or “spite”.
The appellant further submits that there is no cogent basis for departing from the usual rule that costs are payable on a party/party basis.
As to the respondent’s submission that the claim is inherently vexatious, the appellant submits that trespass is actionable per se without proof of damage to person or property. Nominal damages do not vindicate a plaintiff’s right to determine who is permitted on their property.
The appellant submits that the respondent’s submissions regarding its rejection of the offer to settle are irrelevant to the costs of the appeal. The offer was to resolve the proceedings as a whole, not merely the appeal. Additionally, the offer was that each party should “walk away” and bear their own costs. That is not a reasonable offer to resolve the proceedings as a whole.
Consideration
The appellant concedes that the Court should order that he pay the respondent’s costs of the appeal, but resists the respondent’s application for costs to be awarded on a solicitor/client basis.
Rule 264(2) of the Supreme Court Civil Rules 2006 (SA) provides that:
As a general rule, however, costs are awarded as between party and party (that is, on the basis that the party entitled to the costs will be reimbursed for costs reasonably incurred by the party in the conduct of the litigation to an extent determined by reference to the scale of costs in force, under these Rules or the old rules, when the costs were incurred).
To depart from that rule and award costs on a solicitor/client or indemnity basis under r 264(5), the Court must be satisfied of some unreasonable conduct by the party ordered to pay costs, albeit that the impugned conduct need not necessarily rise as high as vexation.[4] The unreasonable conduct may relate to the refusal of a settlement offer.
[4] Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 (Mason P).
For the reasons that follow, I do not consider that the matters raised by the respondent justify a departure from the general rule that costs be awarded on a party/party basis, insofar as the costs of the appeal are concerned.
The first two of the four matters raised by the respondent (see [5] above) are not relevant considerations in so far as the costs of the appeal are concerned. If the Magistrates Court found that the claim was vexatious, and/or that the claim was not properly served upon the respondent, those matters would be relevant considerations when that Court exercised its discretion as to the costs of the claim. However, these two matters are not relevant to the costs of the appeal to this Court.
As to the matter of the appellant’s threats to seek indemnity costs if successful on the appeal, the respondent relies upon three emails sent by the appellant to James Yeatman, in-house counsel for the respondent. In each email, the appellant indicated an intention to seek indemnity costs if successful. The first of the three emails was sent on 27 September 2018, prior to the Magistrates Court setting aside the default judgment and the subsequent lodgement of the appeal against that decision. The email is therefore not relevant to the costs of the appeal. The latter two emails, dated 19 December 2018 and 16 January 2019, were sent after the commencement of the appeal. Those messages specifically refer to the appellant’s intention to seek indemnity costs should he succeed in the appeal. Although the issue raised in the messages is relevant to this Court’s discretion as to costs, the action of warning of an intention to seek indemnity costs is not of itself so unreasonable as to justify departure from the general rule as to party/party costs.
Some, but not all, of the correspondence exchanged between the parties or their solicitors about settlement was marked “without prejudice”. Other messages specifically stated that reliance would be placed on the correspondence in support of a claim for costs. Under these circumstances I consider that all of the correspondence exchanged about settlement should be treated as if it were specifically endorsed “without prejudice save as to costs”, i.e. it may be taken into account in deciding the costs question.
I turn to consider the appellant’s rejection of the settlement offer. On 5 February 2019, the respondent through Mr Yeatman, made an offer by email to the appellant’s solicitor, to “settle this matter on the basis that your clients discontinue all proceedings and Roy Morgan will not seek costs (in other words, settle the matter by walking away, both parties bearing their own costs).”
On 8 February 2019, the appellant’s solicitor rejected this settlement offer, and made a counter offer to “put 30k all in and each party bear the appeal costs.” Given that the respondent’s offer was for the appellant to “discontinue all proceedings”, it is apparent that its scope extended to the discontinuance of the appeal. As such, the rejection of the settlement offer is relevant to the exercise of this Court’s discretion as to the costs of the appeal.[5]
[5] Supreme Court Civil Rules r 263(3).
In so far as the settlement offer related to the appeal, I do not consider that the appellant’s decision to reject the offer was so unreasonable as to justify departure from the general rule as to party/party costs. Although ultimately unsuccessful, the appellant’s appeal was not devoid of merit, nor was it clearly unarguable. But for the content of documents that the appellant himself put before the Court, his contention that the respondent had failed to prove that it had an arguable defence on the merits may have succeeded.[6]
[6] Cosenza v Roy Morgan Interviewing Services Pty Ltd [2019] SASC 95 at [35]-[46] (Parker J).
I therefore find that there is no reason to depart from the ordinary principle expressed in r 264(2) that the costs of the appeal should be awarded on a party/party basis.
Notwithstanding that finding, I do not consider it appropriate that either party should pay the other’s costs incurred in arguing the basis upon which the costs of the appeal should be determined. My reasons are, first, while the respondent succeeded on the appeal, it failed in its claim for solicitor/client costs. Secondly, I consider that there was very little substance in the claim for solicitor/client costs on the appeal, as the matters raised were largely only relevant to the costs of the claim in the Magistrates Court. Thirdly, because of the two preceding considerations, I do not consider it just that the appellant should be required to pay the costs incurred by the respondent in arguing the basis upon which the costs of the appeal should be awarded. However, because the appellant failed in his appeal, I do not consider it equitable that the respondent should be required to pay any part of his costs. Thus, each party is to bear its own costs in relation to this aspect of the matter.
Conclusion
I order:
1Subject to Order 2 below, the appellant is to pay the respondent’s costs of and incidental to the appeal, on a party/party basis.
2Each party is to bear its own costs of and incidental to the dispute about the basis upon which the costs of the appeal should be awarded.