D v W (No 2) - [2011] SADC 165

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
D v W (NO 2)
[2011] SADC 165
Judgment of His Honour Judge Costello
24 October 2011
PROCEDURE - COSTS
Orders made in relation to both plaintiff's claim and defendant's counterclaim - although orders made on certain issues in favour of defendant plaintiff substantially successful in the action - application by the defendant for costs on issues upon which he succeeded dismissed - plaintiff sought orders for costs on indemnity basis for the action or in alternative the trial - not appropriate to depart from the usual order - plaintiff to have her costs of the action on a party/party basis.
De Facto Relationships Act 1996, referred to.
Cretazzo v Lombardi (1975) 13 SASR 4; Robinson v The Australian Association of Social Workers Ltd (2000) 210 LSJS 73; Adelaide & Ors v Hartford (Holdings) & Anor (No 10) [2002] SADC 102; Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248, considered.

D v W (NO 2)
[2011] SADC 165
Introduction

On 23 September 2011, I delivered my reasons in relation to the trial of this action. I indicated that, on the plaintiff’s claim, I was disposed to order a sale of the farm and the distribution of the proceeds of such a sale. I also indicated that I was satisfied that the plaintiff was entitled to an occupation rent from the defendant and to monies based upon the right of exoneration.
In relation to the defendant’s counterclaim I declined to extend the time within which to make a claim for division of property pursuant to the De Facto Relationships Act 1996 (“the Act”) or to make a declaration that he had a beneficial interest in assets (comprising real estate and business) acquired by the plaintiff.
I did indicate that I was disposed to make a declaration that the defendant had a beneficial interest in the farm greater than 50%.
The plaintiff has sought an order that the defendant pay her costs of action, to be adjudicated, if not agreed, on an indemnity basis. In the alternative she seeks an order that the defendant pay the costs of the trial on an indemnity basis. In the further alternative, she seeks the usual order for costs to be made in her favour on a party party basis.
The defendant opposes these orders and says that any order for costs should reflect the success that each party had in the action. In particular, having “succeeded” on issues relating to equitable accounting and beneficial ownership of the farm, he says that there should be an order for costs made in his favour in relation to the counterclaim.
The Defendant’s Application for Costs
I will first deal with the defendant’s application for costs.
Whilst it is true that the defendant has succeeded on the issue relating to him having a greater than 50% beneficial entitlement to ownership in the farm and in some respects on the issue of equitable accounting, it is clear from my reasons that it is the plaintiff who has been substantially successful in the trial of the action.
It is trite to observe that costs are in the discretion of the Court and, that my discretion to fashion an order for costs, as I see fit in the interests of justice, is largely unfettered.
Of course the discretion must be exercised judicially.
The existence of jurisdiction to order a successful party to pay the opponent’s costs was settled in Cretazzo v Lombardi[1] where Bray CJ said:
It follows, therefore, that there is now jurisdiction to order a successful party, even a wholly successful party and whether the plaintiff or defendant, to pay his opponent’s costs in part or in whole. Of course, it by no means follows that it would be a judicial exercise of the discretion to do so and it may well be that in many cases it would not, since there must be some reason for departing from the settled practice whereby the successful party receives its costs from his opponents.
[1] Cretazzo v Lombardi (1975) 13 SASR 4 at 12
Having acknowledged that costs may be awarded against a successful plaintiff, Jacobs J in Cretazzo[2] sounded a note of “cautious disapproval” of applications to apportion costs “according only to the success or failure of one party or the other on the various issues of fact and law, which arise in the course of a trial”.
[2] (1975) 13 SASR 4
His Honour observed[3]:
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] (1975) 13 SASR 4 at p 16
This “cautious disapproval” sounded by Jacobs J has been cited with approval on numerous occasions[4].
[4] Robinson v The Australian Association of Social Workers Ltd (2000) 210 LSJS 73; Cp (Adelaide) & Ors v Hartford (Holdings) & Anor (No 10) [2002] SADC 102
I am not satisfied that this is an appropriate case to depart from the settled practice whereby the successful party or in this case the party who has been substantially successful receives her costs from her opponent.
The Plaintiff’s Application for Costs
As I indicated earlier the plaintiff’s application for costs is in the alternative namely:
·indemnity costs of the action;
·indemnity costs of the trial;
·party/party costs of the action including the trial.
In Colgate-Palmolive Co and Anor v Cussons Pty Ltd[5] Sheppard J dealt with the principles involved in such applications. The principles, distilled by His Honour, relevant to this application, I perceive to be:
1.The ordinary rule is that, where the Court orders the costs of one party to the litigation to be paid by another party, the order is for payment of those costs on the party and party basis.
2.In consequence of that settled practice, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis.
3.There should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice.
[5] Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248
While the categories in which the discretion to order costs to be paid on an indemnity basis are not closed, circumstances in which it has been thought appropriate to warrant the exercise of the discretion include:
·The making the allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud.
·Evidence of particular misconduct that causes loss of time to the Court and to the other parties.
·The fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law.
·The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
·An imprudent refusal of an offer to compromise.
Nevertheless the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, on the indemnity basis, does not mean that Judges are necessarily obliged to exercise their discretion to make such an order[6].
[6] Colgate-Palmolive Co & Anor v Cussons Pty Ltd at p 257
The Particular Facts and Circumstances
I trust that I do no disservice to the plaintiff’s argument if I summarise the matters relied on by her in support of her claim for indemnity costs as follows:
·Properly advised, the defendant should have realised that his counterclaim had no realistic prospect of success.
·The counterclaim appears to have been brought for purely tactical reasons.
·The defendant failed to discover documents relevant to his claim while vigorously pursuing the plaintiff for discovery as to her financial position.
·Most of the trial time and interlocutory process concerned issues relevant only to the counterclaim.
·The defendant was squarely on notice of these matters, the plaintiff having raised them through her counsel, during his opening submissions.
·The defendant’s insistence on wishing to remain on the farm until his death left the plaintiff with no choice but to institute proceedings.
·Reasonably advised, it was imprudent for the defendant to reject the plaintiff’s informal offer before action which offer was consistent with earlier correspondence and discussions.
·The plaintiff’s offer of a 50-50 split was fair, equitable and given the reasons for decision, ultimately bettered at trial.
I accept that these factors in combination are capable of warranting the making of an order for payment of costs on an indemnity basis. However, I am not satisfied that this is an appropriate case to make such an order. Whilst the defendant has failed in relation to his counterclaim, I cannot say that prior to hearing the evidence of both parties in detail it could be said that the counterclaim was “hopeless” or that there was simply no prospect of him satisfying the Court either to extend the time for the making of an application under the Act or make a declaration with respect to the plaintiff’s South Plympton property.
In his counterclaim the defendant sought an order under the De Facto Relationships Act (1996) for an extension of time to claim a general division of property as well as equitable claims.
In considering the extension of time issue, the Court was required to consider whether an extension was necessary to avoid a “serious injustice” to the defendant.
In order to determine the merits of the “serious injustice” issue it was necessary to determine the strength of his equitable claims. In other words the issues relating to his claim under the Act and in equity were interwoven.
The fact, that these claims were so interlinked, made it in my opinion, reasonable for the defendant to pursue his claims to trial.
It was not, in my view, so obvious prior to hearing evidence from both parties that the defendant’s pursuit of a claim under the Act was hopeless, unnecessary or imprudent in the sense adverted to by the authorities.
In this regard, I do not overlook the comments made by the defendant with respect to a claim under the Act, but, as I indicated in the Reasons, he also asserted a belief that he was entitled to a share in her assets in the same way as she was entitled to share in his.
Furthermore, in exercising my discretion on this application, I take into account the fact that the defendant has succeeded on some issues in the trial.
Finally, although in correspondence, the plaintiff made offers which she has arguably “bettered” at trial, these offers remained as informal offers and were never, at any stage made the subject of a formal Rules Offer.
For these reasons, I order that the defendant is to pay the plaintiff her costs of the action on a party party basis.
Subject to that, I am prepared to make an order generally in line with the draft Minutes of Order submitted by the plaintiff with this exception. I am not disposed to make an order that the sum of $100,000 is to be paid in to the District Court Suitor’s Fund by the defendant pending the adjudication of costs or agreement as to costs.