Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2)

[2014] NSWCA 219

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219

Hearing dates:

On the papers

Decision date:

10 July 2014

Before:

Ward JA; Emmett JA; Gleeson JA

Decision:

1. In lieu of order 2 by the primary judge on 18 April 2013, judgment be given for the second plaintiff against the defendants for interest from 1 March 2005 to 27 February 2013 in the amount of $155,679.38.

2. Subject to order 7 made on 21 May 2014, there be no order for costs in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

PRACTICE AND PROCEDURE - Costs - Costs of appeal - General rule- costs follow the event - What is the practical result of the claim - Departing from the general rule - Where there has been a mixed outcome in the proceedings

Legislation Cited:

Civil Procedure Act 2005 (NSW) s98
Uniform Civil Procedure Rules 2005 (NSW) r42.1

Cases Cited:

Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158
Elite Protective Service Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor (No 2) [2012] NSWSC 1579
Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15
Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306
State of New South Wales v Stanley [2007] NSWCA 330
Sydney City Council v Geftlick (No 2) [2006] NSWCA 374
Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338
Windsurfing International Inc v Petit [1987] AIPC 90-441

Category:

Costs

Parties:

Doppstadt Australia Pty Ltd (First appellant)
Raymond John Davis (Second appellant)
Lovick & Son Developments Pty Ltd (First respondent)
Lovick Engineering Pty Ltd (Second respondent)

Representation:

Counsel:
C C Hodgekiss SC with H Woods (Appellants)
I Pike SC with D A Lloyd (Respondents)
Solicitors:
Michael Flaherty (Appellants)
Campbell Paton & Taylor (Respondents)

File Number(s):

2013/87009

 Decision under appeal 

Jurisdiction:

9111

Citation:

Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor [2012] NSWSC 529
Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor (No 2) [2012] NSWSC 1579
Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor (No 3) [2013] NSWSC 135

Date of Decision:

2012-05-21 00:00:00

Before:

Slattery J

File Number(s):

2006/255184

Judgment

1. THE COURT: The Court delivered judgment in this appeal on 21 May 2014: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 (the principal reasons). The judgment of the primary judge in favour of both respondents (Developments and Engineering) for $254,468.80 was varied and judgment was given only in favour of Engineering for $216,424.32 plus prejudgment interest. The judgment for prejudgment interest of $183,046.69 was set aside and the parties were directed to agree upon and provide the Court with a calculation of prejudgment interest on the reduced judgment.

1. These reasons deal with the two remaining issues: interest and costs.

Interest

1. The parties have agreed that the prejudgment interest calculation is $155,679.38. The appropriate order is that, in lieu of order 2 by the primary judge on 18 April 2013, judgment be given for the second plaintiff (Engineering) against the defendants for interest from 1 March 2005 to 27 February 2013 in the amount of $155,679.38.

Costs

1. At [409] of the principal reasons Gleeson JA indicated his view (with the concurrence of Ward and Emmett JJA) that, since the appellants' limited success on the appeal was largely offset by the respondents' success on the cross-appeal, and this translated into only a small reduction in the amount of the judgment (before interest) in favour of the second respondent (Engineering), then each party should pay their own costs in this Court.

1. This provisional view was subject to affording the parties the opportunity to make further written submissions on costs, in the event that agreement could not be reached. The parties did not agree and the Court has now received those submissions.

The costs orders which are sought

1. The appellants' written submissions contended that the costs order proposed at [409] of the principal reasons was appropriate. That is, each party should pay their own costs in this Court.

1. Alternatively, if the Court did not adhere to the proposed costs order, the appellants contended for the following orders:

(1)   The respondents pay the appellants' costs of the appeal.

(2)   Developments pay the cross-respondents' costs of the cross-appeal insofar as it concerned Developments' claim for damages.

(3)   The cross-respondents otherwise pay Engineering's costs of the cross-appeal.

1. In support of its primary position the appellants say that, whilst unsuccessful so far as their appeal related to liability, interest, and costs, they were successful (albeit not wholly) so far as it related to damages. It was argued that substantial time was required to be taken at the hearing of the appeal in respect of damages because the respondents, in their written submissions, failed to engage with the arguments raised by the appellants and stated that they relied on their submissions below. The appellants say that they are in a better position than prior to the appeal and the Court should not embark on a detailed analysis of the various grounds of appeal and cross-appeal and the costs that would have been incurred on each. The argument advanced was that the matter should be looked at globally.

1. However if a different approach was to be taken by the Court then the appellants say that costs should follow the event and this would justify the alternative costs order noted above.

1. The respondents' written submissions contended for the following order:

(1)   The appellants pay 75 per cent of the respondents' costs of the proceedings in this Court, on an ordinary basis.

1. In support of that position the respondents say that the Court should adopt an issue-by-issue approach on the question of costs and that the proposed order reflects the just outcome on costs. This was said to be because first, liability was the dominant issue on the appeal and the appellants failed on this issue (except in one small respect) and should pay the costs of that issue; secondly, although the appellants enjoyed some limited success on the issue of damages the respondents have retained a not insubstantial award of damages and the appellants should not have the costs of litigating that issue; and thirdly, the respondents were successful on their responsive cross-appeal save for three matters which occupied relatively little time.

1. The respondents say that the liability issue occupied about 75 per cent of the time taken in the proceedings in this Court. Next they say that the time spent on, and costs incurred in relation to, the part of their cross-appeal, on which they succeeded, is likely to be equal to or perhaps greater than the time spent on, and costs incurred in relation to, the part of the appellants' damages appeal, on which they succeeded in gaining a minor reduction in the damages award in favour of the respondents. They say that the appropriate order in respect of the damages, interest, and costs issues is that there be no orders as to costs.

1. The costs order sought by the respondents reflects what they say was the time taken by the liability issue on which the appellants failed, with the time and costs of the other issues, in effect, offsetting each other.

Consideration and conclusion

1. The starting position is s 98 of the Civil Procedure Act2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including, by whom, to whom, and to what extent costs are to be paid. Next, reference should be made to the Uniform Civil Procedure Rules 2005 (NSW) r 42.1 which provides that, if the Court makes any order as to costs, it should be in terms that costs follow the event unless the circumstances justify some other order.

1. Depending on the nature of the litigation the "event" may be characterised in more than one way. The authorities were reviewed by Ward J in Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 at [24]-[26], [54]-[60]. Generally the "event" refers to the event of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861-37,862 (Waddell J).

1. Here, if one looks at the appeal, the appellants were unsuccessful on liability, interest, and costs but succeeded in respect of the damages awarded. Ignoring for the moment the respondents' success on the cross-appeal (on the failure to mitigate loss issue), the appellants were successful in reducing three components of the damages awarded, the most significant of which was a substantial reduction in the estimated profit of a Peterson machine by reducing the period of calculation from 12 to 7.5 months. In monetary terms the amount of damages assessed by the primary judge, before taking into account failure to mitigate loss, was reduced from $381,703.20 to $216,424.32: see Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor (No 2) [2012] NSWSC 1579 at [39]-[40] and [349] principal reasons. However, the respondents succeeded on their cross-appeal on the failure to mitigate loss issue. As a consequence the reduction in the second respondent's damages by one third by the primary judge was set aside. In monetary terms the appellants succeeded overall in reducing the award of damages in favour of the second respondent (Engineering) by approximately $38,000. The first respondent (Developments) was totally unsuccessful on its cross-appeal on damages.

1. The usual circumstance in which a court will deprive the successful party of the costs relating to an issue on which the successful party lost is when that issue is clearly dominant or separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64] (Campbell JA). See also Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; 254 ALR 328 at 330-331 (Mahoney JA).

1. The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Service Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows:

"· Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v PC Henderson (Australia) Pty Ltd.

· In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

· If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

· Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

· A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

· Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272."

1. Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: James v Surf Road Nominees Pty Ltd (No 2) at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. In our view, such an exercise is not warranted in the present case, particularly having regard to:

(1)   the multiple sub-issues (on which there was some mixed success for each of the parties) raised by the primary issues of liability and damages; and

(2)   the substantial degree of overlap between the liability issue and the failure to mitigate loss issue so far as both concerned the operation and performance of the Doppstadt shredder - that is, whether the failures of the Doppstadt shredder were due to operator error and failure to service and maintain the shredder in accordance with the Doppstadt operator manual, or because the shredder did not perform as represented by the appellants. The respondents' success on the issues of liability and failure to mitigate was outweighed by the appellants' success on the damages issue.

1. Nor do we consider that this is an appropriate case where one party's failure on what might be viewed as a separable issue, such as the appellants' failure on liability (except in one small respect) or the first respondent's failure on damages, should be treated as so clearly dominant an issue as justifying an order for costs in respect of that particular issue. It is important to bear in mind at all times the overall outcome in monetary terms of these proceedings on appeal as between the parties.

1. In our view, in the circumstances of this appeal, it is preferable to make a costs order which is the result of an overall assessment reflecting the respective successes of the parties on appeal, rather than separate orders directed to specific issues on which one or other of the parties was successful. We do not consider that an issue-by-issue approach will produce a result that is fairer than looking at the matter globally.

1. Taking account of the fact that the appellants' overall success in the appeal (on the issue of damages) translated into only a small reduction of approximately $38,000 in the damages awarded to the second respondent, we are not persuaded that we should depart from the preliminary view that the appropriate order in the present case is that each party pay their own costs in this Court. This order is not to be taken as affecting order 7 made by this Court on 21 May 2014 concerning the costs of the respondents' notice of motion filed 14 November 2013, which was dismissed with costs.

1. Accordingly the Court orders that:

(1)   In lieu of order 2 by the primary judge on 18 April 2013, judgment be given for the second plaintiff against the defendants for interest from 1 March 2005 to 27 February 2013 in the amount of $155,679.38.

(2)   Subject to order 7 made on 21 May 2014, there be no order for costs in this Court.

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Decision last updated: 10 July 2014