Duke Unley Pty Ltd v The Corporation of the City of Unley

Supreme Court of South Australia
(Civil)
DUKE UNLEY PTY LTD & ORS v THE CORPORATION OF THE CITY OF UNLEY
[2023] SASC 3
Reasons of Auxiliary Judge Norman a Master of the Supreme Court
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
Rulings on costs of interlocutory applications.
Uniform Civil Rules 2020 (SA), referred to.
Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd (No 2) [2021] SASC 75; Golski v Kirk (1987) 14 FCR 143; Holt v Wynter (2000) 49 NSW LR 128 ; Holt v Bunney (No 2) [2020] SASCFC 120 ; Gwinnett v Day (No 2) [2012] SASC 61; Price v BW & RD Smart (No 2) [2020] SASCFC 15; Karastamatis v Tzanavaras (No 2) [2014] SASC 21; Donald Campbell & Co v Pollak [1927] AC 732; Cretazzo v Lombardi (1975) 13 SASR 4; Whyte v Brosch & Ors (1998) 45 NSWLR 354; Allplastics Engineering Pty Ltd v Dornoch Ltd [2006] NSWCA 33, considered.

DUKE UNLEY PTY LTD & ORS v THE CORPORATION OF THE CITY OF UNLEY
[2023] SASC 3
Civil

These are applications for costs orders following the determination of the applicants’ interlocutory applications FDN 18 and FDN 22 and of the respondent’s interlocutory applications FDN 14 and FDN 20.
The parties have filed written submissions and in correspondence to the Court dated 4 October 2022 from the applicants and 6 October 2022 from the respondent it was agreed that the applications would be determined on the papers.
Background
Nature of the proceedings
The applicants purchased the Unley Shopping Centre, abutting the Soldiers Memorial Gardens in Unley from the respondent in 1997. They say that in 2020 when undertaking unrelated investigations, they discovered that they had been paying for the respondent’s water and electricity usage in respect of the garden since purchase, which payment was unauthorised and without their knowledge. They have sought in these proceedings to recover from the respondent the amounts paid in respect of water and electricity for the gardens.
Between them the parties filed four separate applications seeking a range of orders.
The applications
By FDN 14 the respondent sought further and better particulars of various paragraphs of the Statement of Claim, and conversely by FDN 18 the applicants sought leave to file and serve an amended Statement of Claim. To resolve these two overlapping applications, the applicants filed a revised Statement of Claim FDN 29 and accordingly FDN 14 and FDN 18 were addressed as an application for strike out or alternatively for further and better particulars of FDN 29.
By FDN 22 the applicants sought further and better particulars of the respondent’s defence.
Each party sought further and better discovery from the other, the applicants by way of FDN 18 and the respondent by way of FDN 20.
Finally, the applicants sought an order for separate trials of liability and quantum in FDN 22.
All of these matters were argued before Judge Bochner on 29 November 2021 and 1 February 2022 who on 26 May 2022 published her reasons.
Orders made on the applications
On FDN 14 it was ordered that paragraph 5 of the revised Statement of Claim be struck out.
In respect of FDN 18, it was ordered that in the event that a trial on quantum was required, the respondent was to make discovery of certain identified documents.
In respect of FDN 20, it was ordered that in the event that a trial on quantum was required, the applicants were to make production of unredacted copies of certain documents from their list of documents FDN 11 if relevant to the applicants’ election as to seeking restitution or damages, and the applicants were also to make further and better discovery of documents referred to in a letter from the respondent dated 21 May 2021. Further, in the event that a trial on quantum was required and that the documents were relevant to the applicants’ election as aforesaid, the applicants were to make further and better discovery of certain documents referred to in that letter.
In respect of FDN 22 orders were made that there would be separate trials of separate issues in the proceedings, namely issues on liability which would proceed first and issues of compensation which would proceed subsequently if liability was first established. Further particulars were ordered with respect to certain paragraphs of the defence.
Costs were reserved.
Submissions of the parties
The court received written submissions from the applicants dated 15 July 2022 FDN 45 and on 1 August 2022 FDN 50, and from the respondent on 15 July 2022 FDN 46 and on 29 July 2022 FDN 47. As at 6 October 2022, I was seized of the matter, and I formally reserved my decision.
Applicants’ Submissions FDN 45
In their written submission the applicants submitted that they had been overwhelmingly successful in respect of the issues arising on each of the four applications so accordingly they sought orders that the respondent pay their costs of and incidental to each of those applications on a standard cost basis. They exhibited a table setting out the parties’ successes or failures on all of the issues arising and analysed these in detail in their submissions. On the separate trial issues they accepted that ordinarily the cost of such an application should be costs in the cause, but submitted that in the circumstances of the case, that application had been inextricably intertwined with a substantial discovery application bought by the respondent.
They referred to the relevant rules of court as to the costs of interlocutory applications and to the decision in of Blue J in Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd (No 2).[1]
[1] [2021] SASC 75.
Respondent’s submissions FDN 46
The respondent submitted that the cost of each application should be costs in the cause, referring to the presumptive position on the cost of interlocutory applications contained in sub‑rules UCR 194.4(5), 194.6 and 194.5. Other than the application for separate trials, it submitted that each of the parties had been successful and unsuccessful to some extent on the applications for discovery and particulars, none of which fell within sub-rules 194.4(2) or 194.4(3), and there was no reason for the Court to depart from that presumptive position. The outcome of the applications had not arisen from any significant fault by the respondent and the length and complexity of the submissions demonstrated that the issues arising were not straight forward, so there could be no serious suggestion of any misconduct or unreasonable conduct. Further, the apparent degree of success of the applicants on certain issues had occurred in consequence of changes in the landscape of the proceedings during the interlocutory disputes. In relation to the applicants’ separate trial application it was submitted that while they were successful, this was the result of a discretionary indulgence from the Court rather than an application to enforce a procedural right, or the remedy of any breach of the rules by the respondent. The respondent referred to Golski v Kirk,[2] and Holt v Wynter.[3]
Respondent’s submissions FDN 47
[2] (1987) 14 FCR 143.
[3] (2000) 49 NSW LR 128 at [147]‑[148].
In its reply submissions the respondent contended that the applicants had provided a selective and self-serving history seeking to obscure the fact that they had repeatedly changed position, filed late documents, ignored the default costs position under the rules, and continued to wrongly approach the matter as though their success on disputed and complex legal issues was a fait accompli. They had correctly conceded that the costs of a separate trial application would ordinarily be costs in the cause. The respondent also addressed particular aspects of the applicants’ cost submissions.
Applicants’ reply submissions – FDN 50
In reply, the applicants submitted that the presumptive cost rule did not fetter the Court’s broad discretion with respect to costs. This had been made clear in Mayfield.[4] Where an applicant for an interlocutory order was wholly successful or wholly unsuccessful, generally it might be expected that the costs of the interlocutory application would follow the event of such application, because the wholly unsuccessful party was to be viewed as the proximate cause of the costs incurred in the application. This had happened in the present case. The respondent was almost wholly unsuccessful in the positions it had adopted on the various issues arising in the applications. This had caused the incurring of considerable and unnecessary costs by the applicants in circumstances where in many instances they had written prior to the hearing proposing a basis for resolution of the issues, such as the amendment of the Statement of Claim, which was rejected either expressly or impliedly, or ignored by the respondent.
Principles
[4] Supra.
Presumptive position on the costs of an interlocutory application
The relevant principles are set out in the respondent’s submissions FDN 46.
UCR 194.4(5) provides that subject to an order to the contrary the costs of an interlocutory application are costs in the cause. However, UCR 194.6 provides that the Court can have regard to anything it considers relevant when exercising its discretion on costs. An example provided is the misconduct or unreasonable conduct of a party in connection with the proceedings.
UCR 194.5, the general costs principles rule and UCR 194.6 are analogous to 2006 r 263, see Holt v Bunney (No 2).[5] In Gwinnett v Day (No 2)[6] Stanley J at [14] observed that:
“In my view, 6SCR263 is to be construed as identifying the general approach to awarding costs and identifying specific exceptions to the general approach that it is not to be construed as to finding the exceptions to the general or exclude exhaustively”.
[5] [2020] SASCFC 120 at [9].
[6] [2012] SASC 61.
I refer further to Price v BW & RD Smart (No 2).[7]
[7] [2020] SASCFC 15 at [3].
A Judge is entitled to make a different approach to that provided by the rules “if the circumstances warrant it” – Karastamatis v Tzanavaras (No 2).[8] However, there must be some reason for departing from the settled practice: Donald Campbell & Co v Pollak[9] (Viscount Cave LC), referred to with approval by Bray CJ in Cretazzo v Lombardi.[10]
[8] [2014] SASC 21 at [4].
[9] [1927] AC 732 at 812.
[10] (1975) 13 SASR 4 at [12].
The purpose of the exceptions to the position that costs of an interlocutory application are costs in the cause which are provided in UCR 194.4 (being the cost of an amendment and the cost of an application to extend time) is to ensure that parties are aware that there is a cost to not complying with their duty to ensure that “proceedings are conducted effectively and expeditiously and with an appropriate use of judicial resources”: Whyte v Brosch & Ors[11] per Spiegelman CJ, with whom Mason P Sheller and Stein JJA and Fitzgerald AJA agreed (this decision related to the failure to comply with a rule requiring the filing of written submissions, which had resulted in the adjournment of proceedings).
[11] (1998) 45 NSWLR 354.
The Common Law principle is that the purpose of a cost order is to indemnify or compensate a non-defaulting party: Allplastics Engineering Pty Ltd v Dornoch Ltd.[12]
[12] [2006] NSWCA 33 at [39].
In Gary ArthurEwin Taylor v Police[13] Gray J at [19] stated that “Costs orders are intended to operate as an indemnity to the party who has been disadvantaged by an unreasonable obstruction or unreasonable delay”.
[13] (2002) SASC 317.
The corollary is that where such factors are absent, costs should follow the ultimate event rather than the outcome of any specific interlocutory dispute between the parties.
In contrast to the 2006 rules, the UCR removed the presumption of costs following the event in every instance. There is no equivalent to UCR194.4(5) in 2006 rule 263.
The new presumptive costs position for an interlocutory application necessarily takes into account that an ordinarily one party will have succeeded and one have failed on an interlocutory dispute, so accordingly the mere fact that a party has succeeded or failed does not, without more, justify a departure from the basic position. There must be some further or additional factor beyond simple success or failure on an issue to justify departure from the presumptive position. In Mayfield Blue J made a number of observations in relation to the costs of interlocutory applications:
[8]When making an order in relation to the costs of an interlocutory application, it may be appropriate to order:
· that the unsuccessful party on that application pay the costs of the application of the successful party regardless of the ultimate event of the action;
…
[9]Determining the appropriate order in relation to the costs of an interlocutory application will principally be informed by an analysis as to the proximate cause of the incurring of those costs. In some cases:
· it can be confidently determined when the interlocutory application is decided that the cause of the incurring of those costs was the making of the application by the unsuccessful party or resistance of the application by the unsuccessful party; in these cases the costs of the interlocutory application will generally be ordered to follow the event of the interlocutory application.
…
[10]The most common interlocutory applications relate to pleadings (strike out applications or applications for further and better particulars) and discovery (applications for further and better discovery). Often these applications have mixed results (the applicant succeeding in respect of some paragraphs of the pleading or categories of discovery but failing in respect of others) and an order is made that the costs of the application be costs in the cause or no order is made as to the costs of the application. However, where the applicant for the interlocutory order is wholly successful or wholly unsuccessful, generally5 it may be expected that the costs of the interlocutory application will follow the event of the interlocutory application because respectively the making of, or resistance to, the interlocutory application is seen as the proximate cause of the incurring of the costs of the interlocutory application.
(Footnotes omitted)
Consideration
In considering the costs of the several interlocutory applications heard and determined by Judge Bochner, which costs are the subject of the present applications, I have had regard to the UCR provisions that subject to an order to the contrary the costs of an interlocutory application will be costs in the cause, although noting the Court can have regard to anything considered relevant when exercising a discretion on costs, which include the unreasonable conduct of a party in connection with the proceedings.
I also have regard to the observations of Blue J in Mayfield, that in making an order in relation to the costs of an interlocutory application, it may be appropriate to order that the unsuccessful party on that application pay the costs of the application of the successful party regardless of the ultimate event of the action, and that in determining the appropriate order in relation to the costs of an interlocutory application the court will principally be informed by an analysis as to the proximate cause of the incurring of those costs. Where there has been an unsuccessful application, or resistance to an application is unsuccessful, the costs will generally follow the event of the application. Where instead there are mixed results, such as succeeding in some aspects or failing in respect of others, costs might be costs in the cause or no order might be made as to the costs of the application.
In the present instance the applicants’ position is that they were successful, or substantially successful, in respect to each of the contested applications, whereas the respondent’s position is that the presumptive rule should apply, namely that the costs of each should be costs in the cause.
I have considered the history and outcome of each application.
FDN 14 respondent’s application for strike out and/ or for further particulars
This application dated 30 April 2021 was for the strike out and/or for further particulars of 24 paragraphs of the original Statement of Claim. The application was preceded by a letter from the respondent to the applicants on 25 March 2021, but the latter had responded in detail on 26 May 2021 submitting a draft amended Statement of Claim pursuant to UCR 69.1(1) incorporating changes as explained and seeking consent to file this. However, no response was received from the respondent, so the applicants applied for leave to file this revised pleading. Subsequently the respondent wrote on 18 June 2021 contending that this amended Claim likewise remained deficient and it continued to press its application. However, in her reasons of 26 May 2022 Judge Bochner only ordered further particulars in relation to paragraph 5 - the argument concerning which appears to have occupied only negligible time. The respondent’s application was otherwise dismissed in respect to paragraphs 9, 9A, 12, 13, 22, 23, 15, 15A, 16(d), 25, 26, 31 and 32. I refer to Her Honour’s reasons at [5]-[45].
Strictly, the result was “mixed” - the respondent was successful in relation to paragraph 5- but it does appear that this was a relatively minor portion of the argument in totality - the relevant portion of the judgment amounts to only about a third of a page, and overall, it can be fairly said that the applicants were successful on this application.
FDN 18 Applicants’ application for further discovery from the respondent.
The applicants had sought discovery by the respondent in this application of further categories of documents, but there being no response to the application they wrote on 2 July 2021 noting this and inquiring whether the respondent intended to file a further list of documents. However, the latter continued to oppose the whole of the application and it proceeded to argument.
In the result, however, the applicants were wholly successful. Judge Bochner determined at [82] to [91] of her reasons that the respondent was required to provide further discovery in respect of all of the documents sought in the application. The position is accordingly that set out in Blue J’s reasons in Mayfield, namely that there has been an unsuccessful resistance to an application, so they should follow the event of the application.
FDN 20 Respondent’s application for further discovery
In this application, filed on 16 June 2021, the respondent sought further discovery and the production of unredacted documents, together with a Kadlunga list of the applicants’ privileged documents. In particular, the application related to both certain numbered documents contained in the applicants’ list and the further discovery of categories of documents set out in a letter dated 21 May 2021 - the initial request had been made in an email on 13 May 2021. In response, in a letter dated 5 July 2021, the applicants explained to the respondent that certain of the documents sought contained commercially sensitive information and they accordingly provided draft confidentiality undertakings to be executed prior to the unredacted copies being provided to the respondent. The application nevertheless proceeded to argument.
In her reasons at [98]-[108] Judge Bochner determined that the applicants were not required to provide an unredacted copy of document 59, nor were they required to provide unredacted copies of documents 56, 57 and 58 until a trial on quantum - if such was required - and then only subject to appropriate confidentiality arrangements.

A further discovery request of the respondent was made in a letter dated 21 May 2021. It related to 10 different categories of documents. However, in a responding letter dated 12 July 2021 the applicants explained that these categories had either already been discovered, or were not discoverable, or were only relevant to the respondent’s “passing on” defence, which was not available on a claim for restitution for unjust enrichment, so they were not relevant and therefore not discoverable.
Judge Bochner determined at [118] of her reasons that only the documents in category 4 identified in the 21 May 2021 letter were presently discoverable. In relation to categories 7 to 10 - the “passing on” defence documents, the Court ruled at [123] that these were only required to be discovered if they became relevant to the applicants’ election and the quantum thereof.
Judge Bochner at [112], [114] and [121] of her reasons otherwise dismissed, or declined to make orders in respect of the balance of the categories sought by the respondent.
I accept the submission of the applicants that these results constitute relevant success on their part. The Court accepted their proposition that the “passing on” defence documents were not relevant to their unjust enrichment claim, and in all other respects, Judge Bochner had either dismissed or had declined to make the orders in respect of the balance of the categories sought by the respondent.
The cause of the incurring of the costs of this application was the making and pursuing of this part of the application by the respondent, the unsuccessful party, so the costs therof should follow the event.
FDN 20 Respondent’s application for a Kadlunga list
This portion of FDN 20 constituted the application of the respondent for the provision by the applicants of a Kadlunga list of privileged documents. This had been requested by the respondent in a letter dated 24 May 2021, but in their response by letter dated 2 July 2021 the applicants had explained that their list complied with UCR 73.3(5) and they asked the respondent to confirm that it no longer pressed this aspect of its application. It nevertheless proceeded.
In her reasons at [105] to [108] Judge Bochner determined that the applicants were not required to provide a Kadlunga list in respect of those documents for which privilege was claimed.
In summary the result of FDN 20 as a whole was that the applicants had only been required to make further discovery of one additional category of documents. Although strictly this was a “mixed” result, the application was nearly wholly unsuccessful.
The cause of the incurring of the costs of this part of the application was the making and pursuing of the application by the respondent, the unsuccessful party, so the costs thereof should follow the event.
FDN 22 Applicants’ application for separate trials and for further particulars of the Defence
In this application filed on 29 July 2021 the applicants sought an order for separate trials of the issues of liability and quantum (they also sought further particulars of 5 paragraphs of the respondent’s defence, which is dealt with below). The reasons for the orders for separate trials had been explained in detail in [37] of Mr Whitington’s affidavit of 19 July 2021, filed prior to the hearing. Ordinarily the cost of a separate trial application should be costs in the cause - UCR 194.4(5), however as is apparent from Judge Bochner’s reasons at [47]-[69] this was not by reason of an indulgence to the applicants. It is clear that the application was inextricably intertwined with, and made in response to the respondent’s discovery application relating to discovery of leasing arrangements with tenants (see Reasons at [49]). There was a clear dispute between the parties relating to the “passing on” defence and this issue had been a substantial component of the arguments presented. The respondent had explicitly opposed the order for separate trials, as summarised in Her Honour’s reasons at [55]-[58]. In the result, however, a separate trial was ordered. I refer to Her Honour’s reasons at [47]-[69]. The applicants were successful in their application. Clearly, this issue took up a significant part of the argument time.
The cause of the incurring of the costs of this application was the resistance to the application by the respondent, the unsuccessful party, so the costs thereof should follow the event.
FDN 22 Applicants’ application for further particulars of the Defence
In respect to the applicants’ request for further particulars of the defence, this had initially been made in a letter of 1 June 2021. However, in its response letter of 15 June 2021 the respondent refused to provide either further particulars and/or adequate responses to the applicant’s requests. As it transpired, at the hearing, the applicants only pressed requests for further particulars in relation to three paragraphs of the defence, namely paragraphs 7.1.6, 14.2 and 15.1.
In her decision, Judge Bochner determined at [70]-[81] that the respondent was required to provide further particulars in respect of two of these three requests, namely further particulars of paras 7.16. and 15.1, but not with respect to para 14.2.
Again, although strictly this was a “mixed” result, the applicant was nearly wholly successful.
The cause of the incurring of the costs of this application was the resistance to the application by the respondent, the unsuccessful party, so the costs thereof should follow the event.
Respondent’s submissions relating to changes in the landscape of the proceedings during the course of the interlocutory dispute
In its submissions, whilst acknowledging the findings made by Judge Bochner on the various applications considered and determined by her, the respondent has submitted that many of the costs relating to the applications arose by reason of the applicants’ changes in position throughout the interlocutory process, and that accordingly it would be unjust to visit on it the cost consequences by reference only to the end result. In relation to the applicants’ separate trial application, it contended that while they were successful, this was the result of a discretionary indulgence from the Court rather than an application to enforce a procedural right, and that a party seeking an indulgence was generally to pay the costs of that application. Further, one consequence of the separate trial order was to relieve the applicants - for the time being - from their obligation to make discovery of certain categories of documents, notwithstanding that at the time that it had bought its discovery application there was no such order and that application had been reasonably made and pursued. It had incurred the cost of preparing its submissions, FDN 31, on a different basis, and further the applicants had provided very late written submissions which in turn had required a further response from it FDN 36. Accordingly, it submitted, it was misleading for the applicants to have focussed on the outcome of particular issues in determining costs. Further, the respondents submitted, the applicants had repeatedly changed their position, filed late documents, ignored the default costs position under the rules, and continued to wrongly approach the matter as though their success on disputed and complex legal issues was a fait accompli.
The applicants have rejected these arguments. In response to the contentions that much of the costs arose from their changes in position throughout the interlocutory process, the fact was that most costs had arisen from the respondent’s failure to change its position in response to their attempts to address the issues raised by the respondent. Examples included the revision of the Statement of Claim, the respondent’s pursuit of the misconceived application for a Kadlunga list notwithstanding the applicants’ letter of 2 July 2021, and the respondent’s pursuit of its application for production of unredacted copies of documents notwithstanding the letter of 5 July 2021 enclosing a proposed confidentiality undertaking. In relation to the separate trials issue, the applicants submitted, this application had been inextricably linked to the respondent’s extensive request for discovery relating to “passing on” defence documents, and this issue was sufficient to remove the separate trials application from the usual case where such costs would be costs in the cause. While the respondent’s position resisting a separate trial might not have been unreasonable in and of itself, its failure to alter its position relating to the discovery application was the proximate cause of the costs of the separate trial application.
I have considered these arguments. The filing by the applicants of Revision 1 to the Statement of Claim in response to the respondent’s further particulars/strike out application clearly narrowed those issues in dispute and in the result the respondent’s application on this issue was either wholly answered by the amendment or it was largely dismissed. The respondent had only been successful in striking out one paragraph. In relation to the respondent’s discovery application, the applicants wrote a detailed 12 July 2021 letter addressing those issues. However, the respondent chose not to respond substantially to those matters, but instead pursued the application discovery but was wholly unsuccessful. The respondent pursued its application for a Kadlunga list notwithstanding the applicants’ letter of 2 July 2021, and it also pursued its application for production of unredacted copies of documents notwithstanding the applicants’ letter of 5 July 2021 enclosing a proposed confidentiality undertaking. In my view, the costs generally arose from the respondent’s failure to change its position in response to the applicants’ attempts to address the issues raised by it, rather than from changes in position by the applicants.
I have accordingly come to the conclusion that the “changing landscape” argument advanced by the respondent should not stand in the way of the costs orders being made in favour of the applicants which I have referred to above. The fact is that the latter made genuine attempts to resolve matters in dispute and explained their position on the various issues in correspondence to the respondent, which had nevertheless continued to pursue its own applications and opposed the applicants’ applications.
I order that the respondent is to pay the costs on a standard basis of the applicants’ interlocutory applications FDN 18 and FDN 22 and the respondent’s interlocutory applications FDN 14 and FDN 20.
Given the complexity of the legal issues, particularly the separate trial applications, I certify that the hearing of the applications as fit for senior counsel.
Summary of orders
1.The respondent is to pay the costs on a standard basis of the applicants’ interlocutory applications FDN 18 and FDN 22 and of the respondent’s interlocutory applications FDN 14 and FDN 20.
2. I certify that the hearing of the applications as fit for senior counsel.

[2023] SASC 3

24 January 2023