Gnomon Technologies Pty Ltd v Element Engineering Pty Ltd (No 4) - [2012] SASC 175

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
GNOMON TECHNOLOGIES PTY LTD & ANOR v ELEMENT ENGINEERING PTY LTD & ANOR (No 4)
[2012] SASC 175
Judgment of Judge Lunn a Master of the Supreme Court
28 September 2012
PROCEDURE - COSTS
Order for costs in favour of plaintiffs and to be paid forthwith ("the 1st costs order") - subsequent orders for costs in favour of defendants but not ordered to be paid forthwith ("the 2nd costs order") - costs on the 1st cost order not yet adjudicated - application by defendants under R 266 to set off costs under 2nd costs order against 1st costs order - interpretation of "set off" in 1st costs order - whether set off should be allowed - held should be off setting of all costs ordered in the action to date as between the plaintiffs and the defendants.

GNOMON TECHNOLOGIES PTY LTD & ANOR v ELEMENT ENGINEERING PTY LTD & ANOR (No 4)
[2012] SASC 175
JUDGE LUNN:
Reasons on defendants’ application to set off costs orders

On 31 January 2012 I gave ex tempore reasons for making a costs order on FDN8 which was an application by the plaintiffs for summary judgment for part of the relief claimed, and which was contested, but successful.[1] The relevant part of my fiat on 31 January 2012 was as follows:
[1] See my reasons published on 18 January 2012 (FDN19).
Remarks
The pltfs are to have their costs of FDN8. I consider there was no reasonable basis for the defts to maintain their defences of liens and so those costs should be payable on an indemnity basis. As it was a discrete issue, those costs should also be exempted from R265 and be payable forthwith, but subject to any further application to set them off against the counterclaim if and when it is made… On FDN3 the second pltf is to have its costs, but there is no proper basis for them to be either indemnity costs or payable forthwith.
…
Order
…
5.The defts are to pay the pltfs on an indemnity basis and forthwith subject to any setoff their costs of FDN8 as agreed or adjudicated.
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8. The defts are to pay the second pltf its costs as between party and party of the application for security for costs against it and R265 is to apply to those costs.
…[2]
[2] The order was subsequently sealed (FDN31) but the relevant wording is as stated above in the fiat.
This was an order for costs on FDN8 in favour of both plaintiffs and against both defendants. In paragraph 5 of the fiat the order was made “subject to any setoff”. This is to be interpreted in the light of the passage in the remarks “but subject to any further application to set them off against the counterclaim if and when it is made”.
As at 31 January 2012 no counterclaim had been filed[3], but some reference had been made to it in the defendants’ affidavits…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Gnomon Technologies Pty Ltd v Element Engineering Pty Ltd (No 4) [2012] SASC 175
Case: [2012] SASC 175
Decision Date: 28 September 2012

CaseChat Overview and Summary

Gnomon Technologies Pty Ltd was involved in a legal dispute with Element Engineering Pty Ltd, and the case reached the court, which dealt with issues pertaining to costs. Initially, the court issued an order in favour of Gnomon Technologies, requiring Element Engineering to pay costs immediately, referred to as the "1st costs order." Later, the court made another order in favour of Element Engineering, but it did not mandate immediate payment, termed the "2nd costs order." At the time of the application, the costs outlined in the 1st costs order had not been finalised. Element Engineering applied under Rule 266 to offset the costs from the 2nd costs order against those from the 1st costs order. The crux of the legal issue was interpreting the term "set off" within the context of the 1st costs order and determining whether such an offset should be permitted.

The court meticulously examined the language used in the 1st costs order and the procedural rules applicable. It found that the term "set off" should be interpreted broadly, encompassing all costs ordered throughout the litigation between the parties up to that point. The court held that an offset of all costs should be implemented, considering the overarching intent to balance the financial burden between the parties. This interpretation aligned with the procedural fairness and the equitable principles guiding cost adjudications in such disputes.

In light of this interpretation, the court ruled that the costs ordered in the 2nd costs order could be set off against those in the 1st costs order. This decision meant that Element Engineering did not need to make immediate payment of the costs as initially ordered. Instead, the financial obligations of both parties would be adjusted to reflect the total costs incurred during the litigation. The court's decision ensured that the costs were fairly distributed, reflecting the procedural fairness and the intent to balance the financial implications between the parties.

Orders