Harcourts South Australia Pty Ltd v Ouwens Casserly Real Estate Pty Ltd (No 2)

In Harcourts South Australia Pty Ltd v Ouwens Casserly Real Estate Pty Ltd (No 2), the court was required to determine the appropriate costs order in a dispute over a franchise agreement. The plaintiff, Harcourts South Australia, sought its costs on either a solicitor/client basis or an indemnity basis, arguing that the defendants had unreasonably rejected a pre-trial settlement offer and that the terms of the franchise agreement entitled it to elevated costs. The defendants, Ouwens Casserly Real Estate, opposed the plaintiff's applications for costs, arguing that the plaintiff should recover only 75 per cent of its party/party costs. The court considered the defendants' submission that the plaintiff should recover only 75 per cent of its party/party costs to be untenable. The court found that the plaintiff was substantially successful in its claim, as it established that the defendants had breached the terms of the franchise agreement and had abandoned the franchise. The court emphasised that costs generally follow the event and that the plaintiff's substantial success warranted an award of full party/party costs. The court then turned to the question of whether costs should be ordered on an elevated basis, as provided for in the franchise agreement.

The court found that there were no exceptional circumstances that would warrant departing from the general rule that costs follow the event. The court noted that the plaintiff had made a pre-trial settlement offer to the defendants, which, in light of the outcome, was unreasonable for the defendants to reject. The court also considered the terms of the franchise agreement, which provided for the plaintiff to recover its costs of any proceedings taken on a breach of the agreement on an elevated basis. However, the court found that there were no exceptional circumstances that would warrant departing from the general rule that costs follow the event. The court held that the plaintiff was entitled to its full party/party costs but not on an elevated basis. The court fixed the judgment amount at $222,917.17 as at 23 February 2017, with interest thereafter accruing at the rate of $28.29 per day. The court ordered that the defendants pay the plaintiff's costs on a party/party basis, but not on an indemnity basis.