Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd - [2004] SASC 161

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
HARTFORD HOLDINGS PTY LTD v CP (ADELAIDE) PTY LTD & ORS AND COLLIERS JARDINE PTY LTD
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Gray and The Honourable Justice Besanko)
8 June 2004
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT - CHARACTER AND ATTRIBUTES OF CONDUCT
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES
PROCEDURE - COSTS - TAXATION - PRINCIPLES OF TAXATION - IN GENERAL
Appeal and cross-appeal from a Judge of the District Court - first respondents entered into indentures with appellants to lease shops and run businesses - second respondent acted as agent for appellant in the course of the transaction - both businesses ran at a loss - the first respondents were awarded damages for misleading and deceptive conduct by the appellants - whether in relation to misleading and deceptive conduct the trial Judge had made a finding of inducement or reliance - whether the trial Judge erred in finding that there was inducement or reliance - whether the trial Judge erred in finding that the appellant acted imprudently with regard to Calderbank offer made by the second respondent - whether the trial Judge's order in relation to costs will result in an injustice to first respondents - whether plaintiff in person is entitled to costs payable to counsel - whether plaintiff in person is entitled to compensation by way of lost earnings for work of counsel - whether interest awarded by trial Judge inadequate - appeal dismissed - cross-appeal allowed in part.
Trade Practices Act (1974) Cth s 51A, s 51A(2), s 52, s 52(1), s 82, s 82(1), s 87; Supreme Court Act 1935 (SA) s 40(1); District Court Act 1991 (SA) s 42(1); Supreme Court Rules (SA) R 101, R 101.07(2)(b), referred to.
Henville v Walker (2001) 206 CLR 459; Cachia v Hanes (1993) 179 CLR 403, applied.
Khan v Lord Chancellor [2003] 2 All ER 367; Malkinson v Trim [2003] 2 All ER 356, not followed.
Gould v Vaggelas (1985) 157 CLR 215; CP (Adelaide) & Ors v Hartford (Holdings) & Anor (No.10) [2002] SADC 102; Burford v Allan [1998] SASC 6693, discussed.
CP (Adelaide) v Hartford (Holdings) [2002] SASC 304; I & L Securities Pty Limited v HTW Valuers (Brisbane)Pty Limited (2002) 210 CLR 109; Walton v McBride (1995) 36 NSWLR 440; Kowal v Zaccoli (2002) 4 VR 399; Bickford v Bickford [1923] SASR 148, considered.

HARTFORD HOLDINGS PTY LTD v CP (ADELAIDE) PTY LTD & ORS AND COLLIERS JARDINE PTY LTD
[2004] SASC 161
Full Court: Doyle CJ, Gray and Besanko JJ
DOYLE CJ
Introduction

On about 28 July 2000 CP (Adelaide) Pty Ltd (“CP”) executed two indentures between CP and Hartford (Holdings) Ltd (“Hartford”), the effect of which was that CP would fit out two shops in a food court to be established in the basement of a new and large building in Adelaide, the building to be occupied mainly by a David Jones department store. Hartford owned the building. The effect of the indentures was further that CP would fit out the shops, enter into leases to occupy them and run a food or food related business from each of them.
The building opened on 31 August 2000. The food court was not complete. CP began trading from the shops early in September 2000.
From the outset the turnover achieved by CP was less than it had expected. CP complained about a number of matters, and in particular a lack of people or through traffic in the food court, the promotion of the food court by Hartford, and other matters relevant to the operation of the businesses in the food court.
On about 6 March 2001 CP closed both businesses. Both businesses were operating at a loss.
CP brought proceedings in the District Court against Hartford and its agent, Colliers Jardine (SA) Pty Ltd (“Colliers”). Colliers had been appointed to act as Hartford’s letting agent for the premises in the food court. Mr Rentis was an employee of Colliers, and the person responsible for the letting of premises in the food court.
CP claimed damages for loss that it sustained as a result of entering into the leases and operating the two businesses in the food court.
The Judge awarded damages of $457,740.00 to CP against Hartford, to compensate CP for loss and damage suffered by the conduct of Hartford by its agents Colliers and Rentis and, in respect of one matter, by the conduct of Hartford itself. The conduct of Colliers and Rentis on which the Judge based the award, consisted of the making of representations that were found to be misleading or deceptive. There were five of them in all.
The Judge found that Colliers had established that it had reasonable grounds for making four of the five representations of which CP complained, and so by operation of s 51A of the Trade Practices Act 1974 (Cth) (“TPA”)he found that Colliers had contravened s 52(1) of the TPA by making one representation only.
As to that representation, the Judge found that there was no “causal link” between that conduct by Colliers and Rentis and CP entering into the leases, and so found that Colliers was not liable to CP. There is no appeal against that decision.
The Judge also awarded damages to Mr Nicolaou, Mr Makridis, Mr Kritharas and Mr Sallis. Each of them was a director of CP, or involved in one way or another with the set up and operation of the businesses that it operated. Their precise status in relation to CP was unclear, but that was not an issue on appeal. The Judge awarded them damages for loss of income, and for stress and anxiety suffered by the conduct of Hartford. In all they recovered about $39,000.00.
The Judge found in favour of Hartford on a counter claim against all of the plaintiffs. There is no issue on appeal in relation to that.
The Judge made a detailed order as to the costs of the action. The order reflects the outcome of a number of applications and orders made along the way, and successes by different parties on different aspects of the case.
Hartford has appealed against the Judge’s decision awarding damages to the plaintiffs. Hartford argues that the claims should have been dismissed because the plaintiffs failed to establish the necessary causal link between Hartford’s contraventions of s 52 (the Judge’s findings of a contravention were not disputed on appeal) and the loss or damage suffered by the plaintiffs (the Judge’s findings as to the amount of damages were not disputed on appeal).
CP and the individual plaintiffs appeal against the order for costs. Their appeal challenges the manner in which the Judge allocated the costs of various issues. The plaintiffs complain also that the Judge made an unwarranted reduction in their costs, referable to issues on which they had failed. They complain also that the order descends to excessive detail, requiring a taxation of costs that will be unmanageable and extremely expensive. They argue that the Judge should have made his decision on a broad-axe basis. The plaintiffs also challenge some of the detailed aspects of the costs orders.
Mr Sallis appeals against the order in respect of the costs payable to him for the work that he performed in the case. He is an admitted practitioner of the Court. He performed work that otherwise would have been performed by a solicitor or by a barrister. He submits that the costs payable to him should reflect that fact.
Hartford appeals against an order for costs made in favour of Colliers. The Judge ordered that Hartford pay to Colliers its costs of action, including the costs of contribution proceedings between Hartford and Colliers, except for such costs as were ordered to be paid to Colliers by the plaintiffs. The Judge ordered that the costs payable by Hartford be taxed as between solicitor and client as from 14 days after Hartford received from Colliers a letter of 29 November 2001. That letter made a settlement offer as between the defendants. The Judge said the offer was a generous one, and that Hartford was imprudent in not accepting it. Hartford complains that the Judge was wrong to so decide, and submits that this part of the order should be set aside.
I will begin by outlining, as briefly as I can, the decision reached by the Judge, paying particular attention to matters relevant to Hartford’s appeal. Then I will outline Hartford’s argument on appeal, and then deal with the issues that arise on that argument. Finally, I will deal with costs.
The trial and the Judge’s findings about misleading and deceptive conduct
The trial was a long one. According to the Judge it extended over 101 days. Mr Sallis is an admitted practitioner. He appeared for himself, having succeeded in overturning a decision by the trial Judge that he would not be permitted to do so: CP (Adelaide) v Hartford (Holdings) [2002] SASC 304. CP and the other three individual plaintiffs were separately represented, but for much of the trial their counsel was not present. In effect, Mr Sallis presented the case for all plaintiffs: at [127].
The lead up to the execution of the indentures on about 28 July is a rather complicated story. During this period in different ways each of the individual plaintiffs became interested in and then involved in the proposal to lease and to operate two shops in the food court. There were negotiations with Rentis, with representatives of Hartford, and as between the plaintiffs. Issues that were dealt with were matters such as the set up and fit out of the shops, financing the venture, the proposed mode of operation of the businesses, sales and cash flow projections, terms of the indentures and so on. The project took shape as one for a licensed café called La Moda, offering food and drinks, and for a beverage bar called “Jooce”. Jooce sold fresh fruit juices, coffee, alcoholic drinks, baguettes and cakes.
The individual plaintiffs had different skills that they were able to contribute to the enterprise, but only one of them had any relevant practical experience in the businesses which they were about to undertake. Mr Nicolaou is an accountant, and provided that expertise to CP. Mr Makridis is a project manager, and contributed that expertise to the setting up and fitting out of the businesses. Mr Kritharas had experience of operating coffee shops and snack bars. Mr Sallis is a legal practitioner. As I understand the evidence, none of them except perhaps Mr Kritharas had any significant experience in the proposed field of business.
In the period leading up to the execution of the indentures, they came to know Mr Anderson, and to be closely involved with him. He had a lot of experience in running cafés and was regarded as having a “golden touch” in this respect: at [13].
Over a number of months, Mr Anderson was closely involved in the planning and set up of the two businesses. His advice and opinions appear to have been significant to the plaintiffs. He was much more experienced in the proposed field of business than any of the plaintiffs. At trial the plaintiffs said that by April 2000 any plans for Anderson to have a beneficial interest in the venture had come to an end, due to financial and other difficulties he faced. The Judge found that Mr Anderson continued to have a concealed interest in the venture. Relevantly to the issue of causation, the Judge found at [150] that Mr Anderson believed the businesses would be highly lucrative, and at [152] that Mr Anderson had told the plaintiffs this and was likely to have “infected them with his own optimism and enthusiasm” for the businesses.
The overall significance of Mr Anderson’s influence appears from findings made by the Judge at [332]. The Judge was there dealing with the question of whether misleading conduct by Colliers and Rentis, not actionable against Colliers by s 51A(2) of the TPA, gave rise to a claim for damages. Commenting on the role of Mr Anderson, the Judge said at [332]:
“Circumstantially I infer Anderson said a significant amount to each of the plaintiffs about the venture and influenced them to enter into it. He was excited and enthused himself about the project. It is likely he was the source of the statement that Jooce would be a licence to print money. Because of the money which he had put into Luestners’ Trust account before 26 July, and his need to benefit his own poor financial position by a profitable venture, it is likely he was pushing the plaintiffs to commit themselves to the venture. It is significant that on 15 May 2000 Sallis immediately contacted Anderson, and not Nicolaou or Rentis, about the major problem which he saw with the lack of exclusivity in the indentures. While Anderson allowed Rentis as the salesman to give his “usual spiel” to the plaintiffs he was usually present to ensure that what could be done was being done to implement the venture. I reject the plaintiffs’ evidence that Nicolaou was the captain of the ship, and infer that it was Anderson. It is appropriate to use the Jones v Dunkel inference from the plaintiffs’ failure to call Anderson in this context to reinforce the circumstantial inference that he did play a significant role in influencing the plaintiffs to enter into the transaction.”
The damages claim rested on a claim that Hartford and Colliers made a large number of representations about the set up and operation of the food court, publicity for and promotion of the food court, competition from other businesses in the food court, costs of operation, and other matters relevant to the likely profitability of the businesses.
The Judge said that all of the representations complained about were statements or opinions about future events or predictions, and so the issue arose whether the maker of any such representations had reasonable grounds for making them: s51A of the TPA.
The Judge made findings as to each of the alleged representations. On my count there were 18 in all, apart from some minor miscellaneous matters. It suffices to outline in general terms what the Judge found.
Some of the alleged representations were along the lines that Mr Rentis told the plaintiffs things relating to trading conditions in the food court that were incorrect, or failed to inform them of significant relevant matters. For example, the plaintiffs alleged that Mr Rentis told them that La Moda would be the only shop in the food court serving mainly light meals, snacks and coffee, and that Mr Rentis did not tell them that there would be a competing business called Coffee Club. The plaintiffs claimed that Mr Rentis assured them that there would be no competing businesses in the food court.
As to a number of such representations the Judge rejected the evidence of the plaintiffs, finding that Mr Rentis made no misleading or deceptive statement on the subject, that if asked he would have disclosed the true situation, or that the matter was not of any great concern to the plaintiffs when making their decision to execute the indentures. For example, in relation to the alleged representation about competition from the Coffee Club, he found that their expectations were so high that this possibility was of no great consequence to them: at [225]. In relation to the alleged representation that there would be no competing businesses, he found that nothing was said to the plaintiffs by Mr Rentis or by Hartford that could have led them to believe they had any greater protection against competition than was conferred by the express terms of the leases; at [241].
Evidence from the plaintiffs about some other alleged representations was simply rejected by the Judge. The plaintiffs said that Mr Rentis reassured them, before they entered into the indentures, that he could sell the businesses “a dozen times”, that there was “no risk to the plaintiffs.” As to the former, the Judge accepted Rentis’ evidence that he did not say this. He said this allegation was an example “of how the plaintiffs collectively have twisted and distorted in setting up this action what was actually said in order to try and give themselves a cause of action:” at [228]. As to the latter, he said that if anyone told the plaintiffs there were no risks involved in the venture, it was probably Mr Anderson: reasons at [229]. As to an alleged misrepresentation about the number of people that would pass through the food court, the Judge said that if a figure of 7,000 people a day was given to the plaintiffs, it came not from Mr Rentis but from others such as Mr Anderson or other tenants: reasons at [253]. There were other matters on which the Judge found that the source of a statement or belief was Mr Anderson rather than Mr Rentis, for example, an allegation that representations were made as to the gross sales that the plaintiffs would achieve: at [270].
The Judge found that some of the alleged representations were made, but were not in fact misleading. For example, a representation that the food court would have a much better fit out than a rival food court at the Myer Centre; reasons at [266]. Similarly, in relation to an alleged representation that the locations for La Moda and Jooce were excellent locations: at [297]. The Judge found that some statements were just puffery or sales talk: at [284].
In relation to some representations, the Judge made findings strongly adverse to the plaintiffs. For example, the plaintiffs pleaded that Mr Rentis told Mr Nicolaou and Mr Makridis that the cost of fitting out La Moda and Jooce would be about $250,000.00. The plaintiffs said the fit out costs were in fact about $400,000.00. The Judge found that no such representation was made by Mr Rentis. He found in any event that the plaintiffs knew the fit out costs would be about $400,000.00 before they executed the indentures. He said at [304]:
“It was nonsense for them to have pleaded that they were induced by any such representations to have entered into the transactions with Hartford.”
As can be seen, the plaintiffs alleged that they were induced to enter into the indentures by a number of representations that were misleading and deceptive. But the Judge found as to the majority of them that they were not made, or were not misleading, or were just sales talk, or that if the relevant statement was made it was Mr Anderson who was the source of the statement. In relation to some of the alleged misrepresentations the Judge rejected the evidence of the plaintiffs, sometimes in terms that reflected adversely on their credibility or reliability or both of them.
The overall significance of this emerges again from the Judge’s reasons dealing with the one representation by which the Judge found Colliers had contravened s 52 of the TPA. I have already set out what the Judge said about the role of Mr Anderson. The Judge found that another factor “working on the minds of the plaintiffs when they committed themselves to the transactions” (at [330]) was “misconceptions which were not induced by the misleading conduct of the defendants”:at [334]. The Judge went on to say:
“I accept that when they committed themselves to the venture the plaintiffs’ states of mind were that there would be an average traffic flow of about 7,000 people per day, the shops had excellent locations, there would be no significant competition from other businesses in the Food Court and they would not be taking any real risks in committing themselves to the liabilities. They obviously strongly believed that the venture would be successful. They also had Anderson’s belief that the ventures would be extremely profitable. That is shown in Sallis’ comments to Dew that they would “make a killing” and to Goodes of the NAB that they had rejected an offer of $1 million for the businesses. (This latter comment was not true, but was Sallis using poetic licence to show off and say how good and valuable the businesses were expected to be.) It is consistent with Kritharas being asked to pay $100,000 for a 10% share, and with him agreeing to pay it. Nicolaou, Makridis, Sallis and Anderson were all comfortable with extracting that amount of money from Kritharas because they believed it would be a good investment for him. Before executing the indentures they had stars in their eyes and were prepared to take significant risks and not act with usual business prudence because they thought they would readily earn a lot of easy money from the businesses.”
In view of all this, it is not surprising that the Judge took an adverse view of the plaintiffs’ credit. In relation to their credit the Judge said at [159]:
“Their involvement with CP has been a financial disaster for each of the four natural plaintiffs. Each faces personal bankruptcy if they do not succeed sufficiently in this action to obtain enough money to pay out their guarantees to the National Bank and to some other creditors. If they are declared bankrupt, Nicolaou and Sallis may each face difficulties in continuing their professional careers. They are desperate people who cannot afford to lose this case. As will be dealt with later some of the allegations of misrepresentations were so weak and ill-founded that they gave the impression of drowning men clutching at straws. There is a reasonable inference that in their evidence they were consciously or subconsciously seeking to benefit themselves rather than relating the objective truth”. (footnote omitted)
The Judge concluded that these matters had coloured the plaintiffs’ approach to the case. He found that Mr Sallis was not a credible witness on disputed matters, and made the same finding in relation to Mr Nicolaou: at [162] and [173]. He found Mr Kritharas to be “a most unimpressive and unbelievable witness”: at [179]. He found Mr Makridis to be more believable than the other individual plaintiffs, but was not prepared to accept his evidence when it conflicted with that of Mr Rentis: at [184].

The Judge generally preferred the evidence of Mr Rentis to that of the individual plaintiffs: at [188].
Despite all this, the Judge found that Colliers and Rentis made five representations that were misleading and deceptive.
Adjacent to the food court was a food hall operated by David Jones. David Jones had operated a food hall in its former premises. The new food hall was larger. It also contained “a sizable café area” with waiter service: at [4]. This was significantly different from what had been provided in the former food hall. In this respect the new food hall was significantly different from the former food hall. The Judge found at [236]:
“I find that subject to s51A Colliers were guilty of misleading conduct contrary to s52(1) of the TPA in Rentis representing that the new David Jones would be similar to the old Food hall, albeit increased by 30%-40%. Objectively his statement meant that the style of the operation for selling coffee and light meals in the new Food Hall would not be dissimilar to the old Food Hall. However, I find that under s51A(2) of the TPA Rentis did have reasonable grounds for making this statement.”
The Judge found Mr Rentis represented that when the food court opened there would be “prominent signage” at entrances to the basement. This was important, both because the food court was in a basement, and because the food court was a new venture. There was no prominent signage until March 2001. The Judge found that this representation was misleading conduct by Colliers, but that Rentis had reasonable grounds for making the representation, based on the instructions he had been given: at [257]. The Judge also found that Mr Rentis misrepresented the extent of advertising of the food court to be undertaken by Hartford, but again that based on his instructions Mr Rentis had reasonable grounds to make the representations that he made: at [263].
The Judge found that Mr Rentis, acting on information given by Hartford, told the plaintiffs that there would be seating for 500 people in the food court. In fact there was seating for only about 350. Once again, the representation was misleading, but Mr Rentis had reasonable grounds for making it: at [291].
Mr Rentis admitted that he had told the plaintiffs that significant parts of the food court in the basement would be readily visible from North Terrace. Mr Rentis had misread the plans. The visibility of the food court from street level was a significant matter. Mr Rentis had no reasonable grounds for making this representation: at [308]. But, as I have already mentioned, the Judge found that this representation standing alone had no effect on the plaintiffs’ decision to execute the indentures.
Representations were made by Hartford and on its behalf, before the indentures were executed, that Hartford would contribute $30,000.00 to the fit out and set up of each of La Moda and Jooce, amounting to $60,000.00 in all. The indentures so provided. Hartford paid only $16,916.00, claiming set-offs to which the Judge found it was not entitled. The Judge found that in this respect Hartford engaged in misleading conduct. To the extent that Colliers had represented that the payment would be made, Colliers had reasonable grounds for making that representation: at [309].
From this summary it can be seen that the influences on the plaintiffs’ decision to enter into the indentures included opinions expressed by Anderson, beliefs about the prospects of the business that the plaintiffs themselves formed, and conduct of Hartford that was in breach of s 52 of the TPA. As well, at trial the plaintiffs alleged that their decision was influenced by a number of representations that were not established, or by statements that were found not to be misleading, or to have been mere sales talk, or to be attributable to Mr Anderson. As well, relevantly to the finding about causation, the Judge was not prepared to accept the evidence of the plaintiffs when it conflicted with that of Mr Rentis.
The Judge’s findings about causation
That is the setting in which the Judge considered whether the plaintiffs suffered loss by the conduct of Hartford.
The Judge directed himself as follows in relation to the application of s 82 and s 87 of the TPA. He said at [323]:
“On the issue of inducement and reliance it is not necessary to differentiate between these sections. Under these sections the plaintiffs can only satisfy the statutory cause of action under the TPA when they have suffered loss or damage “by” misleading conduct of a defendant contrary to s52(1). The word “by” in these sections expresses the notion of causation: Wardley Australia Ltd v Western Australia. Causation is essentially a question of fact to be determined by reference to commonsense and experience and one into which policy considerations and value judgments must necessarily enter: March v Stramare Pty Ltd. Where there is more than one cause for the loss it is sufficient if the misleading conduct plays some part, even if only a minor part, in contributing to it: Gould v Vaggelas. In determining causation for loss arising from the misleading conduct of a particular defendant the Court looks to the totality of the misleading conduct of that defendant in determining whether the necessary causal link has been established: Sutton v Thompson. It does not need to analyse the causal link separately in relation to each act of misleading conduct to see whether that act on its own would have provided a sufficient causal link. (Footnotes omitted).
The Judge then went on to make the following findings at [324]:
“I find that the totality of the misleading conduct of Hartford, as summarised in paragraph 322 above, did induce each of the plaintiffs, and was relied upon by each of the plaintiffs, to enter into the indentures of lease and the other legal obligations with Hartford and others which followed consequent upon them. But for the totality of this misleading conduct none of the plaintiffs would have entered into the transaction with Hartford. As will be set out in the next subsection, there were also a number of other causes for the plaintiffs doing this. The misleading conduct of Hartford at least played a minor part in it. My findings on this topic would be no different if the misleading conduct about visibility from the North Terrace entrance was excluded from them.”
His reference there to “the next sub-section” is a reference to the Judge’s reasons dealing with the liability of Colliers, where the Judge, in passages set out above, referred to the influence of Mr Anderson and to the plaintiffs’ own misconceptions.
The Judge said that the misrepresentation by Hartford in relation to the contribution to the fit out “probably would not have been the difference between the plaintiffs going in to the transactions and not going into them if they had known before 26 July” of the proposed set off: at [326]. At [327] the Judge said that the reduction in the seating from 500 to about 350 was mainly significant to the beverage bar operated from Jooce, and was of “minimal significance to La Moda”.
Submissions on appeal
Mr Whitington QC for Hartford submits that the Judge failed to make necessary findings of fact on the question of causation, and that the Judge has apparently made an intuitive decision in the form of a “common sense” conclusion, as distinct from a decision based on findings of fact.
Mr Whitington submits that when regard is had to the role of Mr Anderson, to the plaintiffs’ own misconceptions, to the plaintiffs’ claimed reliance on misrepresentations that were not made out, and to the adverse findings on credit, the fact that the proved misrepresentations were on matters material to the decision to enter into the indentures (that much was conceded) provided no basis for an inference of fact that the plaintiffs were induced to enter into the indentures by the conduct in breach of s 52. He submits that in the circumstances of this case, the materiality of the misrepresentations was insufficient to give rise to any inference of inducement. The Judge had to make an affirmative finding of fact that the representations that were a breach of s 52(1) of the TPA had induced the plaintiffs to execute the indentures and to operate the businesses.
That finding, he submits, must precede the consideration of whether, in terms of s 82, the plaintiff suffered loss and damage by that conduct. If there was no inducement in fact, there could be no “logical connection” between the misrepresentations and the ultimate loss and damage.
Mr Whitington submits that preceding an application of s 82 of the TPA there must be a separate finding that the conduct in breach of s 52(1) of the TPA has, in a case like this, been relied upon by the plaintiffs and has caused them to enter into the transaction in question. Only once that finding is made does one come to the question of whether the plaintiffs suffered loss or damage by the contravening conduct.
Mr Whitington referred to the decision of the High Court in Gould v Vaggelas (1985) 157 CLR 215. That case dealt with the question of whether Mr and Mrs Gould had been induced by representations by the defendant to enter into a contract to purchase a resort. The case was decided according to common law principles. The Goulds’ claim was a common law claim for deceit. One of the submissions in that case was that the trial Judge had erred in dealing with a submission that the Goulds did not rely upon the representations by the defendant, and that the Judge had wrongly placed the onus of proof on the defendants. There were circumstances capable of supporting a submission that the Goulds had not been induced to enter into the contract by representations made by the defendant. Mr Whitington referred to the following passage in the reasons of Brennan J at 250-251:
“An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case: Holmes v Jones; Smith v Chadwick. The tribunal of fact may infer that such a material misrepresentation induced the representee to enter into the contract and the fact that there were other inducements to him to do so does not necessarily preclude the drawing of that inference. The relevant question for the tribunal of fact to answer on all the evidence is whether the misrepresentation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss:” (Footnotes omitted)
Mr Whitington submits that in the present case His Honour had to find that the breaches of s 52(1) of the TPA were a “real inducement” or “one of the real inducements” for the plaintiffs to execute the indentures and to operate the businesses. He referred also to the following well known passage from the reasons of Wilson J at 236, with which Gibbs CJ agreed at 219 and Dawson J (dissenting) agreed at 262, where Wilson J said:
“1.     Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2.     If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
3.      The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4.     The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.”
As I understood the submission, Mr Whitington submits that reliance in the first proposition is something different from inducement in the fourth proposition. There has to be first a finding of reliance, and if that finding is made, it is then open to a court to find that the representation has induced a course of action, even if it was not the sole inducement for that course of action, but played only “a minor part” in inducing the course of action. He argues that propositions two and three are propositions that are applicable to the ordinary case, but not to the present case, having regard to the findings of the Judge about the various influences on the plaintiffs’ decision to enter into the indentures. Those findings mean either that an inference of inducement could not be drawn from the fact that the proved misrepresentations related to material matters, or that any such inference was “dissolved” by the findings referred to.
Drawing on these passages Mr Whitington argues that before one comes to s 82 of the TPA, there has to be a finding that the plaintiffs relied upon the representations in question, or that those representations were a real inducement or one of the real inducements to enter into the indentures.
Finally, he argues that the decision of the High Court in Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 does not deal with this first issue, and proceeded on the basis that there was a sound finding that the contravening conduct had induced the plaintiff to undertake the relevant development project, the only issue for decision being the consequential issue of whether the plaintiff had suffered loss or damage by the contravening conduct, and if so, how much loss or damage, bearing in mind that the plaintiff’s own miscalculations as to building costs contributed to his belief that the project would be profitable, and accordingly to his decision to proceed with the project. Thus, Mr Whitington argues that nothing in Henville stands in the way of his submission.
Mr Whitington submits that while the trial Judge found that the subject matter of the misleading and deceptive conduct was matters material to the decision to be made by the plaintiffs, the Judge made no finding that the plaintiffs actually relied on the representations in question. As to the findings contained in paragraph [324] set out above, he submits that those findings are unsubstantiated, and failed to make allowance for the obstacles that he identified to a finding of reliance.
He pointed out that when the Judge dealt with the alleged representations one by one, he made no specific finding of reliance on the part of the plaintiffs. That, however, is not surprising, because at that stage of the reasons the Judge was focusing on the question of what was said, and whether what was said was misleading or deceptive.
Mr Whitington makes the further point that when the Judge was considering the question of causation, and when he dealt with the representations about the contribution to the cost of the fit out, and the number of seats, he rather downplayed the significance of those particular matters.
In the end the submission is that there is either no finding on the crucial matter of reliance or inducement, or that there is a finding in general terms that cannot be sustained. Mr Whitington submits that this Court should find that there is no basis for a finding of inducement or reliance, or, in the alternative, there should be an order for a retrial on the basis that the trial Judge has not made a finding as to a critical matter.
The High Court decision in Henville
In Henville the plaintiffs bought land and built a small block of home units. The project was undertaken with a view to making a profit on the sale of the units. When considering whether to buy the land they relied on advice from the defendant about the likely selling prices for the units, and about market demand for the units. They relied also on their own estimates for construction and other costs. The defendant overestimated demand and price, and the plaintiffs underestimated the project costs. The plaintiffs lost on the project, and sued the defendant, claiming damages assessed by reference to the loss they made. The statements by the defendant about selling prices and demand were found to be in breach of s 51 of the TPA.
On appeal, the High Court restored the trial Judge’s finding that the defendant’s contravention of s 52 was one of two concurrent causes of the plaintiffs’ loss, and held that that sufficed to entitled the plaintiffs to damages under s 82(1) of the TPA. On appeal there was also an issue as to the quantification of damages. In particular, should the damages be reduced because of the part played by the plaintiffs’ own carelessness in estimating construction and other costs, or could it be said that some part of the loss suffered was attributable to the plaintiffs’ own conduct and thus not recoverable from the defendant? On this matter the Court divided, but in view of the submissions on appeal this aspect of the case can be put to one side.
Does the decision in Henville state a principle that is relevant to the present case? In my opinion it does.
Gleeson CJ proceeded on the basis of the trial Judge’s findings that the defendant’s representations were “a substantial inducement” to the plaintiffs in deciding to undertake the project: at [10] and [21]. He also accepted the trial Judge’s finding that the plaintiffs relied as well on their own erroneous estimates at [10]. He rejected a Full Court finding on appeal that the plaintiffs’ erroneous estimates were “the sole cause of the decision to undertake the project”: at [13]. In that context, and before coming to the question of quantification of the damages (on which point he was in dissent), he said at [14]:
“For there to be the necessary causal relationship between a contravention of s 52, and loss or damage, so as to satisfy the requirements of s 82(1), it is not essential that the contravention be the sole cause of the loss or damage. As Brennan J pointed out in Sellars v Adelaide Petroleum NL , where the making of a false representation induces a person to act in a certain manner, loss or damage may flow directly from the act and only indirectly from the making of the representation; but in such a case the act “is a link – not a break- in the chain of causation”. In the present case there were two concurrent causes of the imprudent decision to buy the land and undertake the development project. The conduct of the respondents was one of those causes. That is enough.” (Footnote omitted)
Gaudron J also accepted the trial Judge’s findings about inducement: at [50]. When she came to the question of causation of loss, she said that s 82(1) of the TPA should be understood as picking up common law concepts of causation, having referred to the observations of Wilson J in Gould. She said at [61]:
“As already indicated, that common-sense approach requires no more than that the act or event in question should have materially contributed to the loss or injury suffered. And there is nothing in the Act to suggest that any different approach should be taken in the case of a misrepresentation that constitutes a contravention of s 52(1).”
She said at [62] that it sufficed that the defendant’s misrepresentations “materially contributed to the loss”.
McHugh J said at [78]:
“That factors, other than a respondent’s contravention of the Act, have operated to induce a person to act in a way that results in loss or damage does not prevent that person from recovering the amount of loss or damage under s 82 of the Act. The existence of other operative factors may be relevant in assessing the amount of the loss or damage, but it does not deny an applicant a remedy under s 82.”
He recognised that there was a role for common law concepts of causation under s 82 of the TPA, but those concepts were not to be rigidly applied. He said at [107]:
“Of particular importance to the present case is the long-standing recognition of the possibility that two or more causes may jointly influence a person to undertake a course of conduct. In separate judgments in Gould v Vaggelas, Wilson and Brennan JJ emphasised that a representation need not be the sole inducement in sustaining the loss. If “it plays some part even if only a minor part”, in contributing to the course of action taken – in that case the formation of a contract – a causal connection will exist.” (Footnotes omitted).
He went on to say that it was sufficient if the misrepresentation “was one of the causes of the loss or damage sustained”: at [109].

Gummow J agreed with McHugh and Hayne JJ.
Hayne J also proceeded on the basis of the trial Judge’s finding that the defendant’s estimates misled or deceived the plaintiffs: at [155] and [159]. He then turned to the application of s 82. As to that he said at [163]:
“Secondly, seldom, if ever, will contravening conduct be the sole cause of a person suffering loss. Other factors will always be capable of identification as a cause of the person suffering loss. In a case like the present, the appellants’ relying on the respondents’ estimate of likely receipts can be seen to be a cause of their loss. What the Act directs attention to is whether the contravening conduct was a cause. It does not require, or permit, the attribution of some qualification such as “solely” or “principally” to the word “by”.
I agree with Mr Whitington that in Henville there was no challenge to the finding that the plaintiffs actually relied in part on misrepresentations made by the defendant. But, relevantly, that was in the context of the principles applied by all members of the Court, which principles drew on common law principles of causation. Henville is authority for the proposition that in applying s 82 of the TPA it suffices in a case like Henville if the contravening conduct was one of two concurrent causes of the decision that resulted in loss, (Gleeson CJ at [14]), or “materially contributed to the loss or injury suffered” (Gaudron J at [61]), or was one of the causes of the loss or damage (McHugh J at [109]) or was a cause of the loss (Hayne J at [163]).
There is nothing in the later decision in I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited [2002] HCA 41; (2002) 210 CLR 109 that qualifies these statements of principle, in a manner relevant to this case.
That is the approach to be applied in the present case. The present case is one in which a number of factors were operating when the plaintiffs made the decision to enter into the indentures. The first is the fact that representations made by Mr Rentis about matters that were undeniably material to a decision to enter into the transaction. The second is the fact of opinions expressed by Anderson, in whom the plaintiffs placed faith, that the project would be successful. The third is the plaintiffs’ own enthusiasm for the project, no doubt attributable to a number of matters, but not exclusively to things Mr Rentis said. In addition, when making findings, the Judge had to bear in mind that the plaintiffs had claimed they were influenced by representations that they were not able to prove, or that were not misleading, and had given evidence that the Judge had found not to be reliable.
But, at the end of the day, this is a case in which there were a number of potentially causative factors operating concurrently. As well, the Judge had to bear in mind that the plaintiffs’ own evidence about what influenced their decision was not reliable, and was the subject of challenge.
Did the Judge err?
The Judge’s statement of the relevant principles is found in his reasons at [323], and is set out above. That statement of principle accords with the principles identified by the High Court in Henville.
The Judge’s central findings on causation are found in his reasons at [324], which I have also set out above. There is no reason to think that the Judge overlooked his own statement of principle that it was necessary to find that the misleading conduct played some part in the relevant decision. Nor is there any reason to think that the Judge acted solely on his statement of principle that the causation is a question of fact to be determined by reference to common sense and experience, and immediately leapt to an intuitive decision about causation.
I consider that in his reasons at [324] the Judge has made a finding which purports to be a finding in accordance with the principles identified by him in the preceding paragraph of his reasons. The Judge has found reliance in fact on the representations in breach of s 52(1) of the TPA. He has recognised that other matters influenced the plaintiffs as well. But he has found that Hartfords’ conduct “at least played a minor part”. Understood in its context, that is a finding that accords with the principle identified in Henville.
I agree that one might have expected a more detailed finding, and some explanation of the Judge’s process of reasoning. But, at the end of the day, there is not a great deal that could be said on the matter.
In considering the Judge’s finding it must be borne in mind that the misrepresentations that the Judge found were on matters plainly material to the decision to be made by the plaintiffs. It is also significant that most of the representations on which the plaintiffs failed were only, I consider, shades of meaning or variations of those on which they succeeded. The central finding by the Judge is that the plaintiffs were misled by statements that bore on the topic of competition from other businesses in the food court, the set up of the food court, promotion of the food court and contribution to fit out costs. As I have said, a number of the representations on which the plaintiffs failed went to the same topic, and could reasonably be regarded as elaborations on that topic, even if they were false. As well, it is not at all surprising that the plaintiffs had their own reasons for thinking that the project would succeed. It would be surprising if they did not. It would be relatively rarely that a person would enter upon a business venture relying entirely on statements from another person about the prospects of success of that venture, and having no views of their own. The same comment applies to the role played by Anderson. It would be one thing if there was reason to think that he played the dominant part in the decision to enter into the indentures, but that is not a finding that the Judge made. It is significant that Mr Rentis agreed that the subject matter of the representations was matters that were significant in making a decision whether to embark upon the venture or not. This is not to overlook Mr Whitington’s submission that the materiality of the representations is not decisive. But the materiality is a relevant matter.
In my view, when one considers the materiality of the representations in question, the fact that on many of the issues on which the plaintiffs failed the alleged misrepresentation was linked to those on which they succeeded, it was well open to the Judge to make the finding that he did. The role of Mr Anderson and the part played by the plaintiffs’ own beliefs were matters to be taken into account, but do not present a significant obstacle to a conclusion that the breach of s 52 was a cause or one of the causes of the decision to enter into the indentures, and so a cause of the plaintiffs’ loss. The findings adverse to the plaintiffs’ credit, and the rejection of a number of their claims, provide a reason to scrutinise with care the claim of reliance or inducement, but do no more than that. The Judge could not have overlooked his own findings on that point.
It is also significant that, on the basis of the evidence drawn to our attention during the course of the appeal, reliance by the plaintiffs on the conduct in breach of s 52 of the TPA was not squarely challenged, although again I recognise that the defendants could hardly predict on which of the alleged representations the plaintiffs would succeed. But it was not put to the plaintiffs that the influence of Mr Anderson was the dominant reason for their decision, or the real reason, nor was it put that their own beliefs merited this description.
My conclusion is that in paragraph [324] of his reasons the Judge made a finding about the effect of the contravening conduct on the plaintiffs’ decision to enter into the indentures; that was a finding made with reference to the principles stated in paragraph [323] of the Judge’s reasons, that the Judge was directing his mind to the question of actual reliance or actual inducement in the context of the principles stated by the Judge, and that the finding was one that can readily be supported by reference to the evidence, even though it is expressed in brief terms.
For those reasons I would dismiss Hartford’s appeal against the finding that its contravening conduct caused the plaintiffs’ loss.
Hartford’s appeal on costs
On 29 November 2001, in the second week of the trial, the solicitors for Colliers proposed a settlement as between Colliers and Hartford. I gather that this followed unsuccessful attempts to reach a settlement with the plaintiffs.
Colliers offered to pay to Hartford the sum of $250,000.00, and the plaintiffs’ reasonable costs and disbursements to the date of the letter, in return for Hartford taking over the conduct of the case as a whole, and indemnifying Colliers in respect of any liability to the plaintiffs. Hartford made no response to the offer. The offer was ultimately withdrawn on 8 February 2002, a little less than half way through the case.
It will be recalled that the plaintiffs collectively obtained judgment against Hartford for a little less than $500,000.00, and that Colliers escaped liability.
In his reasons dealing with costs, the Judge agreed that the offer as made was not sufficiently precise that it could have been accepted without further clarification, but took the view, rightly in my opinion, that any further details could have been sorted out without difficulty. The Judge noted that Hartford did not negotiate on the offer with Colliers, or express any interest in the offer. He found that in light of what occurred at trial, Colliers offer was “very generous”: costs reasons at [53]. He concluded that Hartford’s conduct was “imprudent”, and ordered that the costs payable by Hartford to Colliers be as between party and party up to 14 days after the receipt of the letter, and then as between solicitor and client: costs reasons at [54].
Hartford appeals against this order.
Mr Whitington pointed to the fact that in this part of his reasons the Judge said that a prime issue in the case was Mr Rentis’ authority to make whatever representations he made to the plaintiffs. The liability for any representation made without proper grounds or without authority would have fallen on Colliers. The Judge said at [53] of his reasons on costs:
“In their case at trial Hartford could only put forward a weak case that Rentis had made any representations without proper grounds or authority.”
Mr Whitington submits that in this respect the Judge missed the point. Mr Whitington accepted that Hartford knew that Mr Rentis was making representations, including those representations in respect of which Hartford was found to be liable. Mr Whitington argues that Hartford’s difficulty in responding to the offer was that the plaintiffs were alleging that Mr Rentis had made other representations not authorised by Hartford, and indeed representations which Colliers did not claim to have been authorised to make. Colliers answer was that it had not made the representations. If the plaintiffs established that Colliers through Mr Rentis had made representations not authorised by Hartford, while Hartford might still be liable to the plaintiffs (even for unauthorised representations), Hartford would be entitled to an order for contribution from Colliers in respect of any unauthorised representations made by Colliers, giving rise to a liability on the part of Hartford to the plaintiffs.
Mr Whitington submits that the difficulty for Hartford was to know whether this might eventuate. He argued that in the circumstances Hartford did not act unreasonably in rejecting the offer made. At the time when the offer was made, the plaintiffs collectively were claiming about $800,000.00. That being so, and bearing in mind the uncertainty attaching to the liability of Colliers, it was not unreasonable to reject the offer made by Colliers.
Mr Whitington submits that the issue was not, as the Judge said, whether Mr Rentis acted without authority. The issue was whether he had made the further representations alleged by the plaintiffs which Mr Rentis denied making and admitted were not authorised.
In arguing this issue Mr Whitington and Mr Lovell QC, counsel for Colliers, were each content to proceed on the basis that the issue was whether the Judge erred in finding that Hartford acted imprudently in rejecting the offer. In Pirrotta v Citibank Ltd (1998) 72 SASR 259 at 262 this Court noted that there was a substantial body of authority to support the view that one of the circumstances which may justify an award of indemnity costs is an imprudent refusal of an offer of compromise. The Court did not have to decide whether this was the approach to be taken in all matters involving an offer of compromise contained in a so-called Calderbank letter. Nor need we here. It suffices to consider whether the Judge’s conclusion that Hartford acted imprudently was correct, because if that conclusion is correct then in the circumstances it provided a sound basis for the making of the order that the Judge made.
I accept Mr Whitington’s submission that the matter to which the Judge referred in the passage above was not the central issue. I agree that Hartford did not put forward a case that Mr Rentis acted without proper grounds or without authority. As I understand things, Hartford did not contest Mr Rentis’ authority to make the representations which he admitted making. The issue was whether the plaintiffs could establish that Mr Rentis made other representations. If that was proved, it was more or less common ground that they were unauthorised. Despite that, I am satisfied that the Judge correctly understood the issue before him, and that in the circumstances his conclusion that Hartford acted imprudently is correct.
Mr Lovell made the point that Mr Rentis admitted making four of the five representations in respect of which the plaintiffs succeeded. Mr Rentis said that they were authorised by Hartford, and that could hardly be denied in the circumstances. The only issue was whether the representations were misleading, and whether the plaintiffs had relied on them. The materiality of the representations could hardly be denied. If the plaintiffs established that they were misleading, and that they were relied on, and as to the former their case was a strong one, Hartford was going to be found liable to the plaintiffs. Accordingly, Hartfords faced a very substantial risk of being found liable for whatever loss the plaintiffs could establish, because the plaintiffs had good prospects of proving that the representations were misleading and were relied on by them.
As to the representations that Colliers denied making, and in respect of which the plaintiffs were unsuccessful, Colliers did not claim that those representations were authorised by Hartford. If the plaintiffs had succeeded in establishing that the representations were made and were misleading, Mr Lovell acknowledged that Hartford would have obtained an order for contribution or indemnity against Colliers.
But when Colliers made the offer, through to the time of its withdrawal on 8 February 2002, the issue for Hartford was the prospect, assuming the plaintiffs obtained an award of damages against Hartford, of Hartford getting an order for contribution from Colliers that would give it a better result than the offer Colliers had made. If Hartford faced a real risk of being found liable to the plaintiffs, and bearing in mind that the plaintiffs were claiming about $800,000.00, what was the prospect of Colliers being found liable for an amount greater than $250,000.00 and the plaintiffs’ costs and disbursements to the date of the offer?
I agree that that was the issue. I agree that the Judge correctly characterised the offer by Colliers as a generous one. It was about one-third of the total amount claimed by the plaintiffs. If one accepts, as I do, that the prospects of Hartford escaping liability were slender, it can also be said that its prospects of obtaining a better order for contribution against Colliers were slender. This was an offer that meant that if Colliers escaped liability to the plaintiffs, Hartford would still get a large contribution to its liability to the plaintiffs.
The Judge’s finding that Hartford acted imprudently has not been shown to be erroneous, and accordingly there was a basis for him making the order as to costs that he made. It is also relevant to bear in mind that the Judge, having presided over the long and complex trial, was well placed to make the assessment that he made.
Not being satisfied that the Judge has erred in any respect, I would dismiss the appeal by Hartford against this order.
Appeal by plaintiffs against costs order
The Judge heard submissions on the question of costs. He published detailed reasons for his decision on costs: CP (Adelaide) and Ors v Hartford (Holdings) and Anor (No.10) [2002] SADC 102.
The Judge made the following orders:
“1.The plaintiffs are not to recover costs for, and are to pay to each defendant their costs of, each of the applications dealt with in the order of the 31 July 2001, the voir dire proceedings claiming privilege for Sallis’ time records, the issues for the loss on and after 31 December 2000 which were abandoned by the plaintiffs and the affidavits produced by the plaintiffs pursuant to the order of 31 July 2001 including the application to strike out those affidavits, but allowing to the plaintiffs the costs of the preparation of those affidavits to the extent to which their contents constituted the proper preparation of proofs of witnesses.
2.The costs of the applications dealt with by the orders of 17 and 28 August 2001, and of all other interlocutory orders where costs were reserved but no specific order has been made, are to be costs in the cause.
3.The costs of all unsuccessful applications for leave to amend are to be paid by the party making the application to all other parties.
4.In addition to the orders made above about specific issues within the trial, the plaintiffs are not to recover 1/3^rd of their costs of the balance of the trial, and in addition are to pay to each defendant 1/3^rd of its costs of the balance of the trial.
5.Subject to paragraphs 1 to 4 above Hartford is to pay:
(1) to the plaintiffs as represented by Costi their costs of the action; and
(2) to the plaintiff Sallis costs for his work in the action which was not done as the agent of Costi;
but so that the costs under (1) and (2) do not exceed what would otherwise be payable if all plaintiffs had been represented in the action by one firm of solicitors and one set of counsel.
6.The costs payable to the plaintiff Sallis under paragraph 5(2) above are to be assessed on the basis of proper solicitors’ costs for the solicitors’ work which he did and for which he is entitled to costs under this order and on the basis of a litigant in person who is not a legal practitioner for his attendances at the trial and on interlocutory hearings and for his work which would otherwise have attracted counsel fees.
7.Other than for matters where the plaintiffs have been ordered to pay costs to Colliers, Hartford is to pay to Colliers its costs of the action including the contribution proceedings.
8.The costs payable by Hartford under paragraph 7 are to be as between solicitor and client insofar as they were incurred 14 days after the receipt of the letter of 29 November 2001 referred to in paragraph 53 of these reasons.
9.Other than is stated above all costs ordered are to be payable as between party and party.
10.Certificates for counsel are given for all contested chamber hearings before me where I reserved my decision.
11.Under Rule 101.01(1)(c) there is to be a set off between the costs ordered to be paid by the plaintiffs to Hartford and the costs ordered to be paid by Hartford to the plaintiffs with an allocatur to be given only for the nett balance of the costs payable, and interest on costs is only to be payable on that nett balance. In arriving at the set off the amounts respectively payable by Hartford to the plaintiffs as represented by Costi and to the plaintiff Sallis pursuant to paragraph 5 above are to be brought into account rateably in proportion to their respective total amounts.
12.I will hear the parties on what further costs order should be made in relation to these orders.
13.Liberty to the parties to speak to the minutes.”

The plaintiffs complain that order number 4 is erroneous, and should be set aside. Mr Sallis on his own behalf complains about order number 6.
I add that originally the Judge reduced the damages awarded to the plaintiffs because, as he found, causes other than Hartford’s breach of the TPA had contributed to the plaintiffs’ loss. On 31 January 2003 the Judge reversed that order, in light of the decision by the High Court in I & L Securities. Despite this the Judge declined to vary his costs order. The plaintiffs complain about that as well, and this is part of their complaint in relation to order number 4.
As can be seen, by order number 1 the Judge deprived the plaintiffs of their costs on a number of matters. That is to be borne in mind when considering the complaints about order number 4.
The Judge made a number of findings relevant to the decision reflected by order number 4. Before the commencement of the trial, the Judge had made orders for the witnesses to give evidence in chief by affidavit. A large number of affidavits were prepared for the plaintiffs. They were open to numerous objections. The deficiencies were such that in the end the Judge had no choice but to discharge his order, and to allow evidence to be given orally. In part those events are reflected in order number 1. But the Judge went further than that. He took the view that if proper affidavits had been prepared, and exchanged, it was most unlikely that the trial would have lasted as long as it did. He said at [12] of his reasons on costs:
“The plaintiffs must bear the prime responsibility for this from their extraordinary and culpable failure to produce usable witness statements. It is impossible to calculate arithmetically the amount of trial time which was wasted because of this. Many weeks of trial time would have been saved if the major part of the evidence-in-chief of most witnesses had been given by tendering their witness statements, although it is inevitable that there would have been some oral evidence-in-chief. This ground is the major factor in the exercise of my discretion in paragraph 23 below in disallowing part of the trial time to the plaintiffs and ordering them to pay the defendants for it.”
The Judge also found that the plaintiffs wasted considerable time at trial leading evidence through a valuer. He took the view that the relatively late abandonment by the natural plaintiffs of part of their claim for damages should also be reflected in an order that costs be payable to the defendants: cost reasons at [14]. He took the same view in relation to time wasted by Mr Sallis in the cross examination of some of the defendants’ experts, trying to extract evidence from them which should have been presented as part of the plaintiffs’ case. Then he turned to the fact that there were a number of issues on which the plaintiffs had failed. He took the view, rightly in my opinion, that there were circumstances in which a court may not only disallow to a successful party the costs of issues on which that party lost, but may in addition give the costs of those issues to the unsuccessful party. The Judge made a finding that the plaintiffs “acted unreasonably and improperly” in alleging a number of representations on which they were never likely to succeed: costs reasons at [18]. They had tried to “artificially inflate their case” and had made various allegations without proper regard to whether they had any substance or not. The Judge then said at [23] of his reasons on costs:
“As the plaintiffs have obtained a substantial judgment against Hartford, under Rule 101.02 they are entitled to their proper costs of the action except where there is good reason arising from the litigation to order otherwise. In addition to the orders already indicated on specific issues, and based on the grounds referred to in paragraphs 12, 13, 15 and 18 to 21 above, I will order that the plaintiffs only recover 2/3^rds of their costs of the trial, and pay to each defendant 1/3^rd of its costs of the trial.”
Evidently, Mr Sallis put to the Judge the submission that he advanced on appeal, that while the Judge was entitled to reduce the costs payable to the plaintiffs, he should not order them to pay costs to the defendants. As to that the Judge said at [24] of his reasons on costs:
“Sallis urged me that I should only penalise the plaintiffs a proportion of their costs and not order them to pay any costs to the defendants. However, that course would unjustly disadvantage Hartford under the “Sanderson” order as it should not have to pay Colliers for the substantial amount of trial time which was wasted by the plaintiffs. If I had visited the consequences of the matters in paragraphs 12 and 18 to 21 above on the plaintiffs by merely disallowing costs to them it would have been a proportion much greater than 1/3^rd.”
On appeal, Mr Sallis does not challenge the Judge’s finding that the plaintiffs acted “unreasonably and improperly”. He argues that while the Judge was entitled to reduce the plaintiffs’ costs, and to do so substantially, he should not have ordered costs against them. In the circumstances, he argues that that was not a proper exercise of the discretion, and will produce an unjust result.
Mr Sallis made the point, correctly, that the plaintiffs had had a substantial success. Although many of their allegations had failed, they had succeeded on the central core of their case. The Judge found Hartford liable for their loss, and the plaintiffs recovered the bulk of the loss claimed, although it is again to be noted that the individual plaintiffs abandoned some of their claims. He made the point that a number of the allegations on which the plaintiffs failed were of representations not far removed from the representations on which they succeeded.
Mr Sallis submitted that a considerable amount of time was spent at trial on a contention by the defendant that the plaintiffs’ damages, if any, should be reduced, and that that claim had ultimately failed in light of the High Court decision in I & L Securities. He also made the point that in its conduct of the trial Hartford was stubborn and obstinate. The representations that Mr Rentis admitted could not really be denied. There was clear evidence that they were authorised, they were on material matters and in most cases were clearly misleading, and were likely to cause loss. Nevertheless, Hartford continued to resist in what was ultimately, and he submitted inevitably, a hopeless case from their point of view. Thus, Mr Sallis argued that criticisms made by the Judge of the plaintiffs could equally be made of Hartford. I consider that there is a good deal of force in this point.
Finally, Mr Sallis submitted that the Judge’s order would produce a plainly unjust result in the circumstances. Despite their substantial success, the plaintiffs would recover nothing by way of costs, and would be substantially out of pocket to Hartford, possibly losing the bulk of their damages. On this point it is relevant to bear in mind that, depending upon the amount allowed by way of costs to Mr Sallis, the plaintiffs’ costs might well be substantially less than those of the defendants’ costs, and Mr Sallis’ prediction might be correct.
This point highlights the difficulty confronting the Court. The difficulty is that at this stage no one can predict confidently the outcome of the costs orders. However, I am prepared to accept that the effect of order number 4 is likely to be that the plaintiffs will recover little if anything by way of costs.
I consider that there is force in the point made by Mr Sallis. The Judge’s criticism of the conduct of the plaintiffs’ case is deserved, and in any event the finding is not challenged. But, as it seems to me, significant criticisms can be made in relation to the manner in which Hartford conducted its case.
I recognise the width of the discretion to be exercised by the trial Judge. I recognise also that there is no indication that the Judge misunderstood the relevant principles. However, I am left with a strong impression that the Judge’s order will be productive of injustice, when one bears in mind the substantial success that the plaintiffs had in the case.
I would allow the appeal by the plaintiffs against this order. Although the plaintiffs suggested that the matter might be referred back to the Judge, I consider that the issue of costs should be resolved now. I consider that the costs order should be one that reflects the fact that the plaintiffs have had a substantial victory, but also the fact that the trial has been substantially prolonged by their unreasonable conduct of the case.
I would substitute for order number 4 an order that subject to orders numbers 1 to 3, the plaintiffs recover from Hartford 50% of their costs of the trial, and are to pay to Colliers 25% of its costs of the trial. I would not make an order that the plaintiffs be required to pay to the defendant Hartford any part of its costs of the balance of the trial.
In proposing that order, I have taken account of the fact that the claim by Hartford for a reduction in the damages payable to the plaintiffs was ultimately unsuccessful.
I recognise that the order I propose will have the effect of increasing the costs payable by Hartford to Colliers under order number 7.
Mr Sallis submits that the Judge erred in making the detailed order that he made. He said that the taxation would be unmanageable. He submits that all of these orders should be subsumed into a single order fixing an appropriately discounted percentage of the costs of the trial to be payed to the plaintiffs. That argument has obvious attractions. But I cannot say that it was not open to the Judge to make orders of the kind he made. As well, fixing a percentage or proportion that appropriately allowed for each of the matters requiring consideration would be very difficult. I reject this submission.
Mr Sallis attached a further costs order, made on another occasion, and not part of the orders set out above. As I have previously mentioned, after the High Court published its decision in I & L Securities, on application by the plaintiffs the Judge reversed his order reducing the damages payable to the plaintiffs. That had the effect of doubling the damages recoverable by the plaintiffs. The application for this order was served on Colliers, and included an application for an order varying the costs orders previously made by the Judge, apparently including the detailed costs orders set out above.
Colliers attended at court when the application to vary the amount of the damages first came on for hearing. Subsequently the plaintiffs’ solicitors informed Colliers’ solicitors that no order was sought affecting Colliers. The Judge ordered the plaintiffs to pay Colliers its costs of the application up to the time of that notification.
The plaintiffs complain about this order. They argue that Colliers were told orally that there was no need for them to attend at the hearing, prior to the letter just referred to having been sent to Colliers. They submit that the Judge overlooked this matter.
This point was argued at the very end of the appeal, and very briefly by Mr Sallis. Some reference was made to the relevant transcript. I am not satisfied that the Judge was wrong in taking the view that, until the letter in question was received by Colliers, it was not clear to them that there was no need for them to attend. I am not persuaded that the Judge erred in this respect. I would dismiss the appeal against this order.
Appeal by Mr Sallis against costs order
Mr Sallis appeals against order number 6 in relation to costs.
In the course of the submissions on appeal, it emerged that there is an issue concealed within the terms of that order. Does it entitle Mr Sallis, in relation to costs payable to him for his attendances at trial and on interlocutory hearings, to claim the earnings he lost as a result of attending a trial (or, what he could have earned during that time)? Alternatively, is he merely entitled to payment of out of pocket expenses and a witness fee in respect of the time spent by him as a witness? I will return to that point.
Although the notice of appeal is far from clear in this respect, I understand Mr Sallis to argue that in respect of work that he performed before and during the trial, being work of a kind that counsel would have performed if retained, he should be paid costs assessed as if they were costs payable to counsel. That is, in relation to the work done by Mr Sallis that would have been performed by counsel if retained. The Judge should have taken the same approach as he took in relation to work done by Mr Sallis that would have been done by an independent solicitor if Mr Sallis had retained one.
To consider this submission, it is necessary to examine Mr Sallis’ part in the case.
Throughout the case, Mr Costi was on record as solicitor for all plaintiffs. But at trial Mr Sallis appeared for himself, having obtained a decision reversing the trial Judge’s decision that he could not do so (see above). Mr Costi appeared at trial for the plaintiffs other than Mr Sallis, but appeared only occasionally. Although Mr Sallis did not purport to appear for the other plaintiffs at trial, as the Judge said at [127]:
“While Sallis conceded that as a barrister it was improper for him to appear as counsel for the other plaintiffs because of his personal involvement in the case, and while in this Court he did not claim to do so, in reality he has run the whole case as de facto counsel for all plaintiffs with the concurrence of Costi and the other plaintiffs.”
The arrangement to this effect between the plaintiffs, Mr Costi and Mr Sallis was reached because the plaintiffs lacked the resources to retain counsel.
The Judge’s reasons on costs at [63] and at [70] indicate that under costs order number 5, if Mr Sallis did any solicitors work as the agent of Mr Costi, a claim could be made for that by Mr Costi. If Mr Sallis did solicitors work other than as agent for Mr Costi, then costs in respect of that were payable only to Mr Sallis. These were matters to be determined by the taxing officer.
As to costs order number 6, the Judge proceeded on the basis that a solicitor who brings an action in person is entitled to recover the same costs as if the solicitor had employed another solicitor to conduct the case, except for costs made unnecessary because the solicitor was the solicitor’s own client: costs reasons at [65]. On this point the Judge referred to the decision of the High Court in Cachia v Hanes (1993) 179 CLR 403 at 411, where the majority of the High Court recognised the established rule to that effect, while expressing no enthusiasm for it as a matter of principle.
As to the work done by Mr Sallis before and at trial of a kind that would properly be performed by counsel if retained, and that would ordinarily attract an allowance for counsel fees, the Judge took a different view. He noted that Mr Sallis had no right to appear as counsel for the other plaintiffs: costs reasons at [67]. He said that the court should not encourage a barrister who is a party to a case to act as counsel, and particularly should not encourage such a party to act as de facto counsel for other parties. The Judge said at [69] of his reasons on costs:
“However, I consider that I am justified on grounds of public policy not to allow Sallis the equivalent of counsel fees for his participation in the trial or for other work where counsel fees would have been payable if independent counsel had been retained.”
This decision is challenged by Mr Sallis. As I have said, in respect of work performed by him before and at trial that would otherwise have been performed by counsel if retained, he claimed an allowance by way of costs as if he had been retained as counsel, or a payment as a litigant in person assessed on the basis of the scale of fees applicable to counsel.
I consider that the Judge was correct. His decision was required of him, in light of the High Court decision Cachia. There are also sound reasons of justice for the decision reached. It is not necessary to enter upon the broader question of public policy to which the Judge referred. As to that, there are arguments for and against the view that an unrepresented litigant should be entitled to recover substantial compensation by way of costs for the time and effort committed to the presentation and preparation of a case. This debate is, however, foreclosed by the majority decision in Cachia. For what it is worth, I agree with the underlying policy reflected by the majority decision in Cachia.
The power to award costs that the Judge exercised is conferred by s 42(1) of the District Court Act 1991 (SA) which provides:
“Subject to subsection (2) and the rules, costs in any proceedings in the Civil Division will be at the discretion of the Court and may be awarded against any person (whether a party to or a witness in the proceedings or not).”
The section is in terms commonly found in provisions conferring a power to award costs.
Rule 101 of the District Court Rules is in the same terms as Rule 101 of the Supreme Court Rules. In Burford v Allan [1998] SASC 6693 I considered the meaning of “costs” in s 40(1) of the Supreme Court Act 1935 (SA) (which for present purposes is indistinguishable from s 42(1) of the District Court Act 1991 (SA) and the meaning of “costs” in Rule 101 of the Supreme Court Rules. The Court had before it an appeal against a decision on taxation refusing to allow a claim for interest incurred by a litigant on a litigation loan, the loan having been taken out as the only practicable means for the litigant to fund the claim which was ultimately successful, resulting in an order for costs. The Court held that the claim was correctly disallowed. In my reasons, referring to the expression “costs” in the Supreme Court Act and in the Supreme Court Rules, I said:
“…I can find nothing in the Rule to suggest that an amount may be allowed upon a taxation, that does not fall within the recognised meaning of “costs”.”
I referred to the decision of the High Court in Cachia and said:
“In my opinion these passages have a twofold significance. First, the emphasis upon “costs” being professional legal costs, that is reimbursement to a practitioner for work done or expenses incurred by the practitioner. Secondly, the emphasis upon the fact that the award of costs is not intended to be complete compensation for losses suffered by a litigant.
For both those reasons the majority concluded that the litigant in person could not recover compensation for time spent by him in preparing and conducting his case. In principle, I can see no difference between the claim made in that case and the claim made in the present case. First of all, in each case the claim is for an expense that does not represent remuneration paid to a legal practitioner or an expense incurred by the practitioner in the course of representing the client. The claim is for a cost to the client, not to the practitioner. Secondly, each claim seems to rest in part on the premise that an award of costs should adequately compensate a litigant for any cost or loss associated with the conduct of the litigation.
It is surprising that no authority has been found by the parties more closely in point. However, in my opinion the principle that underlies the decision in Cachia v Hanes (supra) is that costs recoverable under s40 of the Act are a reimbursement for work done or expenses incurred by a practitioner, and do not extend to an expense of the type claimed in the present case. In my opinion, the judge was right, for this fundamental reason, to reverse the master’s decision on the point.”
The other members of the court agreed with my reasons. I adhere to that view.
In Cachia the High Court considered a claim on taxation of costs by an unrepresented litigant for compensation for loss of his time spent in the preparation and conduct of his case, as well as for out of pocket expenses. The claim was quantified at a rate of $85.00 per hour, based on the fees charged by the appellant as a self employed consulting engineer: at 408. For present purposes, the relevant provisions in the New South Wales legislation and rules are indistinguishable from the South Australian provisions. The majority (Mason CJ, Brennan, Deane, Dawson and McHugh JJ) said at 410:
“To use the Rules to compensate a litigant in person for time lost would cut across their clear intent. Costs, within the meaning of the Rules, are reimbursement for work done or expenses incurred by a practitioner or practitioner’s employee. Compensation for the loss of time of a litigant in person cannot be said to constitute costs within the meaning of the Rules.”
They referred to what they called an “anomalous exception” pursuant to which a solicitor who acts for himself, and obtains an order for costs, is entitled to the same costs as if he had employed a solicitor, except for costs made unnecessary because the solicitor is the solicitor’s own client: at 411. In answer to a submission that if such a claim was allowed, a claim by a litigant who is not a solicitor should be allowed, the majority said at 412 – 413:
“If the explanations for allowing the costs of a solicitor acting for himself are unconvincing, the logical answer may be to abandon the exception in favour of the general principle rather than the other way round. However, it is not necessary to go so far for the purposes of the present case. It suffices to say that the existence of a limited and questionable exception provides no proper basis for overturning a general principle which has, as we have said, never been doubted and which has been affirmed in recent times.” (Footnote omitted)
It is clear that the majority took the view that this anomalous exception was not to be extended.

The majority decision was that the expression “costs”, absent a reason to give it a more extended meaning, refers to reimbursement for work done or expenses incurred by a practitioner, and does not include compensation for the loss of time of the litigant in person. The decision in Cachia was so interpreted and applied by me in Burford. It was interpreted in the same way by the Court of Appeal of the Supreme Court of New South Wales in Walton v McBride (1995) 36 NSWLR 440 at 452-3 Kirby P, at 461 Powell JA and at 473 Cole JA (diss), and by the Court of Appeal of the Supreme Court of Victoria in Kowal v Zaccoli [2002] VSCA 100; (2002) 4 VR 399 at [8]-[10] Phillips JA, Winneke P at [17] and Ormiston JA at [18] agreeing with those reasons. It is clear enough that a different approach has been taken in England: see Khan v Lord Chancellor [2003] EWHC 12 (QB); [2003] 2 All ER 367 and Malkinson v Trim [2002] EWCA Civ 1273; [2003] 2 All ER 356. However, those decisions are based on somewhat different statutory provisions, and in any event do not reflect the law of Australia.
I recognise that there is no binding authority dealing with the precise circumstance now before the Court. This is a claim by Mr Sallis as an unrepresented litigant who is an admitted and enrolled legal practitioner, holding a practising certificate. Mr Sallis is entitled to appear as a practitioner, and to perform the work of counsel, although in this case he appeared in person to represent himself. The claim is for costs for work done in the course of the action that, on a taxation of costs, is work of a kind that would be dealt with as a claim for counsel fees under Rule 101.07(2)(b), which provides that the allowance of counsel fees is to be at the discretion of the taxing officer. Pursuant to current practice, if a claim were made for such work it would appear in a Bill of Costs lodged for taxation by a solicitor: see Bickford v Bickford [1923] SASR 148 at 157-158. It would appear as a disbursement, and would be assessed by the taxing officer as to entitlement and amount by reference to law and practice, and by reference to the Guide to Counsel Fees published by the Masters of the Court.
In the present case the claim is not a claim for reimbursement for work done or expenses incurred by Mr Sallis as counsel retained by a party. He appeared in his own right. He did not appear as counsel for any other person. Nor is it a claim to reimburse Mr Costi, the solicitor for the plaintiffs, for a liability incurred by him to counsel. There was no relationship of solicitor and counsel as between Mr Costi and Mr Sallis, or as between the other four plaintiffs and Mr Sallis. The claim is, in substance, a claim to compensate Mr Sallis as a litigant in person for the time that he spent in connection with the case, assessing that compensation as if the work done was performed by counsel retained by a party to the case. Accordingly, consistently with what the majority said in Cachia, it is not a claim for costs as that term is understood in the Rules. The exception in favour of a solicitor who acts for himself should not be extended to the present case. Unless the High Court determines otherwise, that exception should be confined to its present limits. Although, in South Australia, practitioners are admitted as solicitors and barristers, and can practice in both capacities, or in one only, a distinction remains as a matter of law and practice between the role of solicitor and that of counsel, and between the position of solicitor and that of counsel. Different professional duties attach to each capacity, although there is a considerable overlap.
I recognise that it might be said, as a matter of logic, that at least in a state in which practitioners are admitted as solicitors and barristers, and can practice as such, the so-called “anomalous exception” should be extended to a case like this. But I consider that the decision in Cachia requires a decision to the contrary. If it does not, I consider that it is in any event more consistent with principle to restrict the exception to its present limits. The role of counsel is one that requires a degree of independence between counsel and client, and the recognition and performance of duties to the court of a substantial nature. As the Judge observed, there are good reasons why a person with a direct interest in litigation should not be permitted to act as counsel. There are solid arguments against extending the exception, because that may encourage a practitioner to appear in person. As I have already pointed out, Mr Sallis did not appear as counsel. He was acting only for himself, and not for any other of the plaintiffs. The only basis for a claim by him for the allowance that he seeks is that had he not acted as his own counsel, he might have retained counsel and thus incurred costs equivalent to the allowance that he now claims. However, in principle, that is not a reason for allowing the claim, because in substance that is to argue that an unrepresented litigant should be compensated in costs either by reference to the costs that the litigant would have incurred had the litigant been represented, or by reference to the time and effort that the litigant committed to the case and thus avoided the need to retain counsel. Cachia makes it plain that that reasoning cannot be accepted.
I consider that the Judge’s decision was correct. I would dismiss the appeal against this aspect of his orders.
I refer to the issue concealed within the terms of the order made. I consider that, consistent with what is said in Cachia, pursuant to costs orders numbers 5 and 6, Mr Sallis is not entitled to costs in respect of work done by him in connection with the case, assessed by reference to the earnings that he would have earned had he not been engaged in the conduct of the case. The assessment of the loss of earnings is likely to be complex, were it to be undertaken. But, quite apart from that, in Cachia the majority said at 417, referring to English provisions which appear to permit the litigant to recover loss of earnings incurred in the course of presenting or conducting a case:
“Clearly, that is merely an indirect way of recompensing a litigant for time spent in the preparation or conduct of his case which, if it is not contemplated by the relevant legislation or rules, is not permissible. Of course, a litigant who qualifies as a witness is entitled to the ordinary witness’s fees.”
I take this passage in their Honours’ reasons to reflect a decision that a litigant in person is not to be awarded costs calculated by reference to loss of earnings. Mr Sallis is entitled to a witness fee in respect of his time as a witness. He is entitled to out of pocket expenses, to the extent that they are properly attributable to the preparation and conduct of the case. He is entitled to costs for work done as a solicitor, pursuant to the “anomalous exception”, or to the extent that such work was done as an agent for Mr Costi. But he is not entitled to compensation, measured by way of loss of earnings, for time spent performing work in the course of the case that is the work of counsel.
Plaintiffs’ appeal on interest
The Judge awarded interest to the plaintiffs, in respect of the period to judgment, in an amount of $35,806.00. That was the final amount allowed, after a number of adjustments were made to that item, reflecting adjustments that had been made to the judgment amount.
The plaintiffs claim that the allowance is inadequate.
A memorandum was provided to the Judge that set out the claim made by the plaintiffs. It makes the point that capital and non-trading losses comprised in the award of damages ($531,247.00) were incurred by early September 2000, about 22 months before judgment was delivered. The capital losses, we were told, amounted to about $340,000.00. Trading losses were incurred between early September 2000 and the closing of the businesses in early March 2001. Some very minor losses were incurred after that date. Not all trade creditors had been paid, but it was likely that most of them would claim interest. Interest for 22 months (from September 2000 to delivery of judgment) on the full amount at a rate of 6.5% per annum amounted to approximately $63,000.00. The plaintiffs accepted that there should be some discounting of this amount because the trading losses were incurred over the period from September 2000 to March 2001.
In my view, the approach proposed by the plaintiffs is broadly correct. It appears to me that the Judge has made an excessive deduction. The Judge records, when dealing with an application to vary the amount of the judgment, that he no longer had the calculations by reference to which he originally arrived at the allowance for interest, and so the basis upon which the Judge arrived at his figure of $35,806.00 cannot be known.
In the circumstances, there can be no precision in this. However, while there should be some deduction from the figure calculated by the plaintiffs, I agree that the amount of the deduction made by the Judge is excessive. I would allow the appeal in this respect, and substitute an award of a lump sum of $50,000.00 by way of interest to the date of judgment.
Conclusions
For those reasons I would dismiss the appeal by Hartford against the judgment in favour of the plaintiffs. I would dismiss the appeal by Hartford against order number 8 of the costs orders, made in favour of Colliers. I would allow the appeal by the plaintiffs in part, set aside order number 4 of the costs orders, and order that subject to orders number 1 to number 3 the plaintiffs recover from Hartford 50% of their costs of the trial, and pay to the defendant Colliers 25% of its costs of the trial. Otherwise, I would dismiss the appeal by the plaintiffs against the Judge’s costs orders.
I would dismiss the appeal by Mr Sallis against the orders made as to costs, and in particular against order number 6 of the costs orders.
I would allow the appeal by the plaintiffs against the award of damages, to the extent of increasing the damages to reflect an increase in the allowance for interest to the date of judgment from the amount of $35,806.00 to the amount of $50,000.00.
The parties should prepare appropriate minutes of order for consideration by the Court. I wish to hear the parties on the question of the costs of the appeal.
GRAY J I agree with the reasons given by Doyle CJ and with the orders which he proposes.
BESANKO J I agree with the reasons of the Chief Justice and with the orders which he proposes