Holmes v Jefferis (No 2) - [2022] SASCA 74

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
HOLMES v JEFFERIS (No 2)
[2022] SASCA 74
Judgment of the Court of Appeal
(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)
28 July 2022
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INTERLOCUTORY PROCEEDINGS - COSTS IN THE CAUSE
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - PARTIAL SUCCESS
On 30 June 2022, the Court of Appeal granted leave to appeal and allowed an appeal brought by the appellant against a decision of a judge of the District Court granting the respondent summary judgment and ordering that an account be taken before trial.
The appellant seeks an order that the respondent pay her costs of the respondent’s application before the District Court master, the appeal before the District Court judge and the appeal before this Court. The respondent contends that costs of the matters before the District Court master and judge should be costs in the cause and that the parties should bear their own costs of the appeal in this Court.
Held (the Court):
1.The respondent pay the appellant’s costs of and incidental to the respondent’s summary judgment application, as originally ordered by the master on 13 April 2021.
2.The respondent pay the appellant’s costs of and incidental to the appeal before the District Court judge.
3.The respondent pay the appellant’s costs of and incidental to the appeal to this Court.
4.The respondent pay the appellant’s costs of and incidental to addressing the question of costs.

Uniform Civil Rules 2020 (SA) r 194.4(5), referred to.
Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd [1992] WASC 356; Doss v Doss (1843) 18 ER 464; Holmes v Jefferis [2022] SASCA 63; Cretazzo v Lombardi (1975) 13 SASR 4; Sanders v Snell (No 2) (2000) 174 ALR 53; Re Madden (as Official Liquidator of Aquanaut Construction Pty Ltd) (In Liq) [2001] NSWSC 1051, considered.

HOLMES v JEFFERIS (No 2)
[2022] SASCA 74
Court of Appeal – Civil: Livesey P, Doyle & Bleby JJA
THE COURT:
Introduction

Following argument on 9 June 2022, on 30 June 2022 this Court granted leave to appeal and allowed the appeal. At the time reasons were delivered the court intimated that it was minded to make the following orders regarding costs:
1.The respondent physiotherapist is ordered to pay the appellant bookkeeper’s costs of the physiotherapist’s application for summary judgment, as originally ordered by the District Court master on 13 April 2021.
2.The physiotherapist is ordered to pay the bookkeeper’s costs of the appeal before the District Court judge.
3.The physiotherapist is ordered to pay the bookkeeper’s costs of this appeal.
When these orders were outlined the solicitor for the physiotherapist was not in a position to deal with costs and was given seven days within which to provide submissions.
The court requested that the parties confer in order to determine whether the necessary cost orders might be agreed. Whether or not there was conferral, there was no agreement on the question of costs.
On 6 July 2022, the physiotherapist provided written submissions. It will be necessary to return to those submissions. It was, in consequence, necessary to call on the appellant bookkeeper to make submissions as to costs.
Whilst in some cases it may be understandable that the parties are not in a position to deal with costs at the time of judgment, perhaps until the reasons for judgment have been considered, in most cases the parties should attend the delivery of judgment ready and well equipped to address the necessary orders required of the court, together with any costs issues. That will extend to consequential costs issues in the court or courts below. The parties cannot expect to have further time to address issues which are often predictable and which can be narrowed by consultation between the parties before judgment is delivered.
For the reasons that follow, the orders intimated by this Court will be made, together with a further order that the respondent pay the appellant’s costs of addressing the question of costs.
The respondent’s submissions on summary judgment costs
The physiotherapist submitted that the costs orders should be as follows:
1.The costs of the initial application for summary judgment heard by the master should be costs in the cause.
2.Costs of this appeal and of the appeal to the District Court judge should be reserved or, alternatively, costs in the cause.
3.In the final alternative, the physiotherapist submitted that the parties should bear their own costs of the appeal.
The physiotherapist cited r 194.4(5) of the Uniform Civil Rules 2020 (SA) (the Rules) that, subject to an order of the court to the contrary, costs of an interlocutory application are costs in the cause. The physiotherapist submitted that the apparent intention of the rule is to alter the previous practice whereby costs would ordinarily follow the event.
It was submitted that there was no reason why the default position outlined by the Rules should not apply to the costs incurred before the master. This was submitted to be consistent with “the conventional position” that where a party unsuccessfully seeks summary judgment that party is not ordered to pay costs and those costs are borne by the party who fails at trial.[1]
[1] Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd [1992] WASC 356 (Whitehall Holdings).
In Whitehall Holdings, Ipp J said that the “usual order where an application for summary judgment is dismissed is that the costs of the application be in the cause so that the party successful at the trial recoveries them”. His Honour explained that the basis upon which the usual order is not made is where the respondent should have known that it would “inevitably fail” to obtain summary judgment.[2] In that case, the appellant’s principal defence was a counterclaim which exceeded the claim for which summary judgment was sought. It is unclear from the report whether the then Western Australian rules and the current South Australian rules are comparable. For example, in that case the Full Court set aside the summary judgment and made an order that the appellants have “leave to defend”. That order raises the possibility that the rules are not comparable.
[2] Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd [1992] WASC 356, 2 (Ipp J, with whom Pidgeon and Owen JJ agreed).
It is not necessary to rule on whether the usual rule referred to in Whitehall Holdings explains the current terms of r 194.4(5). That rule is itself rendered subject to an order to the contrary made by this Court.
In many cases, the current rule will be explained by the fact that when an application for summary judgment fails, it fails because a reasonable basis for defending the claim (for example) has been established. That basis may or may not ultimately succeed at trial. In those circumstances it may be appropriate to defer the question of costs until the fate of the defence has been determined at trial. That is consistent with the summary way in which the merits of the defence are addressed on an interlocutory basis ahead of the trial.
The appellant’s submissions on summary judgment costs
The bookkeeper says that this approach is inconsistent with the approach taken by the physiotherapist before the judge. The bookkeeper points out that after this appeal was commenced, the matter was called back on before the judge at the request of the physiotherapist so that she could obtain a costs order.
There is no inconsistency. Any apparent inconsistency is explained by the different positions of an applicant and a respondent on an application for summary judgment. As just explained, where a respondent succeeds, the basis upon which the respondent succeeds may or may not be made good at trial. By contrast, and assuming there is no material change to the issues litigated, where the applicant succeeds with a summary judgment application, by definition the applicant would have succeeded at trial.
Determination of costs on summary judgment
In this case the nature of the application for summary judgment is relevant to determining whether to make an order in favour of the ultimately successful respondent.
In this case, the physiotherapist sought a summary order for an account principally on the basis that the bookkeeper admitted that she was an accounting party. The key to the physiotherapist’s case on summary judgment was that a summary order for an accounting should be made before the trial. There was a contest between the parties as to whether the ‘rule’ in Doss v Doss (1843) 18 ER 464 applied and, in consequence, whether the physiotherapist first needed to establish that something was owed by the bookkeeper. This Court ruled that the physiotherapist had failed to establish that the bookkeeper was liable to account at this time, in part because the physiotherapist had not yet established whether anything was or would ever be due. In addition, this Court found that a trial would only be avoided if the accounting became a trial.
As the physiotherapist failed on those contentions, there was no proper basis to seek an account before trial and there is no reason why she ought not be ordered to pay the costs of her unsuccessful application before the master.
The submissions on the costs of the appeals
As to the costs of the appeals, the physiotherapist submits that although this Court has determined that there should be no summary order for an account at this time, it has not determined that there should never be an account, particularly as the bookkeeper is an admitted accounting party.
The physiotherapist emphasises that this Court determined that there are various factual matters presently in dispute which explained why an order for an account should not have been made at this time.[3] The physiotherapist submits that one possible outcome of the trial is that the bookkeeper will fail on the factual matters presently in dispute and “as a result, her basis for opposing an order for an account and prosecuting this appeal will fall away”.
[3] Holmes v Jefferis [2022] SASCA 63, [113]-[123] (Livesey P and Bleby JA), [131] (Doyle JA).
In the alternative, the physiotherapist submits that the bookkeeper succeeded on some but not all grounds and that costs were necessarily incurred in addressing all of the grounds. On this basis, it is submitted that the appropriate order is that the parties bear their own costs of the appeal to this Court.
The bookkeeper submits that this Court found that an order for an account at this time lacked utility because the physiotherapist conceded on appeal that the account was confined to the bookkeeper’s activities in taking monies from the cash tin and banking them.[4] The bookkeeper emphasises the finding by this Court that following a conventional trial “the existence and amount of any shortfall will have been established”.[5] As a result, the bookkeeper submits that it is unlikely that there will ever be an order for an account to be taken.
[4] Holmes v Jefferis [2022] SASCA 63, [120] (Livesey P and Bleby JA), [130] (Doyle JA).
[5] Holmes v Jefferis [2022] SASCA 63, [118] (Livesey P and Bleby JA) (with whom Doyle JA agreed).
Determination of costs on the appeals
Whilst it is true that there remain factual disputes between the parties, particularly the reasons for any shortfall and the extent of the bookkeeper’s liability for that shortfall, the principal issue arising on the appeals was whether liability to account at this time and before trial had been established. That was an issue informed by but distinct from any underlying factual issues dividing these parties.
In light of this Court’s reasons, the physiotherapist failed and should pay the bookkeeper’s costs incurred on the appeal before the judge.
Whilst in some cases it is appropriate to reflect partial success or partial failure in the order for costs made by this Court, in this case it is not appropriate to divide issues or apportion costs according to those issues. We start with the well-known observations in Cretazzo v Lombardi against the making of “issues-based” orders for costs:[6]
The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.
[6] Cretazzo v Lombardi (1975) 13 SASR 4, 16 (Jacobs J).
A number of authorities show that courts have usually been reluctant to make orders for costs on particular issues or, more generally, to penalise an ultimately successful party for not winning every argument.[7] Whilst that approach is not invariable, the issues which were not pressed were not substantial and did not occupy significant time, before or on the hearing of the appeal.
[7] Sanders v Snell (No 2) (2000) 174 ALR 53, 57 (Kirby J: “unless there are good and exceptional reasons in the particular case to do so”. See also Re Madden (as Official Liquidator of Aquanaut Construction Pty Ltd) (In Liq) [2001] NSWSC 1051, [4] (Hamilton J).
The bookkeeper succeeded on appeal to this Court. This is not a proper case in which to order other than that the physiotherapist pay the bookkeeper’s costs. Costs should follow the event.
Conclusions
Accordingly, the orders intimated on 30 June 2022 will be made. In addition, the physiotherapist must pay the bookkeeper’s costs incurred in addressing the question of costs.
The orders of the court should be as follows:
1.The respondent is ordered to pay the appellant’s costs of and incidental to the respondent’s summary judgment application, as originally ordered by the master on 13 April 2021.
2.The respondent is ordered to pay the appellant’s costs of and incidental to the appeal before the District Court judge.
3.The respondent is ordered to pay the appellant’s costs of and incidental to the appeal to this Court.
4.The respondent is ordered to pay the appellant’s costs of and incidental to addressing the question of costs.