Hutchinson v Ellis
[2010] SASCFC 71
•9 December 2010
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
HUTCHINSON v ELLIS
[2010] SASCFC 71
Judgment of The Honourable Chief Justice Doyle, The Honourable Justice Gray and The Honourable Justice White
9 December 2010
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - PARTICULAR CASES - OTHER MATTERS - COSTS
Appeal against a costs order made in the District Court in proceedings under the Domestic Partners Property Act 1996 (SA) - in an action in the District Court both the plaintiff and defendant sought a division of assets - following the Judge's principal decision, an order was made for costs - where part of costs order included an order that the defendant pay the plaintiff's costs incurred from a particular time and date (referrable to an offer made by the plaintiff to settle the action) on a party/party basis - plaintiff complained on appeal that the Judge should have ordered the defendant to pay costs of the action prior to the time and date of the plaintiff's offer of settlement on a party/party basis, and subsequent to that time and date on an indemnity or solicitor/client basis.
Held: (Doyle CJ and Gray J): Appeal dismissed - a decision regarding costs will only be interfered with if the appellate court is satisfied that there is an identifiable error or if the exercise of the discretion has been so unreasonable or unjust as to require the appellate court to substitute its own discretion - the trial was one in which both parties sought and obtained a division of property, it was not a simple money claim - both parties were criticised by the Judge for their conduct during the litigation - the orders made by the Judge were open to him - no error of principle identified.
(White J, in dissent): the Judge's cost discretion miscarried - on re-assessment, would make an order that the defendant pay 70 per cent of the plaintiff's costs of the action on a party/party basis.
De Facto Relationships Act 1996 (SA); Domestic Partners Property Act 1996 (SA); District Court Act 1991 (SA) s 42(1); District Court Civil Rules 2006 r 187 and r 263(1); Civil Procedure Act 2005 (NSW) s 98(1); Uniform Civil Procedure Rules 2005 (NSW) cl 42.1; Family Law Act 1975 (Cth) s 117, referred to.
H, RT v E, CK (No 2) [2009] SADC 96; H, RT v E, CK [2009] SADC 76; House v The King (1936) 55 CLR 499; Norwest Refrigeration Services Pty Ltd v Baine Dawes (WA) Pty Ltd (1984) 157 CLR 149; Southern Resources Ltd v Residues Treatment & Trading Co Ltd (1990) 56 SASR 455; Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387; Donald Campbell & Co Ltd v Pollak [1972] AC 732; Latoudis v Casey (1990) 170 CLR 534; Oshlack v Richmond River Council (1998) 193 CLR 72; Dunstan v Rickwood (No 2) [2007] NSWCA 266; Baker v Towle [2008] NSWCA 73; Vollmer v Hauber Davidson [2006] NSWCA 79, considered.
WORDS AND PHRASES CONSIDERED/DEFINED
"the event"
HUTCHINSON v ELLIS
[2010] SASCFC 71Full Court: Doyle CJ, Gray and White JJ
DOYLE CJ: I have had the benefit of considering the reasons of Gray J and those of White J. I would dismiss the appeal. In substance I agree with the reasons of Gray J.
I acknowledge the force of the reasoning of White J. But, in my opinion, it is clear enough that the Judge took the view that, but for the settlement offer made during the break in the trial, the appropriate order was an order that each party bear his or her own costs. It was open to the Judge to come to that conclusion having regard to the manner in which the trial had been conducted. For what it is worth, I am not persuaded that the plaintiff at trial was the successful party. Neither party was successful in achieving the result for which they contended. The most one can say is that the plaintiff came closer to the result for which he contended than did the defendant. That is another reason supporting the approach that the Judge took.
GRAY J.
This is an appeal against a costs order made following a trial in the District Court.
Introduction
This appeal arises out of a claim for a division of assets under the De Facto Relationships Act 1996 (SA) and insofar as is necessary, under the Domestic Partners Property Act 1996 (SA). The parties, who had been in a de facto relationship for some years, were, as the Judge described, at loggerheads on every conceivable issue.
In the within proceeding, each party sought a division of assets. Those assets included both realty and personalty. As the Judge noted, the parties put everything in issue. Ultimately, the Judge reached his view as to the division of the assets and addressed that division through the detailed provisions of his order. The monetary adjustment arrived at was then reflected through the order made with respect to property known as the Roxby property. The payment to be made by the defendant to the plaintiff to effect the transfer of the plaintiff’s interest in the Roxby property was fixed so as to give accord to the overall division of assets considered by the Judge to be appropriate.
The final orders of the District Court Judge were as follows:[1]
[1] H, R T v E, C K (No 2) [2009] SADC 96 at [30].
Consistent with the above reasons, there will be orders in terms as substantially drafted by the parties (with some minor drafting changes) as follows:
THE COURT ORDERS THAT:
In full and final settlement, satisfaction and redemption of any claim that either party may have against the other for settlement of property and alteration or interests in property arising out of law and equity, including but not limited to the Domestic Partners Property Act 1996 (SA)
1.Within 30 days of the date hereof the defendant do pay to the plaintiff the sum of ONE HUNDRED AND SIXTY THOUSAND DOLLARS ($160,000) plus interest in the amount of ONE THOUSAND DOLLARS ($1,000) by way of bank cheque made payable to TINDALL GASK BENTLEY TRUST ACCOUNT for and on behalf of the plaintiff.
2.Contemporaneously with the payment to the plaintiff referred to in paragraph 1 hereof, the plaintiff do deliver up to the defendant a Memorandum of Transfer, in registrable form of all the plaintiff’s right, title, estate and interest in the property situated at 18 Wangianna Street Roxby Downs in the State of South Australia, being the whole of the land comprised and described in Certificate of Title Register Book Volume 5199 Folio 848 (herein called “the Roxby Downs property”) to the intent that after payment as provided for in paragraph 1 hereof, the defendant shall be entitled to be the registered proprietor thereof free from any claim by the plaintiff hereinafter.
3.Henceforth the defendant shall discharge to the exoneration of the plaintiff all payments of principal and interest accruing or arising pursuant to any registered mortgage or charge over the said property and the defendant shall indemnify the plaintiff and hold the plaintiff forever indemnified with respect thereto.
4.In default of the defendant paying to the plaintiff either all or part of the sums provided for in paragraph 1 hereof, the defendant shall pay interest on such unpaid monies due to the plaintiff, such interest to be at the rate prescribed from time to time by the Rules of Court pursuant to s 40 of the District Court Act 1991 (SA) payable to the plaintiff as and from the date on which such payment or payments fall due and until payment has been made.
5.In the event the defendant shall default in the payment of all or part of the sums referred to in paragraph 1 hereof and such default shall continue for a period of THIRTY (30) days, the Roxby Downs property shall be sold on such terms as the parties may agree and in default of agreement as ordered by the court, the net proceeds of sale together be applied as follows:
(a) in payment of all costs of and incidental to the sale of the said property including Land Agent’s fees, conveyancing costs and the costs of discharging any mortgage thereon;
(b) as to the sum of ONE HUNDRED AND SIXTY ONE THOUSAND THREE HUNDRED DOLLARS ($161,300) referred to in paragraph 1 hereof, by way of bank cheque payable to TINDALL GASK BENTLEY TRUST ACCOUNT for and on behalf of the plaintiff;
(c) the balance to the defendant.
6.The plaintiff transfer to the defendant all his right, title, estate and interest in the Toyota Avalon motor vehicle registration number WWL 443 to the intent that the defendant be the owner thereof free from claim by the plaintiff hereinafter.
7.The defendant transfer any interest she may have in the plaintiff’s business COOINDA ELECTRICAL to the plaintiff subject to the plaintiff indemnifying her in respect of all costs and liabilities arising therefrom including but not limited to taxation liabilities.
8.Other than as specified herein, all the property hereafter in the possession of the plaintiff, including but not without limited the generality thereof:
(a) the property located at 3 Johns Lane, Hahndorf in the State of South Australia being the whole of the land and improvements thereon comprised and described in Certificate of Title Register Book Volume 5648 Folio 976;
(b) any motor vehicle currently in his possession;
(c) any monies standing to his credit in any financial institution;
(d) all life insurance, life assurance policies and superannuation entitlements currently in his name;
(e) all items of personalty including furniture currently in his possession; and
(f) any other item of property whether real or personal of whatsoever nature and whatsoever source currently in his possession;
shall be the sole property of the plaintiff free of any claim by the defendant.
9.Other than as specified herein, all the property hereafter in the possession of the defendant, including but without limiting the generality thereof:
(a) any motor vehicle currently in her possession;
(c) any monies standing to her credit in any financial institution;
(d) all life insurance, life assurance policies and superannuation entitlements currently in her name;
(e) all items of personalty including furniture currently in her possession; and
(f) any other item of property whether real or personal of whatsoever nature and whatsoever source currently in her possession;
shall be the sole property of the plaintiff free of any claim by the defendant.
10.The parties shall do all such acts and things and duly execute all such documents as may be necessary to give effect to the terms of this order.
11.The parties shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this order.
12.The defendant pay the plaintiff’s costs incurred as and from 4pm on Friday 29 May 2009 on a party/party basis, such costs to be agreed or taxed.
The only matter the subject of appeal is the order made as to costs: “[t]he defendant pay the plaintiff’s costs incurred as and from 4pm on Friday 29 May 2009 on a party/party basis, such costs to be agreed or taxed”.
The plaintiff, the appellant in this action, claimed that the Judge should have ordered that the plaintiff recover the costs of the proceedings prior to 4.00pm on 29 May 2009 on a party-party basis, and that further, the Judge should have ordered that the plaintiff recover the costs subsequent to 4.00pm on 29 May 2009 on an indemnity or solicitor-client basis. That time and date is referable to an offer made by the plaintiff to settle the action.
The Trial
The Judge dealt with the issue of costs in separate reasons.[2] In the course of those reasons, the Judge noted that both parties sought orders for costs in their favour. The plaintiff, the male partner, sought costs on an indemnity or solicitor-client basis from the time of the issue of proceedings.
[2] H, R T v E, C K (No 2) [2009] SADC 96.
The Judge, at the outset of his reasons for costs, identified the general rule as to costs, and observed:[3]
Under 6R 263 of the District Court Civil Rules (2006), “as a general rule, costs follow the event”. Sub-rule 263(2) contains a number of exceptions not otherwise relevant. The Full Court in Forlyle Pty Ltd v Tiver, held that:
“… the general rule is that a successful party has a reasonable expectation of obtaining an order for costs unless for some reason connected with the case a different order was specially warranted”.
The intent of 6R 263 is that the party who on the whole succeeds should normally have to costs of the action: see Master Norman “Legal Costs South Australia Butterworths para 1172, Reid Hewitt & Co v Joseph. The plaintiff’s predicament was akin to that in Forlyle Pty Ltd v Tiver, where the plaintiff “had no alternative but to bring the proceedings”.
[Footnotes omitted]
[3] H, R T v E, C K (No 2) [2009] SADC 96 at [16]-[17].
The Judge addressed two offers to settle made by the plaintiff. These offers formed the basis of the plaintiff’s contention that indemnity or solicitor-client costs should be awarded. With respect to the first offer, the Judge noted that it was made in breach of the mandatory requirements of the rules, and further, that it was in terms more favourable to the plaintiff than the terms of the Court’s ultimate order. On appeal, the plaintiff made no challenge to this aspect of the Judge’s reasons.
The second offer was made by letter delivered partway through the trial. It was made at a time shortly prior to a resumed hearing of the proceedings. This offer did not seek to invoke the rules of the Court. Had it done so, it would have failed to comply with the mandatory requirements of those rules. The offer remained open for acceptance for a period of about 10 days and was not open for acceptance once the trial resumed.
In respect of the second offer, the Judge observed:[4]
On the other hand, this offer was close to and in fact on terms less favourable to the plaintiff than he ultimately achieved under the terms of the court judgment, at least in terms of principal relief. In exercising the discretion vested by 6R263(3), the court may “have regard to any offer to consent to judgment or other attempt to settle the action or an issue involved in the action.” Thus the court is not precluded from considering offers that do not comply with the formal requirements of the Rules. This second offer was wholly reasonable in the circumstances. It was one capable of acceptance, either as to the primary relief, or as to costs, or both. It merited a substantial response in view of the length of time the proceedings had taken already, the sum of money potentially at stake, and the limited nature and scope of the orders sought by the parties.
[4] H, R T v E, C K (No 2) [2009] SADC 96 at [26].
The Judge then specifically addressed the application for costs. He commented with regard to the plaintiff’s case as follows:[5]
In the wake of this background, the question is what order for costs is appropriate? The plaintiff’s case was unrealistic. As mentioned in the principal judgment, he sought to prove contributions to the relationship through tables provided to the defence on the first day of the trial. By trials [sic] end his counsel formulated a claim for the payment to him of some $277,000. His manner of presentation locked the defendant into responding to the schedules and consequently extended the length of the hearing. Both parties embarked upon a mode of proof contrary to the approach suggested by the authorities: Arnold v Dalton and Hogg v Roberts.
[Footnotes omitted]
[5] H, R T v E, C K (No 2) [2009] SADC 96 at [27].
The Judge then addressed the defendant’s case and noted:[6]
The defendant’s case was not without its blemishes either. Her manner of proof was non-specific. She was totally unresponsive to any offer throughout the proceedings and doggedly denied the entitlement by the plaintiff to a monetary adjustment. In his closing submission, the defendant’s counsel maintained that she should keep the Roxby Downs property and the plaintiff keep the Hahndorf property. Had things stood there, the only appropriate order was that each party bear their own costs of the proceedings.
[6] H, R T v E, C K (No 2) [2009] SADC 96 at [28].
Having made the above observations, the Judge then reached his conclusion, expressed in the following terms:[7]
Things stand quite differently, however, following the second offer, preceding the resumption of the trial between the 1st and 9th June 2009. A great deal of the evidence had been advanced by that stage. The plaintiff’s case was fully exposed and substantially tested under cross-examination. The defendant was in an ideal position to know exactly what the case against her was and what the risks were. The second offer was very close to the mark in terms of principal relief and apposite in point of time. Her failure to respond in any respect and to continue to resist to the bitter end, on a basis that was ultimately rejected, tells heavily against her. From this point onwards in the combined circumstances, it is clearly appropriate to give effect to the policy lying behind 6R 263. Accordingly as to the second part of the trial, the plaintiff should have his costs on a party/party basis, as and from 4pm Friday 29 May 2009.
[7] H, R T v E, C K (No 2) [2009] SADC 96 at [29].
It was accepted by both parties that the Judge had a general discretion as to costs.[8] Where an appeal is lodged against a decision the subject of a general discretion, an appellate court will only intervene where clear error has been shown of the nature identified in House.[9] A decision regarding costs will only be interfered with if the appellate court is satisfied that there is an identifiable error or if the exercise of discretion has been so unreasonable or unjust as to require the appellate court to substitute its own discretion.[10]
[8] By virtue of section 42(1) of the District Court Act 1991 (SA).
[9] House v King (1936) 55 CLR 499 at 505 (Dixon, Evatt and McTiernan JJ).
[10] Norwest Refrigeration Services Pty Ltd v Baine Dawes (WA) Pty Ltd (1984) 157 CLR 149 at 176 (Brennan J), cited in Southern Resources Ltd v Residues Treatment & Trading Co Ltd (1990) 56 SASR 455 at 480 (Jacobs ACJ, Prior and Mullighan JJ).
The Appeal
On appeal, the plaintiff complained that the Judge had entirely overlooked addressing the plaintiff’s claim for party-party costs of the entire proceedings. In my view this submission is without substance. As noted above the Judge expressly referred to the general rule and to the relevant authorities. The Judge made an order with respect to costs having regard to the nature of the case, including the plaintiff’s conduct. This conduct included the unnecessary lengthening of the trial resulting from the way in which the plaintiff presented his case. It is clear that the Judge was aware of the plaintiff’s claim for party-party costs of the entire proceedings, but was not prepared to make such an order for the reasons identified.
The approach taken by the Judge, of refusing indemnity or solicitor-client costs subsequent to 4.00pm on 29 May 2009, was also challenged on appeal. It was contended that the Judge failed to give adequate weight to the second offer and in particular the fact that the plaintiff offered the defendant a greater sum than was ultimately ordered. It was accepted by the plaintiff that the second offer of a monetary sum, was tied to the payment of a specified amount for costs and interest.
Counsel for the plaintiff contended that the circumstances compelling the exercise of the discretion in favour of the plaintiff were so strong that the Judge must have fallen into error. In my view this complaint is also without substance. The Judge referred in detail to the second offer and the merits of that offer and reflected his consideration of those merits in the terms of the costs award ultimately made.
In my view the appeal should be dismissed. The Judge exercised his wide discretion as to costs to order the costs of part of the proceedings to the plaintiff on a party-party basis. This was a trial in which both parties sought and obtained a division of property. It was not a simple money claim. Both parties were criticised by the Judge in relation to the way in which they conducted themselves during the litigation. On the material before the Judge, he was entitled to exercise his discretion in the way that he did. No error of principle has been identified and I do not consider that the order made gives rise to any injustice, manifest or otherwise. In my view the orders made by the Judge were open to him. The plaintiff has failed to show that the Judge’s exercise of discretion was so unreasonable or unjust as to require this Court to substitute its own discretion.
Conclusion
I would dismiss this appeal.
WHITE J. This is an appeal against a costs order made in the District Court in proceedings under the Domestic Partners Property Act 1996 (SA) (the DPP Act).[11]
[11] Formally known as the De Facto Relationships Act 1996 (SA).
Following a 12 day trial in the District Court, the Judge made orders under s 10 of the DPP Act dividing between the plaintiff (the present appellant) and the defendant (the respondent to this appeal) the property of each of them and their jointly owned property.[12] The principal orders were these:
1.In respect of a jointly owned property at Roxby Downs, the defendant was required to pay to the plaintiff $160,000 and the plaintiff to transfer the whole of his interest to the defendant;
2.The plaintiff was required to transfer to the defendant the whole of his interest in a jointly owned motor vehicle, purchased in early 2003;
3.The defendant was required to transfer to the plaintiff any interest which she held in the plaintiff’s electrical business;
4.Each of the parties was declared to be the sole owner of specified property in that party’s possession at the time of the orders. Amongst other things, this meant that the plaintiff retained the ownership of a property at Hahndorf which he had acquired before the commencement of the relationship.
In addition, the Judge made a number of consequential and ancillary orders to give effect to his principal orders.
[12] H, RT v E, CK [2009] SADC 76.
Although the proceedings in the District Court concerned all the commonly owned property and some property acquired by one or other of the parties in their own names, the central issue at trial was the question of whether the defendant should pay an amount to the plaintiff in order to obtain sole ownership of the Roxby Downs property and, if so, how much she should pay. The Judge made this plain in the following passage:
[T]he parties effectively sought a division of property by the payment of a lump sum. The plaintiff made no claim for the transfer of the Roxby Downs property to him, and for her part the defendant laid no claim to his Hahndorf property. The question always was how much, if any, the defendant should have to pay in order to secure a full legal interest in Roxby Downs. The pleadings were framed in this way, the trial conducted with that outcome in mind on both sides and the final submissions were wholly consistent with that approach.[13]
[13] H, RT v E, CK (No 2) [2009] SADC 96 at [9].
The trial commenced on 24 March 2009 and continued for a number of days before being adjourned part heard to 1 June 2009 when it continued for a further six days.
Following the Judge’s principal decision, both parties sought costs orders in their favour, with the plaintiff contending that he should recover the whole of his costs of action on either an indemnity or solicitor/client basis. For this purpose, he relied upon two offers to settle to which I will refer shortly. The Judge rejected the submissions of each party and ordered that the defendant pay the plaintiff’s costs incurred from 4.00 pm on Friday, 29 May 2009 on a party/party basis. It is against that order that the plaintiff now appeals.
The Judge’s Reasoning
The Judge noted that the general rule is that costs follow the event.[14] He referred to the principle that a successful party has a reasonable expectation of obtaining an order for costs unless for some reason connected with the case a different order is specially warranted.[15]
[14] District Court Civil Rules 2006 (SA) r 263(1).
[15] Forlyle Pty Ltd v Tiver [2007] SASC 464 at [29]; (2007) 252 LSJS 387 at [395], citing Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812; Latoudis v Casey (1990) 170 CLR 534 at 557,569; and Oshlack v Richmond River Council [1998] HCA 11 at [134]; (1998) 193 CLR 72 at 122.
The Judge considered that it was the plaintiff who had been successful:
Viewed objectively [the plaintiff] was the successful [party] and the defendant was the losing party.[16]
[16] H, RT v E, CK (No 2) [2009] SADC 96 at [19].
The defendant had not made any offers of settlement. The Judge was satisfied that the plaintiff had made “several offers to settle”,[17] the terms of two of which were proved before him when the issue of costs was argued.
[17] Ibid at [15].
The first, which purported to be an offer filed under r 187 of the District Court Civil Rules 2006 (the 2006 Rules), proposed that the defendant pay to the plaintiff the sum of $186,000, inclusive of interest plus costs to be agreed or taxed. The Judge found that the terms of this offer did not conform with the requirements of r 187(3) and had, in any event, proposed a payment which was significantly greater than the sum of $160,000 ultimately ordered to be paid by the defendant. For these reasons, the Judge said:
The application by the plaintiff for costs on a solicitor/client basis on account of this offer must therefore fail.[18]
It is implicit in this conclusion that the Judge regarded the first offer as being potentially relevant to the basis upon which costs may be ordered, rather than to the plaintiff’s underlying entitlement.
[18] Ibid at [23].
The second offer was made by letter on 19 May 2009, ie, just on two weeks before the trial was to resume on 1 June 2009. By this offer, the plaintiff proposed payment to him by the defendant of $150,000 and, in addition, $80,000 for costs and interest. The offer was expressed to be open for acceptance to 4.00 pm on Friday, 29 May 2009, that being the last business day before the trial was to resume.
The Judge considered that he was entitled to have regard to the terms of this offer. It was not suggested that he had been wrong to do so. The Judge considered that the offer was “wholly reasonable” and that it merited:
a substantial response in view of the length of time the proceedings had already taken, the sum of money potentially at stake, and the limited nature and scope of the orders sought by the parties.[19]
[19] Ibid at [26].
Having given this background, the Judge then addressed the making of an appropriate costs order. He was critical of the manner of presentation of both parties’ cases and of the plaintiff’s formulation of his claim in his final submissions. The Judge said that, save for the second offer, the only appropriate order would have been that each party bear their own costs:
[27]… As mentioned in the principal judgment, he sought to prove contributions to the relationship through tables provided to the defence on the first day of the trial. By trials end his counsel formulated a claim for the payment to him of some $277,000. His manner of presentation locked the defendant into responding to the schedules and consequently extended the length of the hearing. Both parties embarked upon a mode of proof contrary to the approach suggested by the authorities: Arnold v Dalton and Hogg v Roberts.
[28]The defendant’s case was not without its blemishes either. Her manner of proof was non-specific. She was totally unresponsive to any offer throughout the proceedings and doggedly denied the entitlement by the plaintiff to a monetary adjustment. In his closing submission, the defendant’s counsel maintained that she should keep the Roxby Downs property and the plaintiff keep the Hahndorf property. Had things stood there, the only appropriate order was that each party bear their own costs of the proceedings.
(Citations omitted)
The Judge held, however, that the plaintiff’s second offer entitled him to an order for part of his costs, on a party/party basis:
[29]Things stand quite differently, however, following the second offer, preceding the resumption of the trial between the 1st and 9th June 2009. A great deal of the evidence had been advanced by that stage. The plaintiff’s case was fully exposed and substantially tested under cross-examination. The defendant was in an ideal position to know exactly what the case against her was and what the risks were. The second offer was very close to the mark in terms of principal relief and apposite in point of time. Her failure to respond in any respect and to continue to resist to the bitter end, on a basis that was ultimately rejected, tells heavily against her. From this point onwards in the combined circumstances, it is clearly appropriate to give effect to the policy lying behind 6R 263. Accordingly as to the second part of the trial, the plaintiff should have his costs on a party/party basis, as and from 4pm Friday 29 May 2009.
Consideration of Appeal
Costs being in the discretion of the District Court under s 42 of the District Court Act 1991 (SA) and r 263 of the 2006 Rules, this Court can interfere with the Judge’s order for costs only in accordance with the principles stated in House v The King.[20]
[20] (1936) 55 CLR 499 at 505.
The plaintiff contended on appeal that the Judge had erred by failing to award him the whole of his costs of trial, or at least a greater proportion than 50 per cent and, further, by failing to award at least some of the costs on a solicitor/client basis. His principal submission was that the Judge had failed to give full effect to his finding that it had been the plaintiff who was successful in the proceedings, and that it was the plaintiff who had been “forced” to bring the proceedings.
The DPP Act does not contain any provision concerning the costs of proceedings under that Act.
In Kardos v Sarbutt (No 2)[21] Brereton J (with whom Basten JA and Hunt AJA agreed) suggested, in relation to the NSW counterpart to the DPP Act, that a number of considerations affected the exercise of the costs discretion. These included the fact that the general rule in the Family Court in relation to proceedings for property settlement is that each party bears their costs,[22] and that in disputes concerning dissolution of a partnership or the sale of jointly owned land, it is common for costs to be paid from the partnership assets and from the sale proceeds of the land, respectively. Brereton J appears to have considered that an appropriate starting point for an exercise of the costs discretion in proceedings of the present kind was that each party should bear their own costs.
[21] [2006] NSWCA 206.
[22] Ibid at [27] referring to s 117 of the Family Law Act 1975 (Cth).
However, in the later case of Dunstan v Rickwood (No 2)[23] McColl JA, with whom Beazley and Ipp JJA agreed, held that it was inappropriate to engraft onto the costs discretion granted by s 98(1) of the Civil Procedure Act 2005 (NSW)[24] and regulated by cl 42.1 of the Uniform Civil Procedure Rules 2005 (NSW)[25] a condition derived from s 117 of the Family Law Act, when the legislature itself had not chosen to introduce such a qualification. Her Honour held that instead of the starting point for the exercise of the discretion in cases of the present kind being that each party bear its own costs, the starting point should be the conventional position that costs follow the event. Dunstan v Rickwood (No 2) was followed in the later New South Wales decision of Baker v Towle, [26] and has since been followed in Victoria in Kalenik v Apostolidis,[27] and in Tasmania in Bellchambers v Jackson.[28]
[23] [2007] NSWCA 266.
[24] The counterpart to s 42(1) of the District Court Act 1991 (SA).
[25] The counterpart of r 263(1) of the 2006 Rules.
[26] [2008] NSWCA 73.
[27] [2009] VSC 475.
[28] [2009] TASSC 113.
In my opinion, it is appropriate for courts in this State to adopt the same approach.
As the New South Wales authorities indicate, it is not always easy in litigation of the present kind to identify “the event” for the purposes of the application of the general costs rule. The “event” may be defined in a variety of ways. Because of the potential difficulties, there appears to be good sense in the suggestion of Basten JA in Baker v Towle that applications for an adjustment of assets following the cessation of a domestic relationship should involve a specific claim and a defence indicating the degree (if any) to which the defendant is willing to concede the adjustment sought.[29] By this means the pleadings will identify the scope of the dispute. Whilst the absence of such clearly defined pleadings complicated this case, the Judge’s unchallenged finding that objectively it was the plaintiff who was the successful party makes it unnecessary to address this issue in any detail.
[29] Ibid at [83].
The plaintiff’s submission that the Judge erred by failing to take into account that he had been forced to commence the present proceedings to obtain an order under the DPP Act should not be upheld. The fact that it is a plaintiff who commences the proceedings and ultimately obtains an order in his or her favour does not have the significance in proceedings of the present kind which it would usually have. As Hislop J pointed out in Vollmer v Hauber Davidson,[30] in the absence of agreement between the parties as to the division of property, it is necessary for both of them to resort to the court for an order to obtain finality. In the present case it could as easily have been the defendant who instituted proceedings to obtain an adjustment of the parties’ entitlements, with the plaintiff then having to lodge a counterclaim.
[30] [2006] NSWCA 79.
Given the Judge’s finding that it was the plaintiff who was the successful party, the application of the general rule that costs follow the event should have led to the starting point that the plaintiff was entitled to his costs of action. It was not suggested that any of the exceptions to the general rule listed in r 263(2) of the 2006 Rules was applicable. However, the Judge’s finding that the plaintiff’s conduct of the trial had extended unnecessarily the length of the hearing was a relevant consideration. It was appropriate for this consideration to be reflected in the costs order.
Normally, deficiencies or prolixity in a successful party’s conduct of a trial which extend its length unnecessarily result in a reduction of the costs otherwise payable. However, in the present case the Judge went further, and, had it not been for the plaintiff’s offer of 19 June 2009, would have ordered each party to bear their own costs. For the reduction to be of this extent, the Judge would have had to have been satisfied that the plaintiff’s manner of presentation of his case at least doubled the length of trial, so that his own entitlement to costs was effectively cancelled out by the unnecessary costs which he had caused the defendant to incur. In fact, on this basis the Judge would have had to have been satisfied that the plaintiff’s conduct had more than doubled the length of the trial because, even when account was taken of the defendant’s own poor conduct in the trial, he still considered that each party should bear their own costs. In addition, the effect of the Judge’s order was to preclude the plaintiff from recovering any of his pre-trial costs without there being any suggestion that the plaintiff’s conduct pre-trial should be criticised.
This suggests that the implicit basis for the Judge’s decision is that the plaintiff’s conduct of the trial caused it to take eight or nine days longer, or three or four times longer, than was reasonably required.
Given the issues between the parties and the Judge’s criticisms of the defendant’s case, it seems unlikely that the plaintiff’s manner of conduct of the trial was so poor as to have caused it to be, say, three or four times longer than it should have been. I appreciate that it is difficult for this Court to make an assessment about this, and that the Judge was much better placed to make this assessment.
However, two matters do seem to be significant. The first is that the Judge did not make a finding that the plaintiff’s conduct had extended the trial in the way or to the extent outlined above. If the plaintiff’s conduct had been so extreme as the implicit basis for the Judge’s finding suggests, one would have expected a finding to that effect. The second matter is that, during the argument on costs, the Judge himself suggested that the plaintiff’s manner of conduct of the trial may have extended it by about three days. Of course, this was a comment made in argument only, and could not be said to be a concluded view. It does, however, lend some support to the view that the implicit basis for the Judge’s decision identified above is unsound.
In addition, the Judge appears to have conflated the issues of the entitlement to costs, on the one hand, and the basis upon which the costs to which a party is entitled to be paid, on the other. As noted earlier, the Judge used the first offer in his assessment of the basis upon which costs may be awarded, and the second offer in his assessment of the plaintiff’s underlying entitlement. The Judge did not proceed by first resolving the question of whether the plaintiff was entitled to any costs, and then by determining the basis upon which those costs should be paid. Further, apart from what the Judge said in relation to the first offer, he did not address at all the plaintiff’s submission that he should recover his costs on an indemnity or solicitor/client basis.
In all these circumstances, I consider that the Judge’s cost discretion has miscarried, and that this Court should re-assess the position.
Re-assessment
The starting point is that the general rule indicates that the plaintiff, being the successful party, should recover his costs of action. The fact that the plaintiff bettered his offer made on 19 June 2009 adds support to that view. However, account should be taken of the Judge’s finding that the plaintiff’s manner of conduct of the trial caused it to be unnecessarily extended. It seems that this may have been of the order of three days, but there can be no precision about that. The respondent’s counsel on appeal did not suggest that such an assessment was inappropriate. On that basis, the plaintiff’s costs recovery should be reduced to 70 per cent.
I do not consider that the plaintiff should recover his costs on either any indemnity or solicitor/client basis. In support of this claim the plaintiff relied only on the informal offer made on 19 June 2009. Account has been taken of this offer in the assessment of the plaintiff’s basic costs entitlement. Further, the offer was made after six days of trial, and it would be inappropriate for such a late offer to entitle the plaintiff to costs on either an indemnity or solicitor/client basis for the whole trial.
Conclusion
For the reasons given above, I would allow the appeal. I would set aside the costs order made by the Judge on 4 September 2009 and would substitute an order that the defendant pay 70 per cent of the plaintiff’s costs of action on a party/party basis.
5
14
1