Jackson & Anor v Abram & Anor (No 2)

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
JACKSON & ANOR v ABRAM & ANOR (NO 2)
[2016] SASCFC 36
Judgment of The Full Court
(The Honourable Justice Peek, The Honourable Justice Stanley and The Honourable Justice Lovell)
5 April 2016
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - OTHER CASES - SUBSTANTIAL SUCCESS
The appeal was against a claim for damages for negligent investment advice in relation to a series of investments. On 4 December 2015 the Full Court of the Supreme Court allowed the appeal, setting aside the award of damages made by a Judge of the District Court and in lieu thereof increasing the damages payable by the respondent to the appellant to an amount of $412,242.00. The Court set aside the costs order made below and in lieu thereof ordered that the respondent pay the appellant’s costs of the trial on a party/party basis.
The appellants submit that the respondents should be ordered to pay the costs of the appeal. The respondents submit that having regard to the discrete arguments advanced on the appeal upon which the appellants succeeded or failed, and the excessive supplementary written submission filed by the appellants, it is appropriate for the Court to apportion costs such that the respondents should have an order for 70 per cent of their costs of the appeal. In the alternative, the respondents submit that the appellants should only obtain an order for 30 per cent of their costs of the appeal.
Held (the Court):
1. This is not an appropriate case to depart from the general rule that costs follow the event (at [5]).
2. It is appropriate that costs should follow the event and the appellants recover their costs of and incidental to the appeal from the respondents (at [6]).
3. The respondents to pay the appellants 90 per cent of their costs of and incidental to the appeal to this Court to be agreed or taxed (at [8]).
Supreme Court Act 1935 (SA) s 40(1); Supreme Court Rules 2006 (SA) r 263 (1), referred to.
Cretazzo v Lombardi (1975) 13 SASR 4; A, DC v Prince Alfred College Inc (No. 2) [2016] SASCFC 27; Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No. 2) (1991) 28 FCR 172; Oschlack v Richmond River Council (1998) 193 CLR 72, considered.

JACKSON & ANOR v ABRAM & ANOR (NO 2)
[2016] SASCFC 36
Full Court: Peek, Stanley and Lovell JJ

THE COURT: On 4 December 2015 this Court allowed the appeal in this matter, setting aside the award of damages made by a Judge of the District Court and in lieu thereof increasing the damages payable by the respondent to the appellant to an amount of $412,242.00. The Court set aside the costs order made below and in lieu thereof ordered that the respondent pay the appellant’s costs of the trial on a party/party basis. The Court invited submissions from the parties as to the costs of the appeal.
The appellants submit that the respondents should be ordered to pay the costs of the appeal. The respondents, on the other hand, submit that having regard to the discrete arguments advanced on the appeal upon which the appellants succeeded or failed, and the excessive supplementary written submission filed by the appellants, it is appropriate for the Court to apportion costs such that the respondents should have an order for 70 per cent of their costs of the appeal. In the alternative, the respondents submit that the appellants should only obtain an order for 30 per cent of their costs of the appeal.
The award of costs is in the discretion of the court and the court may award costs on any basis it considers appropriate.[1] As a general rule, costs follow the event.[2] That general rule is subject to specific rules to the contrary and to prescribed exceptions, none of which are relevant to this case.[3] The court’s discretion as to costs is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and it cannot be exercised on grounds unconnected with the litigation.[4] In A, DC v Prince Alfred College Inc (No. 2)[5] this Court observed that in recent times, courts more readily modify the general rule recognising that the interests of justice sometimes require a reduction in the costs that would otherwise have been awarded to a successful party when that party has failed on particular disputed questions of fact or law.[6] Those principles recognise that where a litigant has succeeded only upon a portion of the claim, circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.
[1] Supreme Court Act 1935 (SA) s 40(1).
[2] 6SCR 263(1).
[3] 6SCR 263(2).
[4] Cretazzo v Lombardi (1975) 13 SASR 4 per Bray CJ at 11.
[5] [2016] SASCFC 27.
[6] [2016] SASCFC 27 at [5].
This is not such a case. In this matter, while the appeal was successful, the first appellant was unsuccessful on six of nine grounds of the appeal. Further, the second appellant was unsuccessful on the only ground it argued.
Notwithstanding these factors, with one exception, the Court considers that this is not an appropriate case for the dissection of issues and arguments heard on the appeal for the purpose of departing from the general rule. The appeal was against a claim for damages for negligent investment advice in relation to a series of investments. While the trial judge found that some advice was negligent, which caused loss to the first appellant resulting in an award of damages in his favour, ultimately the appellants suffered an award of costs because the damages award failed to exceed a filed offer. The outcome of the appeal to this Court was that the award of damages was increased substantially and the costs orders in relation to the trial below were set aside and an order made for the costs of the trial to be paid by the respondents to the first appellant. Accordingly, the first appellant was substantially successful on the appeal even though he did not succeed on every ground argued. Justice would not be served if the appellant was dissuaded by the risk of costs from canvassing all issues which might have been material to the decision of the case.[7] As was observed in Oschlack v Richmond River Council[8] by McHugh J, if the litigation had not been defended by the respondent, the appellant would not have incurred the expense which he did.[9]
[7] Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No. 2) (1991) 28 FCR 172 at 173 – 174.
[8] (1998) 193 CLR 72.
[9] (1998) 193 CLR 72 at [67].
In these circumstances, subject to one matter, we consider it appropriate that costs should follow the event and the appellants recover their costs of and incidental to the appeal from the respondents. The second appellant was concerned with only one ground of the appeal. It was unsuccessful on this ground. However, the second appellant was represented by the first appellant on the hearing of the appeal. In the circumstances, we consider that justice will be done if the appellants recover 90 per cent of their costs of and incidental to the appeal.
In reaching this judgment we reject the submission that the appellants should suffer some special costs order on the basis of the excessive supplementary argument document they filed. The document was lengthy and at times repetitive and clearly in breach of the Practice Direction regulating the filing of written outlines of argument. Nonetheless the Court recognises that this was a complex matter in which the first appellant represented himself and the second appellant without the benefit of counsel or solicitors. The Court considers some leniency must be extended in these circumstances.
The Court orders that the respondents are to pay the appellants 90 per cent of their costs of and incidental to the appeal to this Court to be agreed or taxed.

The Full Court of the Supreme Court of South Australia considered an appeal concerning the award of costs in a proceeding between the Jackson parties and the Abram parties. The dispute arose from an earlier judgment where the primary judge had awarded costs to the Abram parties on an indemnity basis, despite the Jackson parties having achieved substantial success in certain aspects of the litigation. The Jackson parties sought to appeal this costs order.

The central legal issue before the Full Court was whether the primary judge had erred in departing from the general rule that costs follow the event, and specifically, whether the primary judge was justified in ordering costs on an indemnity basis in favour of the Abram parties, notwithstanding the Jackson parties' substantial success. The Court was required to determine if the reasons provided by the primary judge for this departure were sufficient and legally sound.

The Full Court reasoned that the primary judge's decision to award indemnity costs was not supported by the evidence or the established legal principles. While acknowledging that a judge has discretion to depart from the usual costs rule, the Court found that the primary judge had failed to articulate a sufficient or compelling reason for doing so in this instance. The Jackson parties' substantial success in the litigation was a significant factor that weighed against an indemnity costs order in favour of the Abram parties. The Court held that the primary judge had misapplied the principles governing the award of costs, particularly in circumstances where one party has achieved substantial success.

Consequently, the Full Court allowed the appeal, setting aside the primary judge's order for indemnity costs. The Court ordered that the Abram parties pay the Jackson parties' costs of the appeal and that the costs of the original proceeding be costs to be taxed on a party and party basis, with liberty to apply for a review of that order if so advised.

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Background to the litigation

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Legal Principle Established