Johnson v Synnex Australia; Johnson v Leader Computers (No 3) - [2018] SASCFC 15

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
JOHNSON v SYNNEX AUSTRALIA; JOHNSON v LEADER COMPUTERS (NO 3)
[2018] SASCFC 15
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Blue and The Honourable Justice Evans)
5 March 2018
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
Applications for costs on dismissal of appeals.
The Court dismissed an appeal against judgments of a District Court Judge dismissing an appeal against orders by a Master that the respondent Synnex Australia Pty Ltd recover its costs of action out of the appellant’s monies in the suitor’s fund: Johnson v Synnex Computers Pty Ltd; Johnson v Leader Computers Pty Ltd (No 3) [2017] SASCFC 27.
The respondents seek orders that the appellant pay their costs of appeal on the basis that costs should follow the event. The appellant resists the orders on the ground that she was successful on one of the issues argued on appeal. She seeks orders setting aside the costs orders made by the Master and Judge on the same basis. She seeks an order that the respondent Leader Computers Pty Ltd pay her costs of an interlocutory application to the Full Court in relation to the hearing and determination of other potential issues between the parties.
Held by the Court:
1. The appellant did not succeed on appeal on the issue on which she contends that she succeeded. Rather the Court found it unnecessary to decide that issue. There is no reason why the costs of the appeal should not follow the event (at [7]).
2. The costs of the interlocutory application on appeal should be costs in the cause of the appeal (at [12]).
3. There is no reason to disturb the costs orders made by the Master and the Judge (at [14]).
4. The appellant is to pay the respondent’s costs of appeal (including the costs related to the interlocutory application on appeal) in each matter (at [15]).
A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27; Lesses v Maras (No 3) [2017] SASCFC 154, considered.

JOHNSON v SYNNEX AUSTRALIA; JOHNSON v LEADER COMPUTERS (NO 3)
[2018] SASCFC 15
Full Court: Kourakis CJ, Blue and Evans JJ
THE COURT:

On 8 December 2017 this Court dismissed an appeal by Fay Johnson against judgments of a District Court Judge dismissing an appeal against orders by a Master that the respondent Synnex Australia Pty Ltd recover its costs of action out of the appellant’s monies in the suitors fund.[1]
[1] Johnson v Synnex Computers Pty Ltd; Johnson v Leader Computers Pty Ltd (No 2) [2017] SASCFC 27.
These reasons address costs issues.
Costs of the appeal
The respondents Synnex Australia Pty Ltd (Synnex) and Leader Computers Pty Ltd (Leader) seek an order that Mrs Johnson pay their costs of appeal.
Mrs Johnson seeks an order that each party bear its own costs of the appeal. Mrs Johnson contends that, although the respondents were successful in the sense that her appeals were dismissed, nevertheless the respondents failed in contending that they were entitled to reach agreement between themselves as to their respective priorities in relation to Mr Johnson’s share (the agreement contention).
In A, DC v Prince Alfred College Inc (No 2)[2] this Court said:
The principles governing the exercise of the costs discretion are well established. The Court exercises a judicial discretion with respect to costs in which the general rule is that costs ordinarily follow the event unless there are special circumstances justifying another order. In more 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.
…
The modification of the ordinary rule to reflect the way in which particular issues in the litigation are determined is a response to those ‘cases in which issues are raised which unduly extend the time and expense of litigation’.
…
The authorities to which we have referred make it clear that the rule does not only apply to a ‘precise issue in the technical pleading sense’ but extends to any substantial disputed question of fact or law. There is of course a limit to the dissection of an action which is practicably possible.
On the other hand, the court should not be overly parsimonious in the award of costs to a plaintiff who has won a judgment against a wrongdoer who has denied liability on all of the grounds of the plaintiff’s claim.
There can be no precision in the balancing of the tension between the ordinary rule and its qualification. Much will depend on the extent to which the costs of the litigation of the separate issues can easily be separated out and on the reasonableness of the forensic decision of the successful party to pursue, not only the claims on which he or she succeeded, but also those claims on which he or she failed.[3]
[2] [2016] SASCFC 27.
[3] At [5]-[6], [11]-[13] per Kourakis CJ, Gray and Peek JJ. (Footnotes omitted)
In Lesses v Maras (No 3)[4] this Court said:
Without limiting the factors relevant to exercise of the discretion, it is more likely to be exercised to make a costs order reflecting mixed success:
the more separate and distinct the issue on which the successful party failed (a separateness assessment);
the greater the relative value and importance of the issue on which the successful party failed (a value assessment);
the greater the proportion of costs of the issue on which the successful party failed (a relativity assessment);
the greater the amount of costs of the issue on which the successful party failed (an absolute assessment);
the less the merit of the successful party’s case on the unsuccessful issue (a merit assessment).
In general terms, appellate courts tend to exercise the discretion to make a costs order reflecting mixed success on appeal less frequently than the discretion is exercised (either at first instance or on appeal) in respect of the costs of action in the court below. This reflects the fact that appeal costs are usually much smaller than first instance costs and the issues are usually fewer and more refined. Nevertheless, appellate courts do exercise discretion to make cost orders reflecting mixed success on appeal when appropriate.[5]
[4] [2017] SASCFC 154.
[5] At [84]-[85] per Blue, Parker and Hinton JJ. (Footnotes omitted)
In the present case the respondents did not fail on their contention that they were entitled to reach agreement between themselves as to their respective priorities in relation to Mr Johnson’s share (the agreement contention). This Court found it unnecessary to decide that issue because the respondents succeeded on their primary contentions.[6] In addition the agreement contention was interrelated with the respondents’ primary contentions such that it was not clearly separate and distinct and very little time was devoted to it. In the circumstances there is no reason why the usual costs order should not be made reflecting the event.
[6] Johnson v Synnex Computers Pty Ltd.
Costs of interlocutory application
Mrs Johnson seeks an order that Leader pay her costs of Leader’s oral application made on 9 February 2017 and its interlocutory application dated 8 May 2017 seeking that the Full Court hear and determine the potential issue of priority as between Leader’s charge and Synnex’s charge on the ground that these applications were ultimately dismissed.
As summarised in the primary reasons for judgment,[7] during the initial hearing of the appeal on 9 February 2017 Mrs Johnson advanced a contention that, if the Synnex costs of action were paid out of her share pursuant to the order subject of the appeal, she would be entitled to contribution from Mr Johnson’s bankruptcy trustee and would thereupon be subrogated to Synnex’s secured rights under the Synnex charge over the balance of Mr Johnson’s share and could assert against Leader that Synnex’s charge has priority over the Leader charge (the subrogation issue). The respondents indicated that, if Mrs Johnson advanced these contentions on appeal, they would contend that on an assessment on the merits Leader’s charge had priority over Synnex’s charge because it was the first in time (the priority issue).
[7] Johnson v Synnex Computers Pty Ltd; Johnson v Leader Computers Pty Ltd (No 2) [2017] SASCFC 165 at [84]-[86].
The hearing of the appeal was adjourned to enable the parties to consider whether they wished to agitate these additional issues on appeal and a number of directions hearings were convened before a member of the Court in relation to that question. During the directions hearings Mrs Johnson expressed interest in agitating the subrogation issue on appeal but opposed agitation of the priority issue on appeal. The respondents expressed opposition to agitation by Mrs Johnson of the subrogation issue unless the priority issue was also agitated and filed a formal interlocutory application seeking the hearing and determination of all issues.
When the hearing of the appeal resumed on 30 May 2017, Mrs Johnson abandoned her contention based on the subrogation issue. Consequentially Leader abandoned its interlocutory application because it was contingent on the subrogation issue being heard and determined as well as the priority issue.
It was in the interest of justice that the question be explored whether all remaining potential issues between the parties could be heard and determined without the need for potentially further hearings in the District Court and further potential appeals. In light of Mrs Johnson’s position in relation to the subrogation issue, it was reasonable for Leader to make its interlocutory application. In light of Mrs Johnson’s ultimate position in relation to the subrogation issue, Leader had no option but to abandon its interlocutory application. In the circumstances, the costs of the interlocutory application (including the costs of the directions hearings) should be costs in the cause of the appeal.
Costs in District Court
Mrs Johnson seeks an order that each party bear its own costs of the argument before the Master and the appeal to the District Court Judge.
This application is made on the same ground as the ground relied on by Mrs Johnson for seeking an order that each party bear its own costs of the appeal to this Court. This application fails for the same reason as in respect of the costs of the appeal.
Orders
The Court orders in each matter that the appellant pay the respondent’s costs of appeal (including the costs related to the question of the scope of the appeal incorporating the directions hearings).