Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd

[2019] VSCA 169

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0027

KEYS CONSULTING PTY LTD (ACN 069 620 686)	First Appellant
and
ANTONIO SCATURCHIO	Second Appellant
v
CAT ENTERPRISES PTY LTD (ACN 100 325 460) & OTHERS (according to the attached Schedule) [No 2]	Respondents

---

JUDGES:	MAXWELL P, NIALL JA and MACAULAY AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	Determined on the papers
DATE OF REASONS:	31 July 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 169
JUDGMENT APPEALED FROM:	Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd & Ors [2017] VCC 1661 (Judge Macnamara)

---

PRACTICE AND PROCEDURE – Costs – Appeal – Appellants partly successful – Costs of appeal – Costs of trial – Apportionment of costs – Respondents to pay 75 per cent of the appellants’ costs of appeal.

---

APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr D J Williams QC with Mr R L Moore	McNab McNab & Starke
For the Respondents	Mr D G Robertson QC with Mr A W Sandbach	Goldsmith Lawyers

MAXWELL P
NIALL JA
MACAULAY AJA:

Introduction

1. In this matter, the Court allowed an appeal from a decision of a judge of the County Court.[1]  These reasons deal with the question of costs and assume a familiarity with the principal judgment. 

   [1]Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 136 (‘Reasons’).

1. In short compass, at trial the respondents succeeded in establishing that the appellants had engaged in misleading and deceptive conduct in relation to two contracts for the sale of a business.  The two contracts related to two aspects of what were, in substance, a single business operated by the appellants.

1. Under the first contract, the respondents had part paid the contract price of $450,000 and an amount of $150,000 remained owing.  Under the second contract, the full purchase price of $200,000 remained unpaid.  At first instance, the appellants, as plaintiffs, sought to recover the amount outstanding under the contracts.  The respondents, by counterclaim, alleged that the appellants had made a number of misrepresentations which amounted to misleading and deceptive conduct and sought relief from the liability to pay amounts outstanding, and damages.

1. The respondents were substantially successful below. The form of relief ordered by the judge involved relieving the respondents from the obligation to pay the outstanding amounts, by varying the contracts,[2] and awarding damages in the sum of $295,301.45 for loss and damage.[3] 

   [2]Pursuant to s 243(b) of sch 2 of the Competition and Consumer Act 2019 (Cth) (‘ACL’).

   [3]Pursuant to s 236 of the ACL.  The sum of the damages comprised $217,032.86, together with interest of $78,268.59.

1. By their application for leave to appeal, the appellants sought to overturn the liability finding in relation to the first contract (ground 1) and to reduce the award of damages (grounds 2 and 3).  As noted in the principal reasons, the appellants accepted an admitted loss of $17,032.86, but disputed the quantification of the balance of the damages on the basis that it amounted to speculation in circumstances where the respondents had failed to properly prove the amount of the loss.

1. The appellants failed in their attack on the liability,[4] but succeeded in relation to their attack on the quantification of damages.[5]

   [4]Reasons [53].

   [5]Ibid [101] (with respect to ground 2), [111] (with respect to ground 3).

1. Following the delivery of judgment and pronouncement of orders, the parties were given, and have availed themselves of, an opportunity to address in writing the question of costs in respect of both the appeal and trial. 

Costs of the appeal

1. The appellants submitted that they had been successful on the appeal and that the general rule as to costs should be applied.  They submitted that they had been substantially successful in reducing the quantum of damages from $217,032.86 to $17,032.86, being the quantum of damages that was conceded at trial.  Accordingly, they submitted, the respondents should pay the appellants’ costs of the appeal.

1. Alternatively, the appellants submitted that if there was to be some apportionment of costs, recognising their failure on ground 1, the respondents should pay 80 per cent of their costs of the appeal.

1. The respondents submitted that the appellants had sought to reverse the decision of the Court below, obtain judgment on their proceeding and to have the counterclaim dismissed.  They submitted that the appellants had been unsuccessful in their main endeavour and that the reduction of the amount of damages represented a partial win that was offset by its loss, with the result that there should be no order for costs.

1. In Nom de Plume Nominees Pty Ltd v Fingal Developments Pty Ltd [No 2],[6] Tate and McLeish JJA and Ginnane AJA stated that:

while the general rule is that costs should follow the event, where there is a multiplicity of issues and mixed success has been enjoyed by the parties, the court may take a pragmatic approach in relation to costs, taking into consideration the success (or lack of success) of the parties on an issues basis.  Such an approach will be primarily a matter of impression and evaluation.[7]

[6][2016] VSCA 233.

[7]Ibid [13], citing Chen v Chan(No 2) [2009] VSCA 233 [10]. See also Spotless Group Limited v Premier Building and Consulting Pty Ltd [2008] VSCA 115 [15] (Redlich JA).

1. In our opinion, the issues presented in the application for leave to appeal divided themselves into an attack on liability and an attack on damages.  That division was reflected in quite separate arguments being advanced on each issue.  We regard the failure of the appellants to overturn the judgment below in its entirety as significant in the determination of where costs should fall.

1. The division between the two issues does not permit any precise demarcation and, in our view, the appellants have, in the round, achieved success in substantially reducing the award of damages that they were liable to pay.

1. In those circumstances, the appellants are entitled to an order for costs in respect of the appeal, but there should be a reduction in recognition of the discrete areas on which they failed.  We would order that the respondents pay 75 per cent of the appellants’ costs of the application for leave to appeal and the appeal.

Costs of trial

1. Finally, we turn to the question of costs at trial.  We note that the judge had ordered costs as follows.  On the appellants’ claim for the amounts outstanding under the contracts, the judge ordered that the claim be dismissed with costs, including all reserved costs.[8]  On the respondents’ counterclaim, the judge ordered that the appellants (as defendants to the counterclaim) pay the costs of the respondents (plaintiffs by counterclaim), including all reserved costs[9] on the standard basis.  The judge made a special order in favour of the respondents in respect of the costs of an application for removal of a caveat, which were ordered to be paid on the indemnity basis.

   [8]Except the costs reserved on 21 May 2015, as to which there was no order as to costs.

   [9]Again, except the costs reserved on 21 May 2015.

1. The appellants submitted that their success in this appeal should be reflected in the costs order of the Court below.  They sought a variation of the order made by the judge, with the effect that the appellants (defendants by counterclaim) pay 50 per cent of the costs of the respondents (plaintiffs by counterclaim), including all reserved costs, except for costs in respect of which a specific order had been made.

1. The respondents submitted that the net result was that they had been successful in defeating the appellants’ claim for outstanding payments under the contract and had obtained a net order in its favour of $17,032.86 plus interest.  The judge also ordered that the caveat which purported to secure the debt owed to the appellants be removed.  In those circumstances, it was submitted that they remained successful in defeating the appellants’ claim and that the costs order below should not be disturbed.

1. In our view, the success of the respondents in meeting the appellants’ claim for payments outstanding under the contracts was reflected in the first costs order made by the judge in respect of that proceeding.  There is no occasion to revisit that order.

1. In relation to the counterclaim, the respondents were successful in establishing their claim of misleading and deceptive conduct and in being relieved of the obligation to pay the outstanding amounts.  However, in light of the outcome of this proceeding, they failed in their claim for damages. 

1. At first instance, the respondents had substantial success and we are not persuaded that there should be an apportionment of the trial costs.  Although the appellants have avoided an obligation to pay damages over and above that which they conceded, that partial success does not warrant any departure from the usual order.  The success of the appeal, which still leaves a substantial judgment in favour of the respondents, does not warrant us revisiting the costs order below.  Accordingly, we will not interfere with the costs orders made by the judge.

1. In the result, the only order we will make will be that the respondents pay 75 per cent of the appellants’ costs of the application for leave to appeal and the appeal. 

- - - - -

SCHEDULE OF PARTIES

KEYS CONSULTING PTY LTD (ACN 069 620 686)	First Appellant
and
ANTONIO SCATURCHIO	Second Appellant
v
CAT ENTERPRISES PTY LTD (ACN 100 325 460)	First Respondent
and
CRAIG TRIGG	Second Respondent
and
JULIE TRIGG	Third Respondent