Landmark Operations Ltd v Temaru Holdings Pty Ltd (No 3)

[2015] SADC 6

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

LANDMARK OPERATIONS LTD v TEMARU HOLDINGS PTY LTD AND ANOR (NO 3)

[2015] SADC 6

Judgment of His Honour Judge Barrett

30 January 2015

PROCEDURE - COSTS

Judgment has been entered for the second defendant on the principal claim and for the plaintiff on the counterclaim. The second defendant resists an order to pay the plaintiff's costs on the unsuccessful counterclaim on the ground that the counterclaim was really part of the defence, in which it was successful.

Held: Because there was a discrete counterclaim the costs should follow the event. The plaintiff bearing the costs of the principal defence and the second defendant the costs of the counterclaim.

District Court Rules r 263(1), referred to.
Landmark Operations Ltd v Temaru Holdings Pty Ltd and Anor [2014] SADC 142; Landmark Operations Ltd v Temaru Holdings Pty Ltd and Anor (No 2) [2014] SADC 221; Latoudis v Casey [1970] HCA 59; Ausbulk v Evison (No 2) [2010] SADC 165; Forlyle v Tiver [2007] SASC 464, considered.

LANDMARK OPERATIONS LTD v TEMARU HOLDINGS PTY LTD AND ANOR (NO 3)
[2015] SADC 6

1. I delivered judgments in this matter on 27 August 2014 Landmark Operations Ltd v Temaru Holdings Pty Ltd and Anor [2014] SADC 142 and 24 December 2014 Landmark Operations Ltd v Temaru Holdings Pty Ltd and Anor (No 2) [2014] SADC 221. In the first judgment I found for the second defendant on the plaintiff’s claim. In the second I found for the plaintiff on the second defendant’s counterclaim. The second judgment was really a clarification of the findings made in the first.

2. Following the delivery of the second judgment there has been a dispute about costs. The plaintiff seeks an order that each successful party receive its costs, the second defendant his costs of the claim and the plaintiff its costs of the counterclaim.

3. The second defendant submits that the counterclaim was essentially part of his defence to the claim and because he was successful in resisting the plaintiff’s claim, he should not be obliged to pay the costs of the counterclaim.

4. In his defence Mr Toop was asserting that the guarantee that he signed did not include purchases or transport of stock. It only related to purchases of merchandise. In addition to the principal defence that the document, and the circumstances of its execution, all pointed to the guarantee being so limited, Mr Toop pleaded by way of counterclaim an alternative route to avoiding liability, that is that the plaintiff or its agents had behaved unconscionably within the meaning of the Trade Practices Act. If relief from liability under that alternative head was to be sought, so the argument goes, the second defendant was obliged to make an “application” for relief. A simple defence is not an application. Hence the application by way of counterclaim.

5. The argument goes on that the counterclaim did not cause any prolongation of the trial. No additional witnesses were required to prove the counterclaim. No further time was expended in the trail by reason of the counterclaim. While unsuccessful in the counterclaim, the second defendant was successful in his principal defence. Costs should follow the event[1] and only rarely, in exceptional circumstances, should a successful party be deprived of any part of his costs.[2]

   [1]    Latoudis v Casey [1970] HCA 59.

   [2]    Forlyle v Tiver [2007] SASC 464 per Debelle J at [29].

6. One such exceptional circumstance is where a party has been guilty of misconduct. Here it cannot be said that the second defendant has engaged in any misconduct.

7. If, contrary to his submission, the second defendant has been guilty of misconduct, the appropriate course is not to order him to pay costs but to make a single order that the second defendant receive his costs, minus the estimated time taken for the failed counterclaim. The second defendant suggested the range of reduction might be of the order of 5 to 10 per cent. The second defendant cited as authority for that approach a decision I made in Ausbulk v Everson (No 2) [2010] SADC 165.

8. I am not persuaded that I should depart from the principle that costs should follow the event. Rule 263(1) of the District Court Rules provides that, as a general rule, costs should follow the event. Each party has succeeded in a claim or counterclaim. None of the authorities cited by Mr Riggall for the second defendant addresses the question of the costs on a discrete counterclaim. Each deals with an aspect of a claim or a defence and the costs thereof. The circumstances in which a party will be denied its costs, if it has lost an aspect of its claim or its defence are limited. Misconduct in the proceedings is one of the limited circumstances in which a party may be denied a part of its costs. In my view the second defendant was not guilty of misconduct in pleading the counterclaim. But the fact remains that the second defendant chose to file a discrete counterclaim which he lost.

9. I am not able in this case to readily identify the costs, if any, attributable to the counterclaim. I suspect little or no court time could be said to have been taken up with the counterclaim, but there may be costs associated with the pleadings and pre-trial proceedings which attach to the counterclaim.

10. In Ausbulk v Everson ibid, I was able to identify the court time taken up by an aspect by the defendant’s defence which was unsuccessful and which unduly protracted the trial. Accordingly I discounted the defendant’s cost by a nominated proportion. That case did not involve the question of a discrete counterclaim. Ausbulk is distinguishable.

11. I do not think it is appropriate to attempt an estimate of the costs of the counterclaim so as to discount the second defendant’s costs by a fixed proportion. I will apply the general rule. Costs will follow the event.

12. I order that the plaintiff pay the second defendant’s costs of the claim, and the second defendant pay the plaintiff’s costs of the counterclaim, such costs to be agreed or taxed.