Malaugh Holdings (No 2) P/L & Anor v Seal & Anor (No 2) - [2011] SADC 37

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MALAUGH HOLDINGS (NO 2) P/L & ANOR v SEAL & ANOR (No 2)
[2011] SADC 37
Judgment of His Honour Judge David Smith
5 April 2011
INTEREST - RECOVERABILITY OF INTEREST
Application by defendants for direction pursuant to s 40 of the District Court Act 1991 that post-judgment interest not run from a certain date on a judgment debt - consideration of Court’s discretion to make such an order.
Held: application for direction dismissed on grounds that defendants had not established that a proper basis existed for the exercise of the Court’s discretion to make such a direction.

PROCEDURE - COSTS - TAXATION - REVIEW
Application by defendants for Further Review by a Judge of taxing Master’s decision reviewing his own Provisional Costs Order – discussion of nature of application – consideration of on what basis a party should recover costs of adjudicating a Bill of Costs and interest on costs of action including costs of adjudication.
Held: on Further Review Judge declined to vary Master’s orders and confirmed both the costs order and interest order.
District Court Rules 2006 r 278; District Court Act 1991 s 40; Supreme Court Act 1935 s 114; Local and District Criminal Courts Act 1926 s 153; District Court Rules 1992 r 84.19, referred to.
Seal & Ors v Malaugh Holdings (No 2) Pty Ltd & Ors [2007] SASC 388; Osborne v Kelly & Klimenko (1999) 75 SASR 392; O’Sullivan v Farrer (1989) 168 CLR 210; Cretazza v Lombardi (1975) 13 SASR 4; Law Society of SA v Jordon (1998) 198 LSJS 434; Orio Holdings Pty Ltd & Ano v Costi & Co [2008] SASC 218; Schweppes Ltd v Archer (1934) 34 SR (NSW) 178; Callaghan v Callaghan Unreported, Supreme Court of South Australia, S5562, 3 May 1996; Burford v Allan [1998] SASC 6693, considered.

MALAUGH HOLDINGS (NO 2) P/L & ANOR v SEAL & ANOR (No 2)
[2011] SADC 37

There are two applications before me.
First, by an Interlocutory Application, filed on the 30 March 2010, the defendants[1] seek an order that interest not run on the judgment debt entered against them after 13 December 2007.
[1] For the sake of convenience and in conformity with counsel’s written and oral submissions I will refer to Malaugh Holdings (No 2) Pty Ltd, Richard John Pearce and Barbara Anne Pearce or any one or combination of them as “the plaintiff” or “the plaintiffs” and to Pinnipedia Pty Ltd, Patricia Mary Seal and Ian Douglas Seal or any one or combination of them as “the defendant” or “the defendants”.
Secondly, by an Application for Further Review, filed on the 24 May 2010, the defendants seek a further review of the Master’s decisions in which he reviewed his own Provisional Costs Order and in particular ordered:
·that the plaintiffs have costs of the adjudication; and
·that the plaintiffs have interest upon their costs.
Background
Both actions concerned the sale and purchase of a service station on the Gorge Road at Athelstone on the 12 May 1997. Both actions were tried together in December 2005.
On the 2 March 2007, in the first action, in which the plaintiff sought the recovery of a loan made to the defendants pursuant to an agreement, I found that the defendants were liable to repay the plaintiff the amount of the loan, namely $125,000, and indicated that I proposed to enter judgment in that sum plus the interest prescribed in the loan agreement. On the same day, in the second action, I dismissed an array of misrepresentation claims by the defendants against the plaintiffs.
On the 15 March 2007, after submissions, I fixed pre‑judgment interest in the sum of $70,383.73 and entered judgment in that total sum of $195,383.73 in favour of the plaintiff. I also ordered that the defendants pay the plaintiffs’ costs in both actions to be agreed or taxed.
The defendants appealed by Notice dated the 23 March 2007.
The defendants’ home at Beaumont was their only significant asset. On the 30 March 2007 the plaintiffs registered a Warrant of Sale on the title of the said property. On the 31 July 2007, Judge Withers in the Supreme Court ordered that the execution of the Warrant be stayed pending the appeal.[2]
[2] After the dismissal of the appeal the Master on the 11.03.08 directed that the Warrant remain and that the stay order be lifted insofar as it related to the judgment debt.
On the 8 August 2007 His Honour Judge Withers in the Supreme Court ordered, inter alia, that:
5.Post-judgment interest shall run from 15 March 2007 on the amount of the Judgment including the amount of pre-judgment interest and costs of the action notwithstanding that the amount payable for costs has not yet been quantified.
The appeal to the Full Court of the Supreme Court by the defendants was dismissed on the 6 November 2007 with costs.[3]
[3] See Seal & Ors v Malaugh Holdings (No 2) Pty Ltd & Ors [2007] SASC 388.
The parties then turned to the assessment of the costs payable by the defendants. Only the District Court adjudication on costs is relevant to this further review, but I note in passing that in the Supreme Court a total of $46,140.27 was claimed by the plaintiffs as costs, $35,256.00 was allowed and the plaintiffs were awarded the costs of the adjudication.
The history of the taxation costs in the District Court is set out by the Master in his reasons of the 19 August 2009 and 10 May 2010. He described the costs adjudication as a “… lengthy and drawn out process …”
On the 24 January 2008 following the filing of a short form Bill of Costs and the responses thereto, the Court issued an Interim Allocator in favour of the plaintiffs in the sum of $30,375.66.
Then on the 19 March 2008 the plaintiffs filed a long form Schedule of Costs which did not include items previously agreed in the short form process. This long form Bill of Costs was then adjudicated upon in the course of multiple hearings extending from the 21 April 2008 to 5 August 2009. It is to be noted that some loose ends in respect of the adjudication were dealt with on the 24 September and the 11 November 2009.
It is agreed between the parties that, in this stage of the costs adjudication, the plaintiffs claimed $101,232.47 and the sum allowed was $63,547.14. I note that the above agreed figures do not precisely agree with the casting of the schedule of costs, pursuant to the order of the Master on the 11 November 2009 as provided to me by the Registrar.[4] However, I will proceed on the agreed basis, namely that a Provisional Costs Order in terms of the agreed figures was made by the Master on the 10 December 2009. There have been subsequent applications and adjudications but the Provisional Costs Order of the 10 December 2009 is the subject of this further review.
[4] The document provided to Smith DCJ at his request for the purpose of this Further Review and disclosed to and discussed with counsel in Court on 2.03.11 is marked Exhibit A.
On the 5 August 2009, having substantially concluded the adjudication, the Master heard submissions on, inter alia, the claims by the plaintiffs for:
·the costs of the adjudication; and
·interest on costs.
In reasons published on the 19 August 2009 (“Primary Reasons”) the Master, with some adjustments, ordered that the defendants pay the plaintiffs costs of the adjudication[5] and, again subject to some adjustments, also ordered that the plaintiffs have interest on costs calculated from time the plaintiffs paid money to their solicitors on account of costs.[6]
[5] See [46] to [58].
[6] See [59] to [123].
Pursuant to r 278 of the District Court Rules 2006 both the plaintiffs and defendants applied[7] to the Master for a Review of his Provisional Costs Order of the 10 December 2009. That Order implemented the multiple decisions in the Primary Reasons and so the applications effectively sought a review of some of the decisions made in the Primary Reasons. In particular, both the plaintiffs and the defendants applied, inter alia, for a review by the Master of his decision as to interest on the costs and additionally the defendants sought, inter alia, a review of his decision as to the costs of adjudication. The Master then conducted a review of his Primary Reasons as to the above matters. In his review reasons dated the 10 May 2010 (“Review Reasons”) the Master confirmed his decision as to the costs of adjudication but he varied his decision as to the award of interest on costs.[8]
[7] See application of plaintiffs 21.12.09 and see also application of defendants 25.02.10.
[8] Reasons for Review 10.05.10 at [26] to [27].
I am now further reviewing the Master’s Review Reasons pursuant to r 278(5) and (6) of the District Court Rules 2006.
Despite the passage of years, the only payment made by the defendants to the plaintiffs to date has been $15,172 in respect of the Supreme Court Interim Allocator. The defendants seek to excuse themselves for not having made any further payments by claiming that the warrant on their property has prevented them raising money.
Interest on Judgment Sum
I turn now to the matters to be determined by me and start with the interlocutory application which has been referred directly to me by the Master in which the defendants seek an order that interest not run on the judgment debt after the 13 December 2007.
Section 40 of the District Court Act 1991 provides:
40 (1) A judgment debt bears interest at a rate prescribed by the rules.
(2) Subject to any direction by the Court to the contrary, the interest runs—
(a)in the case of taxed costs—from the date the costs are taxed or an earlier date fixed by the taxing officer;
(b)in the case of any other monetary sum—from the date of the judgment.
Accordingly, the judgment debt in this case, namely $195,383.73, bears interest at the rate prescribed by the Rules from the date of the judgment, namely the 15 March 2007, until payment, unless there be “... any direction by the Court to the contrary ...”[9]
[9] See s 40(1) and (2)(b).
The power to make “any direction ... to the contrary” is apparently absolute and unfettered. Notwithstanding the generosity of the language conferring it, such a discretion is constrained by not only the circumstances of the matter, but also the scope, intent and purpose of the legislation.[10] In Cretazza v Lombardi[11], Bray CJ said of the apparently unfettered discretion to order costs under the Rules:
Order 65, rule 1 provides generally that all costs shall be in the discretion of the court or judge, subject to a proviso irrelevant for the present purpose. Time and again attempts have been made to fetter that general discretion by the imposition of judge-made rules. Time and again those fetters have been released by appellate courts. I think the guiding principle still stands as it left the House of Lords in the famous case of Donald Campbell & Co. v. Poliak, that the general discretion is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.
(Footnote removed)
[10] See O’Sullivan v Farrer (1989) 168 CLR 210 at 216.
[11] (1975) 13 SASR 4 at 11.
The argument of the defendants is that this Court should make a direction “... to the contrary”, namely that interest not run after the 13 December 2007 which was the date of the first of two unsuccessful interlocutory applications by the defendants for an order for the removal of the Warrant of Sale from the title of their Beaumont property. They sought its removal on grounds that they had, at that time, all but secured a loan of $300,000, in order to “pay out” the judgment debt together with post‑judgment interest.[12]
[12] See Interlocutory Application dated 13.12.07 and affidavits in relation thereto being:
·affidavit of Dominic Agresta sworn 13.12.07
·affidavit of Patricia and Ian Seal sworn 2.04.07; and
·affidavit of Peter Pedler sworn 20.12.07.
See also Interlocutory Application dated 4.02.08 and affidavits in relation thereto being:
·affidavit of Dominic Agresta sworn 4.02.08; and
·affidavit of Peter Pedler sworn 1.02.08.
I take this submission to be that by not accepting a proposal that the Warrant be lifted to enable the payment of the judgment debt of $195,383.73 plus accrued post-judgment interest, the plaintiffs were guilty of “disentitling conduct” of the type mentioned in Osborne v Kelly & Klimenko[13] and from that time onward the plaintiffs should be deprived of interest.
[13] (1999) 75 SASR 392.
At the time of these applications, the costs liability of the defendants had not been quantified and, in circumstances where the defendants apparently had no other means to meet their considerable actual and contingent liability, the plaintiffs were reluctant to surrender unconditionally the security of the Warrant even if it meant obtaining the immediate payment of the judgment debt and post-judgment interest. The plaintiffs did offer to compromise. In response to the first application of the 13 December 2007, the plaintiffs made two counterproposals. Neither of these proposals were taken up.[14] At about the time of the second application of the 4 February 2008, the plaintiffs made two further proposals, neither of which were taken up.[15]
[14] See [7] to [10] of the affidavit of Peter Pedler sworn on the 20.12.07.
[15] See [6] to [11] of the affidavit of Peter Pedler sworn on the 1.02.08.
The two proposals made by the plaintiffs in late 2007 were as follows:
The first is to take a first registered mortgage over the property securing payment of the monies owed to the plaintiff in this action and the Supreme Court action with a term that ends one month after the costs are determined or agreed to allow the defendants time to refinance the security at that time. In the meantime interest would continue to accrue on the judgment sum although if the defendants are proposing to take a mortgage from Assured they must consider that they are in a position to pay the interest on that facility and therefore there should be no reason why they could not begin to pay the interest on the judgment sum.
The second is to agree to withdraw the warrant of execution upon receipt of a bank cheque for the amount of the judgment sum plus interest accrued on the judgment sum to that date together with the amount claimed for costs in the District Court action and the Supreme Court action on our undertaking that that amount will be paid into Court pending the determination of the costs. Once costs are determined the balance (if any) will be returned to the defendants.[16]
[16] See [8] and [9] of affidavit of Peter Pedler sworn 20.12.07).
The proposal made in early 2008 by the solicitors acting for the plaintiffs were:
The warrant will be withdrawn in exchange for:
1. A bank cheque payable to Malaugh in the sum of $253,835.38;
2.A bank cheque payable to the Registrar of the District Court in the sum of $110,309.41;
3.A bank cheque payable to the Registrar of the Supreme Court in the sum of $46,140.27; and
4.A cheque for our reasonable costs of an incidental to the registration and discharge of the warrant of execution. Our estimate of those costs is $600.00 plus registration fees of $216.00
If settlement proceeds on that basis, we will provide to you our written undertaking to immediately pay the cheques drawn in favour of the Registrar of the District Court and the Registrar of the Supreme Court to the credit of your clients in each of those actions, on the basis that no order will be made for the disbursement of those funds until the costs are taxed in that jurisdiction.
In the alternative, our instructions are that, subject to the consent of the defendants to an extension of the warrant of execution for so long as is required, Malaugh will give an undertaking not to execute the warrant of sale until a date which is one month after the date on which the final allocatur (sic) in respect of the District Court costs is sealed.[17]
[17] See Exhibit PDP2 to affidavit of Peter Pedler sworn 1.02.08.
Neither of the interlocutory applications was successful.
In my view, the plaintiffs were justified in taking the stance they did. The fact that they would not agree to the removal of the Warrant, upon payment of the judgment plus pre‑judgment interest, is no basis for this Court to direct that interest not run on the judgment debt. Their stance was reasonable. The Master in his Review Reasons, though in a different context, took much the same view in relation to the Warrant of Sale. I agree with and adopt what he said there.[18]
[18] See Reasons on Review dated the 10.05.10 at [48] to [55].
I decline to make the direction sought. To the extent that it is necessary, I order that interest run on the judgment debt at the rate prescribed by the Rules of Court from the date of the judgment, namely the 15 March 2007 until payment.[19]
[19] Rule 261 of the District Court Rules 2006 prescribes the rates of interest for the period from 4.09.06 to the present time. For the earlier period, namely from the 15.03.07 to 4.09.06, the previous District Court Rules 1992 apply and in particular r 84.19 which invokes the Third Schedule to the Rules.
Despite the expressed concerns of counsel for the plaintiffs, there is no competence problem arising from Judge Withers order of the 8 August 2007. That order was in the context of the Supreme Court appeal and His Honour Judge Withers was not there purporting to exercise any District Court jurisdiction. Further, the defendants are here applying for a direction under s 40(2) of the District Court Act 1991 arising from circumstances which had arisen since the time of the Supreme Court order. In any event, my final order duplicates that of Judge Withers and so the worst that can happen is that my order is considered otiose. Finally, there being no “direction of Court to the contrary”, by force of s 40 alone, interest runs on the judgment debt from the date of the judgment.
Further Review
I turn now to the Further Review.
Nature of Application for Further Review
Rule 278 of the District Court Rules 2006 provides relevantly:
278—Review of provisional costs order
(1)A party who is dissatisfied with a provisional costs order may, within 14 days after the date of the order, apply for review of the order by a Master.
....................
(5)A party who is dissatisfied with the decision on review may, within 14 days of that decision, apply for a further review by a Judge.
(6)The Court may, on the further review, confirm the costs order as entered in the Court’s record as a judgment of the Court or order that it be varied as the Court thinks appropriate.
The hearing of an application for further review is a rehearing on the papers rather than a review de novo.[20] As to the basis upon which a judge should intervene upon a further review, in Schweppes Ltd v Archer[21] Jordan CJ with whom Harvey CJ in Equity and Street J concurred said at 183 and 184 as follows:
“In appeals as to costs, the principles to be applied are these. The court will always review a decision of a taxing officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the taxing officer has correctly exercised a discretion which he possesses and is purporting to exercise, the court is reluctant to interfere. It has undoubted jurisdiction to review the taxing officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances (Western Australian Bank v Royal Insurance Co (1908) 7 CLR 385 at 388[PDF]; Clark Tait & Co v Federal Commissioner of Taxation (1931) 47 CLR 142 at 145-146), but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case”:
[20] See Law Society of SA v Jordon (1998) 198 LSJS 434 and see also Orio Holdings Pty Ltd & Ano v Costi & Co [2008] SASC 218.
[21] (1934) 34 SR (NSW) 178.

Further, in Law Society of SA v Jordan (supra) at 441 Doyle CJ with whom Millhouse and Nyland JJ agreed said:
Usually, on a review of a taxing Master's decision, a judge will be slow to intervene: Australian Coal and Shale Employees’ Federation v Commonwealth (1953) 94 CLR 621 at 628; Dalgety Australia Operations Ltd v FF Seeley Nominees Pty Ltd (No 2) (1988) 49 SASR 75. The reason for this is that many of the decisions made in the course of a taxation involve the exercise of a judgment that the taxing Master, using the experience gained from other taxations, in best placed to make. As well, some of the decisions made on a taxation are discretionary in nature.
Costs of Adjudication
With those principles in mind I turn to the first matter for Further Review, namely the Master’s decision to order that the defendants pay the plaintiffs costs of adjudication.
In his Review Reasons, the Master refused to interfere with his Primary Reasons as to this topic.[22]
[22] See [87] and [88] of the Review Reasons and see also [13] to [58] of the Primary Reasons.
First, it was contended before me that the plaintiffs were “stunningly unsuccessful” because they were awarded only $63,547.14 of their claim of $101,125.47 and so should have been deprived of costs. The defendants went further and boldly suggested that the Master should have ordered that the plaintiffs pay their costs.
The Master made it clear, in response to that same argument, that, in exercising his discretion as to costs, he was not disposed to deprive the plaintiffs of an award on the mere basis that they were not wholly successful. In this respect he relied upon the remarks of Perry J in Callaghan v Callaghan[23] to the effect that the Court should be slow to deprive a successful party of costs even if he or she has failed on various issues in the case.
[23] Unreported, Supreme Court of South Australia, S5562, 3 May 1996.
In his Primary Reasons, after directing himself as to the guiding principles[24], the Master gave examples of disallowed and reduced claims.[25] He explained that some of the reductions did not involve any significant expenditure of time.[26] Some claims by the plaintiffs, he said, had the flavour of solicitor/client attendances and some were not pursued.[27] He reflected the extent of the plaintiffs’ failed claims by, inter alia, reducing the drawing fee for the Schedule of Costs and the fee claimed for time spent in the adjudication.[28] In his Review Reasons the Master drew attention to these matters and in the end was disinclined to take a different approach on Review.[29]
[24] See [28] to [45].
[25] See [46] to [57].
[26] See [49].
[27] See [51].
[28] See [50] to [57].
[29] See Review Reasons [87] and [88].
In considering this “degree of success argument”, I remind myself of the principles which guide the review of a taxing master’s decision, namely that a judge should, first, give due recognition to the host of discretionary and experience based decisions which go into a taxation of a bill of costs, secondly, be slow or reluctant to interfere, and, thirdly, do so only where the discretion has not been exercised at all or has been exercised in a manner which is plainly or manifestly wrong.
In the circumstances of this case, the fact that the plaintiffs recovered only about 64 per cent of its claimed costs does not provide any basis for interference. The plaintiffs lack of success in the taxation was appropriately reflected in reduction of drawing fees and time expended in the hearing. The Master clearly did not regard this outcome as “... a stunning failure”. I would not regard approximately six out of 10 as a failure. Further, he made the point that the quantum of reductions bore no direct relationship to the cost of the adjudication. A judge reviewing the exercise a discretion of a taxing Master in this area which lies at the heart of the taxation process, whilst not abdicating his duty to review, should pay due regard to the expertise and experience of the taxing Master.
I would not interfere with the Master’s decision in this respect.
Secondly, the defendants argued that the discretion to award costs miscarried in that the Master erroneously took the view that “the starting point” was the fact that on the 15 March 2007 the plaintiffs were awarded costs of the actions.[30] I do not agree that the comment was either inappropriate or indicative of the Master relying upon some extraneous or irrelevant matter which caused the exercise of the discretion to miscarry. In strict terms the favourable costs order is the starting point. The taxation process flows from that order. There is nothing in the Master’s reasons to suggest that he reasoned, that the fact that the plaintiffs were awarded costs of the two actions somehow, automatically, translated into them being entitled to costs of the adjudication process.
[30] See [48] of the Primary Decision of the 19.09.09.
There is no substance to this second argument.
Thirdly, the defendants’ counsel argued that the Master’s allusion to the fact that defendants made no offer somehow tainted his approach. Again, in this respect, the Master referred to Perry J’s comments in Callaghan, namely that “... the Court should be slow to yield to such arguments when there are adequate procedures under the Rules for formal offers in settlement to be made, which once made, are accompanied by clear costs sanctions”. Rule 187 of the District Court Rules 2006 enabled the filing of an offer of settlement in respect of an adjudication upon costs.
It was entirely proper for the Master to have regard to the fact that the defendants made no offer. It was one of many considerations relevant to the exercise of discretion.
This argument too fails.
There is no basis upon which I would be inclined to intervene as to the Master’s decision as to the costs of the adjudication. Accordingly, I confirm his order.
Interest on the Costs
I turn to the remaining issue for Review, namely the Master’s decision to award the plaintiffs interest on the costs.
The power to award interest on the costs is, again, regulated by s 40 of the District Court Act 1991.[31]
[31] See [22] above.
The plaintiffs sought interest on the costs to run as and from the dates when they paid monies to their solicitors on account of those costs. In the Primary Reasons the Master awarded interest on the costs to be calculated at a rate of 6 per cent, ordered that it run from the time of the payments into trust, and deducted a year to account for “... lengthy periods spent on adjudication and the large amount taxed off...” The amount allowed was $18,830.[32]
[32] See Primary Reasons at [106] to [123].
On review the Master set aside his order. He adhered to the core part of his decision, namely that interest run on the costs of adjudication calculated on the amounts paid by the plaintiffs to their solicitors on account of costs, from the dates of those payments. But he rightly acknowledged that he should not have calculated the interest on the basis of a global 6 per cent, but in accordance with the statutory requirement in s 40(1), it should have been calculated at the various rates of interest prescribed under the Rules of Court.[33] Further, he decided that it was a wrong exercise of his discretion to deprive the plaintiffs of 12 months of interest. Having changed his mind as to those matters, he recalculated the plaintiffs’ entitlement, and allowed $27,498.97 for interest to the 19 August 2009.[34]
[33] See footnote 16 above.
[34] See Review Reasons [56] to [67].
The plaintiffs contended that there was no proper basis on this review to disturb the Master’s decision in this respect.
The defendants submitted that there was no proper basis on which the Master should have departed from what counsel described as “... the ordinary course ...”, namely that interest run from the date the costs are taxed.
Before considering the submissions I turn to the construction of s 40 of the District Court Act 1991.
I note that “judgment debt” is not defined in the District Court Act 1991.
I consider that “judgment debt” in s 40(1) of the said Act means any money owed pursuant to a judgment of the Court. In this respect I agree with the learned author of Note 1 under s 40 in Lunn’s Civil Procedure South Australia Volume I.
Further, a consideration of the provision as a whole indicates also that the legislature intended that “judgment debt” also include “taxed costs”. In particular:
·Section 40(1) provides generally that a judgment debt will carry interest; and
·Section 40(2) deals with from when interest is to run on the judgment debt, and in doing so divides judgment debt into two component parts, namely taxed costs and any other monetary sum.
Accordingly, it is clear that the judgment debt (in s 40(1)) is made up of taxed costs (in s 40(2)(a)), and any other monetary sum in s 40(2)(b). The evident intent of the draftsman in dividing judgment sum into those two component parts is, inter alia, to flag to the Court that in the exercise of its discretion as to the running of interest, the Court could, in the appropriate case, order that interest run on costs from a date earlier than taxation.
I turn to the submissions.
The primary contention of the defendants was that there was no proper basis for the Master, in the exercise of his discretion, to direct that interest run from a date before the date when the costs were taxed. However, the plain language of the section confers a discretion on the Master to so order. What is required is that there be a proper basis to do so. In this case, the evidence establishes that the plaintiffs in the course of the conduct of these actions made the following payments to their solicitors on accounts of costs:
13/11/02                  $264.00
12/06/03               $3,491.79
10/07/03             $11,043.04
17/09/03               $1,223.79
09/02/04               $3,401.46
30/06/04               $2,441.43
30/06/04               $3,152.00
24/08/04             $20,000.00
19/01/05               $1,484.12
20/09/05                  $264.55
17/11/05             $30,000.00
Total              $76,766.18
For the following reasons, I consider that the Master’s decision to run the interest as and from those dates and on those sums was a proper exercise of his discretion.
The date from which interest is to run is left entirely to the discretion of the taxing officer by s 40 of the said District Court Act. I refer here to what I said earlier about the discretion.[35] There are necessarily guidelines or principles which assist the exercise of the discretion of the type conferred by s 40. They are canvassed in the judgment of Doyle CJ in the case of Osborne. The judgment concerned s 114 of the Supreme Court Act 1935, which in material respects is the same as s 40 of the District Court Act. His Honour The Chief Justice makes it clear that, in respect of the discretion to order costs and interest on costs, a guiding consideration is to compensate and indemnify the successful party for the expense he or she has been put to in the litigation.[36]
[35] See [24] above.
[36] See Osborne at [31] and [32].
In Osborne at [34] and [35] Doyle CJ said:
Bearing in mind the purpose of an award of costs, the purpose of an award of interest, and the way in which the section operates, did a proper exercise of the discretion in this case require that the defendant be ordered to pay interest from a date preceding the date of the certificate of the taxing officer?
If the plaintiff had already paid legal costs or disbursements, there may be a sound basis for the exercise of the discretion to fix an earlier date from which interest is to run. In that event the plaintiff will have met a cost for which the defendant is liable, and will have been out of pocket from the time of the payment until the costs are paid. Compensation to the plaintiff, and the giving of a partial indemnity, would require that an earlier date be fixed than the date of the taxing officer's certificate. In saying this I am putting to one side the possibility of the existence of other relevant factors that might support a contrary decision. The same reasoning might apply if the plaintiff has not paid costs or disbursements, but had agreed to pay interest on them if recovered from the defendant. An agreement to pay interest on unpaid costs raises issues that do not have to be considered in this case. I am not to be taken as deciding that such an agreement would be a reason for fixing an earlier date.
Then later at [65] his Honour The Chief Justice added:
If a plaintiff has paid the costs, wholly or in part, the subject of a taxation, or has agreed to pay interest on them, that will be a circumstance which might justify an award of interest from judgment, or even from an earlier date. I mention again the reservation that I expressed earlier relating to an agreement to pay interest on unpaid costs.
It is rather obvious to say that to fully compensate and indemnify the plaintiffs the taxing officer’s order should not only require the unsuccessful defendants to repay those sums paid on account of costs, to the extent that they are allowed on taxation, but also to require the defendants to pay interest thereon from the dates of the payments.
Accordingly, the Master’s award of interest to the plaintiffs from the dates of the payments of costs was clearly justified. The question then arises whether there were any other relevant factors which might support a decision not to so backdate the calculation.
In Osborne it was made clear that it is appropriate for the taxing officer to also have regard to “disentitling conduct”. Doyle CJ at [66] said:
If the defendant has been guilty of delay, or of an unreasonable approach to the taxation of costs, the taxing officer might well fix a date earlier than the date of the certificate from which interest is to run. In such a case it is not easy to see how the date could be a date earlier than the judgment.
The converse must also be true, namely that any such disentitling conduct by the successful party could result in a reduction of the award of interest. The defendants contended that there was such conduct here, namely unwarranted delay and over‑claiming on the taxation. I have dealt with these matters. Suffice it to say, there was on the evidence no delay for which the plaintiffs were solely responsible and which could be characterised as such disentitling conduct, and the extent to which the plaintiffs were unsuccessful in the taxation, was adequately reflected by the Master in disallowed and reduced items. I say again that I agree with the Master as to these matters.
The defendants also contended that “the starting point is not for the award of interest ...” In that submission, counsel for the defendant Mr Tredrea relied upon that said by Chief Justice Doyle at [7] in Osborne. With respect, I disagree that there is any support for that proposition in [7] of Osborne or anywhere else in the judgment. At [7] the Chief Justice, inter alia, quoted his own judgment in Burford v Allan[37] where he said as follows “the starting point is not an award of interest from the date of judgment ...” It can be seen that counsel has inadvertently omitted the phrase “... from the date of judgment ...”
[37] [1998] SASC 6693.
Indeed, as I have made clear, [38] I consider that on the proper construction of s 40 the starting point is an award of interest. The successful litigant has a statutory entitlement to interest “at a rate prescribed by the rules” on the “judgment debt” which in my view includes costs ordered in his or her favour as eventually taxed. The discretion, embodied in s 40, operates only in respect of the running of the interest.
[38] See [60] above.
There is nothing else in the defendants’ submission which requires attention.
Accordingly, as to this question of interest on the costs of action which include the costs of adjudication, I confirm the Master’s order.
Conclusion - Summary
I dismiss the defendants’ interlocutory application of the 30 March 2010 in which they sought an order that interest not run on the judgment debt of $195,383.73 after the 13 December 2007.
In respect of the defendants’ application for Further Review of the 24 May 2010 I decline to vary the Master’s Review Decisions and confirm his orders.
In the submission before me of counsel for the plaintiffs there was effectively a plea that the interest entitlements of the plaintiffs be updated. In my view, these entitlements to interest on firstly, the judgment sum of $195,383.73 and secondly, on the costs are all entitlements which flow automatically at the appropriate interest rates until paid. These entitlements are simply a matter of arithmetical calculation based on rates of interest fixed by the Rules. No particular order of Court should be necessary for this, however, if there are any difficulties which require the intervention of the Court then I refer the parties to the Master.