Manock v Moles (No 2) - [2008] SADC 104

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
MANOCK v MOLES (NO 2)
[2008] SADC 104
Judgment of His Honour Judge Tilmouth
15 August 2008
PROCEDURE - COSTS
General rule - Costs follow the event - discretion conferred by s42 of the District Court Act. Depriving successful party of some costs.
District Court Act 1991 (SA) s42; Supreme Court Rules 101.02; District Court Rules 2006, r263, referred to.
Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387; [2007] SASC 464, applied.

MANOCK v MOLES (NO 2)
[2008] SADC 104
Background

The court delivered judgment in this appeal against the order of the Master on 17 July 2008, upholding in part, the defendant’s appeal against the order of the Master striking out substantial paragraphs of a defence to an action against him by the plaintiff/respondent in defamation[1]. Liberty was granted to both parties to consider the judgment, before making submissions in relation to costs.
[1] Manock v Moles [2008] SADC 90
Oral submissions were then made on 23 July 2008. At that time the appellant sought at least half his costs, the appeal having succeeded. Counsel pointed to the principle that costs normally follow the event. Counsel for the plaintiff resisted such an order and in fact sought his costs, or at least some costs, in his favour. At that time the effect of the judgment of the Full Court in Forlyle Pty Ltd v Tiver[2] on the question of costs was raised, so the parties were given liberty to file further written submissions in relation to that decision. This they have now done.
[2] (2007) 252 LSJS 387; [2007] SASC 464 per DeBelle J, Sulan and Vanstone JJ agreeing
The decision in Forlyle Pty Ltd v Tiver
Following a five day trial in that case, as trial Judge I made an order for each party, effectively, to bear their own costs. The circumstances were that the plaintiff succeeded on issues taking two days to agitate and the defendant on issues taking three. In so ruling I applied the following principles[3]:
[11] Orders for costs are at the best of times very blunt instruments for dealing justice between parties to litigation. An award of costs is merely compensatory, made principally by way of restorative justice, rather than punitive: Latoudis v Casey (1990) 170 CLR 534 at 543 and 567, Ohn v Walton (1995) 36 NSWLR 77 at 79. It is notorious that costs on a party-party basis, fall significantly short of the actual costs incurred. More importantly perhaps, as this case illustrates only too well, a blanket order awarding a successful party costs "following the event", whilst convenient and relatively easy to tax and enforce, is one very often ignoring other issues materially influencing the course of the litigation. In the result rougher justice might be done on account of convenience or practicality than might otherwise be the case if a less simplistic and more discriminating approach was taken.
[12] The starting point must be s42(1) of the District Court Act 1991 (SA), which vests a wide and unfettered discretion to award costs, a discretion nonetheless to be exercised judicially. This is identical in terms to section 40 of the Supreme Court Act 1935 (SA). Rule 101.02(1) however, provides that costs are to follow the event "unless otherwise ordered".
[13] It was put on behalf of the plaintiff that this Rule reflected an inevitable rule of practice, automatically applying unless there were "special circumstances" or "good reason" to depart therefrom. No such fetter or qualification appears in the Rules. No reason to impose a gloss of that kind is otherwise apparent. Indeed, the cases suggest that where time consuming issues of substance are clearly separable, trial courts have often attempted to differentiate between those on which a party was successful and those on which it failed, particularly when hardship or unfairness might flow from a bare order for costs to follow the event.
………………….
[17] Consistently with these pronouncements, the practice is clearly not one automatically awarding costs to a successful party. Rule 101.02(1) simply represents a "default" position, as it were. Not infrequently such parties are deprived of their costs, sometimes by ordering them to pay an opponent’s costs: Junius and Kumar v Messenger Press and Ors (1999) 202 LSJS 297 at [6]. There are also countless cases where successful defendants have been deprived of their costs[4].
[3] Forlyle Pty Ltd v Tiver & Ors (No 2) [2007] SADC 55
[4] Detailed in Lunn is Civil Procedure South Australia (1987 Rules) Butterworths at paragraphs 101.02.15 and 101.02.20 respectively and in Rithie’s Uniform Civil Procedure (NSW), Butterworths, paragraphs 42.1.15 and 42.1.25.
The Full Court set aside the costs order made at first instance, and in its stead ordered that the plaintiff recover costs for two days of the hearing, including disbursements relating to its successful claim. The principal judgment in Forlyle Pty Ltd v Tiver[5] proceeded:
[5] Above.
[28]    When making the order, the judge referred to the relevant principles. Nevertheless, the exercise of his discretion has miscarried. While a successful party may be deprived of its costs, this was not an appropriate case in which to do so. The Tivers had determined not to perform their obligations under the settlement agreement. Forlyle had no alternative but to bring the proceedings in order to compel them to perform those obligations. The Tivers persisted with their defence of the claim to the bitter end. Forlyle succeeded in that claim. It is entitled to be compensated for the costs incurred in enforcing its entitlement to the monies under the settlement agreement. As the trial judge found, the Tivers had reneged on that agreement.
[29]    The general rule is that a successful party has a reasonable expectation of obtaining an order for costs unless for some reason connected with the case a different order was specially warranted: Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812 applied in Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 per McHugh J at 569 and at 557 per Dawson J; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [134] per Kirby J. In Oshlack v Richmond River Council at [69] McHugh J pointed out that a successful party will be disentitled an order for costs if its conduct justifies that course. He said:
The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:
No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.”
Misconduct in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.
I do not understand the reasons of Gaudron and Gummow JJ in Oshlack v Richmond River Council to qualify that principle. Forlyle has not been guilty of misconduct in the sense identified by McHugh J. It simply pursued a claim which has failed.
[30]    As Forlyle has failed in its claim for consequential losses, it cannot expect to recover the costs associated with that claim. … Nor should it be the cause of it failing to recover that part of its costs which it incurred in prosecuting the successful part of its claim. The orders as to costs rewards the Tivers for their conduct in refusing to comply with the terms of the settlement agreement. Forlyle had to incur substantial cost to compel the Tivers to comply with that agreement. It should be entitled to recover those costs. At the same time, Forlyle should not recover any costs which are in any respect associated with its failed claim for consequential losses. In all the circumstances, the appropriate order as to costs is to allow Forlyle to recover the costs of two days of the hearing and for other costs associated with that claim including the cost of issuing the proceedings but not allow it to recover those costs or disbursements associated with the claim which failed.
The submission for the appellant is that the ratio of this decision, is such that although a court may properly divide issues and then deprive unsuccessful parties of some costs, generally speaking a successful party should be awarded some costs to reflect success in ‘the event’. The respondent on the other hand submits the case is distinguishable on its facts and in any event “needs to be applied with care rather than with a broad axe”. He makes a further point that things stand differently at the interlocutory stage, rather than when final orders are entered.
As can be seen from the judgment of Debelle J quoted above, a successful party should not be deprived of costs unless a contrary order is justified: see also Milne v A-G (Tas)[6] and Berbette Pty Ltd v Hansa[7]. This may occur for instance, where the party has failed on substantial issues in the litigation, or where it has caused other parties to incur unnecessary costs in their conduct of the proceedings. None of these considerations are applicable here.
[6] (1956) 595 CLR 460 at 477.
[7] [1976] VR 385.
None of the exceptions in 6DCR 263 apply in this instance either. That rule is unqualified, in the sense that it does not provide for ‘costs in the action’, or ‘costs in the proceedings’, or ‘costs in the cause’ to name just a few, should follow the event. It is therefore indiscriminate in its application, so it must apply to all types of proceedings, including the interlocutory.
What costs order is appropriate?
No one single consideration is a satisfactory measure of the relative degrees of success or failure on this appeal. In terms of orders upheld, the number of issues agitated, the time they took to ventilate during the course of the appeal, and what remains left of the amended defence, the respondent has clearly done better in the net result than has the appellant. Although one might quibble at too much precision in this respect, my judgment is that Dr Manock was successful to the extent of approximately two-thirds and therefore failed to the extent of one-third, overall. That being the case, unaffected by the decision of the Full Court, I probably would have otherwise ordered that he therefore have one third of his costs of the appeal to be agreed or taxed, on the basis that in the event he succeeded to the extent of two-thirds, and the appellant to the extent of one-third.
Does the decision of the Supreme Court require any different order? The underlying proceedings are an action in defamation by the respondent. He applied to a Master by way of interlocutory application to strike out much of the defence, and was largely successful. He successfully defended that position on appeal, to the extent of two-thirds. The formal order was in effect then, ‘the appeal is allowed to the extent of one-third; otherwise it is dismissed’.
The general rule is that a successful party has a reasonable expectation of obtaining an order for costs, unless for some reason connected with the case, a different order is warranted. In this case there was no misconduct by the appellant, in the sense mentioned in the above authorities. He brought an appeal and was partly successful. It appears that it must follow from the decision of the Full Court in Forlyle Pty Ltd v Tiver then, that absent disentitling conduct on the part of a successful party, that party is entitled to costs in relation to those issues on which it was successful, but not in relation to those on which it failed. No logical basis for applying different principles to interlocutory proceedings, is evident.
Conclusion and order
The order of the court therefore is that the appellant is entitled to one third of the costs of the appeal, to be agreed or taxed. Those costs include the costs of and incidental to the subsequent appearance following judgment and the submissions as to costs.