Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd (No 2) - [2021] SASC 75

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal to a Single Judge)
MAYFIELD FAMILY WINES PTY LTD v GROWERS WINE GROUP PTY LTD (No 2)
[2021] SASC 75
Judgment of the Honourable Justice Blue
22 June 2021

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
The appeal by the appellant against the dismissal by a Master of an application for summary judgment on its counterclaim against respondent was dismissed: Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd [2021] SASC 55.
The respondent seeks an order that the appellant pay its costs of appeal on the basis that costs should follow the event. The appellant seeks an order that the costs of the appeal be reserved to the trial Judge.
Held:
1.Observations about a unifying factor underlying some of the general principles applied in exercising the costs discretion, namely that the Court is endeavouring to ascertain which party caused or contributed to the incurring of the costs in question (at [6]-[7]).
2.Observations about factors relevant to exercise of the costs discretion in respect of interlocutory applications (at [8]-[11]).
3.Observations about factors relevant to exercise of the costs discretion at first instance on dismissal of a summary judgment application (at [12]-[14]).
4.On an unsuccessful appeal against the dismissal of a summary judgment application by the applicant, usually the appropriate exercise of the costs discretion will result in an order that the unsuccessful appellant pay the respondent’s costs of the appeal (at [15]-[16]).
5.In the present case, the appropriate order is that the appellant pay the respondent’s costs of the appeal (at [21]).

Supreme Court Act 1935 (SA) 40; Uniform Civil Rules 2020 (SA) 194.4(7), referred to.
Cooney v Doepel [1928] VLR 54; King Tide Company Pty Ltd v Arawak Holdings Pty Ltd [2021] QCA 91; Whitehall Holdings Pty Ltd v Custom Credit Corporation Limited (Supreme Court of Western Australia, Pidgeon, Ipp and Owen JJ, 19 June 1992), considered.

MAYFIELD FAMILY WINES PTY LTD v GROWERS WINE GROUP PTY LTD (No 2)
[2021] SASC 75
Civil Appeal

BLUE J: On 17 May 2021 I dismissed an appeal by Mayfield Family Wines Pty Ltd (MFW) against the dismissal by a Master of an application for summary judgment on its counterclaim against Growers Wine Group Pty Ltd (GWG).[1]
[1] Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd [2021] SASC 55.
The sole issue on the application for summary judgment, and on appeal, was whether GWG was entitled to set off, against MFW’s admitted counterclaim, GWG’s unliquidated claim for damages.
When the Master dismissed MFW’s summary judgment application, he ordered that the costs of the application be reserved to the trial Judge.
GWG seeks an order that MFW pay its costs of appeal on the basis that costs should follow the event. MFW seeks an order that the costs of the appeal be reserved to the trial Judge.
Costs principles
Costs are in the discretion of the Court under section 40 of the Supreme Court Act 1935 (SA). The discretion is unfettered but must be exercised judicially.
Without fettering the discretion, several general principles have been formulated in relation to the exercise of the discretion, which principles are best regarded as rules of thumb. There is a unifying factor underlying many of these general principles that the Court is endeavouring to ascertain which party caused or contributed to the incurring of the costs in question.[2]
[2] Koonara Management Pty Ltd (Receivers and Managers Appointed) v Fabriano Pty Ltd [2019] SASC 99 at [51]; Bell v Deputy Coroner of South Australia (No 2) [2020] SASC 77 at [24]; Duncan as Liquidator of WDR Iron Ore Pty Ltd (In Liquidation) v SMA Industries Pty Ltd (No 2) [2020] SASC 127 at [29].
Examples of general principles based on this underlying factor include:
·the principle that costs generally follow the event, reflecting the fact that generally an unsuccessful applicant caused the incurring of the costs by prosecuting the action and generally an unsuccessful respondent caused the incurring of the costs by defending the action;
·the principle that a party may be ordered to pay the costs of their opponent (or at least not recover their own costs) on a relatively discrete and substantial issue on which the opponent succeeded notwithstanding that the first party succeeds overall in the action;
·the principle that a party may be ordered to pay the costs of their opponent incurred after that party rejected an offer by their opponent that would have produced a better result to the party than the ultimate result of the action; and
·the principle that a party may be ordered to pay the costs of their opponent caused by misconduct or other conduct by that party in, relating to or leading up to the action.
When making an order in relation to the costs of an interlocutory application, it may be appropriate to order:
·that the unsuccessful party on that application pay the costs of the application of the successful party regardless of the ultimate event of the action;
·that the costs of the application be costs in the cause;
·that there be no order as to the costs (each party bears its own costs); or
·that the costs of the application be reserved to be determined when the ultimate event of the action is known.
Determining the appropriate order in relation to the costs of an interlocutory application will principally be informed by an analysis as to the proximate cause of the incurring of those costs. In some cases:
·it can be confidently determined when the interlocutory application is decided that the cause of the incurring of those costs was the making of the application by the unsuccessful party or resistance of the application by the unsuccessful party; in these cases the costs of the interlocutory application will generally[3] be ordered to follow the event of the interlocutory application;
·it can be confidently determined at that stage that the costs of the application are merely part of the overall costs of the action; in these cases the costs of the interlocutory application will generally be ordered to be costs in the cause (and hence will generally follow the event of the action);
·it can be confidently determined at that stage that neither party should recover the costs of the interlocutory application (for example, this may be the case when there is a mixed result on the interlocutory application); in these cases no order in relation to the costs of the interlocutory application will generally be made;
·the analysis of causation will be unclear at that stage or may depend on contingencies in the proceeding yet to occur; in these cases the costs of the interlocutory application will generally be reserved to the trial judge.
[3] There may be other relevant factors that lead to a different order and each case must ultimately be considered on its own facts and merits.
The most common interlocutory applications relate to pleadings (strike out applications or applications for further and better particulars[4]) and discovery (applications for further and better discovery). Often these applications have mixed results (the applicant succeeding in respect of some paragraphs of the pleading or categories of discovery but failing in respect of others) and an order is made that the costs of the application be costs in the cause or no order is made as to the costs of the application. However, where the applicant for the interlocutory order is wholly successful or wholly unsuccessful, generally[5] it may be expected that the costs of the interlocutory application will follow the event of the interlocutory application because respectively the making of, or resistance to, the interlocutory application is seen as the proximate cause of the incurring of the costs of the interlocutory application.
[4] Applications for leave to amend a pleading raise different considerations and need not be addressed here.
[5] There may be other relevant factors that lead to a different order and each case must ultimately be considered on its own facts and merits.
The analysis in relation to an interlocutory application for an interlocutory injunction is more complex. If the applicant for the interlocutory injunction fails to establish a prima facie case (or a reasonable case to be tried) and the application is consequentially dismissed, it may be that it is an appropriate exercise of the discretion to order that the applicant pay the costs of the interlocutory application. However, most applications for interlocutory injunctions are decided on the “balance of convenience”. The principal purpose of an interlocutory application is to regulate the interim rights and liabilities of the parties on a basis that is most fair and equitable pending the ultimate determination of the ultimate rights and liabilities of the parties (assuming that the applicant establishes a prima facie case). The balancing exercise may be finely tuned and in any event involves the exercise of a discretion. As a result, it will often be the case that the Court is not at that stage in a position to analyse confidently which party caused the incurring of the costs of the interlocutory application and often an order will be made that the costs be costs in the cause.[6]
[6] See His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 at [21] per Beazley, Giles and Hodgson JA.
When the applicant in an action applies for summary judgment, the issue is not whether the applicant will ultimately succeed in the action but rather whether there is no reasonable basis for defending the applicant's claim. Similarly, when the respondent in an action applies for summary judgment, the issue is not whether the applicant will ultimately fail in the action but rather whether there is no reasonable basis for the applicant's claim. If the application is successful, it may be expected that generally the party who is successful on the interlocutory application will receive an order that the unsuccessful party pay their costs of the application, even if the application does not dispose of the action but only part of it. Conversely, if the application is unsuccessful, as a matter of principle, although much will depend on the nature of the issues on the summary judgment application (including whether they are as to the facts or the law or both) and the conduct of the parties (including the timing and content of any evidence adduced on the application), the proximate cause of the incurring of the costs of the application should often[7] be seen as the making of the unsuccessful application for summary judgment rather than the prosecution or defence of the action (the event of which can only be determined at the conclusion of the action). The position will often be more analogous to the pleadings and discovery applications referred to above than the interlocutory injunction applications referred to above.
[7] There may be other relevant factors that lead to a different order and each case must ultimately be considered on its own facts and merits.
In Cooney v Doepel[8] Mann J said:
There seems to be an impression that when a summons of this kind is dismissed, costs should be costs in the cause, and by consent such orders are often made, but there is no rule to that effect, and, speaking for myself, I can see no foundation for such a practice. The summary procedure under Order XIV is a very special one, and if a plaintiff, having taken out his summons for final judgment, fails on that summons, I see no reason why the usual consequences as to costs should not follow.[9]
[8] [1928] VLR 54.
[9] At 54. Followed in Allen v Birkbeck [1931] VLR 140 at 140 per Irvine CJ.
On the other hand, in Whitehall Holdings Pty Ltd v Custom Credit Corporation Limited[10] Ipp J (with whom Pidgeon J and Owen J agreed) said that “[t]he usual order where an application for summary judgment is dismissed is that the costs of the application be in the cause so that the party successful at the trial recovers them.”[11] It appears from the Court’s reasons for judgment that this was common ground but, in any event, this was said when the regime for summary judgment was quite different and a defendant required leave to defend.
[10] (Supreme Court of Western Australia, Pidgeon, Ipp and Owen JJ, 19 June 1992).
[11] At 2.
Regardless of the appropriate costs order on an interlocutory application at first instance, it is settled that there is a general principle that the costs of an appeal against an interlocutory order should generally follow the event of the appeal rather than being reserved to the trial judge or being costs in the cause of the underlying action. The appeal is a separate proceeding to the underlying action. As a matter of principle, generally,[12] the proximate cause of incurring the costs of the appeal should be seen, when the appeal is dismissed, as the prosecution of the appeal by the appellant and, when the appeal is allowed, as the resistance of the appeal by the respondent to the appeal.
[12] There may be other relevant factors that lead to a different order and each case must ultimately be considered on its own facts and merits.
Thus, in Whitehall Holdings Pty Ltd v Custom Credit Corporation Limited[13] Ipp J (with whom Pidgeon J and Owen J agreed) said:
As regards the costs of the appeal I accept that the usual order in cases such as this is that the unsuccessful party should pay the costs of the appeal.[14]
Pidgeon J (with whom Owen J also agreed) said:
In respect of the costs on appeal I would follow the note in the White Book in most editions. I am looking at edition 1988 and I think it is in all the editions under 14/7/15 that costs on the appeal normally follow the event.[15]
[13] (Supreme Court of Western Australia, Pidgeon, Ipp and Owen JJ, 19 June 1992).
[14] At 4.
[15] At 6.
Exercise of discretion
MFW accepts that, in respect of the costs of the appeal, the starting point is the general principle that costs follow the event of the appeal. MFW submits, however, that there is good reason to depart from the usual order.
MFW observes that there remain live issues for determination by the trial Judge and it may ultimately succeed in defeating the set off claim. In particular, as I observed in my primary reasons for judgment on the appeal,[16] the trial Judge will be in a position to determine definitively the nature and extent of the connection between the respective claims and determine whether that connection is sufficient to give rise to an equitable set off.
[16] Mayfield Family Wines Pty Ltd v Growers Wine Group Pty Ltd [2021] SASC 55 at [87].
MFW refers to the fact that, in Whitehall Holdings Pty Ltd v Custom Credit Corporation Limited,[17] the Full Court of the Supreme Court of Western Australia concluded that, on the facts of that case, there was good reason to depart from the usual order that costs follow the event of the appeal. However, in that case, the appeal against the Master’s decision was allowed and the Full Court set aside summary judgment granted at first instance. The good reason for departing from the usual order was that it was strongly arguable by the respondent that the defence by the appellants to the respondent’s counterclaim which resulted in the appeal being allowed was not advanced before the Master at first instance. Further, the appellants placed before the Full Court affidavit material that persuaded the Full Court to uphold the appeal and there was reason to suspect that that affidavit material was false. As a result, the Full Court ordered that the costs of the appeal be reserved to the trial judge. There are no similar factors in the present case.
[17] (Supreme Court of Western Australia, Pidgeon, Ipp and Owen JJ, 19 June 1992).
MFW refers to the fact that, in King Tide Company Pty Ltd v Arawak Holdings Pty Ltd,[18] the Queensland Court of Appeal concluded that on the facts of that case there was good reason to depart from the usual order that costs follow the event of the appeal. However, in that case also, the appeal was successful. The appeal by King Tide Company was against a decision by a Judge dismissing a challenge to a costs assessment in favour of Arawak Holdings by a costs assessor. The challenge was on the ground that the costs agreement between Arawak and its solicitors provided that costs were only payable to the solicitors if Arawak was paid by King Tide an amount for costs and that the costs assessment infringed the indemnity principle. Before the Judge, King Tide suggested that there were other documents comprising the costs agreement but was unable to provide a basis for that assertion. On appeal, it became apparent that there were in fact other such documents that had not previously been disclosed by Arawak. The appeal was allowed by consent on the basis that King Tide contended that there were still further undisclosed documents and it was appropriate that the factual question of the constitution of the costs agreement be remitted to the trial division for determination. Arawak contended that the costs of the appeal should be reserved because the rehearing of the indemnity point might prove to be futile if there were in fact no further documents in existence comprising the costs agreement. This contention was accepted by the Court of Appeal. McMurdo JA (with whom Morrison JA and Henry J agreed) said:
It is true that costs ordinarily follow the event, and that this appeal is being allowed. However, the respondent’s submission, namely that the rehearing of the indemnity point may prove to be futile and it then would be unjust for the respondent to bear the costs of this appeal, is persuasive. The costs of this appeal should be reserved.[19]
There are no similar factors in the present case.
[18] [2021] QCA 91.
[19] At [14].
In the present case, the proximate cause of the incurring of the costs of appeal was the prosecution of the appeal by MFW on which it was unsuccessful. Costs should follow the event of the appeal. There are no future contingencies which foreseeably could affect the causation analysis. No evidence of substance was adduced before the Master or on appeal and the entitlement or otherwise of MFW to summary judgment was argued on the face of pleadings.
Conclusion
I order that the appellant, Mayfield Family Wines Pty Ltd, pay the costs of the respondent, Growers Wine Group Pty Ltd, of the appeal against the dismissal of its summary judgment application. Rule 194.4(7) of the Uniform Civil Rules 2020 (SA) provides that the quantum of costs ordered is to be taxed if not agreed.