McCasker v Omad (NT) Pty Ltd (No 4) - [2023] NTSC 89

CITATION:McCasker v OMAD (NT) Pty Ltd (No 4) [2023] NTSC 89
PARTIES:McCASKER, Raymond Henry
v

OMAD (NT) PTY LTD

(ACN 128 898 135)

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT exercising Territory jurisdiction
FILE NO:2022-02046-SC
DELIVERED:  4 October 2023
WRITTEN SUBMISSIONS:            31 August, 19 September 2023
JUDGMENT OF:  Brownhill J

CATCHWORDS:
COSTS – Costs in discretion of Court – General rule that costs follow the event – Where case involved clearly discrete issues for determination – Where differential costs order appropriate – Where counting parties’ success on number of issues not appropriate approach – Whether ‘final flow of money test’ appropriate – Where such test operates only in sphere of commercial arbitration cases – Where neither party acted unreasonably – Costs discretion to be exercised on the basis of how much time was taken up by the issues on which each party was successful

Anheuser-Busch Inc v Budejovicky Budfar, Narodni Podnik (unreported, FCA, Alsop J, 2002); Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304; CB Australia Ltd v Shepherd [2018] NSWSC 353; Central Australian Aboriginal Congress v CGU Insurance Ltd (2009) 24 NTLR 222; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296; McCasker v OMAD (NT) Pty Ltd(No 3) [2023] NTSC 68; Northern Territory v Sangare (2019) 265 CLR 164; Palm Bridge Pty Ltd v Miles [2001] WASCA 334; Penfold v Higgins [2003] NTSC 89; Value Inn Pty Ltd v Proprietors of Unit Plan 2004/048 [2020] NTCA 8, referred to
Formosa v Eminent Forms Pty Ltd (2005) 91 SASR 6; Miles v Palm Bridge Pty Ltd [2001] WASC 42, not applied
Federal Court of Australia Act 1976 (Cth) s 52(2)
Gaming Machine Regulations 1995 (NT) r 31A
Supreme Court Rules 1987 (NT) r 63.72
REPRESENTATION:
Counsel:
Plaintiff:P Maher
Defendant:A Wyvill SC with F Keppert
Solicitors:
Plaintiff:Maher Raumteen Solicitors
Defendant:Tsoukalis Lawyers
Judgment category classification:    B
Judgment ID Number:  Bro2318
Number of pages:  14

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
McCasker v OMAD (NT) Pty Ltd (No 4) [2023] NTSC 89

No. 2022-02046-SC

BETWEEN:

RAYMOND HENRY McCASKER

Plaintiff

AND:

OMAD (NT) PTY LTD(ACN 128 898 135) Defendant

CORAM: BROWNHILL J
REASONS FOR JUDGMENT
(Delivered 4 October 2023)
Background

Judgment in this matter was delivered on 10 August 2023.[1]
As sought by the plaintiff (‘McCasker’), the Court declared that, pursuant to cl 22.6 of the Lease between McCasker and the defendant (‘OMAD’), the sale price of the 20 gaming machines acquired by McCasker from OMAD is the market value for sale as part of a business of the gaming machines, which does not include any amount in respect of Gaming Machine Licence 244 (‘GML244’) or the government levy prescribed by r 31A of the Gaming Machine Regulations 1995 (NT) (‘Levy’).
The other claims of McCasker for declarations and damages were dismissed.
The Court granted OMAD judgment in the sum of $228,000 plus GST and interest.
The quantum of interest and the issue of costs were reserved.
GST
The Court held that GST is payable on the assessed sale price comprising the judgment sum.[2] McCasker did not resist that ruling.
Consequently, the judgment sum is $228,000 plus GST.
Interest
The Court held that interest is payable on the judgment sum from 2 June 2022 to the day of judgment on 10 August 2023.[3]
The Court noted that the practice of the Court is to apply the interest rates applicable to post-judgment interest, which are the interest rates fixed pursuant to s 52(2)(a) of the Federal Court of Australia Act 1976 (Cth).[4]
OMAD sought interest calculated in accordance with the Court’s practice at $23,178.54. McCasker did not resist an award of that sum.
Consequently, there will be judgment for OMAD for $228,000 plus GST and $23,178.54 in interest.
Post-judgment interest accrues at $63.09 per day from the date of judgment, 10 August 2023, until judgment is delivered.
Costs
OMAD seeks its costs from McCasker in reliance on the general rule that the successful party is entitled to its costs. McCasker seeks that there be no order as to costs because each party both enjoyed substantial success and suffered substantial loss.
Principles
The most important guiding principle by reference to which the discretion as to costs is to be exercised is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party.[5]
The guiding principle that the successful party should ordinarily be awarded its costs may be departed from in circumstances where a differential costs order is appropriate.[6] The circumstances in which such an order may be appropriate include where: (a) in respect of one or more issues, the successful party has ‘unfairly, improperly or unnecessarily increased the costs’, including unreasonably pursuing or persisting with points which have no merit; (b) the bulk of the time has been taken on an issue on which the unsuccessful party has succeeded, even if the successful party has not acted unreasonably in raising those issues; and/or (c) where a particular issue or group of issues is clearly dominant or separable, and the application of the general rule may involve hardship on a losing party which has nevertheless succeeded on that issue or group of issues.[7]
Where a matter involves multiple issues and the question before the Court is whether it should make some other order as to costs than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter.[8] Examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or where there is a claim by a plaintiff and a cross-claim by a defendant.[9] Both occurred in this case. Both parties’ positions on the question of costs involved acknowledgement that this is a matter which involved clearly discrete issues for determination.
Success on issues
OMAD argued that, taking a non-technical, broad-brush approach[10] to the issues in the case, there were five issues, namely whether: (a) there was a contract between McCasker and OMAD in terms of cl 22.6 of the Lease which remained valid and enforceable by OMAD; (b) OMAD was obliged to transfer GML244 to McCasker pursuant to cl 22.5 of the Lease; (c) OMAD breached cll 22.5 and 22.6 of the Lease (or other contractual obligation in similar terms); (d) if a contract in terms of cl 22.6 existed and was valid and enforceable, what was the amount of the sale price payable by McCasker to OMAD under cl 22.6 and, as part of that issue, did the sale price include an amount for GML244 and/or the Levy; and (e) whether McCasker had suffered damages and, if so, in what amount. OMAD argued that it had succeeded and McCasker had failed on all of these issues, with McCasker’s only success being as to the ‘sub-issue’ of whether the sale price included an amount for GML244 and/or the Levy.
Accepting that the case can be divided into those five issues, it is not accurate to say that OMAD succeeded on all of them. Issue (d) comprised OMAD’s counter-claim for $1,217,00 plus GST and interest and McCasker’s claim that, if a contract in terms of cl 22.6 existed and was valid and enforceable (which it denied, hence issues (a), (b), (c) and (e)), only the market value of the 20 gaming machines (and the other plant and equipment) was payable. The judgment that OMAD was entitled to $228,000 plus GST meant McCasker succeeded on issue (d).
Further, there are powerful considerations weighing heavily against attempts to divide up a case by issues and examine the ‘score’ by reference to an issue count.[11] I do not consider that to be the appropriate approach in light of those considerations. Further, that approach does not take proper account of the time spent in the hearing on the single issue on which McCasker was successful (as to which, see below).
OMAD argued that McCasker’s success on the sale price issue is a matter which the Court might take into account, ‘if it was otherwise appropriate to do so’, and OMAD argued that, for a number of reasons, it was not appropriate as justification for an order less favourable to OMAD than having its costs.
Final flow of money test
First, OMAD argued that, in cases involving competing financial claims and counterclaims only, success can be judged by identifying the party to whom there is a ‘final flow of money’.[12]
McCasker argued that this is not a case in which the ‘final flow of money test’ was appropriate because McCasker sought various declaratory relief and succeeded in obtaining the declaration most significant to the case, which concerned whether or not the sale price for the gaming machines included an amount referrable to the value of GML244 or the Levy.
The two authorities cited by OMAD in support of the ‘final flow of money test’ are appeals from the determination of costs in commercial arbitrations. Those authorities cite other authorities and arbitration texts establishing the ‘final flow of money test’ as operating in commercial arbitrations involving claims and cross-claims for money under building and engineering contracts.
Research has been unable to locate a single decision where the ‘final flow of money test’ was applied in a case which did not concern commercial arbitration costs, let alone a case involving relief which was other than monetary. The only case located where the ‘final flow of money test’ was pressed in a case not involving arbitration was CB Australia Ltd v Shepherd [2018] NSWSC 353. The case involved a claim and a cross-claim for money. The submission was put that costs should be awarded on the basis of the ‘final flow of money’ where the plaintiff succeeded on its claim and the defendant succeeded on its counter-claim such that there was a net flow of money from the defendant to the plaintiff. The Court rejected that approach (at [9]) and instead adopted the position (at [16]) that the costs order should reflect that some of the time in the hearing related to the plaintiff’s claim, some related to the cross-claim, and a great deal of it related to matters of background and analysis referable to both; and (at [17]) the commercial consequences of the decision, namely that the plaintiff had achieved a net receipt of approximately half of the money it claimed. The costs order (at [19]) was for the defendant to pay 50% of the plaintiff’s costs of the proceeding.
I do not accept that the ‘final flow of money test’ operates outside the sphere of commercial arbitration cases. Even if it does, I do not accept that it is the appropriate approach in the circumstances of this case, for the reasons referred to below.
Reasonableness of parties’ conduct
Second, OMAD argued that its claim that the sale price included an amount referable to GML244 or the Levy was reasonable. McCasker argued that OMAD’s position in this respect was unreasonable because the expert valuation evidence relied on by OMAD did not support the contention. Mr West’s expert evidence was rejected because he did not express any opinion that the market value of the gaming machines included the value of GML244 or the Levy, and simply valued GML244 (by reference to the amount of the Levy) because that is what he was instructed to do.
I do not accept that OMAD’s reliance on Mr West’s evidence was unreasonable. He did ascribe a value to GML244, and he was prepared to add that value to the market value of the gaming machines in his report, which could, reasonably, have been evidence in support of OMAD’s contention. However, Mr West’s opinion and approaches, and the reasons for rejection of his opinion, were revealed during his oral evidence.
Thirdly, OMAD argued that McCasker’s contentions and reliance on cl 22.5 of the Lease were misconceived, on the basis that the contentions were rejected. That contentions were rejected does not make putting them unreasonable.
Fourthly, OMAD argued that it was unreasonable of McCasker to commence the proceedings when cl 22.6 of the Lease allowed for binding expert determination of the sale price.
I do not accept that McCasker’s decision to commence the proceedings rather than proceed to expert determination was unreasonable. The terms of the Lease were drafted at a time before any gaming machines were on the Premises and before any gaming machine licence in respect of the Premises existed. Its terms did not expressly address those matters, giving rise to the parties’ alternative constructions of its terms. In those circumstances, and where there was no contractual entitlement to review or appeal from an expert determination, it was not unreasonable for McCasker to seek to have the alternative constructions determined by the Court. Furthermore, although OMAD told McCasker, on more than one occasion and over a considerable period of time, that it would be seeking expert determination pursuant to cl 22.6 of the Lease, it did not take any positive steps in that regard. It could reasonably be inferred that OMAD was as reluctant to pursue that course as McCasker was in the circumstances of the case.
Fifthly, OMAD argued that McCasker’s taking and retaining possession of the plant and equipment, including the gaming machines, without paying for them was unreasonable.
I do not accept that McCasker’s conduct was unreasonable. He made offers of $50,000 for the plant and equipment and $100,000 for the gaming machines, but they were not accepted by OMAD. OMAD had offered to accept $1,188,100 for the plant and equipment. The proceedings were commenced some three months after the Lease had expired and McCasker had taken possession, and those proceedings disputed his contractual obligation to acquire the plant and equipment. It was open to OMAD to seek the return of possession from McCasker, but it chose to argue McCasker was bound by a contractual obligation to acquire the plant and equipment and pursue McCasker for payment. In those circumstances, retention of possession whilst the dispute about the obligation to acquire and the sale price was determined was not unreasonable.
Sixthly, OMAD argued that McCasker’s claim he had terminated his agreement to acquire the plant and equipment and his claim for damages were not founded on any evidence and so were unreasonable.
The Court held that the evidence relied on did not sustain those claims. That is not a finding that there was no evidence to support those claims. There was evidence about these matters, but it did not satisfy the Court that the contentions were made out. Again, that contentions were rejected on the basis of the evidence before the Court does not make putting them unreasonable.
In summary, I do not accept that either party acted unreasonably such that the discretion as to costs should be exercised on the basis that one or the other of them did.
Time taken on issues
Where there are discrete and severable issues of law or fact, the Court’s discretion may be exercised on the basis of an estimate of the time taken by way of evidence or argument on those discrete issues at the hearing.[13] Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.[14] This approach can result in the discretion being exercised so as to make no order for costs[15] (as McCasker submitted) or so as to order one party to pay only a proportion of the other party’s costs (as OMAD submitted by way of alternative).[16]
OMAD argued that ‘the only real issue in this case concerned’ whether the sale price of the gaming machines payable under cl 22.6 included an allowance for GML244 or the Levy. It was on that issue that McCasker succeeded. That observation is borne out by the considerable proportion of the time and efforts in the case that was directed to this issue.
Determination of this issue reduced OMAD’s judgment to around 20% of what it claimed. Of the 14 exhibits tendered by the parties, 8 related to the disputed expert valuation evidence which dealt largely with this issue. The issue occupied, by the disputed expert evidence and arguments about its admissibility, a considerable portion of the two hearing days (about 47% of the pages of transcript) and a substantial part of at least two directions hearings. It occupied about 35% of the written submissions of the parties (leaving out from that calculation the submissions dealing with the background and factual matters). It also occupied about 35% of the judgment (again, leaving out from that calculation the submissions dealing with the background and factual matters). This issue was by far the most significant of all issues in the case, in terms of the time taken in hearing, preparation and determination and, consequently, the costs to the parties. For that reason, I consider it inappropriate to approach the exercise of the costs discretion on the basis of an ‘issues score’ (as in, which party had success on most of the issues), and appropriate to approach the exercise of the costs discretion on the basis of how much time was taken up by the issues on which OMAD was successful and how much time was taken up by the issue on which McCasker was successful.
Conclusion
On that approach, I do not propose to award no costs to either party, as I consider that would be unfair to OMAD given how much time was taken up by the issues on which it was successful.
Doing the best I can, and using a broad-brush approach, I consider that a fair and just result would be to order McCasker to pay 50% of OMAD’s costs.
OMAD sought an order that all reserved costs be costs in the cause. McCasker did not resist that order. I consider it to be appropriate.
OMAD sought certification under Rule 63.72(9)(b) of the Supreme Court Rules 1987 (NT) that the retainer of more than one counsel was warranted. I accept that a prudent person not compelled by poverty would come into Court with two counsel in this matter,[17] given the weight of the case, including the quantum of the counter-claim made by OMAD, the reasonably complex issues of construction of the terms of the Lease, the valuation evidence (which involved three different valuers), and the arguments regarding the nature of the contractual obligation under cl 22.6 and its revocability, repudiation and termination of that obligation. I also take into account that McCasker also engaged two counsel.
Disposition
There is judgment for OMAD for $228,000 plus GST and $23,178.54 in interest.
Post-judgment interest accrues at $63.09 per day from the date of judgment, 10 August 2023, until judgment is delivered to OMAD.
All reserved costs are to be costs in the cause.
McCasker is to pay 50% of OMAD’s costs in the proceeding.
I certify that the retainer of two counsel was warranted.

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[1]McCasker v OMAD (NT) Pty Ltd(No 3) [2023] NTSC 68.

[2]Ibid at [166].

[3]Ibid at [163].

[4]Ibid at [165].

[5]Northern Territory v Sangare (2019) 265 CLR 164 at [25] per the Court.

[6]Value Inn Pty Ltd v Proprietors of Unit Plan 2004/048 [2020] NTCA 8 (‘Value Inn’) at [31] per Grant CJ and Mildren AJ, and the authorities there cited.

[7]Ibid.

[8]James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34] per the Court, cited in Value Inn at [32]-[33].

[9]Ibid.

[10]Citing Value Inn at [34], citing in turn Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at [8] per the Court.

[11]Penfold v Higgins [2003] NTSC 89 at [17] per Mildren J (‘Penfold v Higgins’), citing Anheuser-Busch Inc v Budejovicky Budfar, Narodni Podnik (unreported, FCA, Alsop J, 2002) at [5].

[12]Citing Miles v Palm Bridge Pty Ltd [2001] WASC 42 at [51] per Hasluck J (‘Miles v Palm Bridge’); Formosa v Eminent Forms Pty Ltd (2005) 91 SASR 6 at [27] per Bleby J. I note that the decision in Miles v Palm Bridge was overturned on appeal, on the ground that the Judge had not taken into account some matters when deciding that, on the ‘final flow of money test’, the builder should be considered the successful party: see Palm Bridge Pty Ltd v Miles [2001] WASCA 334.

[13]Value Inn at [35], citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at [29] per Gummow, French and Hill JJ (‘Dodds Family Investments v Lane’), cited in James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36] and Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304.

[14]Ibid.

[15]As upheld in Value Inn and Dodds Family Investments v Lane.

[16]As ordered in Penfold v Higgins.

[17]Central Australian Aboriginal Congress v CGU Insurance Ltd (2009) 24 NTLR 222 at [18] per Mildren J (Martin BR CJ and Angel J agreeing).