McIntyre v Quality Roofing Services Pty Ltd (No 2)

[2019] SASCFC 69

Supreme Court of South Australia

(Full Court: Civil)

MCINTYRE & ANOR v QUALITY ROOFING SERVICES PTY LTD (No 2)

[2019] SASCFC 69

Judgment of The Full Court

(The Honourable Justice Parker, The Honourable Justice Lovell and The Honourable Auxiliary Justice Tilmouth)

26 June 2019

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - OTHER CASES

The appellants seek orders for costs to follow the event having largely succeeded in setting aside a judgment against them, entered by a District Court Judge.

Held: As the appellants have a reasonable expectation of a favourable costs order and that the respondent did not succeed on any particular issue, costs should follow the event.  Discussion as to the proper disposition of costs issues in related proceedings before the Environmental, Resources and Development Court.

Supreme Court Civil Rules 2006 (SA) r 263(1), r 264(1); Supreme Court Act 1935 (SA) s 40(1); McIntyre & Anor v Quality Roofing Services Pty Ltd [2019] SASCFC 29; Copping and Others v ANZ McCaughan and Another; Tillett Nominees Pty Ltd and Others (1995) 63 SASR 523; Cretazzo v Lombardi (1975) 13 SASR 4; Latoudis v Casey (1990) 170 CLR 534; Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387; Australian Trade Commission v Disktravel [2000] FCA 62; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107; Oshlack v Richmond River Council (1998) 193 CLR 72; Anderson v Bowles (1951) 84 CLR 310; Gray v Sirtex Medical Ltd (2011) 193 FCR 1; Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1; Hamdorf v Riddle [1971] SASR 398, referred to.

MCINTYRE & ANOR v QUALITY ROOFING SERVICES PTY LTD (No 2)
[2019] SASCFC 69

Full Court:      Parker and Lovell JJ and Tilmouth AJ

1. PARKER J:          I agree with the reasons of Tilmouth AJ and the orders he proposes.

2. LOVELL J:          I agree with the reasons of Tilmouth AJ and the orders he proposes.

   TILMOUTH AJ:

   The issues

3. This matter returns to the court for determination of the appropriate costs orders following the judgment of this Court allowing the McIntyres’ appeal, delivered on 3 April 2019.[1]

   [1]    McIntyre & Anor v Quality Roofing Services Pty Ltd [2019] SASCFC 29.

4. The appellants seek an order for costs to ‘follow the event’ pursuant to SCR 263(1) of the Supreme Court Civil Rules 2006 (SA).  In contrast, the respondents argue for costs assessed on an ‘issues by issues basis’, limited to the discrete issues on which the appellants succeeded.

5. The orders pronounced by this Court on 3 April 2019 were these:

   1.     The judgment in favour of Quality Roofing Service for $27,403 is set aside;

   2.     The order dismissing the McIntyres’ cross-action is set aside;

   3.     The orders for interest against the McIntyres are set aside;

   4.The order in favour of Quality Roofing Service for the costs of the Environment, Resources and Development Court action are set aside;

   5.     The costs orders in favour of Quality Roofing Service are set aside;

   6.The following issues are remitted for hearing and determination by another judge of the District Court;

   a.     resolution of the McIntyres’ cross-action and counterclaim;

   b.     costs of the proceedings in the Environmental, Resources and Development Court;

   c.     costs of the proceedings in the Magistrates and District Courts;

   d.     questions of pre-and post-judgment interest;

   Costs of the appeal

6. The default basis for awarding costs is as a general discretionary matter ‘awarded as between party and party’, pursuant to SCR 264(1) and (2) of the Supreme Court Civil Rules. Nevertheless the Court may in the exercise of an unfettered discretion, award costs on any basis the Court considers appropriate, under s 40(1) of the Supreme Court Act 1935 (SA) and r 264(1) of the Supreme Court Civil Rules: Copping and Others v ANZ McCaughan and Another; Tillett Nominees Pty Ltd and Others.[2]

   [2] (1995) 63 SASR 523, 527.

7. Whilst the primary position is that costs should ordinarily follow the event: Hamdorf v Riddle,[3] there is no absolute rule applying to the whole costs of an action, as opposed to particular issues within it: Copping and Others v ANZ McCaughan and Another; Tillett Nominees Pty Ltd and Others.[4]  In appropriate cases courts may more readily apportion costs as between issues when there is ‘reason for departing from the settled practice whereby the successful party receives his costs …’: Cretazzo v Lombardi.[5]

   [3] [1971] SASR 398, 402.

   [4] (1995) 63 SASR 523, 527.

   [5] (1975) 13 SASR 4, 12.

8. Even then a successful party holds a reasonable expectation of obtaining a favourable order for costs, unless for some reason connected with the litigation itself, a different order is warranted: Latoudis v Casey,[6] Forlyle Pty Ltd v Tiver.[7]  Exemptive orders are more likely to be made when a successful party unreasonably pursues a particular issue or conducts its case unreasonably in respect of that issue: Australian Trade Commission v Disktravel,[8] Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2).[9]Even then as McHugh J remarked in Oshlack v Richmond River Council:[10]

   By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation.

   [6] (1990) 170 CLR 534, 557, 569.

   [7] (2007) 252 LSJS 387, [29].

   [8] [2000] FCA 62, [3] per French, Kiefel and Mansfield JJ.

   [9] [2008] FCAFC 107, [3]-[6] per Finkelstein and Gordon JJ.

   [10] (1998) 193 CLR 72, [66].

9. It is true enough that there were multiple grounds of appeal.  The fact remains however, that the appellants were substantially and if not wholly successful on appeal.  Expressed in another way, no distinct issue was resolved in favour of the respondents justifying departure from the settled practice pursuant to SCR 263(1) and 264(1).

10. It follows that the appropriate order is for the appellants to have their costs of and incidental to the appeal, taxed on a party and party basis.

    The cost of proceedings in the ERD Court

11. A subsidiary issue arising between the parties relates to a dispute as to the costs of related proceedings in the Environmental Resources and Development Court.[11]  In an addendum written submission, the appellants apply for an order remitting ‘in the first instance for hearing and determination of costs incurred in the ERD Court’.  The parties are at odds as to the proper interpretation of orders 4, 5 and 6 quoted above, insofar as the venue for the resolution of the ERD Court costs is concerned.

    [11]   City of Charles Sturt v McIntyre & Ors [2014] SAERDC 45, hereafter referred to as the 'ERD Court'.

12. This impasse came about because of the stance taken by the respondents who dispute the view that the ERD Court ‘had the ability to determine costs of the proceedings in that Court’.  As a consequence the parties approached the ERD Court Judge for directions.  The Judge determined on 16 April 2019 that:[12]

    … having read the Orders made by the Full Court [he] considers that the issue of costs in the Environment, Resources and Development Court has been remitted for hearing and determination before another Judge of the District Court.

    [12]   Email from the Registrar of the ERD Court dated 16 April 2019.

13. The claim for costs relating to the ERD Court proceedings in the underlying action, was in damages for breach of contract.  Damages that may or may not fall to be awarded in the contractual claim, fundamentally depend upon adverse costs orders first crystallising in the proceedings as between the parties in the ERD Court.  It was the intention of the above orders that questions of costs in the ERD Court be first determined by the ERD Court itself, according to ordinary principles and practice of that Court.

14. There is another fundamental reason why this must be the case.  As there was no appeal from the ERD Court, this Court has no jurisdiction and no power to make any order with respect to ERD Court costs, or to direct they be determined by the District Court.  Likewise, a District Court Judge exercising jurisdiction in the Civil Division of that Court under the District Court Act 1991 (SA), has neither the jurisdiction nor the power to make costs orders in ERD proceedings. Only once those orders are perfected by the ERD Court can the District Court Judge then adjudicate whether adverse costs orders against either party may be awarded by way of contractual damages in the civil action. By parity of reasoning, the ERD Court being a creature of statute established by s 4 of the Environment, Resources and Development Court Act 1993 (SA), the ERD Court Judge had no power to remit ERD costs for determination by a District Court Judge exercising jurisdiction under the District Court Act 1991 (SA).

15. It was anticipated when orders 4, 5 and 6 were made on 3 April 2019, that once the ERD Court made orders determining costs in that Court, then and only then could the District Court sitting in its Civil Division determine whether those costs sound in damages for breach of contract at the instance of either party.

    Interim judgment

16. Subsidiary orders are sought awarding the appellants an ‘interim judgment’ for $12,000, as well as orders that they recover their costs incurred in the ERD Court as damages, on an indemnity basis.  It follows from the above analysis that questions of costs paid by either party pursuant to orders of the ERD Court of 10 December 2016,[13] including those to the District Council of Charles Sturt, are matters for consideration by the District Court Judge by way of damages for breach of contract.  Even then it does not follow that because an adverse costs order was made against a party in one proceeding, that it can be recovered against the opposing party in subsequent proceedings.  On the contrary, there is a well-established policy that ordinarily costs of legal proceedings are not recoverable as damages in other proceedings:  Anderson v Bowles,[14] and see Gray v Sirtex Medical Ltd.[15]  A situation bearing some parallels to the present is to be found in Avenhouse v Hornsby Shire Council.[16]  These are questions for the District Court Judge to determine after the ERD Court finalises all outstanding issues of costs in that Court.

    [13]   CB5, p 249.

    [14] (1951) 84 CLR 310, 323.

    [15] (2011) 193 FCR 1, [15]-[18] per Bennett, Gilmour and Gordon JJ.

    [16] (1998) 44 NSWLR 1, 33F-37C.

    Conclusion and Orders

17. For the above reasons the following orders are proposed:

    1.The appellants have their costs of and incidental to the appeal, taxed on a party and party basis.

    2.The question whether costs orders made by the ERD Court sound in damages, be heard by a District Court Judge, once the ERD Court determines the incidence of costs of the proceedings in the ERD Court.

    3.There will be an order by consent under the slip rule (SCR 342(1)), correcting order 1 of the primary judgment, by deleting the amount of $27,403 therein and substituting in lieu thereof the sum of $27,903.