Netline Pty Ltd v QAV Pty Ltd [No 2]
[2015] WASC 113 (S)
•26 MAY 2015
NETLINE PTY LTD -v- QAV PTY LTD [No 2] [2015] WASC 113 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 113 (S) | |
| Case No: | CIV:1289/2014 | ON THE PAPERS | |
| Coram: | BEECH J | 26/05/15 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Defendant pay 50% of the plaintiffs' costs of the action, to be taxed if not agreed | ||
| B | |||
| PDF Version |
| Parties: | NETLINE PTY LTD KATHRYN ISABEL LANCE QAV PTY LTD |
Catchwords: | Costs Plaintiffs successful on whether defendant entitled to terminate contract Plaintiffs unsuccessful in claiming specific performance of agency agreement Appropriate costs orders |
Legislation: | Rules of the Supreme Court 1971 (WA), O 66 r 1 |
Case References: | Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113 Singh v Kaur Bal [2011] WASC 303 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : NETLINE PTY LTD -v- QAV PTY LTD [No 2] [2015] WASC 113 (S) CORAM : BEECH J HEARD : ON THE PAPERS DELIVERED : 26 MAY 2015 FILE NO/S : CIV 1289 of 2014 BETWEEN : NETLINE PTY LTD
- KATHRYN ISABEL LANCE
Plaintiffs
AND
QAV PTY LTD
Defendant
Catchwords:
Costs - Plaintiffs successful on whether defendant entitled to terminate contract - Plaintiffs unsuccessful in claiming specific performance of agency agreement - Appropriate costs orders
Legislation:
Rules of the Supreme Court 1971 (WA), O 66 r 1
Result:
Defendant pay 50% of the plaintiffs' costs of the action, to be taxed if not agreed
Category: B
Representation:
Counsel:
Plaintiffs : No appearance (on the papers)
Defendant : No appearance (on the papers)
Solicitors:
Plaintiffs : Lavan Legal
Defendant : Lawton Gillon
Case(s) referred to in judgment(s):
Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113
Singh v Kaur Bal [2011] WASC 303 (S)
1 BEECH J: On 2 April 2015, I published reasons for decision in this action.1 These reasons deal with the costs of the action.
2 I will use the same terminology and abbreviations in these reasons. In summary, in my reasons for decision I:
(1) rejected the Manager's contention that the Split Return Agreement contained an implied term entitling the Manager to terminate it on reasonable notice;
(2) found that, consequently, the Manager's purported termination of the Split Return Agreement by its letter of 16 December 2013 was of no effect;
(3) declined to grant specific performance of the Split Return Agreement, ordering an award of damages to the Owners, to be assessed; and
(4) found that on a proper construction of cl 9 of the Split Return Agreement, the Manager was not entitled to deduct booking fees from moneys to be remitted to the Owners.
3 On 2 April 2015, I made orders giving effect to those conclusions, and for the exchange of submissions and affidavits on the question of costs. I also ordered that the question of costs be determined on the papers.
4 Both parties claim to be entitled to costs orders in their favour.
The Owners' position
5 The Owners seek orders that:
(1) the Manager pay their costs of the action;
(2) the quantum of costs be determined by the court on the papers, by reference to a series of steps outlined in the Owners' submissions.2
6 Alternatively to (1), the Owners contend that if any adjustment is to be made to the costs order in their favour on account of their failure on the specific performance issue, it should be a deduction of no more than 30%.3
7 In their submissions, the Owners rely heavily on their assertion that it was the Manager's late shift in its position as to whether it would continue to perform its obligations under the Split Return Agreement that led to the Owners' late amendment to their pleading to claim specific performance, ultimately unsuccessfully.4
The Manager's position
8 The Manager claims an order that the Owners pay its costs of the action, to be taxed if not agreed.5
9 The Manager concedes that it failed on the implied term issue.6 Nevertheless, it asserts that it should be awarded its costs of the action. Its submissions repeat in detail many of the Manager's arguments about the flaws in the Owners' initial claim for a declaration. The Manager emphasises the lateness of the Owners' amendment to claim specific performance, asserting that if such a claim had been made from the start 'it is unlikely the implied terms [sic] for termination point would have ever been argued by the [Manager]'.7
10 The Manager also relies on a settlement offer that it made immediately following the trial, once the Owners had amended their pleading to claim specific performance. The Manager asserts that acceptance by the Owners of the offer 'would eliminate any loss for the [Owners]'.8
Costs - general principles
11 I apply the following principles outlined in Singh v Kaur Bal:9
The court's costs discretion under s 37 of the Supreme Court Act 1935 (WA) and O 66 of the Rules of the Supreme Court 1971 (WA) is broad.
Order 66 r 1(1), r 1(2) and r 1(3) are in the following terms:
'1. General rules as to costs
(1) Subject to the express provisions of any statute and of these Rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.
(2) If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part.
(3) Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.'
'It is clear that while the court has a broad discretion as to costs, generally costs will follow the event: Rules of the Supreme Court 1971 (WA), O 66 r 1(1). It is incumbent upon the unsuccessful party to satisfy the court that there are good reasons why it should not pay the other party's costs: Nikolaou v Papasavas, Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394, 407.
The court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. But that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement, and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties: see MacKinnon v Petersen (Unreported, NSWSC, 19 April 1989) (Cole J); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67] - [68] (McHugh J). Litigation is time-consuming, expensive and burdensome enough already.
In addition, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 [24].
In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S), the position was put as follows:
"[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7]." '
I also apply the following principles stated by the Victorian Court of Appeal in Chen v Chan [2009] VSCA 233 [10]:
'(1) The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.
(2) The Rules of Court permit significant flexibility in determining questions of costs. In particular, the court is entitled to examine the realities of the case and will attempt to do 'substantial justice' as between the parties on matters of costs.
(3) Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4) A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5) Where a court determines to make an order apportioning costs, then it does so primarily as 'a matter of impression and evaluation', rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
(6) Where a number of parties have had the same representation, there is a 'rule of thumb' as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted. (footnotes omitted)'
12 The primary issues at trial were whether the Split Return Agreement contained an implied term entitling the Manager to terminate upon reasonable notice and, if not, whether there should be an order for specific performance of the Split Return Agreement.10
13 There was also an issue of construction of the Split Return Agreement regarding booking fees. In my view, that issue was very much of secondary importance to the action. No additional evidence was led in respect of it, and the submissions about it occupied very little of the hearing time.
14 In substance, the Owners succeeded on the question of whether there was an implied term, but failed on the question of whether specific performance should be awarded.
15 In my view, the Owners' objectively determined primary purpose in litigating the action was to have the Manager continue to manage the Premises. The Owners did not achieve that purpose. Nevertheless, the Owners were partially successful in obtaining a finding that the Manager was not entitled to terminate. To my mind, that finding reflects success to a significant degree on the part of the Owners. It sustained an award of damages in their favour.
16 The Manager fought the issue of whether there was an implied term entitling it to terminate. It failed on that issue.
17 I do not accept the Manager's assertion that if the Owners had claimed specific performance at an earlier stage, it is unlikely that the Manager would have relied on any argument that there was an implied term entitling it to terminate the Split Return Agreement. There is no evidence to support that assertion. In the absence of such evidence, I do not think that the objective probabilities sustain it.
18 The principles that I have referred to show that the court will generally be slow to award a partially successful plaintiff only part of its costs. Nevertheless, in my view, the circumstances of this case make it appropriate that the Owners be awarded 50% of their costs. The question of specific performance, on which the Owners failed, is discrete and severable from the construction issues on which the Owners succeeded. The whole of the oral evidence, including lengthy cross-examination of Mr Lance, related to the question of what relief should be given to the Owners if they succeeded on the implied term issue. The question of relief added significantly to the length of the trial of the action.
19 Both parties rely upon the timing of events relating to the Owners' amendment of the relief claimed. The Owners assert that prior to trial the Manager did not make clear its position as to whether it would continue to perform the Split Return Agreement in the face of a finding that there was no implied term entitling it to terminate.11 There is force in that submission, given that the response by counsel for the Manager to an enquiry from the bench in relation to his client's position was that he would need to take instructions overnight.12
20 However, in my view, both parties share responsibility for the lack of clarity in this respect. The Owners did not at any time prior to trial seek clarity, but rather were apparently content to proceed with the action on the basis of a claim for a declaration. They proceeded in that fashion in the face of lengthy correspondence and pleadings on the part of the Manager to the effect that the declaration was an inappropriate form of relief.
21 In any event, had the Manager's position been made clear earlier, the result would have been that the Owners would have made their claim for specific performance earlier. That claim was unsuccessful. In these circumstances, there are significant limits on the extent to which the Owners can claim that the Manager's belated clarifying of its position detracts from the weight to be given to the Owners' failure on the question of specific performance.
22 I do not consider that the Manager's offer of 13 March 2015 bears upon my exercise of the costs discretion. I do not accept the Manager's assertion that acceptance of that offer would eliminate any loss for the Owners. The offer of 13 March 2015 was for the Manager to purchase the Premises at a specified price, or at market value as determined by a valuer. The Owners own the Premises. Their rights as owners are distinct from and anterior to their rights and obligations under the Split Return Agreement. Under the Split Return Agreement, they are entitled to the benefit of the contractual services of the Manager in relation to the Premises. In circumstances where the Manager refuses to perform its obligations under that agreement, the Owners' damages reflect the financial disadvantage to them of having to obtain an alternative manager for the Premises. It is, of course, open to the Owners to choose to sell the Premises if they wish. But they are not obliged to do this in order to mitigate their loss arising from the Manager's refusal to perform.
23 I am not persuaded that it is appropriate in the interests of justice to attempt to fix the quantum of costs. The numerous steps entailed in the exchange of expert reports on costs, and the exchange of submissions, as proposed in the Owners' submissions, would involve the court in an unduly lengthy process and in a form of mini-taxation. The objects of O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) would not be advanced by fixing the costs of the trial based on such a lengthy process. In my view, costs should be taxed in the ordinary way.
Conclusion
24 For these reasons I order that the Manager pay 50% of the Owners' costs of the action, to be taxed if not agreed.
1Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113.
2 Plaintiffs' costs submissions dated 12 May 2015 [1].
3 Plaintiffs' costs submissions [2].
4 See plaintiffs' costs submissions [12] - [26].
5 Defendant's costs submissions dated 12 May 2015 [3].
6 Defendant's costs submissions [2].
7 Defendant's submissions [43].
8 Defendant's submissions [41].
9Singh v Kaur Bal [2011] WASC 303 (S) [9] - [11], [15].
10Netline [23] - [25].
11 Plaintiffs' costs submissions [12] - [16].
12 ts 61 - 62.
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