Ouwens Casserly Real Estate Pty Ltd v Harcourts South Australia Pty Ltd

[2017] SASCFC 69

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Permission to Appeal)

OUWENS CASSERLY REAL ESTATE PTY LTD & ORS v HARCOURTS SOUTH AUSTRALIA PTY LTD

[2017] SASCFC 69

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Peek and The Honourable Justice Stanley)

15 June 2017

PROCEDURE - COSTS - AGREEMENTS AS TO COSTS

PROCEDURE - COSTS - APPEALS AS TO COSTS - DISCRETION

Application for permission to appeal in private.

The applicant/defendant, who was unsuccessful below, appeals an order imposing costs on a solicitor/client basis pursuant to a clause contained  in a franchise agreement stating that the franchisee shall bear all costs and expenses including legal costs.

The applicant argues that the clause does not express the agreement as to costs in the same terms as the rules thereby not unambiguously providing for any order for costs greater than party/party costs.

Held per Curiam, refusing permission to appeal:

1.   The application has insufficient prospects of success.

2.   Appeals on questions of costs should not be encouraged.

3.   The appeal turns on the interpretation of a discrete clause which raises no question of general importance.

Citibank v Pirrotta (unreported, Supreme Court of South Australia, Full Court, Cox, Mullighan and Williams JJ, 1 April 1989); Perpetual Trustees & Ors v Barker (2004) 232 LSJS 400; [2004] SASC 58; Re Adelphi Hotel (Brighton) Ltd [1953] 2 All ER 498, considered.

OUWENS CASSERLY REAL ESTATE PTY LTD & ORS v HARCOURTS SOUTH AUSTRALIA PTY LTD
[2017] SASCFC 69

Full Court:      Kourakis CJ, Peek and Stanley JJ

1. THE COURT:      This is an application for permission to appeal against an order made in the District Court that the applicant/defendant, who was unsuccessful, pay costs on a solicitor/client basis.   The order was not made because of the defendant’s delinquent conduct of the proceedings.  Rather, the order was made because the defendant was the franchisee under an agreement with the plaintiffs/respondent of which clause 11.27 provided:

   The Franchisee shall bear all costs and expenses, including legal costs and any other professional fees and disbursements incurred by the Franchisor or in connection with;

   (a)Any enforcement of the Franchisor’s rights and remedies, powers and privileges under this Agreement.

   …

2. There is authority, not challenged by the applicant, that the costs discretion should ordinarily be exercised so as to reflect a contractual right as to costs.[1]

   [1]    Perpetual Trustees Australia Limited & Others v Barker (2004) 232 LSJS 400 [2004] SASC 58.

3. The rationale is no doubt to avoid satellite litigation over the contractual provision.  However, there is authority that the discretion should not be so exercised unless the contract plainly and unambiguously provides for costs on some other basis.[2]  The rationale is probably that there should not be a lengthy argument on the construction of a contract on an application for the costs.  Similarly, presumably if there is the possibility of some contractual set off or counterclaim the order would not be made.

   [2]    Citibank v Pirrotta (unreported, Supreme Court of South Australia, Full Court, Cox, Mullighan and Williams JJ, 1 April 1989) and Re Adelphi Hotel (Brighton) Ltd [1953] 2 All ER 498 at 502.

4. The applicant in this case argues that because clause 11.27 does not expressly use the same cost terms as the rules, ie solicitor/client costs or indemnity costs, the contract does not clearly plainly and unambiguously provide for an order of costs above party/party costs.

5. In our view the application has insufficient prospects for success.  The provision is that the franchisee must pay the costs ‘incurred’.  That expression plainly means something more than party/party costs.  Of course, it is arguable that clause 11.27 is impliedly qualified by the concept of reasonableness.  However, an order for solicitor/client costs requires the party in whose favour the order is made to prove reasonableness.  Clause 11.27, even so qualified, therefore plainly and unambiguously provides for costs, at least, on a solicitor/client basis even though that term is not used.  We note that the respondent has cross-appealed on that very issue contending that indemnity costs should have been ordered.  The cross-appeal is pressed only if permission is granted.

6. Furthermore, the proposed ground of appeal relates to a contract which does not appear to be of general application.

7. Finally, appeals on questions of cost should not be encouraged. 

8. We refuse permission to appeal on the grounds that the application has insufficient prospects of success to justify a grant of permission, on a question of costs related to the construction of a contractual provision which is otherwise not of general importance.