Pappas v P & R Electrical Wholesalers Pty Ltd (No 2) - [2017] SADC 2

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PAPPAS v P & R ELECTRICAL WHOLESALERS PTY LTD & ANOR (NO 2)
[2017] SADC 2
Reasons for Decision of Her Honour Judge McIntyre
13 January 2017
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT
The plaintiff sued the first defendant for breach of an employment contract and for breach of a loan contract. He sued the first defendant and the second defendant for misleading and deceptive conduct in relation to the loan contract. For the reasons delivered on 4 November 2016 the plaintiff’s claim in respect of the loan contract was dismissed and it was further determined that there was no breach of his employment contract by reason of its termination. The plaintiff was however underpaid $54,335.38 upon his termination in respect of annual and long service leave entitlements. On 24 November 2016 judgment was entered for the plaintiff against the first defendant in the sum of $62,500 being the underpayment plus interest.
The plaintiff seeks costs on the basis that costs follow the event and that he has been partially successful in his claim. The defendants resist this order and contend that the plaintiff should be deprived of his costs under DCR.263(2)(g). The defendants further seek an order that the plaintiff pay their costs of action on the basis that, in substance, the plaintiff has failed across all contested issues.
Held:
1. The plaintiff is not deprived of his costs by reason of DCR.263(2)(g).
2. The plaintiff is a successful litigant who is entitled to his costs as against the first defendant and is not to be deprived of those costs because he failed on a number of issues except where those issues or allegations have caused a significant increase in the length or cost of the proceedings or where allegations are made improperly or unreasonably.
3. The plaintiff was wholly unsuccessful in his claim against the second defendant.
Orders:
1. That the first defendant pay the plaintiff 70% of his costs of action on a party/party basis;
2. That the plaintiff pay the whole of the second defendant’s costs of action on a party/party basis.
District Court Act 1991 s 39; District Court (Civil) Rules 2006 DCR 187, 263, referred to.
Lovell v Lovell (1950) 81 CLR 513 at 532; Cretazzi v Lombardi (1975) 13 SASR 4 at 11; Re Elgindata Ltd (No 2) [1993] 1 All ER 232; Duke Group Ltd (in liq) v Pilmer & Ors [1998] SASC 6699; Rapuano (trading as RAPS Electrical) v Karydis Frisan & Anor [2013] SASFC 93, considered.

PAPPAS v P & R ELECTRICAL WHOLESALERS PTY LTD & ANOR (NO 2)
[2017] SADC 2

The plaintiff sued the first defendant for breach of an employment contract and for breach of a loan contract. He sued the first defendant and the second defendant for misleading and deceptive conduct in relation to the loan contract. For the reasons delivered on 4 November 2016 I dismissed the plaintiff’s claim in respect of the loan contract and found that whilst the plaintiff was an employee of the first defendant there was no breach of his employment contract by reason of its termination. The plaintiff was however underpaid upon his termination in respect of annual and long service leave entitlements. I quantified the total underpayment as $54,335.38. On 24 November 2016 judgment was entered for the plaintiff against the first defendant in the sum of $62,500 being the underpayment plus interest.
The plaintiff seeks costs on the basis that costs follow the event and that he has been partially successful in his claim. The defendants resist this order and contend that the plaintiff should be deprived of his costs under DCR.263(2)(g). The defendants further seek an order that the plaintiff pay their costs of action on the basis that, in substance, the plaintiff has failed across all contested issues.
The starting point for consideration of this issue is s. 42(1) of the District Court Act 1991, which vests a wide and unfettered discretion to award costs. The discretion must be exercised judicially.[1] District Court Rule 263 sets out the Court’s discretion as to costs relevantly as follows:
[1] Lovell v Lovell (1950) 81 CLR 513 at 532; Cretazzo v Lombardi (1975) 13 SASR 4 at 11.
263—Court's discretion as to costs
(1)As a general rule, costs follow the event.
(2)The general rule is, however, subject to specific rules to the contrary and also to the following exceptions (which apply subject to the Court's order to the contrary)—
……………….
(g)in an action founded on a claim for damages or any other monetary sum (other than a claim for defamation), general costs of action are not to be awarded in favour of the successful plaintiff unless the amount awarded exceeds $60,000.
The first question to be determined is whether the “amount awarded” to the plaintiff exceeds $60,000. This depends upon whether interest is included in that amount. There is no authority on point.
The plaintiff claimed inter alia that he had been underpaid for both long service leave and annual leave. He sought payment of those entitlements plus interest. The defendants did not file any offers to consent to judgment in this matter. It was however conceded in opening that there had in fact been an underpayment by the first defendant at the time the plaintiff’s employment was terminated in respect of the plaintiff’s long service and annual leave entitlements. There was dispute about the quantum of that underpayment. The first defendant’s calculation was, largely, preferred over that of the plaintiff for the reasons set out in the judgment dated 4 November 2016.
Had the defendants made a formal offer under DCR.187 it ought to have been expressed in terms of a judgment to be entered. DCR.187 relevantly provides:
187—Making of a formal offer
(1)A party (the offeror) may, by notice in writing, make an offer to any other party (the offeree) to compromise any claim in the proceeding, either in whole or in part, on specified terms (a formal offer).
(2)A formal offer is to be expressed-
(a) in terms of a judgment to be entered upon acceptance (a judgment offer);
………………………..
Given the nature of the underpayment it was inevitable that a claim for interest would also be successful.[2] A judgment offer under DCR.187 would therefore have had to be an offer that was inclusive of interest in order to be effective.
[2] Section 39 District Court Act 1991 (SA).
Whilst the wording of DCR.187 does not sit very comfortably with the wording of DCR.263 given the use of “amount awarded” in one and the reference to “judgment” in the other, it suggests that what is relevant for the question of costs is the judgment sum.
It is my view that the amount awarded in the circumstances of this case includes the amount for interest. That being the case the plaintiff is not deprived of his costs by reason of DCR.263. In those circumstances the plaintiff is a successful litigant who is entitled to his costs as against the first defendant and is not to be deprived of those costs because he failed on a number of issues except where those issues or allegations have caused a significant increase in the length or cost of the proceedings or where allegations are made improperly or unreasonably.[3]
[3] In Re Elgindata Ltd (No 2) [1993] 1 All ER 232; Duke Group Ltd (in liq) v Pilmer & Ors [1998] SASC 6699; Rapuano v Karydis Frisan & Anor [2013] SASCFC 93.
There is no basis upon which the plaintiff ought to be deprived of his costs on grounds of misconduct.[4] The claim for breach of the employment contract and the claim for underpayment were interlinked components of the plaintiff’s case. It cannot be said that the trial or the pre-trial procedures would have been substantially, if at all, shortened if the underpayment issue had been the only issue. Much of the evidence relating to the employment contract would have been required in any event. The plaintiff did not act unreasonably in pursuing his claim and canvassing all employment issues.
[4] Rapuano op. cit.
The situation is however somewhat different in relation to the loan agreement. Whilst some aspects of the evidence on that topic traversed issues that were also relevant to the determination of the employment issues much of it did not. Likewise it is clear that some aspects of the pleadings and the pre-trial procedures were solely related to the loan issue. I consider that the plaintiff’s entitlement to costs as against the first defendant ought to be reduced to reflect this. This is necessarily a broad axe assessment I consider that the reduction should be in the order of 30%.
The situation in respect of the second defendant is different because the plaintiff was wholly unsuccessful in his claim against the second defendant. In those circumstances the second defendant is the successful litigant and costs ought to follow the event. There is no basis upon which the second defendant’s costs ought to be reduced.
I therefore make the following orders:
1That the first defendant pay the plaintiff 70% of his costs of action on a party/party basis;
2That the plaintiff pay the whole of the second defendant’s costs of action on a party/party basis.