R E Phillips Nominees P/L T/A Splash Touch Free Car Wash v Hanna Wash Systems P/L (No 3)
[2008] SADC 150
•12 November 2008
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
R E PHILLIPS NOMINEES P/L T/A SPLASH TOUCH FREE CAR WASH & ANOR v HANNA WASH SYSTEMS P/L & ORS (No 3)
[2008] SADC 150
Judgment of The Honourable Justice David
12 November 2008
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - NATURE OF PROCEEDINGS - DAMAGES RECOVERED SMALL
First plaintiff succeeded in action in misleading and deceptive conduct against first and third defendants and in action in contract against first defendant - first plaintiff only recovered small amount of damages it originally claimed - proceedings protracted - whether costs should follow event.
Held: First and third defendants pay 30 per cent of first plaintiff’s costs of action and the hearing of remitted issues to be taxed if not agreed.
District Court Civil Rules 1987 (SA) r 101.01; Supreme Court Civil Rules 2006 (SA) r 292(3)(c), referred to.
Cretazzo v Lombardi (1975) 13 SASR 4; Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387; GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296 (Unreported, Robson J, 12 August 2008); R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006); R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors (No 2) [2008] SADC 134 (Unreported, Judge David, 16 October 2008); Speciality Equipment Company Inc v RE Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v RE Phillips Nominees P/L (2007) 99 SASR 535, considered.
R E PHILLIPS NOMINEES P/L T/A SPLASH TOUCH FREE CAR WASH & ANOR v HANNA WASH SYSTEMS P/L & ORS (No 3)
[2008] SADC 150Civil
DAVID J: The Full Court of the Supreme Court remitted this matter for reconsideration pursuant to r 292(3)(c) of the Supreme Court Civil Rules 2006 (SA). All but one of the remitted matters were dealt with in my reasons delivered on 16 October 2008.[1] I now turn to the question of the order for costs to be made in relation to the successful award of damages for the first plaintiff in the sums of $91,412 (not including interest) against the first and third defendants and $26,638.82 (not including interest) against the first defendant. Pursuant to my earlier reasons as to the remitted issues,[2] all parties have agreed on the appropriate orders that should be made, except for the question of the first plaintiff’s costs in relation to the above matters. Both the first and third defendants argue that in the exercise of my discretion, only a small proportion of the costs, to be taxed or agreed, should be paid. The first plaintiff argues that the costs should follow the event and a full order for costs should be made.
[1] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors (No 2) [2008] SADC 134 (Unreported, Judge David, 16 October 2008).
[2] Ibid.
In my original judgment,[3] I ordered costs on the proven claim to follow the event. However, the Full Court on remitting the matter, said per Doyle CJ:[4]
It was a long trial. The costs will be substantial. There are a number of factors here which might call for a different approach to costs. In saying this I express no final view on them. My point is merely that there are matters that called for consideration, and which the parties are entitled to know the Judge has considered. The amount awarded for damages is far less than Phillips claimed. On a number of issues Phillips failed. There are reasons to think that Phillips’ approach to the case, and to the quantification of damages, protracted the hearing. These are just some of the relevant factors. The trial Judge is best placed to deal with them. Indeed, it is difficult for the Full Court to deal with them adequately. It is for that reason that all parties, and the Court, will be assisted by reasons from the Judge explaining his ultimate decision on the question of costs. As I have already said, there is no need for those reasons to be lengthy, but they should canvass the main issues.
I therefore look at the matter afresh.
[3] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006).
[4] Speciality Equipment Company Inc v RE Phillips Nominees P/L & Anor, Hanna Wash Systems P/L v RE Phillips Nominees P/L (2007) 99 SASR 535, 575.
I am guided in my decision on the question of costs by r 101.01 of the District Court Rules 1987 (SA) and, in particular, the principle that costs are in the discretion of the Court. I am conscious of authorities which have said that where a successful party has failed on some issues, or has, by its conduct, unnecessarily protracted proceedings, that might affect the order as to costs.[5]
[5] See, eg, Cretazzo v Lombardi (1975) 13 SASR 4, 11‑12; Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387, (2007) SASC 464; GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296 (Unreported, Robson J, 12 August 2008).
Mr Ross-Smith, for the first plaintiff, argues that in this case the costs should follow the event and a full award should be made. Even though the judgment awarded is much less than that which was claimed, his submission is that the first plaintiff was nevertheless the winning party and much of the evidence had to be presented in any event, irrespective of the final result. Both Mr Hoile and Ms Bidstrup, for the defendants, emphasise that the first plaintiff’s claims were grossly exaggerated and that many of the claims for defective components were unsuccessful. They argue that the matter became protracted because of the exaggerated claims and the issues which were unsuccessful.
The greater part of the first plaintiff’s claim was for loss of profits. That necessitated the calling of complicated accountancy evidence and amounted to the substantial bulk of the claim. As first formulated in the first plaintiff’s accountant’s report (P18), there was a claim of $535,476 for past loss of profits and a claim of $919,300 for future loss of profits. The award for past loss of profits is $15,234.86 and the award for future loss of profits is $50,000. At trial, the amount claimed for past and future loss of profits was refined to an amount in the vicinity of $800,000. In my original judgment, I said the following:[6]
As I indicated throughout the trial, I am surprised by the plaintiff’s claim for past and future losses. The Millennium itself, which is the subject of this case, cost in the vicinity of AUD$170,000. There is no dispute that it is now working profitably, and the claim for future and past losses is not for loss in the sense that the plaintiff was losing money, but for the attaining of less profit than he would have attained if he did not have to use extra labour. It seems excessive that the plaintiff is claiming in the vicinity of $800,000 for a machine that is working profitably and only cost in the vicinity of $170,000.
During the trial I raised with counsel on all sides on a number of occasions the question whether the matter could not be resolved by the plaintiff merely obtaining another machine which could do the job, and therefore making his claim on the basis of that new purchase. However, there has been no evidence led as to whether that would be feasible, and the only evidence before me seems to be from the plaintiff himself, who said that no machine existed which could do the job without the help of extra manual labour.
[6] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006) [115]‑[116].
It is to be noted that throughout the trial, I continually drew counsel’s attention to the fact that the Millennium Touchless Automatic Car Wash System (“the Millennium”) was working profitably and the claim for future and past loss of profits was exaggerated. That aspect of the case consumed a great amount of time and required the calling of two expert accountants. It is also to be noted that, as can be seen from my original judgment,[7] many of the claims for damages for individual defective components failed. However, I do have to take into account that the first plaintiff was the successful party in relation to that judgment and in relation to my judgment on the remitted issues, both of which are now the subject of an order for costs.
[7] R E Phillips Nominees P/L t/a Splash Touch Free Car Wash & Anor v Hanna Wash Systems P/L & Ors [2006] SADC 127 (Unreported, Judge David, 1 November 2006).
Exercising my discretion in the circumstances of this case, a fair and appropriate order for costs would be for the first and third defendants to pay 30 per cent of the first plaintiff’s costs to be taxed if not agreed. The parties have agreed the form of all the final orders, apart from the further order I now make as to the percentage of costs to be recovered by the first plaintiff.
I make the following orders:
WHEREAS on 28 February 2007 this Court made various orders, numbered 1‑8, and whereas pursuant to its judgment delivered on 11 December 2007 the Full Court of the Supreme Court of South Australia set aside orders numbered 1, 2, 3 and 8 of the said orders and remitted certain issues to this Court for further determination:
THE COURT ORDERS that:
1.The first plaintiff recovers against the first and the third defendants the sum of $91,412.00 plus interest (up to and including 2 November 2006) in the sum of $13,979.10 plus interest (from 3 November 2006 until 29 October 2008) in the sum of $11,834.72 being a total of $117,225.72.
2.The first plaintiff recovers against the first defendant the sum of $26,638.82 plus interest (up to and including 2 November 2006) in the sum of $3,788.77 plus interest (from 3 November 2006 until 29 October 2008) in the sum of $3,448.81 being a total of $33,876.40.
3.The first defendant recovers against the first plaintiff a total sum of $73,955.25 plus interest (up to and including 2 November 2006) in the sum of $24,124.55 plus interest (from 3 November 2006 until 29 October 2008) in the sum of $9,574.67 being a total of $107,654.47.
4.The first and third defendants pay 30 per cent of the first plaintiff’s costs of the action and the hearing on the remitted issues to be taxed if not agreed.
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