Rodda v Ian Rodda Pty Ltd; Ian Rodda Pty Ltd v Rodda (No 3)

[2015] SASC 135

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

RODDA & ANOR v IAN RODDA PTY LTD & ANOR; IAN RODDA PTY LTD v RODDA & ANOR (No 3)

[2015] SASC 135

Judgment of The Honourable Justice Nicholson

2 September 2015

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

PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF WHOLE ACTION - GENERALLY

Whether to deprive successful parties of part of their costs.

Held: No case for a reduction made out. The successful parties are entitled to the whole of their costs of trial on a party and party basis, in accordance with the orders set out in [2].

Supreme Court Act 1935 s 40, referred to.
Rodda & Anor v Ian Rodda Pty Ltd & Anor; Ian Rodda Pty Ltd v Rodda & Anor [2015] SASC 95; Rodda & Anor v Ian Rodda Pty Ltd & Anor; Ian Rodda Pty Ltd v Rodda & Anor (No 2) [2015] SASC 128; Cretazo v Lombardi (1975) 13 SASR 4; Copping v ANZ McCaughan [1995] SASC 4917, (1995) 63 SASR 523; Gwinnett v Day (No 2) [2012] SASC 61; House v The King [1936] HCA 40, (1936) 55 CLR 499; McFadzean v CFMEU [2007] VSCA 289, (2007) 20 VR 250; Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750; Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (No 2) [2007] NSWSC 568; GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107; Murray & Ors v Lesicar & Ors [2014] SASC 43; Ramsey v Annesley College (No 2) [2013] SASC 145; Parabanks Shopping Centre Pty Ltd v City of Salisbury & Anor (No 2) [2013] SASC 204; Design Joinery & Doors Pty Ltd v IPower Pty Ltd (No 2) [2015] SASC 102; Acquista Investments Pty Ltd & Anor v The Urban Renewal Authority & Ors (No 2) [2015] SASCFC 117; Ridgway v Sporting Shooters Association of Australia Hunting & Conservation Branch (SA) Inc (No 2) [2015] SASC 56; Pharmos Nominees Pty Ltd v Commissioner of State Taxation (No 2) [2012] SASC 34; Duke Group Ltd (in liq) v Pilmer & Ors [1998] SASC 6699; Baumgartner v Baumgartner [1987] HCA 59, (1987) 164 CLR 137, considered.

RODDA & ANOR v IAN RODDA PTY LTD & ANOR; IAN RODDA PTY LTD v RODDA & ANOR (No 3)
[2015] SASC 135

NICHOLSON J.

Introduction

1. The plaintiffs in the principal action were successful at trial and obtained a declaration of right and a suite of orders including: a declaration that the farming land, known as Ocean Downs, was held by the defendants on constructive trust for the plaintiffs, an order directing the transfer of the title to Ocean Downs, an order for an account of rents and profits enjoyed by the defendants from their possession and use of Ocean Downs since 1 December 2012, an order for equitable compensation, an order for the payment of unpaid trust distributions together with interest, and various ancillary orders.  The circumstances of the litigation, my reasons and the terms of all orders made to this point are set out in two previous judgments.[1]

   [1]    Rodda & Anor v Ian Rodda Pty Ltd & Anor; Ian Rodda Pty Ltd v Rodda & Anor [2015] SASC 95 and Rodda & Anor v Ian Rodda Pty Ltd & Anor; Ian Rodda Pty Ltd v Rodda & Anor (No 2) [2015] SASC 128.

2. The plaintiffs now seek orders that the defendants pay the whole of the plaintiffs’ costs on a party and party basis.  They seek orders in the following terms. 

   (i)The defendants pay the plaintiffs’ costs of and incidental to action No. 664 of 2014 (including the costs of the inquiry and account ordered to be taken pursuant to paragraphs 11-13 of the final orders made on 26 August 2015) certified fit for senior counsel to be adjudicated on a party-party basis if not agreed. 

   (ii)The plaintiff, Ian Rodda Pty Ltd, in its capacity as trustee of the Yaringa Proprietors Family Trust, pay the defendants’ costs of and incidental to action No. 846 of 2014 certified fit for senior counsel, to be adjudicated on a party-party basis if not agreed.

3. The trial concerned two claims heard concurrently.  Action No. 664 of 2014 was a claim by the plaintiffs (Stuart Rodda and Shannon Rodda) for, inter alia, relief in equity consequent upon an alleged proprietary estoppel referrable to substantial tracts of farming land owned and/or controlled by the defendants, Ian Rodda Pty Ltd and Ian Rodda (Stuart’s father).  Action No. 846 of 2014, was brought by Ian Rodda Pty Ltd as a plaintiff against Stuart and Shannon, in practical terms by way of a counter-claim, seeking the repayment of a loan in the amount of $135,000 together with interest.  This second action occupied relatively minimal time at the trial and, I infer, by way of trial preparation. 

4. Ian Rodda Pty Ltd failed with its claim for repayment of the loan.  It does not contest that Stuart and Shannon are entitled to their costs in this respect.  However, the defendants to Action No. 664 of 2014 submit that the Court’s discretion as to costs should properly and fairly be exercised by allowing Stuart and Shannon only 60 per cent of their costs of and incidental to that action. 

5. Rule 263 of the Supreme Court Civil Rules 2006 provides (subject to various identified exceptions) that, as a general rule, costs follow the event.  Rule 264 provides that the Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate.  However, the general approach is that costs are to be awarded as between party and party in accordance with the relevant scale provided under the Rules.  In this case, the plaintiffs seek their costs only on a party and party basis. 

6. When the Rules are read in conjunction with section 40 of the Supreme Court Act 1935[2] there is conferred on courts and judges an unfettered discretion as to costs.[3]  The discretion must be exercised judicially and by having regard to relevant considerations and not relying on irrelevant considerations.[4]

   [2] Section 40(1) provides: subject to the express provisions of this Act, and to the rules of court and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, ... shall be in the discretion of the court or judge and the court or judge shall have full power to determine by whom and to what extent such costs are paid.

   [3]    See generally Copping v ANZ McCaughan [1995] SASC 4917; (1995) 63 SASR 523 at 527, Gwinnett v Day (No 2) [2012] SASC 61.

   [4]    House v The King [1936] HCA 40; (1936) 55 CLR 499.

7. The defendants maintain that the plaintiffs should only be entitled to a proportion of their costs.  In so doing, they rely on that line of authorities an early representative of which is Cretazo v Lombardi.[5]  In Cretazo, Bray CJ (with whose reasons Zelling and Jacobs JJ agreed) said this.[6]

   A successful party who has failed on certain issues may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent’s costs of them, and in this context “issue” does not mean a precise issue in the technical pleading sense, but any disputed question of fact or, in my view, of law...

   Jacobs J, whilst in agreement with the Chief Justice, “sounded a note of cautious disapproval” of applications which seek to adjust costs orders on the basis of issues won and lost.  His Honour said this:[7]

   But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law.  The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.  There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike.  I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.

   [5] (1975) 13 SASR 4.

   [6]    At 12 (footnotes omitted).

   [7]    At 16.

8. A more recent formulation of the approach can be found in the judgment of the Victorian Court of Appeal in McFadzean v CFMEU.[8] 

   The position as to costs where a party has been partially successful was summarised by Eames J in Pricom Pty Ltd v Sgarioto:

   As a general rule costs should follow the event, and a successful party should obtain all of the costs of the action even although it failed to establish some of the alternative heads of its claim: Ritter v Godfrey [1920] 2 KB 47. However, in the exercise of its discretion the court may decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim, or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim: Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748, per Toohey J at 48,136.

   The judge below acknowledged that in the normal course, a plaintiff who was only successful on one of a number of pleaded causes of action would be entitled to costs. In our view, the reasons his Honour gave for departing from this course were sound. The Rules of Court are wide enough to permit an apportionment of costs according to issues or causes of action. Importantly, the judge regarded the case brought by the successful appellants as a “substantial failure … whether assessed by references to causes of action or issues”. His Honour observed that the plaintiffs had been successful in eight of the 63 causes of action they had brought, and that, assessed as a proportion of the disputed questions of fact resolved in their favour, the success of the plaintiffs was substantially less than that. In these circumstances, there was clearly a reasonable basis for his Honour’s conclusion that a “substantial injustice” would result from an award of costs in favour of the successful plaintiffs.

   [8] [2007] VSCA 289; (2007) 20 VR 250 at [152]-[153] (Warren CJ, Nettle and Redlich JJA) (citations omitted).

9. The defendants submit to the effect that a cautious approach, as advocated by Jacobs J, is no longer warranted, that the focus should be on a court’s unfettered discretion guided by questions of fairness and that a court should be more ready, than once may have been the case, to apportion costs where a party succeeds in only some of the claims he or she has brought.  I accept that this submission, as a general proposition, has some force.

10. There is a recognition in the more recent authorities that the nature of litigation has changed since Cretazo v Lombardi was decided and that the modern litigation practitioner has a far greater burden of deciding which issues or causes of action should be pursued in a court.[9]  The defendants have drawn to the Court’s attention a number of authorities that are said to support a more flexible approach to this issue.[10]

    [9]    See, for example, Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (No 2) [2007] NSWSC 568 at [7], [11].

    [10]   For example, Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (No 2) [2007] NSWSC 568 at [7], [11], GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296 at [37]-[50], Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [3]-[5], Murray & Ors v Lesicar & Ors [2014] SASC 43 at [25], Ramsey v Annesley College (No 2) [2013] SASC 145 at [70], Parabanks Shopping Centre Pty Ltd v City of Salisbury & Anor (No 2) [2013] SASC 204 at [7], Design Joinery & Doors Pty Ltd v IPower Pty Ltd (No 2) [2015] SASC 102 at [8], Acquista Investments Pty Ltd & Anor v The Urban Renewal Authority & Ors (No 2) [2015] SASCFC 117 at [10], and Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750 at [88].

11. In Hockey v Fairfax Media Publications Pty Ltd (No 2)[11] White J, after reviewing the authorities, said this.

    However, courts are now more ready to apportion the costs awarded to a party who succeeds in only some of the claims he or she brings. This may reflect the increasing factual and legal complexity of modern litigation and the multiplicity of factual and legal issues it entails, and the tendency of applicants to pursue multiple claims involving different factual enquiries in the one proceeding. It may also reflect an encouragement by the courts to applicants to exercise some discrimination in their selection of the claims they litigate. It is to be remembered that the inclusion of multiple causes of action in the one proceeding, even if based on a common substratum of fact, adds to the costs of the pleadings, interlocutory activity, preparation and presentation of the evidence at trial as well as of the trial itself. Nowadays, courts are particularly conscious of their role in attempting to control the cost of litigation.

    [11] [2015] FCA 750 at [88].

12. The plaintiffs in their written submissions make the point that cases such as Cretazo and Hockey concerned situations that were “a world apart from the facts of the present proceedings”.  I agree with the plaintiffs that, given the facts and the decision in each of those cases, both were cases clearly calling for an apportionment.  In each case, it was very difficult to sustain an argument that the party seeking their costs (the plaintiff in each case) was substantially successful.  Similarly, in my earlier decision of Ridgway v Sporting Shooters Association of Australia Hunting & Conservation Branch (SA) Inc (No 2)[12] the “successful” plaintiff failed so significantly with respect to virtually all aspects of the claim that he was ordered to pay a substantial proportion of the defendant’s costs.  This also was a very clear case where the usual approach of costs following the event had to give way. 

    [12] [2015] SASC 56.

13. The plaintiffs have also drawn the Court’s attention to the observations of Gray J in Pharmos Nominees Pty Ltd v Commissioner of State Taxation (No 2)[13] to the effect that it is common to have submissions developed and refined during the course of proceedings and that it would be unfortunate if a party to litigation was reluctant to depart from more refined submissions for fear of being deprived of costs, even if successful.  The plaintiffs also made the point that courts should be wary about adjusting cost orders simply because issues were unsuccessfully pressed, particularly in circumstances where it has had only a minor effect on the time and effort employed during the litigation.  In Duke Group Ltd (in liq) v Pilmer & Ors,[14] the plaintiff had succeeded in contract and in negligence but had failed to establish a breach of fiduciary duty and failed with respect to various aspects of its claim for damages.  Mullighan J rejected the contention that the plaintiff should be deprived of some of its costs.

    The claim ... for damages for breach of a fiduciary duty was, in my view, nothing more than the product of a legal argument on evidence also adduced for other purposes ...  The other issues upon which the plaintiff was not successful did not involve a considerable body of evidence discreet to those issues which resulted in a significant increase in the length or cost of the proceedings. 

    [13] [2012] SASC 34 at [9]-[16].

    [14] [1998] SASC 6699 (1 June 1998).

14. The defendants submit that the pleadings, the interlocutory activity, the preparation for the trial and the trial itself (which was lengthy) were significantly and unnecessarily extended and, thus, the plaintiffs’ costs were significantly and unnecessarily greater than should have been the case, as a result of the fact that the plaintiffs failed with, and in some cases abandoned, a number of their claims.  According to the defendants, the plaintiffs:

    (i)abandoned during the trial an implied partnership claim;

    (ii)abandoned during the trial an estoppel claim with respect to the crops harvested during the 2011-2012 year;

    (iii)failed in a claim that they were entitled to a constructive trust over the Yaringa farming property and, in circumstances, where it was unreasonable to have made that claim;

    (iv)did not pursue a remedy in relation to unpaid distributions but instead sought to use that admitted claim as part of their claim to the Yaringa land;

    (v)failed in a claim for the retention of a benefit said to have been conferred on the basis of a so called Baumgartner trust;[15] and

    (vi)failed in a claim to be entitled to a constructive trust with respect to an option held by the defendants to acquire, by purchase, the Lindsay property.

    [15]   Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137.

    The implied partnership claim and the estoppel claim for the 2011-2012 year crops

15. These two claims were withdrawn during the examination-in-chief of the first plaintiff, Stuart Rodda.  The plaintiffs’ statement of claim was subsequently amended accordingly and the defendants received an order for costs thrown away by reason of the amendments.  I agree with the plaintiffs’ contention that these two issues would not have added significantly, if at all, to the evidence adduced at trial or to the tender book documents.  I am satisfied that the additional work involved, if any, in the preparation of these claims for trial can only have been relatively insignificant. 

    The claim for a constructive trust over the Yaringa farming property

16. It is true that the plaintiffs failed to obtain a constructive trust over the whole of the farming land, including Yaringa, and, in the alternative, they failed to obtain a constructive trust over Yaringa standing alone.  They were found entitled only to a constructive trust over the Ocean Downs farming land.  Nevertheless, the plaintiffs were not entirely unsuccessful with respect to their claim to an interest in Yaringa. 

17. The extent of the equitable compensation ordered was, in part, informed by a finding that the plaintiffs had, until 2003, been induced to understand that they would receive an interest in Yaringa, albeit on terms, with respect to which they acted to their detriment.  In any event, the case concerned the extent of equitable relief properly available to the plaintiffs as a consequence of inter alia: the behaviour of the parties throughout the whole of the period from approximately 1994 to 2012; the work performed by Stuart Rodda and Ian Rodda on all of the farming land, including Yaringa; and the representational conduct by Ian with respect to Stuart’s future ownership of all of the farming land, including Yaringa. 

18. Whilst the plaintiffs failed to obtain in full the equitable relief to which they maintain they were entitled, I am satisfied that the case would not have been conducted materially differently in terms of the evidence led and matters of preparation had they lowered their sights in this respect.  The situation here is analogous to that as described by Mullighan J in Duke Group Ltd (in liq) v Pilmer & Ors in the passage quoted above. 

    Unpaid trust distributions

19. The defendants’ criticism of the plaintiffs here is unwarranted.  It is to be accepted that, from an early time, it had been conceded by the defendants that the plaintiffs were entitled to their unpaid trust distributions.  However, it was not until late in the trial that the actual quantum was finally agreed upon.  More importantly, the facts of the unpaid trust distributions and of the plaintiffs’ entitlement thereto, and the circumstances in which those unpaid trust distributions had come about, were central to the plaintiffs’ claim for equitable relief.  The amounts that had actually been received by the plaintiffs by way of trust distributions and the amounts that remained due and payable, as at 1 December 2012, constituted an important consideration relevant to my assessment of the overall appropriate remedial response.[16]  Again, this issue did not add appreciably, if at all, to the length or complexity of the trial or its preparation. 

    The Baumgartner trust claim

    [16]   Rodda & Anor v Ian Rodda Pty Ltd & Anor; Ian Rodda Pty Ltd v Rodda & Anor (No 2) [2015] SASC 128 at [33].

1. This legal argument also did not add, appreciably, to the length or complexity of the trial or its preparation.  It is a matter that falls to be considered in accordance with the approach taken by Mullighan J in Duke Group Ltd (in liq) v Pilmer & Ors as identified above.

   Constructive trust over the Lindsay option

2. This issue also did not add in a material way to the evidence or complexity of the trial or its preparation.  The evidence concerning the Lindsay option was, at the least, important background, to come before the Court in any event, and for the numerous reasons given by the plaintiffs in paragraph 18 of their document headed “Responsive Submissions on Costs”. 

   A further plaintiffs’ response

3. The plaintiffs submit that the trial was longer and more expensive to the parties than it should have been because of the approach adopted by the defendants.  They put this submission forward by way of a counter-veiling consideration in the event that the Court were minded “to descend into the minutiae of what happened at trial”.  I am satisfied that the trial was extended and made more difficult than it otherwise might have been because of the approach taken by Ian Rodda when giving his evidence.  His cross-examination was significantly longer than it ought to have been, largely as a consequence of his evasive approach to and lack of frankness with respect to a substantial number of matters put to him.  It is not necessary that I take account of this submission by the plaintiffs other than to observe that it illustrates the difficulties that will be faced when a Court is asked to assess the extent to which the apparently excessive length or expense of a trial is to be attributed to only one party.

   Conclusion

4. The trial was a difficult trial which was hard fought on both sides.  Given the nature of the claims, the nature and extent of the relief potentially available was not readily ascertainable in advance.  It was always a case that required cascading forms of alternative relief to be propounded.  It was a case where the oral history and a complex documentary history of the parties’ personal and farming relationship, over approximately 18 years or so, had to be explored, whatever the remedial outcome.  The plaintiffs were more than substantially successful.  An order for costs on a party and party basis, in all likelihood, will not be a full indemnity and will fall short of that by a substantial amount, given the length of the trial and the extensive amount of preparation properly called for.  Nothing that has been put by the defendants persuades me to depart from the general rule that costs should follow the event or to find that the plaintiffs should be deprived of some proportion of those costs.  I make orders in the terms sought by the plaintiffs, as set out in paragraph [2] above.