Sheahan Pty Ltd v Murdock & Gediz Pty Ltd (No 2)

[2008] SADC 21

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

SHEAHAN PTY LTD v MURDOCK & GEDIZ PTY LTD (NO 2)

[2008] SADC 21

Judgment of His Honour Judge Tilmouth

4 March 2008

PROCEDURE - COSTS

General rule - Costs follow the event - discretion conferred by s42 of the District Court Act 1991 (SA) not fettered by Rule 101.02(1) of the Rules of Court.

Depriving successful party of some costs.

District Court Act 1991 (SA) s42; Supreme Court Rules 101.02, referred to.
Copping & ORS v ANZ McCaughan & Anor (1994) 63 SASR 523; Cretazzo v Lombardi (1975) 13 SASR 4; Forlyle Pty Ltd v Tiver & Anor [2007] SASC 464, applied.
Westsub Discounts Pty Ltd v Idaps Australia (No 2) (1990) 94 ALR 310, distinguished.
Waters v PC Henderson (Australia) Pty Ltd (1995) Unreported, Court of Appeal NSW, 6 July 1994; Forlyle Pty Ltd v Tiver & Anor [2007] SADC 55, considered.

SHEAHAN PTY LTD v MURDOCK & GEDIZ PTY LTD (NO 2)
[2008] SADC 21

1. Judgment was delivered in this matter on 1 February 2008, in favour of the plaintiff in the sum of $47,000, plus interest to be agreed or assessed.  The question of costs was reserved.[1]

   [1] Sheahan Pty Ltd v Murdock & Gediz P/L [2008] SADC 5

2. On 27 February 2008 judgment was entered consistent with the earlier reasons of the court, in favour of John Sheahan as liquidator of Blue Apple Pty Ltd against the defendant Gary Murdock in the sum of $40,000, plus an agreed sum of interest as of that date, amounting to $15,523.48.  These reasons therefore deal with the only outstanding issue, that of costs. 

3. Claims in the further sums of $2,830, $10,637 and $40,000 by the plaintiff were dismissed.  Even so, it is difficult to see that the evidence presented by the plaintiff would or could have been much different so far as presenting his case is concerned.

4. On the other hand some time was spent on the “Page” transaction of 29 July 1999, as to which the court was against the plaintiff on the grounds that this sum had already recovered, had no proven preferential effect and in the exercise of discretion under s588FF(1) of the Corporations Act 2001 (Cth). In addition a not insignificant amount of time was devoted to the ‘good faith’ defence mounted by the defendant, on which he was substantially, although not wholly, successful. Furthermore the defence reconsidered its position owing to the fact that the plaintiff announced for the first time during his opening, that he would not be calling expert accounting evidence. As a consequence, the defendant had to go into evidence on the issue of insolvency and call its own expert evidence. Once again, they were more successful than not as to that.

5. The starting point is s42(1) of the District Court Act 1991 (SA), which vests a wide and unfettered discretion to award costs, a discretion nonetheless to be exercised judicially. Rule 101.02(1) however, provides that costs are to follow the event “unless otherwise ordered”.  It was held by the Full Court in Copping & Ors v ANZ McCaughan & Anor[2] that Rule 101.02(1) did not fetter the discretion vested by section 40 of the Supreme Court Act 1935 (SA) and hence it must follow section 42 of the District Court Act, as both are couched in identical terms. 

   [2] (1994) 63 SASR 523

6. It has long been the case that a successful party failing on certain issues, may be deprived of costs on those issues, and sometimes ordered in addition to pay the opponent's costs: Cretazzo v Lombardi[3] and Robinson v Australian Association of Social Workers Ltd.[4]It has also been long standing practice to deprive a successful plaintiff of costs relating to issues on which the plaintiff has failed when such orders are warranted: Hughes v Western Australian Cricket Association (Inc),[5]  Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No. 2).[6] 

   [3] (1975) 13 SASR 4 at 12

   [4] (2000) 210 LSJS 73; [2000] SASC 239 at [13-14] and see Forlyle Pty Ltd v Tiver & Anon [2007] SADC 55, upheld in principle in Forlyle Pty Ltd v Tiver & Anon [2007] SASC 464 at [28]

   [5] [1986] ATPR 48, 134 at 48, 136

   [6] (1991) 28 FCR 172 at 173

7. Nevertheless as Jacobs J cautioned in Cretazzo v Lombardi,[7] the authorities do not go so far as to lend ‘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’. 

   [7] Above at 13 

8. In this matter the parties have been more or less equally successful.  However the Full Court in Forlyle Pty Ltd v Tiver & Anon[8] determined that a successful party should ordinarily be entitled to some costs.   In the result the court is of the view that no less than one-third of the total trial time can be fairly allocated to issues upon which the plaintiff failed and the defendants succeeded. 

   [8] [2007] SASC 464 at [28] and [30]

9. Accordingly there will be an order awarding the plaintiff two-thirds of his costs to be agreed or taxed, such cost to exclude the costs of and incidental to obtaining any expert report or reports and any disbursements with respect thereto.