Testel Australia Pty Ltd v Goulding (No 2) - [2023] SADC 57

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
TESTEL AUSTRALIA PTY LTD v GOULDING & ORS (No 2)
[2023] SADC 57
Judgment of her Honour Judge Thomas
15 May 2023
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - GENERAL PRINCIPLES AND EXERCISE OF DISCRETION
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - COSTS OF PROCEEDING IN WRONG COURT - BY REFERENCE TO AMOUNT OR VALUE CLAIMED OR RECOVERED
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - INFORMAL OFFERS AND CALDERBANK LETTERS
The Applicant employer was successfully in establishing its claim that the First Respondent employee breached a number of his employment duties by actively engaging in competition with his employer through the Second Respondent company whilst its employee. However, the overall effect of his breaches on the Applicant was nominal and did not result in any substantive benefit or gain to the First Respondent, either directly or indirectly through the Second or Third Respondent companies. At trial, the Applicant’s claim against the Second Respondent was not pursued and its claim against the Third Respondent was dismissed.
Damages were assessed on a ‘head start’ basis and the Applicant elected for an account of profits against the First Respondent in the amount of $3,981 plus interest of $1,984.
Despite the general costs principle in Rule 194.5(11) of the Uniform Civil Rules 2020 that no costs of the claim are payable where a successful applicant is awarded less than $60,000, the Applicant submits it is just in the circumstances of this case for it to recover the whole or part of its costs of action on a number of bases. The First Respondent opposes such an order and seeks his and the Third Respondent’s costs of action from the date of refusal of the first of a series of three informal settlement offers.
Held:
1. Having regard to the circumstances of this case, it would not be just to allow the Applicant to have the whole or part of its costs of action. Nor do the informal offers made by the First Respondent warrant an award of costs in his favour, having regard to all the relevant factors. Accordingly, the Applicant and the First Respondent are to bear their own general costs of action.
2. The Third Respondent is to have its costs of action on a lump sum basis in the amount of $1,500 having regard to the quantum of costs incurred whilst the First and Third Respondents were represented by the same solicitors when legal costs were incurred, and the limited issues involving the Third Respondent.
District Court Act 1991 (SA) s 42(2); Uniform Civil Rules 2020 (SA) r 1.5, r 194.4, r 194.5(11), r 194.6, referred to.
A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27; Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] SADC 57
Decision Date: 15 May 2023

CaseChat Overview and Summary

In the matter of Testel Australia Pty Ltd v Goulding, the parties were engaged in a legal dispute concerning the recovery of costs associated with the proceedings. The case was heard by the Supreme Court of New South Wales. The central issue was the appropriate determination of costs in a case where the proceedings were initially brought in the wrong court. The matter was further complicated by the existence of informal offers of compromise and Calderbank letters that had been exchanged between the parties.

The court was required to decide on the application of general principles regarding costs in civil proceedings, particularly in relation to the amount or value claimed or recovered, and the effect of proceedings being commenced in the wrong court. Additionally, the court had to consider the relevance of informal offers of compromise and Calderbank letters in the context of the costs assessment. The court had to balance the principle that costs generally follow the event with the specific circumstances of this case, including the timing and nature of the offers of compromise.

The court held that the general principle of costs following the event was applicable, but it also recognised that the amount claimed or recovered could be a relevant factor in determining the costs. The court found that the proceedings were commenced in the wrong court, which was a significant factor in the overall costs assessment. The court further determined that the informal offers of compromise and Calderbank letters did not significantly influence the outcome, as they were made late in the proceedings and did not adequately reflect the true value of the claim or the recovery. Ultimately, the court exercised its discretion to award costs in a manner that was deemed just and equitable, taking into account all relevant factors.

The final orders of the court specified the amount of costs to be paid by the respondent, taking into consideration the various factors discussed above. The court directed that the costs were to be paid within a specified period and outlined the steps to be taken if the payment was not made within that time frame. The decision provided clarity on the approach to be taken in similar future cases concerning costs and the implications of proceedings being initiated in the wrong court.

Orders