Thompson v Ice Creameries of Australia Pty Ltd

[1998] FCA 261

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 281  of   1994

BETWEEN:

PETER ANTHONY THOMPSON AND ROBYN LESLEY THOMPSON
APPLICANTS

AND:

ICE CREAMERIES OF AUSTRALIA PTY LTD
FIRST RESPONDENT

DAVID ALAN ATCHISON
SECOND RESPONDENT

JUDGE(S):

LEHANE J

DATE OF ORDER:

11 MARCH 1998

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1. Judgment for the applicants against the respondents jointly and severally in the sum of $220,775.00.

1. The respondents pay two-thirds of the applicants’ costs.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 281 of 1994

BETWEEN:

PETER ANTHONY THOMPSON AND ROBYN LESLEY THOMPSON
APPLICANTS

AND:

ICE CREAMERIES OF AUSTRALIA PTY LTD
FIRST RESPONDENT

DAVID ALAN ATCHISON
SECOND RESPONDENT

JUDGE(S):	LEHANE J
DATE:	11 MARCH 1998
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

For reasons given in my judgment delivered on 11 February 1998 I ordered that there should be judgment for the applicants against each respondent for an amount to be calculated in accordance with principles stated in my reasons for judgment.  The amount calculated in accordance with those principles has now been agreed upon, and is $220,775.

I did not, when delivering judgment, make any order as to costs.  I  refrained from doing so because I thought there might be scope for argument about costs and the parties had not at that stage had the opportunity to address any argument to me.  The question now before me is what order should be made as to costs.

The respondents submit that I should apportion the order for costs, so that the applicants should be entitled to costs in relation to issues on which they were successful, the respondents being entitled, on the other hand, to an order for costs in their favour in relation to issues on which (in their submission) they succeeded.  Alternatively, the respondents submit there should be no order as to costs, reflecting the mixed outcome, as they put it, of the proceeding.

The applicants, on the other hand, submit that there should be an order that the respondents pay their costs.  In the applicants’ submission, they were successful on four of the five principal issues raised by them in the proceeding, and successful also in relation to a number of matters raised in the respondents’ defence.  The matter in respect of which the applicants were not successful, they say, occupied only a small portion of the hearing and little of the written evidence.

This case illustrates, as neatly as a case might be expected to, two clearly correct propositions.  One is that the way in which one describes relative success on various issues in a proceeding may depend very much on the point of view from which one embarks upon the task of description; the other is, as has been stated in a number of cases, that questions such as that now before me cannot be answered with mathematical precision.

That is perhaps an inelegant way of saying that the task of exercising the discretion of the court as to costs (which, on the authorities, is a wide one) is not one involving the application of an accurate science, and is one in the performance of which there is often no one clearly correct result to be found.  The court can only do its best in applying what in the cases has been described as a process of impression and evaluation.  That process has been described by the Full Court in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272:

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge.  Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.

That is the task to which I turn.  There are some matters about this  proceeding which are clear.  One relates to the applicants’ allegation that the respondents were liable in respect of representations as to the likely turnover of a franchised ice creamery at Engadine.  On the factual issues thus raised, I found in favour of the respondents.  If, therefore, the applicants’ only case was that they were entitled to damages on the basis that a misleading or deceptive representation had been made as to turnover, the applicants would have failed and, no doubt, in that hypothetical situation, costs would have followed the event.

However, the applicants alleged also, and the respondents conceded, that Mr Atchison represented (on behalf of the first respondent) that the site selected for the ice creamery in Engadine was a suitable site.  The applicants alleged, but the respondents denied, that there was a reasonable basis for that representation.  On that issue, having heard very substantial evidence (particularly expert evidence), I found in favour of the applicants.  The respondents say that the issues relating to that representation ought to be further subdivided.  They say that there were a number of matters involved in it, for example questions relating to a comparison between the performance of sites described as beachside, urban or country, upon which the applicants were unsuccessful.  They say also, and truly, that I did not hold that there was anything about the specific site in Engadine which rendered it unsuitable.

In short, the respondents’ point in relation to the representation as to the suitability of the site is that, of a number of matters to which evidence was directed in relation to that representation, in the end the applicants succeeded only on one aspect: that there was no basis, or no reasonable basis, for a view that the population of the Engadine district was sufficient to support a franchised ice creamery of the kind which the applicants opened in Engadine.

Then the respondents submit the applicants had at best partial success in relation to damages.  They submit, correctly, that the amount of damages claimed by the applicants and supported, at least initially, by their expert evidence, was very substantially greater than the amount finally awarded. They say also, equally correctly, that the amount for which the applicants ultimately contended was significantly greater than the amount ultimately awarded and they say, and again correctly, that the respondents’ submissions as to a number of particular heads of damage, or aspects of heads of damage, were successful also.

I may illustrate one of the propositions to which I referred earlier by recording that the applicants sought to classify the issues rather differently.   They say that there were four issues raised by the statement of claim, one being the representation as to turnover, the second being the representation as to the suitability of the site, the third being reliance and the fourth damages; and of those four the applicants say, and correctly if one adopts their classification, that the applicants succeeded on three out of the four, albeit on the question of damages in an amount which, though substantial, was significantly less than the amount claimed.

In the end all I can do is make a judgment based upon my impression and evaluation of the weight to be given to the various matters to which counsel for both parties have referred.  One of these matters is the circumstance that the applicants were wholly unsuccessful in relation to the representation as to turnover and my acceptance, particularly relevant to that issue, of evidence given by the second respondent, Mr Atchison.   I think it is important to give some effect to the principle that one ought not, too freely, by costs orders deter parties from raising issues which they are entitled properly to raise, whether those be issues of fact or issues of law.  A decision that an applicant fails on a particular and discrete factual issue, even where that failure is on the  footing that evidence of the respondents rather than that of the applicants is accepted, does not necessarily require the conclusion that the respondents should be paid their costs of the issue.   Nevertheless, in my view, the circumstance that the respondents succeeded on that issue is a matter to which some weight is to be given.

I appreciate the force of the argument put to me by counsel for the applicants that, where a respondent considers that an excessive amount is claimed, there are means available, both under the Rules and by other well known established procedures (particularly, the Calderbank letter) by which it may protect itself against an unfavourable outcome as to costs.   Nevertheless, I think I should give some weight to the circumstance that the applicant's claims for damages were found in a number of significant respects not to be sustainable and that the amount to which ultimately the applicants were held to be entitled was quite substantially less than the amount which they claimed. 

However, my impression is that a consideration of the affidavit evidence, the various issues dealt with in the several affidavits and, particularly, of the oral evidence of the trial, suggests that the proportion of the evidence (and therefore of costs incurred in relation to the evidence) relating to the representation as to turnover formed a relatively small part of the evidence overall. Undoubtedly considerable attention was devoted to it in the affidavits.  Undoubtedly considerable attention was devoted to it in cross-examination of the principal witnesses; but, of the total length of the trial, the amount of time involved in that process was, I think, a relatively small proportion of the whole.

The bulk of the hearing was devoted to the question of the suitability of the site, particularly the expert evidence.   It is true that the expert evidence covered a number of aspects of the site, and site selection, in addition to the question of population numbers; but I do not think that an applicant who succeeds in relation to a representation of this nature is to be penalised because evidence, particularly expert evidence, led by the applicant canvasses a number of possible bases on which the site might be regarded as unsuitable, on only one of which the court ultimately holds the applicant to have been successful.  It is true, as counsel for the respondents submitted, that I expressed in my judgment an inclination not to find the representation as to the suitability of the site misleading on any basis other than that of population numbers; but that, it seems to me, in accordance with the principles discussed in the cases to which I have been referred, is not a matter which should weigh against the applicants on the question of the proper order of the costs of the proceedings.

In a number of the authorities to which I have been referred two further propositions have been stated: one is that it can be a proper exercise of the discretion, not merely to refuse costs to a successful applicant on a particular issue on which the applicant has failed but to make an order that the applicant pay the respondent’s costs in relation to that issue.  The other is, however, that apportionment, where there is mixed success, can be very difficult and that it is often more appropriate to take account of mixed success and failure by making a global order, for example, that one party pay a proportion of the other party's costs of the proceeding rather than attempt an apportionment of costs between issues or, perhaps more accurately, make an order which will require a taxation officer to engage in that process.   In my view, this is a case where it would only be productive of further expenditure of time and resources to make an order which would require such an apportionment to be made.  The alternative order sought by the respondents that there be no order as to costs fails, in my view, adequately to reflect the extent of the applicants’ success.  Viewing the trial as a whole, the proper conclusion in my view is that the bulk of it was devoted to the issue of the suitability of the site and on that general issue, including the question of the reasonableness of the second respondent's view that the site was suitable, the applicants were successful.

True it is - and this is by no means unusual - that the applicants claimed damages on a considerably more optimistic basis than that on which I have held them to be entitled.  In the absence of an offer in accordance with the Rules, or a Calderbank offer, I do not think (as I have already said) that great weight is to be given to that; but it should be taken into account, having regard to the circumstance that, in relation to certain heads of damage and to the basis on which damages were claimed under those heads for particular years the applicants' claim was (as I have held) significantly excessive.

Doing the best I can, I think the result which appropriately reflects the degree of the applicants' success in these proceedings is an order that the respondents pay two-thirds of the applicants' costs I so order.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane

Associate:

Dated:            11 March 1998

Counsel for the Applicant:	Mr Christopher Harris
Solicitor for the Applicant:	Willis & Bowring
Counsel for the Respondent:	Mr Matthew Dicker
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	11 March 1998
Date of Judgment:	11 March 1998