Tincknell v Duthy Homes Pty Ltd; Duthy Homes Pty Ltd v Tincknell (No 2) - [2020] SASCFC 47

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
TINCKNELL & ANOR v DUTHY HOMES PTY LTD & ANOR; DUTHY HOMES PTY LTD & ANOR v TINCKNELL & ANOR (No 2)
[2020] SASCFC 47
Judgment of The Full Court
(The Honourable Justice Peek, The Honourable Justice Parker and The Honourable Justice Doyle)
1 June 2020
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - JUDGMENTS AND ORDERS - INTEREST ON JUDGMENTS
Claim for costs and interest on judgment sum following a partially successful appeal.
The Builder sued for the final payment due under a contract. The Owners counter claimed for damages. On 3 April 2018, the District Court entered judgment for the Builder in the sum of $225,879.26. That sum comprised an award of $173,049.41 and pre-judgment interest of $52,829.85. The Owners appealed those orders. On 9 April 2018, the District Court awarded the Builder 60 per cent of its costs on a party/party basis. The Builder appealed the costs order.
On 17 April 2020, the Full Court delivered judgment dismissing nine of the 12 grounds of appeal advanced by the Owners. The Owners succeeded on three grounds and were awarded a total of $82,554.80. Thus, the outcome of the appeal was to reduce the sum payable by the Owners to the Builder from $173,049.41 to $90,494.61. The Full Court varied the costs order such that the Builder is entitled to 50 per cent of its costs in the District Court action on a party/party basis. The costs appeal was otherwise dismissed.
The parties agree that the order for payment of interest made in the District Court be set aside and the interest on the judgment sum be reduced to $27,626.89. Thus, the parties agree that the Owners are entitled to an adjustment in their favour of $107,757.76. The Owners seek interest on that sum calculated from 12 April 2018 to 8 May 2020. The Builder contends that an adjustment should not be made.
The Owners seek an order that they be entitled to 33% of their costs on a party/party basis in both actions. The Builder seeks an order that no costs not be awarded.
Held by the Court:
1. The Owners are entitled to interest in the sum of $16,254.45 on the excess payment of $107,757.76 made by them on 12 April 2018.
2. The Owners are entitled to 20% of their costs of the appeals.

TINCKNELL & ANOR v DUTHY HOMES PTY LTD & ANOR; DUTHY HOMES PTY LTD & ANOR v TINCKNELL & ANOR (No 2)
[2020] SASCFC 47
Full Court: Peek, Parker and Doyle JJ

THE COURT: This judgment deals with claims for the award of costs and interest on the judgment sum following a partially successful appeal. There is also an issue relating to a bank guarantee.
Background
So as to maintain consistency with the terms used to describe the parties in the appeal judgment, we will refer to the appellants collectively as the Owners, and the respondents collectively as the Builder.
The Builder sued for the final payment due under the contract. The Owners counter claimed for damages. On 3 April 2018, the District Court entered judgment for the Builder in the sum of $225,879.26. That sum comprised an award of $173,049.41 and pre-judgment interest of $52,829.85 calculated up to 26 February 2018. The sum of $225,879.26 was paid by the Owners to the Builder on 12 April 2018.
On 9 April 2018, the District Court awarded the Builder 60 per cent of its costs on a party/party basis. The Builder appealed that order. The substantive appeal and the costs appeal were heard together.
On 17 April 2020, the Full Court delivered judgment dismissing nine of the 12 grounds of appeal advanced by the Owners. However, the Owners succeeded on grounds 16, 17 and 18 and were awarded a total of $82,554.80. Thus, the outcome of the appeal was to reduce the sum payable by the Owners to the Builder from $173,049.41 to $90,494.61. The Full Court also varied the costs order such that the Builder is entitled to 50 per cent of its costs on the District Court action on a party/party basis. The costs appeal was otherwise dismissed. The Court made orders to that effect.
Following the appeal decision, the parties have reached agreement that the order for payment of interest made by the District Court on 3 April 2018 be set aside and the interest on the judgment sum be reduced from $52,829.85 to $27,626.89, i.e. a reduction of $25,202.96. Thus, the parties agree that the Owners are entitled to an adjustment in their favour of $107,757.76. That comprises the award of $82,554.80 in favour of the appellants on appeal and the refund to them of $25,202.96 of the interest previously paid.
Interest
The Owners contend that the Builder has had the use of the Owners’ funds in the sum of $107,757.76 since 12 April 2018. They seek interest on that sum calculated at the rate prescribed in Supplementary Rule 217 from 12 April 2018 to 8 May 2020. On that basis, the Owners assert that they are entitled to interest of $16,254.45.
The Builder submits that such an adjustment should not be made. The only basis advanced by the Builder for opposing the proposed award of interest is that the orders made by the Court do not address the effect of the appeal judgment on the payment that had already been made by the Owners. The Builder also complains that the draft order prepared on behalf of the Owners simply notes that there is a credit in favour of the Owners and submits that court orders do not simply note matters.
The latter is merely an objection to the form of the proposed order rather than its substance. The issue is whether the Court should now order the Builder to pay interest on the sum that is the subject of the adjustment in favour of the Owners due to their partial success on the appeal.
We cannot see any reason why the Owners should not be awarded interest on the sum of $107,757.76. That constitutes the payment that they made on 12 April 2018 in excess of the amount that the Full Court later found to be the proper entitlement of the Builder. The fact is that the Builder has had the use of that excess payment for some two years.
As previously noted, the Owners claim $16,254.45 by way of interest on the sum of $107,757.76 at the rate prescribed in Supplementary Rule 217 for the period from 12 April 2018 to 8 May 2020. While the Builder contends that payment should not be ordered, it has not objected to the quantum of the payment or the method of calculation. Supplementary Rule 217 provides for the payment of interest at 6 per cent above the cash rate set by the Reserve Bank. The Owners have adopted the rate of 7.5 per cent per annum for the period from 12 April 2018 to 30 June 2019, 7.25 per cent from 1 July 2019 to 31 December 2019 and 6.75 per cent thereafter. Those rates appear to be correct.
Costs
The Owners observe that they succeeded on three of the 12 grounds of appeal determined by the Full Court, as well as the appeal against costs. They also note that they succeeded on a stay application before a single Judge relating to a bank guarantee. They seek an order that they be entitled to 33 per cent of their costs on a party/party basis in both actions.
The Builder submits that costs not be awarded on the appeal. The basis for that submission is as follows. The Owners sought on the appeal the award of $1,923,019.79. While they succeeded on three grounds, the award made by the District Court Judge was reduced by only $82,554.80. The appeal grounds with significantly higher values (being Grounds 2, 3, 7, 9, 13, 21 and 22) were dismissed. The value of those unsuccessful claims was $1,345,063.74. Those grounds were afforded most of the time and attention in the written arguments of the parties, their outlines of submissions and oral submissions.
The Builder succeeded on grounds 16, 17 and 18. Those grounds represented a total value of $82,554.80. Those three grounds were only addressed on the papers and were not referred to in the outline of submissions or in oral argument. The Builder submits that it is apparent that the parties devoted vastly less effort and attention to these grounds. The remaining appeal grounds (being 12A and 27) were dealt with only on the papers and were dismissed by the Full Court. Thus, in aggregate, the Owners failed on nine appeal grounds with a value of $1,840,464.99. Those grounds occupied the greater part of the written argument, the entirety of the outline of submissions and the entirety of the oral argument.
For the reasons advanced by the Builder, we accept that it is not appropriate to award costs in respect of the appeal on the basis that the Owners succeeded on three of the 12 grounds considered by the Full Court, the costs appeal and on the stay application. Nevertheless, it must also be recognised that the Owners did have a partial success on the appeal. It is also the case that the largest monetary claim advanced on the appeal by the Owners, being the claim for delay damages in excess of $1,000,000, consumed relatively little time in written and oral arguments and submissions. Much more time and effort was devoted to the contentions relating to the waterproofing of the property and the installation of termite barriers. However, there was also a substantial overlap between those two issues.
Adopting a broad axe approach, we consider it appropriate to order that the Builder pay 20 per cent of the costs of the Owners in Action 12 of 2018 and Action 473 of 2018 on a party/party basis.
Interest on the bank guarantee
On 26 February 2018, the District Court ordered that the bank guarantee provided as the security for performance by the Builder be returned. An application for a stay of that order was refused by the District Court. However, on appeal, a Judge of this Court granted a stay on an unconditional basis.[1] The Judge refused to order that the Owners pay interest on the sum subject to the guarantee. That order was not challenged on appeal.
[1] Tincknell v Duthy Homes Pty Ltd [2018] SASC 44.
The Owners submit that the payment of interest on the bank guarantee is not a live issue before the Full Court and has already been the subject of two unsuccessful applications.
The Builder states that it pays a fee for the bank guarantee. It submits that both the trial judgment and the appeal judgment show that the Owners should have released the bank guarantee long ago. On that basis, the Builder submits that it has a proper claim based on the refusal to release the guarantee. That loss crystallised upon the delivery of the Full Court judgment. However, the Builder further submits that the calculation of the amount due is not a matter for the Full Court but should be remitted to the trial Judge.
We consider that it is neither necessary nor appropriate for the Full Court to determine the claim in relation to release of the bank guarantee. That is because the issue was not referred to in the parties’ submissions on the appeal. However, the Builder’s claim does need to be resolved. That issue should be remitted to the trial Judge for determination.
Orders
We would make the following orders in substitution for the orders made by the Full Court on 17 April 2020:
1The appeal in Action 12 of 2018 is allowed.
2Order 2 made by the District Court on 3 April 2018 is set aside and in lieu thereof judgment is to be entered for the plaintiff in the sum of $90,494.61.
3Order 3 made by the District Court on 3 April 2018 is set aside and in lieu thereof interest is awarded on the judgment sum of $27,626.89.
4As a consequence of the defendants having paid to the plaintiff the sum of $225,879.26 on 12 April 2018, the effect of Orders 2 and 3 above is that there is a credit in favour of the defendants in the sum of $107,757.76. The latter sum may be set off against the defendants’ liability to the plaintiff arising under Order 6 below.
5The defendants are awarded interest in the sum of $16,254.45 on the excess payment of $107,757.76 made by them on 12 April 2018. That sum may be set off against the defendants’ liability to the plaintiff arising under Order 6 below.
6Order 1 made by the District Court on 9 April 2018 is set aside and in lieu thereof the plaintiff is entitled to 50 per cent of its costs on the District Court action on a party/party basis.
7The appellants are entitled to 20 per cent of their costs of the appeals in Action 12 of 2018 and in Action 473 of 2018 on a party/party basis.
8The question as to whether any award should be made in favour of the plaintiff as a consequence of a fact that the bank guarantee referred to in Order 2 made on 26 February 2018 in the District Court was not returned to the plaintiff until 22 April 2020 is remitted to the District Court for determination by the trial Judge.