Riordan J provides pithy summary of some of the more difficult costs principles

Riordan J delights me with his helpful summaries of the law in many of his judgments.  Here is his latest, in relation to costs, particularly in multi-party cases of mixed success and success only as to nominal damages, and contractual promises to indemnify against costs, from Saafin Constructions Pty Ltd v MAG Financial and Investment Ventures Pty Ltd [2021] VSC 702 at [27] et seq: 

’27 The Court has a broad discretion with respect to the costs of a proceeding, including under the following provisions:

(a)          Pursuant to s 24 of the Supreme Court Act 1986 (Vic), the costs of and incidental to all matters in the Court is in the discretion of the Court and the Court has full power to determine by whom, and to what extent, the costs are to be paid.

(b)          Section 65C of the Civil Procedure Act 2010 (Vic) empowers the Court to make any order as to costs it considers appropriate to further the overarching purpose, including to make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding.

(c)          Rule 63.04 of the Supreme Court (General Civil Procedure Rules) 2010 (Vic) provides:

(1)          The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.

(2)          Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.

28 Ordinarily, costs will follow the event and a litigant who is substantially successful will be entitled to its costs, in the absence of special circumstances justifying some other order, even if the litigant has not succeeded on all heads of claim.[10]

[10]         Chen v Chan (No 2) [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA); GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296, [38], [59] (Robson J).

29 In the exercise of its discretion, ‘the Court is entitled to examine the realities of the case and will attempt to do “substantial justice” as between the parties on matters of costs.’[11]

[11]         Chen v Chan (No 2) [2009] VSCA 233, [10].

30 Accordingly, a reason is required to justify an issues based costs order. In Mickelberg v State of Western Australia, Newnes J, after a careful review of the authorities, concluded with respect to an issues based cost award:

It seems to me, therefore, that the effect of the authorities is that if a successful party fails on some issue, the circumstances may make it reasonable that that party be deprived of their costs of that issue. It is not necessary that the issue concerned was raised unreasonably by the party. But parties should not be dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case, and unless a particular issue or group of issues is clearly dominant or separable from the balance of the proceedings, or there has been some unreasonable or inappropriate conduct by the successful party in relation to an issue, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the issues on which it was successful and those on which it failed.[12]

[12]         [2007] WASC 140 (S), [43].

31 The principles with respect to issues based costs orders include the following:[13]

(a)          As a general rule, a successful party is entitled to an order for all of its costs of the proceeding, even if it failed to establish one or more alternative heads of claim.

(b)          The Court’s discretion permits the Court to make an order with respect to distinct questions or issues in the pleading sense and any part of the proceeding. Where the issues involve a degree of overlap or common facts, which go in separate directions in relation to different issues, it will usually be undesirable to engage in an issue by issue analysis.

(c)          The Court, in the exercise of its discretion, may decline to order costs to a successful party if the party failed to establish discrete heads of claims or issues, and may order the successful party to pay the costs of the unsuccessful party with respect to those matters.

(d)          It is not necessary for a party seeking an issues based costs order to establish that the issue concerned was raised unreasonably, but it is a relevant consideration.

(e)          After taking into account the failed issues, the Court may make a single order that one party pay a proportion of the other party’s costs and avoid cross-orders or particular orders as to costs.

(f)          Although the quantum of damages recovered compared to the claim may be a relevant consideration, emphasis should be placed on a failure of discrete claims or issues and the time occupied in relation to them.

[13]         See Chen v Chan (No 2) [2009] VSCA 233, [10]; GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296, [59].

32 Where a plaintiff, whose primary purpose is to recover substantial damages, only recovers nominal damages, generally the plaintiff will not be considered ‘the successful party’ in the proceeding.[14]However, in the exercise of its discretion, the Court may order that:

(a)          the defendant pay the plaintiff’s costs of the proceeding;[15]

(b)          the plaintiff pay the defendant’s costs of the proceeding;[16]

(c)          there be an issues based costs order;[17] or

(d)          there be no order as to costs.[18]

[14]         KSG Investments Pty Ltd v Open Markets Group Ltd (No 2) [2021] VSC 359, [9](Nichols J).

[15]         See, eg, Simply Irresistible Pty Ltd v Couper [2011] VSC 33, [7], [26] (Kyrou J).

[16]         See, eg, Gold & Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 345, [32]-[35] (Stevenson J); NCON Australia Ltd v Spotlight Pty Ltd (No 7) [2014] VSC 25, [23] (Robson J).

[17]         See, eg, Nicholson v Hilldove Pty Ltd (No 4) [2013] VSC 578, [18]-[28] (Sifris J).

[18]         KSG Investments Pty Ltd v Open Markets Group Ltd (No 2) [2021] VSC 359, [14](Nichols J); Rozenblit v Vainer (No 2) [2019] VSC 366, [35] (Sifris J); Walsh v Kerr [1987] 2 NZLR 166 (Tipping J).

33 Each case must be determined by reference to its own facts;[19] and reference to the following cases is instructive:

(a)          In Gold & Copper Resources Pty Ltd v Newcrest Operations Ltd, Stevenson J did not consider that the plaintiff, who had succeeded on the issue of liability but failed on causation and remedy, had succeeded on a ‘clearly dominant’ issue that would warrant departure from the usual order as to costs.[20]

(b)          In NCON Australia v Spotlight Pty Ltd (No 7), Robson J considered that the defendant was the successful party in the litigation and entitled to its costs because there ‘was no alternative or further objective to the proceeding other than the recovery of damages’.[21]

(c)          In Nicholson v Hilldove Pty Ltd (No 4), Sifris J said that, although the plaintiff had failed to prove loss, it had been successful on the preliminary question that there was a binding and enforceable agreement.[22] Accordingly, Sifris J ordered that the defendants should pay half of the costs of the determination of the preliminary question.[23]

(d)          In Rozenblit v Vainer (No 2), the plaintiff had succeeded in establishing his first claim for unconscionable conduct, but had failed to prove an entitlement to more than nominal damages; and had failed entirely on his second claim.[24] Sifris J ordered that the plaintiff should pay 25% of the defendants’ costs.[25] This conclusion was reached after an evaluation of the circumstances being, in summary, as follows:

(i)          Although the plaintiff proved unconscionability on the first claim, he was not regarded as being the ‘successful party’ because he was only awarded nominal damages. However, as the defendants were found to have engaged in unconscionable conduct, Sifris J considered there should be no order as to costs on the first claim.[26]

(ii)         Although the defendants were entirely successful on the second claim, Sifris J concluded that they were only entitled to recover half of their costs because of their conduct of the proceeding, including untruthfulness as a witness and non-compliance with discovery obligations.[27]

[19]         Nicholson v Hilldove Pty Ltd (No 4) [2013] VSC 578, [28].

[20]         [2013] NSWSC 345, [32]-[33].

[21]         [2014] VSC 25, [23].

[22]         [2013] VSC 578, [1], [26].

[23]         Ibid [27].

[24]         [2019] VSC 366, [9]-[10].

[25]         Ibid [3].

[26]         Ibid [30]-[35].

[27]         Ibid [36]-[43].

34 Relevant considerations in the award of costs, after an award of nominal damages, have been found to include:

(a)          whether the finding of a breach amounts to a vindication of rights of some significance;[28] and

(b)          where proof of breach of duty was a substantial and vigorously contested aspect of the case at trial.[29]

[28]         Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171, [14] (Hodgson JA, with whom Allsop P and Macfarlan JA agreed).

[29]         Simply Irresistible Pty Ltd v Couper [2011] VSC 33, [26] (Kyrou J); Witcombe v Talbot & Olivier (No 2) [2009] WASC 173 (S), [27] (Beech J).

35 A contractual right to indemnity costs or costs generally does not fetter the Court’s discretion.[30]However, where there is a contractual right for costs to be awarded, including on an indemnity basis, the Court will ordinarily exercise its discretion to reflect the contractual right.[31]

[30]         See, eg, Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87, [12]-[14] (Beazley JA, with whom Ipp and Hodgson JJA agreed); Taree Pty Ltd v Bob Jane Corp Pty Ltd [2008] VSC 228, [39]-[44] (Vickery J).

[31]         Taree Pty Ltd v Bob Jane Corporation Pty Ltd [2008] VSC 228, [44] (Vickery J) (citations omitted); Chen v Kevin McNamara & Son Pty Ltd [2012] VSCA 229, [8] (Redlich JA, with whom Maxwell P and Robson AJA agreed).

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