Actol Pty Ltd v Rise Products Pty Ltd; Rise Products Pty Ltd v Benth Holdings Pty Ltd t/as Gledswood Projects

Actol's submissions

1. Actol submitted (in paragraph [3] of its written submissions) that Rise Products should be ordered to pay its costs because: "(a) Firstly, the Applicant demanded prior to the commencement of its application a payment/refund of $50,560.68 from the First Respondent which is directly referable to the amount the Tribunal ultimately ordered to be paid by the First Respondent. The First Respondent ignored that demand; (b) Secondly, the Applicant's legal representatives subsequently made a second demand for payment/refund of $50,560.68 from the First Respondent prior to commencement of litigation, but again this demand was again ignored; (c) Thirdly, faced with a continued denial of liability by the First Respondent to make payment/refund the sum of $50,560.68 at a pre-litigation stage there was little alternative available to the Applicant other than to commence the proceedings; (d) Fourthly, even after the commencement of proceedings the First Defendant continued (and as ultimately found without basis) to deny liability for the payment/refund of the $50,560.68. As such the Applicant was required to prepare its evidence, reply evidence and conduct the hearing due to the stance adopted by the First Defendant. (e) Fifthly, the amount in dispute was greater than $30,000 (for the purposes of section 38(2)(b) of the Civil and Administrative Tribunal Rules) and in such circumstances the exception to s60 CAT Act is appropriately enlivened; and (f) Sixthly, costs should follow the event, as in the 'usual course'".
2. Actol further submitted, in expansion of the proposition that costs should follow the event: "17. The general position in the NSW Courts (pursuant to UCPR 42.1) is that cost follow the event. The 'event' should be seen as a whole - and in this instance the relevant 'event' is the Applicant obtaining a money order in its favour as against the First Respondent. The decisions in Latoudis v Casey [1990] 170 CLR 534 per Mason CJ at p554 and Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 are apropos to this approach. 18. The "conventional approach" to orders as to costs should be adopted by the Tribunal; see Markunsky v Zammit t/a Zammit Quality Constructions [2016] NSWCATAP 253 at [29] and more recently Royal Flair Caravans Pty Ltd v Kylie Ryan Productions Pty Ltd (No 2) [2022] NSWCATAP 341 19. In Thompson v Chapman [2016] NSWCATAP 6 the Appeal Panel (applying Oshlack v Richmond River Council) stated that the discretion should be applied without an attempt being made to differentiate between particular issues on which the successful party overall may not have succeeded. A similar approach was held to be a correct application of discretion in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (cited both in in Markunsky v Zammit and more recently in Royal Flair Caravans Pty Ltd v Kylie Ryan Productions Pty Ltd (No 2) [2022] NSWCATAP 341. … 21. The Applicant was forced to litigate its claims, and while it did not succeed in all of the claims it advanced, it nonetheless could have been spared the time, effort and legal spend it undertook had the First Respondent responded reasonably to the requests made of it in respect to at least the payment/refund of the $50,560.68 relating to the upper storey product. This also would have saved valuable Tribunal hearing time."

Rise Products and Mr Pszczonka's submissions

1. Rise Products and Mr Pszczonka cited the decision of the Court of Appeal in Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 (Mobis Parts) at [5] as stating "the relevant principles for awarding costs where an applicant is only partially successful".
2. In that case, the Court of Appeal stated: "5 There is no issue as to the relevant principles. The discretion under Civil Procedure Act 2005 (NSW), s 98 is ordinarily exercised by requiring that "costs follow the event": Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. This default position was historically understood to mean (so as to preserve the practice, where any issue was tried with a jury, that those costs followed the outcome of that event) "that the costs of the several issues went to the party who succeeded on them respectively, while the general costs went to him who on the whole succeeded on the action": Reid, Hewitt & Co v Joseph [1918] AC 717 at 724-725 (Lord Finlay LC). But more recent authority favours the award of the costs of proceedings to the party successful overall without any differentiation as to issues, at least "unless a particular issue or group of issues is clearly dominant or separable": Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-331 (Mahoney JA); Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[64] (Campbell JA). And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [22] (Hodgson JA, Allsop P and Macfarlan JA agreeing)."
3. On the basis that "Mobis has succeeded on all substantial issues arising under the Local Policy except those as to 'Acceptance of Liability', the cause of the collapse being hail rather than storm, and its claim that all stock not damaged in the collapse was physically lost because its recovery was uncertain", the Court ordered the respondent to pay 90% of the appellant's costs.
4. I note that Rise Products' written submissions suggested that the Court had ordered a partially successful plaintiff to pay 90% of the defendant's costs. That is not correct. The defendant was ordered to pay 90% of the partially successful plaintiff's costs. I do not consider that Mobis Parts is an example of a case where costs were awarded against a partially successful plaintiff.
5. In respect of the circumstances of this case, Rise Products submitted: "9 Actol's claim against Rise was largely unsuccessful. Actol claimed the sum of $476,321.56: Reasons for Decision para [5]. It was awarded the sum of only $50,650.60, being 10.6% of the amount claimed by the Applicant: Reasons for Decision para [384]. 10 The "central issue in these proceedings is the nature of the contractual arrangements between Actol, Rise Products and 3Form.": Reasons for decision para [153]. The issues upon which the Applicant's claim failed were "clearly dominant or separable", being: ● the terms of the contract; ● the identity of the parties to the contract; ● whether the installation or product were defective; ● whether misrepresentations were made or relied upon; ● whether Actol was a "consumer" [for the purposes of the Australian Consumer Law]; ● whether Rise had breached statutory warranties;. ● whether Rise had taken over the supervision of the job; ● what if any role and liability did the cross-defendants have; and ● whether Actol suffered or was entitled to any delay costs. 11 The great bulk of the evidence, hearing time and lengthy submissions were devoted to the above issues. These were discrete issues, severable from the one issue upon which Actol succeeded, being its claim for non-delivery of the product. Taking a pragmatic approach, as this represented only 10.6% of the amount claimed by Actol, this serves as a reasonable proxy for the amount of costs that may have been devoted to this issue. In reality, it was probably less than that but it would be impractical and uneconomic to embark on an exhaustive analysis of the precise amount of time spent on this issue. Accordingly, Rise submits that the appropriate costs orders as between Actol and Rise should be: (a) Actol to pay 90% of the First Respondent's costs in the proceedings as assessed or agreed; and (b) Rise to pay 10% of the Applicant's costs in the proceedings as assessed or agreed."
6. In respect of Mr Pszczonka, Rise Products and Mr Pszczonka submitted: "12 Actol claimed an unspecified amount against Mr Pszczonka by way of compensation or other relief pursuant to section 236 of the Australian Consumer Law: … . Actol's claim against Mr Pszczonka was wholly unsuccessful. Accordingly, … the appropriate costs order as between Actol and [Mr Pszczonka] should be that Actol pay Mr Pszczonka's costs in the proceedings as assessed or agreed."

Actol's reply submissions

1. Actol submitted in reply: "8. While it is recognized that that a finder of fact may make orders pertaining to costs on an 'issue by issue' basis (as dealt with in paragraphs [6]-[8] of Rise and Mr Pszczonka' s submissions) Actol submits that this is only appropriate in the minority of occasions before the Courts and ought not to be used to effectively punish a successful litigant as is being urged upon the Tribunal by the proposed order [3a]. 9. It is inescapable that Actol had success in these proceedings when it achieved a significant monetary order against Rise. This success is the requisite 'event' in the litigation. An 'event' may take many forms and is not bound by rigid definitions; Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] New Galaxy Investments Pty Ltd v Thomson & Ors (No 2) [2017] NSWCA 235 per Basten JA, Gleeson JA, Sackville AJA at [16] and more recently in McInnes v Rheem Australia Pty Limited [2021] NSWCA 89 at [28]. 10. The proposed order at paragraph [3a] of Rise and Mr Pszczonka's submissions invert the general rule that "costs follow the event" by having Actol pay Rise's costs, despite the relevant 'event' in the litigation falling in favour of Actol. This would not be reflective of the observations of McHugh J in Oshlack v Richmond River Council (1990) 170 CLR 534 at pp566-577 at [67] 'Costs are not awarded to punish an unsuccessful party'."
2. Actol submitted that, if the Tribunal were minded to make an order based upon separate issues, the appropriate order would be that Rise Products should pay 75% of Actol's costs as agreed or assessed.
3. In respect of Mr Pszczonka, Actol submitted: "12. Actol's claim against [Mr Pszczonka] was based upon breach by Rise of the Australian Consumer Law counts. For all intents and purposes Mr Pszczonka was the alter ego of Rise. He had held a very senior position in the company since its infancy and directed its management and operations. He had direct personal involvement in Rise's sale of its product to Actol and was required to participate and provide evidence on Rise's behalf in the proceedings. This would have been the case even if Actol had not joined Mr Pszczonks to the proceedings. It is not the case that he was simply an innocent bystander to the litigation. 13. It is submitted that Actol had reasonable grounds for joining Mr Pszczonka to the proceedings given his clear involvement in the transaction between Acto and Rise. This should not militate against Actol. 14. Further, the amount of time spent by the Tribunal in dealing with the Australian Consumer Law claim against Mr Pszczonka personally was de minimus when compared to the time that the whole of the issues (including expert evidence) took to complete. Indeed the Tribunal's decision on the Australian Consumer Law claim focused upon Rise's position rather than that of Mr Pszczonka accessorial involvement. 15. Actol's primary position is that the Tribunal ought to make an order for costs in the form of a Sanderson order - namely that Rise as an unsuccessful party pay Mr Pszczonka's legal costs.
4. In the alternative, Actol submitted that as between it and Mr Pszczonka there should be no order as to costs.

Consideration

1. In the principal decision, at [387], I noted: "Although Actol has succeeded in obtaining a judgment in its favour, it has succeeded in only one element of its claim and in a small proportion of the total amount claimed."
2. The relevant principles applicable in such circumstances are those set out in the passage from Mobis Parts cited by Rise Products, which I have set out above, at [15]. Those principles were more fully outlined in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik) at [38]: "38 The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272."
3. In Taylor v Clientel Developments Pty Ltd (No 2) [2020] NSWCATAP 240, the Appeal Panel cited Bostik in holding that an appellant who effectively succeeded on only one of seven grounds of appeal should recover only 20% of her costs of the appeal. The Appeal Panel held, at [33]: "33 The time taken at the appeal hearing to address Ground 7 was not significant. It is our view that Ground 7 was clearly separable from all other Grounds of the Appeal, except Ground 8 which was consequential on the appellant achieving success on her preceding grounds. We are also of the view that the Grounds of Appeal upon which the appellant failed took up a significant part of the appeal hearing making it appropriate to deprive the appellant of a substantial portion of her costs."
4. In Petropoulos v CPD Holdings Pty Ltd [2019] NSWCATAP 54 the Appeal Panel stated, at [13]: "13 In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq set out two examples of matters involving discrete or separable issues. The first was where a plaintiff makes separate claims for different relief, or a plaintiff makes a claim and a defendant cross-claims. The second is where a respondent is successful in having an appeal against a decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. Hodgson CJ in Eq went on to say (at 13) that: . . . in general terms I accept that if an issue is raised reasonably and is not disproportionate to the whole case, then normally the successful party should get his or her costs. However, particularly in relation to severable issues, the lesser the strength of the point raised and the greater the proportion it bears to the whole case, the more likely it is that the successful party may be deprived of costs; and if the Court comes to the view that it was unreasonable to raise the issue, then the successful party may have to pay the costs of that issue."
5. In these proceedings Actol failed to establish that Rise Products contracted to supply and install the RiseWall formwork. There can be no question that the issue of who contracted to install the formwork took up the bulk of the time of the hearing and was the subject of the bulk of the written and documentary evidence. Actol also failed on the related claim that Rise Products was liable to Actol for defects in the constructed walls because it had taken over supervision of the installation. That issue probably took up the next most substantial part of the evidence and hearing time.
6. The evidence necessary to establish the one claim on which Actol succeeded would have been: 1. the contract for the supply of the product; 2. proof of payment of the full price; 3. the evidence that the RiseWall product was not of acceptable quality and not fit for purpose referred to in paragraphs [259] - [260] of the principal decision, that is the evidence described in paragraph [255]: "Actol pointed to the document prepared by Mr Hutchin, who was employed by an associated company to Rise Products. Actol also relied upon Mr Gharib's evidence (see [82] above) and Mr Healy's evidence (see [81] above). Actol referred in particular to the inconsistent or insufficient joining tongue, to which Mr Hutchin and Mr Healy both referred, and which Mr Pszczonka acknowledged had been improved in subsequent batches of the product."; and 1. the emails and other evidence of Actol rejecting (or indicating that it did not wish to receive) the balance of the product, referred to in paragraphs [103], [121], [133], [149] and [344] of the principal decision.
7. I note that the expert evidence of Dr Cunniffe provided no support for Actol's case that the RiseWall product was not of acceptable quality and not fit for purpose: see paragraphs [207] - [214] of the principal decision.
8. The hearing ran for four days and the submissions to well over 100 pages. If Actol had limited its claim to restitution of the price paid for the product which had not been delivered, it is reasonable to assume that the hearing would have been concluded within half a day.
9. I do not accept Actol's submission that it was compelled to run the proceedings as it did by Rise Products' failure to repay the cost of the undelivered product. That submission cannot be reconciled with the way in which Actol conducted the proceedings, in particular its maintenance of the claim that Rise Products contracted to install the RiseWall formwork.
10. In my view the claim for repayment of the cost of the undelivered product was clearly distinct and separable from the issues on which Actol failed. I also consider that the issues on which Actol failed were dominant, in the sense that most of the evidence filed by the parties was directed to those issues and those issues took up most of the time at the hearing and the bulk of the written submissions.
11. In my view the appropriate order is that there be no order as to costs between Actol and Rise Products. That order takes into account that, although Actol succeeded in obtaining an award in its favour which was not unsubstantial, that award reflected just over 10% of the amount claimed and reflected success on an issue which took up an even smaller proportion of the evidence and hearing time.
12. I have given consideration to the question whether I should make an order requiring Actol to pay some of Rise Products' costs. On a strict allocation of costs according to the parties' success on particular issues, there is no doubt in my view that the costs which Actol would be ordered to pay Rise Products would exceed the costs which Rise Products would be ordered to pay Actol. However, it is necessary to bear in mind the fact that Actol was ultimately successful in obtaining an order for the payment of money by Rise Products: see Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [20]. As Hodgson CJ in Eq suggested in Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, Hodgson CJ in Eq, NSWSC, 3 June 1998), it would usually only be where it was unreasonable to raise an issue on which an otherwise successful party has failed, that a party successful overall would be ordered to pay the unsuccessful party's costs of that issue.
13. I am unable to conclude that it was unreasonable of Actol to raise any of the issues on which it did not succeed.
14. In my view Rise Products' success on the dominant issues is sufficient to justify declining to make an award of costs in favour of Actol but, in the absence of further disentitling conduct, it is not sufficient to justify an order that Actol pay any costs to Rise Products
15. No party has sought to rely upon any pre-trial offer of settlement.
16. I consider that, to the extent that Mr Pszczonka has incurred costs in defending the claim against him, independently of Rise Products' defence of the claim against it, he is entitled to an order for costs in his favour.
17. I do not accept Actol's submission that, because Actol had reasonable grounds for joining Mr Pszczonka to the proceedings "that should not militate against Actol".
18. The claim against Mr Pszczonka alleged accessorial involvement in misleading and deceptive conduct by Rise Products. Actol failed to establish either that any representations made by Rise Products were misleading and deceptive, or the measure of any loss flowing from reliance upon any such representations
19. In those circumstances it was not necessary to address the question whether Mr Pszczonka had been knowingly concerned in any misleading and deceptive conduct of Rise Products.
20. Accordingly I will order Actol to pay Mr Pszczonka the costs incurred by Mr Pszczonka in defending the claim against him, to the extent that such costs were incurred independently of the defence of the claim against Rise Products, such costs to be as agreed or assessed. I will order that there otherwise be no order as to costs in either proceedings.

orders

1. My orders are: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) a hearing on the question of costs is dispensed with. 2. Actol Pty Ltd is to pay Daniel Pszczonka the costs incurred by Mr Pszczonka in defending the claim against him, to the extent that such costs were incurred independently of the defence of the claim against Rise Products Pty Ltd, such costs to be as agreed or assessed. 3. Otherwise, there will be no order as to costs in either proceedings.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 July 2023