Where a party raises issues or makes allegations improperly or unreasonably, this may constitute misconduct such that the court may not only deprive it of its costs but order it to pay the whole or a part of the unsuccessful party's costs: Trade Practices Commission v Nicholas Enterprises Pty Ltd at 208 per Fisher J, Re Elgindata Limited (No 2) [1993] 1 All ER 232 at 237 per Nourse LJ; Ashby v Marshall , (unreported, SC(SA), 28 November 1991); Popovic v Murray (unreported SC(Tas), 15 March 1991).
38 It is rare for a successful party who is guilty of misconduct in the litigation to be ordered to pay the unsuccessful opponent's costs where the misconduct does not lengthen the proceedings unnecessarily, cause unnecessary issues to be canvassed or otherwise cause the costs of the litigation to be increased. Indeed, the court's entitlement to depart from the usual order that costs follow the event has sometimes been said, in effect, to be subject to the qualification that the misconduct in question occasioned unnecessary litigation and expense (see Huxley v West London Extension Railway Company (1899) 14 App Cas 26 at 32-33 per Lord Halsbury LC; Ritter v Godfrey [1920] 2 KB 47 per Atkin LJ at 60). In other cases, however, this qualification has not been mentioned: see for example Donald Campbell & Co v Pollak [1927] AC 732 at 811-812; Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433 at 500; Jamal v Secretary, Department of Health (1988) 14 NSWLR 252 at 271-272; Re Elgindata Limited (No 2) (supra). On balance, it seems to me that while delay and increased expense brought about by improper conduct in the course of the litigation are highly relevant factors in the discretion to depart from the usual order as to costs, they are not essential to the exercise of that discretion. It would, in any event, be very unusual for misconduct of that kind not to cause unnecessary delay and expense.
39 In the present case, the learned trial judge did not expressly find that the appellant's conscious exaggeration and efforts to deceive caused increase expense and delay, but such consequences were the inevitable result of the appellant's improper conduct. In any event, as I have pointed out, having found that the appellant was guilty of serious dishonesty in the conduct of the trial, the order made was within her Honour's discretion.
40 There is another matter, however, that also has a significant bearing on the costs order that was made. As it was put for counsel who appeared for the respondent at trial, "there had been an offer under the rules but for slightly less than [the sum of $5,210.20]". In other words, the respondent had made an offer of compromise under the District Court Rules which the appellant had not accepted, and the award eventually made exceeded the amount of the offer. Accordingly, Pt 39A r 25(6) became operative. This rule provides that in such circumstances "unless the court in an exceptional case and for the avoidance of substantial injustice otherwise orders", the plaintiff is entitled to an order against the defendant for his or her costs in respect of the claim up to and including the day the offer was made. No submissions appear to have been made to the learned judge concerning the consequences of the judgment sum exceeding the offer and her Honour made no mention of this matter in her reasons. It was plainly not something that was considered by her.
41 In Cretazzo v Lombardi (1975) 13 SASR 4 analogous circumstances obtained. The plaintiff sued for personal injuries and liability was not disputed. The plaintiff claimed to suffer from continual headaches and various psychological ailments. The defendant alleged that the plaintiff was a malingerer. The trial judge (like her Honour in the present case) found that the plaintiff was "consciously exaggerating his symptoms to a very large degree, perhaps almost entirely". In consequence the trial judge assessed damages at an amount which was within the jurisdiction of the Local Court. He rejected an argument that the plaintiff should be deprived of his costs because he could have brought the action in the Local Court for the amount he was awarded. He granted costs on a very limited basis to the appellant but ordered him to pay other defined costs, which were substantial, to the respondent.
42 On appeal, Bray CJ (with whom Jacobs and Zelling JJ agreed) referred (at 12) to the inadequate offer made by the defendant pursuant to the then South Australian equivalent of Pt 39A r 25(6). The defendant had made an offer pursuant to the South Australian rule in an amount less than the judgment sum. The learned Chief Justice said in this regard (at 13):
"Under the terms of [the relevant rule] if the offer had been more than the award, the plaintiff must still have received his costs up to a date fourteen days after the making of the offer, and the defendant, though he would have got his costs after that date, would have had no right to any costs incurred before it, subject in either case of a finding of special circumstances by the learned judge. Yet the order under appeal contemplates that this appellant/plaintiff will have to pay portion of the defendant/respondent's costs incurred before the making of the offer. It orders him, in short, to pay portion of the costs of the defendant who has made an inadequate offer which he could not have been ordered to pay if the offer had been excessive. That surely is a highly relevant matter…