[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
JUDGMENT
THE COURT: By judgment delivered on 6 August 2024 (Carbone v Fowler Homes Pty Ltd; Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192), this Court dismissed an appeal by Mr Giuseppe (Joe) Carbone against Fowler Homes Pty Ltd, and made the following orders in a second appeal brought by his son, Mr Matthew Carbone:
1. Appeal allowed in part.
2. Vary order 2 made by the District Court on 10 November 2023 by replacing "$21,759" by "$73,259".
3. Pursuant to s 101 of the Civil Procedure Act, order that interest is not payable on the judgment debt if it is paid within 28 days of today, however to the extent that the judgment debt remains outstanding after 28 days from today, it will attract interest pursuant to s 101 accruing from 10 November 2023.
4. Vary order 3 made by the District Court on 10 November 2023 by replacing "100" by "101".
5. Set aside orders 4 and 5 made by the District Court on 10 November 2023.
6. Direct the parties to supply agreed short minutes of order as to costs in this Court and the District Court within 14 days of today, or, in lieu of agreement, (a) direct each party to file and serve the orders for which he or it contends, together with submissions not exceeding five pages within 14 days of today, and (b) direct each party to file and serve submissions in reply within 7 days thereafter, with a view to issues of costs being resolved on the papers.
What follows presupposes familiarity with the principal judgment, and uses without disrespect the same abbreviations ("Joe", "Matthew" and "Fowler Homes") to refer to the litigants.
Substantially in accordance with the timetable in order 6 above, the parties have supplied submissions (dated 20, 21 and 27 September) in support of the orders for which they contend. The submissions go slightly further than was contemplated by the regime to exercise the discretion as to costs of the appeals, and to re-exercise the discretion as to costs of the trial. To that end, Matthew has filed a motion directed to two slips in the orders made in this Court, and Joe has filed a motion seeking different orders in his proceedings at first instance. The parties were entitled to take that course pursuant to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) and, appropriately, the submissions addressed those further matters as well.
It is convenient first to deal with the slips identified by Matthew, and then to turn to the parties' submissions as to costs.
At [147]-[149], this Court determined Matthew's damages at $500 per week over a period of 63 weeks, resulting in damages of $31,500. Those damages reflected the rent foregone as $500 per week, slightly less than the $550 per week proffered by the appellants. However, as Matthew's submissions point out, that was the rent for only one of the two units which Matthew owned, with the result that Matthew's damages should be increased by a further $31,500.
Against this, Fowler Homes disputes that there was a slip, and maintains that the fact that Matthew had leased the unit to a friend meant that there was no compensable loss. It is said that the opportunity to rent the premises was not, as a matter of fact, taken up, and would not on the counterfactual have been taken up, in which case there was no loss that was compensable. Fowler Homes added that:
Assuming that damages for loss of an opportunity or chance involves a question of causation and assessment, it is at least in the latter respect (namely assessment) that Matthew Carbone's claim fails, because his evidence did not identify that renting out a property to a third party for commercial gain (as opposed to the property being occupied by a friend of Joe) was an outcome that would have been pursued and achieved.
We do not accept Fowler Homes' submission. Matthew is correct to submit that there was a slip in this Court's calculation of damages. It is plain from the reasoning at [147] that the rents paid in all four dwellings were considered, and that the calculation in [151] only extended to one of Matthew's dwellings. As Matthew submits, damages compensate the deprivation of possession, and it is not to the point that one of Matthew's dwellings presently has been made available to a friend of Joe's or that Joe is paying market rent to Matthew for that property.
The consequence is that Matthew's damages should be increased by $31,500.
Order 4 made by this Court in Matthew's appeal varied the orders made in the District Court concerning the calculation of interest by replacing the reference to s 100 of the Civil Procedure Act 2005 (NSW) by 101. This Court's reasons stated at [151] that there appeared to be a slip in those orders, because s 100 applies to pre-judgment interest and s 101 to post-judgment interest. In the order made by the District Court as entered in JusticeLink and reproduced in the Red Folder, the judgment and interest were as follows:
(2) That there be judgment and verdict for the plaintiff against the defendant in the sum of $21,759.
(3) Interest thereon on the rates pertaining from time to time in accordance with s 100 of the UCPR [sic].
It is clear that the reference in order 3 to the UCPR was a slip for the Civil Procedure Act. Section 100 of that statute is titled "Interest up to Judgment" and authorises the Court to include interest for the period from the time the cause of action arose until the judgment takes effect. It is common ground that the reference in order 3 to "interest thereon" is to the amount of principal (namely, $21,759) determined by the District Court to have been overpaid by Matthew. It is also common ground that the reference to s 100 was not a slip but was done deliberately so that Matthew would in addition to the $21,759 be entitled to pre-judgment interest. That came about in the following way.
After the primary judge gave an oral judgment including making orders that there be a judgment against Fowler Homes in favour of Matthew in the sum of $21,759, his counsel said:
BARHAM: Your Honour, I don't know if it's specifically required, if it needs to be added there, but can there be an order, as well, for the judgment sum to carry pre-judgment interest, in accordance with s 100, I think it is, of the Civil Procedure Act?
HIS HONOUR: Yes.
Thereupon, his Honour is recorded as saying: "That the defendant pay interest on the judgment debt referred to in order 2, at the rates pertaining from time to time, pursuant to s 100 of the Civil Procedure Act".
In his written submissions, Matthew observes that order 3 was made "so that the judgment sum in favour of Matthew would carry pre-judgment (as opposed to post-judgment) interest" and says that it should be corrected so that it "should carry pre-judgment interest from the time the cause of action arose to the date judgment was given by the primary judge. The appellants calculate that amount as $17,983.15, in accordance with annexure B." Annexure B sets out the calculations in detail and appears to be correct. It uses pre-judgment rates of interest, incorporates the additional $31,500 mentioned above, and for the period from 1 February 2020 until 30 April 2021 uses the lower pre-judgment interest rate and claims only half the interest, reflecting the fact that rent would have been received throughout the whole of the period.
In Fowler Homes' written submissions, which were supplied a week later, it was accepted that the appellants are correct that the reference in the orders to s 100 did not require alteration. Nor did Fowler Homes' submissions dispute the calculation of interest.
Even so, there is a dispute between the parties as to the appropriate way of correcting the orders made by this Court. Matthew submits that this Court should give a separate order giving judgment for pre-judgment interest in the amount of $17,983.15. Fowler Homes submits that the Court should vacate order 4 made by it, because there was error in the alteration made by this Court.
The approach proposed by Fowler Homes leaves in place order 3 made by the District Court, despite that order being wrong on its face. Further, the money judgment to which Matthew was entitled (prior to his appeal being allowed), and which if necessary would have been executed, is a judgment in an amount of a principal of $21,759 and an amount of interest for the period starting when the cause of action arose and ending on the date of the judgment. It is not in issue that that amount is $17,983.15. The appropriate course is to set aside the separate order concerning the amount of interest, and to vary the existing judgment so that it includes the $17,983,15 of pre-judgment interest. That reflects Matthew's submission to the primary judge that the judgment carry pre-judgment interest.
The result of both of these corrections is that Matthew should have judgment in his favour of $122,742.15 (being $73,259 + $17,983.15 + $31,500). For the same reasons as were stated in [151] of this Court's earlier judgment, Fowler Homes should have 28 days from today to make that payment, failing which it will attract interest at post-judgment rates with effect from 10 November 2023.
We turn to costs. Paragraph [152] of this Court's judgment was as follows:
Understandably, the parties sought to be heard further as to costs. The orders I propose will permit that to occur. In relation to the (much smaller) costs of the appeals, bearing in mind (a) the abandonment of around half of the grounds by the appellants' submissions in reply, (b) the failure of Joe's appeal, (c) the reality that in substance there was one set of costs on each side despite there being two appeals, and (d) the modest success achieved by Matthew, there may be much to be said in the absence of any offers or Calderbank correspondence for the appropriate order as to costs of the appeals being that there be no order as to costs with the intent that the parties bear their own costs. I shall say nothing of the costs of the trial, save to say that it is difficult to see that there is a basis for altering the orders as to costs in the proceeding brought by Joe, and that it is difficult to avoid the conclusion that both sides permitted costs to be incurred disproportionately to what was at stake. Nonetheless, the orders I propose will permit all parties to be heard as to all aspects of the exercise of the costs discretion, in this Court and at trial.
Matthew and Joe submit that an order that each party bear his or its own costs of the appeals is appropriate. However, Fowler Homes submits that Joe should pay Fowler Homes' costs of his appeal and that it should pay 50% of Matthew's costs of his appeal. The reason proffered is that Matthew's success was only modest, particularly when the abandoned grounds of appeal are taken into account. That is true, and was acknowledged in [152] reproduced above. However, it is not the case that an appellant must be wholly successful in order for the usual rule in UCPR r 42.1 that costs follow the event to apply. The fact that an appellant's success is only partial may warrant departing from the usual rule under r 42.1, but that is not necessarily so.
It is also necessary to bear in mind that the parties have a long history of disputation over small amounts. The orders proposed by Fowler Homes would make it necessary for (a) Fowler Homes to identify which costs incurred by it were attributable to Matthew's appeal and which costs were attributable to Joe's appeal - noting that the same representatives appeared and a single set of submissions were supplied - so that Joe may pay the latter as agreed or assessed and (b) for Matthew's costs and Joe's costs to be determined so as to permit only half of the former, as assessed or agreed, and none of the latter to be paid by Fowler Homes - noting once again that the same representatives appeared for father and son. It is very easy to see that much time and expense could be wasted by what is involved in that approach, which involves the need for both sides' costs to be determined and also an apportionment of each side's costs as between Joe's and Matthew's appeal. It is difficult to think of orders which would be more needlessly contestable, between parties with a demonstrated appetite to litigate over minutiae, in respect of the costs of an appeal which must be small in contrast with the costs of the hearings at first instance. In the particular circumstances of this case, it would be decidedly regrettable for both sides to be required to determine their costs and for both sides to be required to allocate those costs as between the proceedings brought by each of Joe and Matthew.
All of those matters confirm the appropriateness of what was contemplated in [152], and embraced by Joe and Matthew, namely that there be no order as to the costs of the appeal, recognising that there was a single set of costs for Matthew and Joe Carbone, and that both Matthew and Fowler Homes enjoyed modest success.
We turn to the more substantial issue, which is the costs at first instance.
Matthew and Joe observe that the prima facie position as to the costs at trial would be that Joe pay Fowler Homes' costs of the proceedings, but that Fowler Homes should pay Matthew's costs of the proceedings. Because of the difficulties already averted to (the fact that the two proceedings were conducted concurrently with identical representation, and the real potential to lead to further dispute and costs in the event that the costs be disentangled) their preferred position is that there be no order as to the costs at trial. They note, correctly, that Matthew did not succeed on all issues, and that Joe's case and Joe's case alone raised the question of the $60,000 payment. But nonetheless, they maintain that the cases were run concurrently as, in substance, a single case, that it is artificial to divide them up, that no part of the time and costs of the trials can neatly be allocated to the $60,000 payment case, and that any other approach ignores the broad-brush approach which should guide the exercise of this court's discretion as to costs.
Fowler Homes says that the appropriate costs order as to Matthew's proceedings is that it pay 50% of his costs of the proceedings. It recognises that identifying an objectively fair and reasonable costs order is difficult, and it accepts that it would be open for it to be ordered to pay between 40% to around 60% of Matthew's costs, but it maintains that where he pursued but failed in his claim of unconscionable conduct, and his claim for misleading or deceptive conduct, and contested but failed with respect to the adoption of the referee report, and failed with respect to his application for disqualification, it would be inappropriate for him to receive all of his costs in the Court below.
Concerning Joe's costs at trial, Fowler Homes notes that the trial judge made no order with respect to the costs of the reference. The reason for that approach is that there was offsetting success of the parties: although Fowler Homes achieved success with respect to Joe's proceedings, it did not receive a costs order in its favour with respect to the reference because of Matthew's success on the same reference. Fowler Homes adds that if this Court were to disturb the trial judge's "no order as to costs" order regarding the reference, which it anticipated Matthew would be asking the Court to do, then this would work an injustice. It suggests either that the order as to the reference be varied so as to require Joe Carbone to pay Fowler Homes' costs of it or alternatively, the costs order of the Court below regarding the reference be left in place. In submissions in reply, Joe and Matthew note that their proposed order does not disturb the costs of the reference.
The submission advanced by Fowler Homes responding to Joe's and Matthew's submissions as to costs at trial are best reproduced in full.
[11] First, the Respondent disputes that it is open to the Court or (even if it is possible) that it would be appropriate for the making of an order allowing [Joe's] appeal for no reason other than to vary a costs order, which was not itself the subject of a successful appeal.
[12] It is relevant to note that [Joe's] Appeal did contain a ground of appeal regarding the issue of costs (Ground 10 (AmRed 133G)), but that ground of appeal was entirely abandoned: Appellants' Reply submissions [2] (Orange 81M). Further, this Court's determination was that [Joe's] appeal ought to be dismissed in its entirety: Appeal Judgment [150].
[13] Secondly, the submission at Appellants' Submissions [17] is wrong. Although the two Carbone claims were run concurrently and involved some common facts, they actually involved two different sets of facts and contentions (including different properties, different claims, and different financial entitlements arising at different times). The $60,000 claim and the deceit claim by [Joe] Carbone are illustrative of those differences, but the differences are not limited to those two matters.
[14] It would be counterintuitive to suggest that the costs incurred by Fowler Homes in responding to [Joe] Carbone's claims (which were more extensive than for Matthew Carbone's claim) should be lost to Fowler Homes by reason of Matthew Carbone's incomplete success against Fowler Homes on a relatively smaller case.
[15] Thirdly, the submission at Appellants' Submissions [18] is misdirected. The Respondent is not suggesting that a costs order be made by reference to issues, so as to burden a costs assessor with the task of allocating costs. The Respondent is identifying a principled reason why Matthew Carbone's entitlement to costs should be discounted by reason of his failure in the Court below on a number of contentions. This sensibly should result in him recovering less than his full costs. See G E Dal Pont (4th ed, LexisNexis Butterworths) Law of Costs [8.5] pp211-212.
[16] The Respondent otherwise relies upon its initial submissions in chief with respect to costs (Respondent's Costs Submissions (21 August 2024)).
One point of common ground is that there be no order as to the costs of the reference.
The result which should have obtained at trial is a judgment in favour of Matthew in the amount of $122,742.15 inclusive of interest, and a judgment in favour of Fowler Homes against Joe.
Matthew enjoyed significant success in the trial in the District Court, although he failed on some issues. We accept his submission that prima facie the appropriate exercise of the discretion as to costs would be for him to have his costs. The fact that a plaintiff does not obtain judgment as extensive as that which is claimed does not of itself disentitle the plaintiff from a favourable costs order. Very few plaintiffs achieve a judgment in the maximum amount that they have claimed, but that does not mean that it is appropriate to order that the unsuccessful defendant pay a fraction of the plaintiff's costs.
We have considered Matthew's and Joe's submission that there be no order as to the costs of the trial, which is said to reflect Matthew's success and Joe's failure as well as preventing the parties from exercising once again their proven capacity to engage in disputation, concerning the allocation of what in substance were two single sets of costs between (in the case of Fowler Homes) the costs of defending Joe's claim and (in the case of Matthew) his costs of obtaining judgment against Fowler Homes. There is force in their counsel's submission that "Enough is enough".
However, although the considerations are finely balanced, we do not think that such an order would reflect the reality that a deal of time was directed to the claim concerning the $60,000 payment, on which Joe failed. More than 10% of each sides' closing submissions was directed to this payment (paragraphs 100-129 of Joe's and Matthew's submissions; paragraphs 13-18 of Fowler Homes' (much shorter) submissions). An order that there be no order as to costs would make sense if Matthew succeeded and Joe failed, and their costs were, applying a broad-brush approach, approximately equal. But it is difficult on the face of the appeal books to be persuaded that that is the case, because the issue concerning the $60,000 payment loomed large in the litigation, and arose on Joe's case and Joe's case alone. Finally, there is also the formal difficulty to which Fowler Homes pointed, namely, that Joe's appeal has failed.
That said, although there should be some discount for the matters on which Matthew lost, we do not think it should be 50% or approximately 50%. Matthew's claim went to trial and he has been found to be entitled to a judgment in excess of $100,000. We are unpersuaded that the issues on which he failed displace his entitlement to the usual order pursuant to UCPR r 42.1.
Accordingly, we think that the orders made against Joe should not be disturbed, so that he should pay Fowler Homes' costs of defending the proceedings brought by him, save that there be no order as to the costs of the reference. No further order is required by this Court to achieve that result, because the orders made by the District Court in the proceeding brought by Joe remain in place. We think that Fowler Homes should pay Matthew's costs of the proceeding brought by him, save that once again there be no order as to the costs of the reference.
We are conscious that those orders carry with them the difficulties of both sides determining which of their own costs are attributable to Joe's and Matthew's claims. However, unlike the parties' costs of the appeal, we have less confidence that there is substantial equivalency of the costs at first instance, in part because they will be more substantial, following a five day trial and eight further directions throughout 2023. It will of course be open to the parties, who will know their own solicitor-client costs and have a better sense of the assessable costs to which they are entitled, to forego their entitlement to the costs as determined by those orders and agree that neither order will be enforced.
Turning finally to the applications determined by this second judgment, the two slips identified took little time, and the result which has been reached on costs at trial is an intermediate one. The appropriate exercise of the discretion as to costs in relation to the applications made after the principal judgment is that there be no order as to costs, with the intent that the parties bear their own costs of those applications.
The Court's orders are as follows:
In 2023/00443714 (Matthew's appeal), order that:
1. Set aside order 4 made by this Court on 6 August 2024.
2. Vary order 2 made by the District Court on 10 November 2023 by replacing $73,259 (in the order as varied by this Court on 6 August 2024) with $122,742.15, with the result that in proceeding 2020/308483 brought by Matthew Carbone against Fowler Homes Pty Ltd, the order taken to have been made on 10 November 2023 is:
That there be judgment and verdict for the plaintiff against the defendant in the sum of $122,742.15.
3. Pursuant to s 101 of the Civil Procedure Act, order that interest is not payable on the judgment debt in order 2 above if it is paid within 28 days of today, however to the extent that the judgment debt remains outstanding after 28 days from today, it will attract interest pursuant to s 101 accruing from 10 November 2023.
4. Set aside order 3 made by the District Court on 10 November 2023.
5. No order as to the costs of the appeal, with the intent that the parties bear their own costs of the appeal.
6. Order that other than for the costs of and incidental to the Reference that took place pursuant to the orders made by the District Court on 24 March 2023, Fowler Homes is to pay Matthew Carbone's costs in the District Court.
In 2023/00443762 (Joe's appeal), order that the notice of motion filed on 20 August 2024 be dismissed.
[3]
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Decision last updated: 05 September 2024