Casey v Retford (No 2) (costs)

File Number(s): 2023/00221664

Publication restriction: Nil

JUDGMENT

1. The plaintiffs, Mr and Ms Casey, sued Mr Retford, a builder, for breach of contract and breaches of the Home Building Act 1989 with respect to the contract between the parties for the renovation and extension of the plaintiffs’ house. Mr Retford counter-claimed.

2. In summary, the plaintiffs alleged that Mr Retford had failed to complete the residential building works required under the contract within the time period specified, and that some of the works performed were defective and had not been rectified. The plaintiffs sought damages for breach of contract.

3. The plaintiffs also claimed that the sum of money that they had paid to Mr Retford represented an overpayment. The plaintiffs sought restitution of the overpayment.

4. The principal judgment in this matter was handed down on 4 February 2025 (see Casey v Retford [2025] NSWDC 1). The plaintiffs succeeded partially in their claims for the rectification of defects and the completion of incomplete works. The plaintiffs were awarded the sum of $117,566.20 in damages.

5. The plaintiffs were not successful in their claim for restitution.

6. The defendant sought an order for the payment to him by the plaintiffs of $70,423.24 by way of cross-claim pleaded in contract and restitution on the basis of quantum meruit. The cross-claim was comprised of $18,499.68 which was said to be owed in relation to variations to the contract, $30,277.58 for works performed under the contract and not paid for, and $21,645.98 allegedly paid by the defendant, on behalf of the plaintiffs, to a third party supplier.

7. The defendant succeeded with respect to an unpaid portion of Variation 3, for which he was owed $814.

8. The defendant was not successful in his claim for restitution on the basis of quantum meruit.

9. The parties have now made written submissions in relation to costs.

The plaintiffs’ submissions on costs

10. The plaintiffs referred to the power to award costs in the Civil Procedure Act 2005, s 98, and Part 42 of the Uniform Civil Proc**edure Rules 2005 (‘UCPR’).

11. The plaintiffs noted that the award of costs is a discretionary power which “must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation” (Northern Territory v Sangare [2019] HCA 25 at [24]).

12. The plaintiffs argued that they should be awarded costs against the defendant on the ordinary basis, for the following reasons:

13. Costs follow the event and the plaintiffs are the successful party. The successful party ought to be awarded costs against the unsuccessful party (Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] and [134]).

14. There is no suggestion that there has been any disentitling conduct on the part of the plaintiffs, or any other matter which would displace the usual rule.

15. The onus lies on the defendant to establish some basis for departure from the usual rule. No such basis has emerged.

16. The award to the defendant on the cross-claim of $814 is grossly disproportionate to the cost of the proceedings on both sides. In Jones v Sutton (No 2) [2005] NSWCA 203, a plaintiff who was awarded $5,000 after a nine day hearing in the District Court was deprived of costs. A similar approach should be taken in this matter.

17. The plaintiffs conceded the claim for $814 by the defendant.

18. The plaintiffs were compelled to pursue the matter to judgment. The costs order they seek is not punitive and simply compensates them for the expense they have incurred.

The defendant’s submissions on costs

13. The defendant submitted that, on the first day of the hearing, the plaintiffs provided a Schedule of Damages setting out claims in the sum of $497,923.36.

14. The defendant pointed out that the award of damages made in the plaintiffs’ favour was approximately 40% of the amount claimed in the Schedule of Damages. The defendant submitted that the claim by the plaintiffs for landscaping works was for $92,946.70, which was roughly 80% of the claim for incomplete works and was entirely unsuccessful. The defendant submitted that, given that the plaintiffs’ claims for restitution and delay damages had not succeeded, the plaintiffs recovered less than one quarter of their claim.

15. The defendant argued that more than half of the time taken at the hearing was occupied with issues with respect to which the plaintiffs failed. Further, the balance of the time, being the concurrent evidence given by the experts, should be regarded as a “draw”.

16. This should inform the exercise of the costs discretion.

17. The defendant referred to Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 Hodgson JA, with whom McClellan CJ at CL and Basten JA agreed, said:

15 It was submitted for Mr Griffith that a successful party may be deprived of costs, and ordered to pay the other party's cost, in respect of an issue lost by the successful party, where that issue was clearly dominant or severable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64], Waters v P C Henderson (Australia) Pty Ltd [1994] NSWCA, 338.

16 I accept that a successful party may be deprived of costs and ordered to pay the other party's costs in those circumstances. I adhere to what I said on this question (Beazley and McColl JJA agreeing) in Turkmani v Visvalingam (No 2) [2009] NSWCA 279 at [9]-[13]:

[9] The applicable principles were stated as follows in the joint judgment of Beazley, Tobias and McColl JJA in James v Surf Road Nominees (No 2) [2005] NSWCA 296 at [31]-[33]:

[31] Costs orders in the Supreme Court are governed by the provisions of s 76 of the Supreme Court Act 1997 and the Supreme Court Rules. Section 76 provides, relevantly that subject to the Act and the Rules, costs shall be in the discretion of the Court: s 76(1)(A). Part 52A r 11 acts as a limited proscription of the Court's discretion conferred by s 76. Part 52A r 11 provides that, subject to Pt 52A, the Court shall order that costs follow the event "except where it appears to the Court that some other order should be made as to the whole or any part of the costs".

[32] The effect of Pt 52A r 11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v P C Henderson (Aust) Pty Ltd (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said:

Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, 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.

[33] Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748:

1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order.

2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.

3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. (references omitted)

[10] Those paragraphs were quoted with approval in Roads and Traffic Authority v McGregor (No 2) [2005] NSWCA 453 at [17]: and there are similar statements of principle in Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[65] and Rockdale City Council v Micro Developments Pty Ltd [2008] NSWCA 128 at [115].

[11] In the present case, in my opinion, the issues of liability and apportionment for contributory negligence were not clearly severable: all the arguments relied on by the appellant with a view to negativing liability had, to a greater or lesser extent, some bearing on the Court's overall assessment of the respective degrees of fault of the appellant and the deceased.

[12] The principles stated in the cases have an alternative basis for departure from the usual order as to costs, namely where the successful party fails on a "clearly dominant issue". That seems to suggest that if an issue can be identified that was clearly dominant, on which the successful party failed, the usual order may be departed from even though that issue was not clearly severable. Here, the respondents argued to the effect that the issue of liability was clearly dominant.

[13] The question of whether a departure from the ordinary rule might be justified on this basis should, in my opinion, be approached having regard to the idea of fairness underlying the making of costs orders, which I expressed as follows in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]:

[121] In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach.

17 Other cases in which similar principles have been expressed include Elite Protective Personnel Pty Limited v Salmon (No 2) [2007] NSWCA 373, and Bostik Australia Pty Limited v Liddiard (No 2) [2009] NSWCA 304.

18 It is clear that this approach is not limited to cases where it was unreasonable for the successful party to raise the issue on which it failed: Rosniak v GIO (1997) 41 NSWLR 608 at 615D. However, the principles only identify cases in which it may be appropriate to depart from the usual result as to costs, not cases in which the court must do so: James at [34]-[36].

19 Further, in my opinion, the underlying principles concerning costs identified in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] and Ohn v Walton (1995) 36 NSWLR 77 at 79 (referred to in Turkmani at [13]) suggest that the application of these principles may not be exactly the same for successful defendants as for successful plaintiffs. In the former case, the defendant has been caused to incur costs in defending a claim which the decision in the case has wholly rejected, and has thus determined should not have brought about the incurring of any costs at all. In those circumstances, it may be considered appropriate that the defendant have costs associated with reasonable defences, even if they ultimately proved to be unsuccessful and severable. In the latter case, the plaintiff has chosen to bring the whole proceedings and thereby to incur costs and cause costs to be incurred which otherwise would not have been incurred; and in those circumstances, it may be seen more readily as appropriate that the plaintiff be liable for the costs of unsuccessful severable claims or issues, even if it was reasonable to include those claims or issues.

20 Most of the cases in which these principles have been considered are cases where a successful plaintiff (or appellant) has not recovered full costs. Two cases which did concern successful defendants (or respondents) give some support to the distinction I have drawn in the previous paragraph: Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]-[25], and Sydney Ferries v Morton (No 2) [2010] NSWCA 238 at [18]. However, this distinction is not necessary for my decision in this case.

18. The defendant also cited Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6] – [7] and [11] per Beazley, McColl and Basten JJA:

6 Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which the appellant 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).

7 As the appellants submit, the commencing position is that costs follow the event so that a successful party is entitled to costs. 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 in the Court of 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]).

…

11 As to the extent to which the appellants should lose the benefit of the first costs order, the appellants are correct that it is often difficult to decide, in retrospect, how much time was occupied upon one issue or the other in the course of an appeal. 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 and Ors v Surf Road Nominees Pty Ltd and Ors [No 2], citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 (at 272). Doing the best it can, having regard to the significance the contributory negligence issue played in the appeal, the Court is of the view that the respondent should bear only seventy-five per cent of the costs of the appeal, such costs to include the costs of this application.

19. The defendant argued that the cost of the plaintiffs’ restitution claim and the delay damages claim were “clearly severable”. The defendants argued that it would not be “fair” for the plaintiffs to recover their costs for those issues from the defendant.

20. The defendant suggested that the plaintiffs be awarded 50% of their costs, on the ordinary basis.

The plaintiffs’ written submissions in reply on costs

21. The plaintiffs argued, in reply, that the successful party’s entitlement to an order for costs should not be discounted to allow for another party’s success on a separate issue which played a very minor part in the proceedings as a whole (Macourt v Clark (No 2) NSWCA 411 at [7]).

22. The severability of an issue on which the successful party failed is not, without more, sufficient to warrant departure from the general approach. The plaintiffs referred to Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 at [14], in which the Court of Appeal said:

14 In the appeal the damages issues were addressed with brevity, both in written submissions and at the hearing. The consideration of the quantum issues did not increase the hearing time or otherwise take up "a significant part" of the appeal. The fact that one issue on which a party failed on the appeal is separable or discrete is not, without more, sufficient to warrant departure from the ordinary rule.

15 The overwhelming focus of both parties was on the issue of liability. This was clear from the written and oral submissions. In the particular circumstances of this case THE Court is not persuaded that the costs order in favour of Dr Tompsett should be disturbed because she failed on the damages part of her appeal.

23. The plaintiffs argued that the issues in the proceedings were not severable. There is no sufficient basis to warrant departure from the general approach. The substantive claims in relation to which the plaintiffs did not succeed were the claim for overpayment and landscaping, and those did not take up significant time in the hearing.

24. The plaintiffs argued that an issue by issue approach would not be appropriate and that there was no proper basis to depart from the general approach.

Consideration

25. The parties are, broadly, in agreement on the principles to be applied, which are set out above.

26. The issue of alleged overpayment and the issue of the defendant’s liability for landscaping works were both issues in relation to which the plaintiffs were unsuccessful. Those issues could readily have been severed from the plaintiffs’ claim. Although neither of those issues were dominant in the proceedings, they required preparation and argument. In all of the circumstances, I consider that the appropriate award is for the defendant to pay 90% of the plaintiffs’ costs on the ordinary basis.

27. The defendant, properly, has not sought costs in relation to the cross-claim.

Order

28. The following order will issue:

29. The defendant is to pay 90% of the plaintiffs’ costs of these proceedings, including the costs of the application for costs, on the ordinary basis.

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