Cummings v Lewis

The Full Court concluded that nothing referred to by the appellant suggested that the discretion concerning the application of s 51A of the Act had miscarried or that an error of law had been committed in its application. The applicant submits that it should be awarded its costs upon a party and party basis up to and including 28 July 1994, and from 29 July 1994 upon a solicitor/client basis.

For the second respondent it was submitted that there were disentitling circumstances in the case for the applicant, being its tardy behaviour in the prosecution of the action, the changing and evolving nature of its case and the nature and quantum of the damages claimed, and that the damages in fact achieved from the judgment were substantially lower than that which the applicant sought to recover. Further, in the second respondent's written submissions, reliance is placed on delays, said to be not its responsibility, as requiring an interest award which should reflect the applicant's own responsibility for the manner in which the litigation was conducted. It was submitted that if the interest were reduced by $8,000.00, the applicant will then have failed to recover a judgment in excess of $100,000.00 and the provision of O 62 r 36A(i) of the Federal Court Rules would apply unless the applicant persuaded the court to make an order to the contrary. In my opinion, the question of the appropriate award of interest was a live issue at the trial and it is not possible to revisit that question under the guise of submissions concerning costs. In those circumstances, in my opinion, O 62 r 36A of the Federal Court Rules has no application.

The central operative provision concerning the exercise of the discretion as to costs in this Court is s 43 of the Act which provides: " (1) Subject to subsection (1A), the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want to jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded. ... (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge. " This section confers a wide discretion upon the Court with respect to costs, but that discretion is not unfettered: Cummings v Lewis (1993) 41 FCR 559 at 602 et seq, Sheppard and Neaves JJ agreeing at 568 with reasons and conclusions of Cooper J on costs. Some of the circumstances in which an order for costs might be less than full were discussed by Mason CJ in Latoudis v Casey (1990) 170 CLR 534 at 544 and by Toohey J at 565. The Federal Court Rules do not purport to qualify that discretion. The only rule to which reference is necessary is O 62 r 15, whereby, when costs are reserved, those costs follow the event "unless the Court or a Judge otherwise orders". Toohey J in Hughes v West Australian Cricket Association (Inc)[1986] ATPR 40-748 at 48,136 set out in a summary way what his Honour understood to be the effect of decisions both of Australian and English courts on the way in which the discretion is to be exercised. His Honour said: " 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey [1920] 2 KB 47. 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. Forster v Farquhar [1893] 1 QB 564. 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 other 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. Cretazzo v Lombardi (1975) 13 SASR 4 at p. 12. There is no difficulty in stating the principles; their application to the facts of a particular case is not always easy. Also it is necessary to keep in mind the caveat by Jacobs J in Cretazzo v Lombardi at p 16. His Honour sounded what he described as 'a note of cautious disapproval' of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented: ' But trials occur daily in which the party, who in the end if wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues. ' " In Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169, Burchett J, considering the case of a successful defendant who had failed in respect of some issues, said: " It does not necessarily follow that the costs orders otherwise appropriate should be affected. A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately, the question is one of discretion and judgment. " In Henderson v Amadio, an unreported judgment of 22 March 1996 of Heerey J, his Honour, having referred to these observations by Burchett J at 494 said: " In my respectful opinion the same reasoning applies to a successful plaintiff who fails on some issues. To extend Burchett J's military metaphor, the plaintiff is not to be regarded as culpable because he attacked at points of the defendant's fortifications other than the place where success came. He is not to be forced, at his peril in respect of costs, to abandon every flank attack. " There is jurisdiction to award costs on an indemnity basis: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225. One circumstance which might justify such an award is the imprudent refusal of an offer to compromise: Colgate Palmolive at 233. Applying the guidance of these observations to the exercise of the statutory discretion conferred by s 43 of the Act, in the circumstances of this case, there is no basis in my view for denying to the applicant any portion of its costs by virtue of its success being less than it sought, or by having regard to the evolution of the case, or to the nature and quantum of the damages claimed. With respect to the complaint of delays by the applicant, it is true that in the period from December 1991 until 16 September 1992, there was delay for which the applicant is responsible. However, in respect of what is said to be delay from 21 July 1994 to 13 February 1995, the applicant had, on 21 July 1993, asked that the proceedings be set down for trial and in dealings with the Court, had indicated that the matter was ready for trial. It was submitted that in those circumstances this period did not represent a period of delay by the applicant. In a sense that is right, in that the applicant was telling the Court that the matter was ready for trial, but as later discovery amongst other important aspects indicated, there were respects in which the applicant's claim to be ready for trial was wrong. I do not regard any tardiness on the part of the applicant in pursuing its claim, as properly calling for a reduction in the costs to which it might otherwise be ordered. This conclusion is fortified by the observation that in a number of respects it can validly be asserted that the second respondent was reluctant to bring the matter to trial. In response to a notice of motion dated 18 January 1994 by the applicant seeking orders that the matter be set down for trial, the second respondent indicated its intention then to seek to deliver interrogatories, and raised for the first time in correspondence the issue of the transfer of the matter to the District Court and indicated that the trial would last ten days. Finally, in respect of the second respondent's submissions, it was said that this is a matter which could and should have been initiated or determined in the District Court. It was submitted that the costs awarded should be substantially reduced to reflect the fact that this type of case could have been heard in the District Court and the lower level of costs that would have been obtained if the matter had been heard or determined in that Court. The fact of the matter, however, is that cross-vesting to the District Court was something that could have been sought by either party in the proceedings (or by the Court of its own motion). No such application was made by the second respondent or by the applicant. I do not think the fact that a judgment of the Federal Court is within the monetary range of the District Court provides a basis on which a successful applicant ought to be deprived of its ordinary costs. On the other hand, in the circumstances of this case, I am not prepared to make an order that part of the applicant's costs be on a solicitor/client basis. In a "without prejudice" letter of 21 July 1994, the applicant offered to settle these proceedings on the basis of $80,000.00 for the claim and interest and $35,000.00 for costs. The second respondent would then abandon any claim against the applicant in relation to costs orders already made in the action and each party would execute a notice of discontinuance. That letter contained a reference to the fact that it might be produced to the Court in relation to the issue of costs. The letter was of the type considered in Calderbank v Calderbank [1975] 3 All ER 333 at 342, with the important difference that the letter in Calderbank did not require any estimate of what the costs component might be. In the detailed reference to authority by Sheppard J in Colgate-Palmolive at 232-3 (supra), and to the principles which his Honour distilled from the authorities to which he referred at 232, it can be said that an imprudent refusal of an offer to compromise can justify the exercise of the Court's discretion to award costs other than on a party and party basis. The second of the guidelines referred to by his Honour is:

" The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis." I accept that O 23 of the Federal Court Rules which governs the making of offers of compromise does not exclude consideration of Calderbank letters: Henderson v Amadio Pty Ltd (22 March 1996, unreported, Heerey J). I referred to some relevant aspects of such an offer in Smallacombe v Lockyer Investment Co Pty Limited (1994) 42 FCR 97. Hill J, in J S Hayes & Assoc Pty Limited v Kimberley- Clark Australia Pty Limited (1994) 52 FCR 201 at 206, indicated that the making of an offer of compromise is simply one of many factors which may be taken into account by the Court in exercising its judicial discretion to award costs. The applicant submitted that the second respondent's unreasonable conduct in attempting to delay the proceedings and its refusal to have the matter resolved by mediation, were further factors inclining to the grant of costs on a solicitor/client basis. I have already indicated that the question of delay was not a one-way street. I do not think that a refusal to engage in mediation is a factor in the circumstances of this case which should bear on the question of solicitor/client costs. Having regard to the nature of the terms of the offer of compromise, which is analogous to the all-up offer in Smallacombe, and different from the kind of offer in Calderbank, and different from the kind of offer in Messiter v Hutchinson (1987) 10 NSWLR 525, I do not think there are in this case special circumstances to justify the making of an order other than the usual order as to costs on a party and party basis. I do not think an offer that requires an assessment of party and party costs (as opposed to an offer to pay taxed or agreed costs) should be considered. In any event, there is no evidence in this case as to whether the offer of the applicant, viewed as a whole, was greater or less than the total of claim, interest and party and party costs at the time of the offer. In the circumstances of this case, the order as to costs that I make is that the second respondent pay to the applicant its costs of and incidental to the proceedings, including reserved costs, those costs to be taxed if not agreed. I certify that this and the eleven (11) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender. Associate Date: 4 February 1997. Counsel for the applicant : Mr D A Savage instructed by : Freehill Hollingdale & Page Counsel for the second respondent: Mr D R Cooper instructed by : Creswicks Dates of Hearing : 5, 9, 20 August; 4, 16 September 1996