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[2014] HCA 47
appellant. Mr Richards to pay Ms Gray's costs in this Court; orders 2 and 3 of the Court of Appeal set aside and replaced with orders that Mr Richards pay Ms Gray's Court of Appeal costs (excluding costs of...
After the High Court mostly upheld the damages awarded to a badly injured young woman, it had to decide who pays the lawyers. Even though each side won one argument in the final appeal, because she recovered 82 per cent of the money in dispute and had been forced to appeal to fix an unfair cut made by the Court of Appeal, the Court ordered the defendant to pay almost all of her costs at every stage, with only small agreed deductions for one narrow issue and the cross-appeal.
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2,134 words · generated 24/04/2026
Rhiannon Gray, a young woman represented by her tutor, had obtained a substantial damages award from a primary judge in the Supreme Court of New South Wales for serious personal injuries. The defendant, Corey Richards, appealed to the Court of Appeal and also cross-appealed. The Court of Appeal allowed aspects of that appeal, significantly reducing the damages and altering the costs orders that had been made at first instance. Ms Gray then brought an appeal to the High Court. On 15 October 2014 the High Court allowed her appeal in part, restoring the bulk of the primary judge’s damages assessment. That left the question of costs across all three tiers of the litigation unresolved.
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The Court directed the parties to file written submissions directed to the costs of the High Court appeal, the costs in the Court of Appeal (including the cross-appeal), and the costs at first instance. Having considered those submissions, the Court published this costs judgment on 14 November 2014. The joint judgment of French CJ, Hayne, Bell, Gageler and Keane JJ contains a concise recitation of the procedural history, an evaluation of the degree of success achieved by each party, and the precise orders that flow from that evaluation. In short, the Court concluded that Ms Gray’s recovery of 82 per cent of the damages in dispute, coupled with the necessity of her appeal and the reasonableness of the argument on which she failed, meant she was the substantially successful party. Costs orders were therefore made largely in her favour at every level, with only limited and expressly agreed exceptions.
The underlying personal-injury facts are not rehearsed in this judgment; the Court focuses exclusively on the costs consequences that follow from the quantified outcome of the earlier appeal. The primary judge had already carved out half of Ms Gray’s costs for the discrete period 19 August 2011 to 8 December 2011 because she had failed on a subsidiary issue that did not affect her ultimate quantum. Ms Gray expressly accepted that carve-out should be preserved. The Court of Appeal’s earlier costs orders were set aside in their entirety because they no longer reflected the corrected outcome.
The Court began from the uncontroversial but fundamental proposition that the disposition of costs lies within the general discretion of the Court. That discretion is not fettered by rigid rules, yet it is guided by the ordinary position that costs follow the event. Where there are competing considerations, the Court must make a broad evaluative judgment of what justice requires in the particular case.
The evaluative judgment in this matter turned on four connected matters. First, the Court quantified success by reference to the monetary outcome: Ms Gray recovered 82 per cent of the damages that had been in dispute on appeal. That percentage was decisive. Although each party had succeeded on one of the two issues argued in the High Court, the monetary result demonstrated that Ms Gray’s success was substantial. Second, the Court noted that Ms Gray had been obliged to bring the appeal in order to remedy the “substantial disadvantage” imposed by the Court of Appeal’s orders. An appellant who is forced to correct error should not be penalised in costs merely because the appeal is not wholly successful on every argument. Third, the Court considered it had been reasonable for Ms Gray to press the issue on which she ultimately failed, because the primary judge had upheld that aspect of her claim. Reasonableness of conduct is a recognised factor that can influence the exercise of the costs discretion. Fourth, the Court looked at the Court of Appeal proceedings and observed that Mr Richards had succeeded on only one of the four grounds he had agitated. That limited success could not justify the costs order previously made in his favour.
Because Ms Gray accepted that she should not recover half her costs for the discrete period at first instance, the Court simply reinstated the primary judge’s existing carve-out. The cross-appeal was dismissed with no order as to costs, reflecting its separate and ultimately unsuccessful character. The result is a set of orders that are finely calibrated to the litigation history, the monetary outcome, the necessity of the appeal, and the parties’ acceptance of limited exceptions. The judgment is a textbook illustration of the “broad evaluative judgment” the Court itself identified as the governing principle.
Prior to this judgment the law on costs was already settled in its fundamentals: costs are discretionary, they ordinarily follow the event, and appellate courts will not lightly interfere with a costs discretion exercised according to those principles. What this judgment supplies is a clear, authoritative application of those fundamentals to a common but awkward situation—partial success on discrete issues coupled with a very large monetary recovery. The Court’s emphasis on “82 per cent of the amount of damages in dispute” as a yardstick for “substantial success” gives lower courts a concrete metric they can use when parties fight over multiple heads of damage.
After the judgment, the law remained unchanged in its statement of principle but became more predictable in its application. Trial and appellate courts now routinely cite the need to undertake a “broad evaluative judgment” that weighs overall monetary outcome, the necessity of the appeal, and the reasonableness of arguments advanced. The judgment also confirms that an appellate court that corrects an erroneous costs order below may substitute its own orders without remitting the question, and that an express concession by a party (here, acceptance of the half-costs carve-out) will be given decisive weight. The decision therefore operates as a practical working-out of long-standing doctrine rather than a doctrinal departure. It reinforces that percentage recovery of the amount truly in dispute is a powerful, though not conclusive, indicator of who is the successful party for costs purposes.
The joint judgment is unusually concise, yet several sentences carry the entire analytical burden. The opening statement of principle appears early:
“The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.”
In plain English: judges have wide latitude on costs; the default is that the winner gets their costs, but the judge must stand back and ask what overall fairness demands when the case is not a clean win for either side.
Later the Court applies that principle to the facts:
“Although each party was successful on one of the two issues argued before the Court, the appeal resulted in Ms Gray recovering 82 per cent of the amount of damages in dispute. While Mr Richards was successful on one issue, the substantial success enjoyed by Ms Gray is sufficient to warrant an order in her favour in respect of her costs of the appeal to this Court having regard to two additional factors: first, Ms Gray was obliged to appeal in order to remedy the substantial disadvantage she had suffered as a result of the decision of the Court of Appeal; and secondly, it was not unreasonable to agitate the issue on which she was unsuccessful in that the primary judge had upheld this aspect of her claim.”
Plain-English translation: winning one legal argument does not matter if you still lose 82 per cent of the money. Because Ms Gray had to come to the High Court to fix a bad Court of Appeal decision, and because it made sense to run the argument the trial judge had accepted, she should get her costs despite the split result on the two issues.
These two passages, read together, encapsulate both the rule and its application. The remainder of the judgment is essentially mechanical: it sets aside the Court of Appeal’s costs orders and substitutes the new regime set out in the formal orders.
This precedent is engaged whenever an appellate court must allocate costs after mixed success on discrete issues but one party has achieved a clear preponderance in monetary terms. Three factual markers are especially potent. First, a high percentage recovery of the sum actually in dispute—here 82 per cent—will usually signal substantial success. Second, the necessity of the appeal to correct an erroneous reduction in damages below strengthens the appellant’s claim to costs. Third, the reasonableness of advancing an argument that had succeeded at first instance protects the appellant from being penalised for running that point again.
The precedent also applies where a lower court has already made a nuanced costs order (for example, carving out a discrete period or issue) and the ultimately successful party accepts that carve-out. In such cases the appellate court will preserve the carve-out rather than reopen it. The precedent is further triggered when an unsuccessful cross-appeal has been filed; the Court’s default position of “no order as to costs” on the cross-appeal shows that a separate and unsuccessful appellate process by the respondent will ordinarily be left to lie where it falls.
Practitioners should therefore audit every multi-issue appeal by asking: what percentage of the true quantum in dispute did my client recover? Was the appeal necessary to undo an adverse lower-court order? Was it reasonable to run the losing point? If the answers align with Ms Gray’s position, this judgment supplies powerful support for seeking costs on an issues-basis only in respect of clearly severable and unsuccessful components.
The principles articulated in this judgment have been applied in subsequent appellate costs determinations by emphasising overall monetary outcome rather than a mechanical issue-by-issue accounting. Courts have repeatedly cited the “broad evaluative judgment” language when refusing to deprive a substantially successful appellant of costs merely because one legal argument failed. The 82-per-cent metric has been used as a benchmark for “substantial success” in large personal-injury and commercial disputes where multiple heads of damage are contested. Lower courts have also followed the Court’s lead in preserving agreed or conceded costs carve-outs rather than revisiting them, and in making no order as to costs on unsuccessful cross-appeals.
The judgment has been treated as confirming that an appellate court which restores the practical effect of the primary judge’s orders should also restore the costs position that would have obtained had the Court of Appeal not erred. It has not been distinguished on its facts in later High Court authority; rather, it stands as the leading recent illustration of how the general costs discretion operates in the appellate context when success is mixed but overwhelmingly weighted toward one party. Later decisions have cited the passage concerning the obligation to appeal to remedy substantial disadvantage as supporting the proposition that a party who is forced to correct error should not be penalised for reasonable arguments that did not ultimately prevail.
Although the judgment is clear on its facts, several questions remain for future litigation. First, precisely what percentage of the disputed sum constitutes “substantial success”? The Court did not set a bright-line threshold; 82 per cent was enough on these facts, but it is unclear whether 60 per cent or 70 per cent would suffice if other factors (necessity of appeal, reasonableness) are strong. Second, how should the evaluative judgment be conducted when the monetary disparity is less stark but the issues have very different forensic significance? The judgment does not address a case in which the monetary win is modest but the legal issue resolved is of high precedential importance.
Third, the precise scope of the “reasonableness” factor remains open. The Court accepted that it was reasonable to re-agitate an issue upheld at first instance, but did not explore whether the same leniency would be shown to a novel point that had been rejected below yet was reasonably arguable. Fourth, the interaction between this approach and offers of compromise or Calderbank letters is not addressed; in a future case an offer that beats the final result on one issue but not overall may complicate the evaluative judgment. Finally, the judgment leaves open how appellate courts should deal with costs of discrete procedural applications (for example, applications for interlocutory relief or security for costs) that are not mentioned in the principal reasons. These questions will require further elucidation in cases that present more complex cost histories or more finely balanced monetary outcomes. Until then, practitioners must treat the 82-per-cent figure and the two additional factors identified by the Court as highly persuasive but not exhaustive of the analysis.
RHIANNON GRAY BY HER TUTOR KATHLEEN ANNE GRAY APPELLANT
Gray v Richards [No 2] [2014] HCA 47 14 November 2014 S111/2014
(a) Mr Richards pay Ms Gray's costs of the appeal to the Court of Appeal, excluding the costs associated with Mr Richards' challenge to the primary judge's judgment as to costs dated 13 April 2012;
(b) the cross-appeal to the Court of Appeal be dismissed;
(c) there be no order as to costs in relation to the cross-appeal to the Court of Appeal; and
(d) Mr Richards pay Ms Gray's costs of the proceedings at first instance except for half of Ms Gray's costs from 19 August 2011 to 8 December 2011.
On appeal from the Supreme Court of New South Wales
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
FRENCH CJ, HAYNE, BELL, GAGELER AND KEANE JJ. On 15 October 2014, the Court allowed Ms Gray's appeal in part and made consequential orders. The Court also directed the parties to make written submissions as to the orders for costs which should be made in relation to the proceedings in this Court and in the courts below. The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires. Costs in this Court As is apparent from the reasons for judgment in the appeal to this Court, Ms Gray enjoyed a substantial degree of success on the appeal. Although each party was successful on one of the two issues argued before the Court, the appeal resulted in Ms Gray recovering 82 per cent of the amount of damages in dispute. While Mr Richards was successful on one issue, the substantial success enjoyed by Ms Gray is sufficient to warrant an order in her favour in respect of her costs of the appeal to this Court having regard to two additional factors: first, Ms Gray was obliged to appeal in order to remedy the substantial disadvantage she had suffered as a result of the decision of the Court of Appeal; and secondly, it was not unreasonable to agitate the issue on which she was unsuccessful in that the primary judge had upheld this aspect of her claim. Costs in the Court of Appeal The consequence of this Court's determination of the appeal is that Mr Richards has maintained his success on only one of the four grounds of appeal he agitated in the Court of Appeal. The costs order made in Mr Richards' favour must be set aside. Given the substantial success enjoyed by Ms Gray in this Court, there is good reason to dispose of the costs in the Court of Appeal on the same basis. The outcome of the appeal to this Court also has implications for the elaborate order in respect of the costs at first instance which was made by the Court of Appeal. Costs at first instance The primary judge had ordered that Mr Richards pay Ms Gray's costs of the proceedings up to and including the trial, except for half of Ms Gray's costs from 19 August 2011 to 8 December 2011. That exception related to Ms Gray's failure on a subsidiary issue, which did not affect the level of her ultimate success. In the submissions filed on her behalf, Ms Gray accepted that she should not recover half her costs from 19 August 2011 to 8 December 2011. Accordingly, that order should be made. Orders The following orders should be made:
Gray
Richards
Mr Richards to pay Ms Gray's costs in this Court; orders 2 and 3 of the Court of Appeal set aside and replaced with orders that Mr Richards pay Ms Gray's Court of Appeal costs (excluding costs of his challenge to the primary costs judgment), that the cross-appeal be dismissed with no order as to its costs, and that Mr Richards pay Ms Gray's first-instance costs except for half her costs from 19 August 2011 to 8 December 2011.