67 The substantial time on the hearing was taken up with issues that the first and second defendants lost. The two issues which the plaintiffs lost were matters that required no factual investigation of substance and occupied a minor part in the proceedings.
68 The third defendant, given its position on the adoption hearing, sought an order that the plaintiffs pay its costs of the adoption hearing but that the third defendant pay the plaintiffs' costs of the reference. This is quite reasonable given that the plaintiffs sought to substantially increase their verdict as against the third defendant and lost on that issue. The fact that they raised that matter certainly kept the third defendant in the adoption proceedings as an active defendant in respect of the plaintiffs' claims in contrast to just playing some other limited role in respect of apportionment.
69 In my view the plaintiffs should have the costs of the adoption proceedings as against the first and second defendants but that the plaintiffs should pay the third defendant's costs of the adoption hearing.
2 (c) Whether a Bullock or Sanderson order should be made against the plaintiffs in respect of the cost order already made that the first and second defendants pay the cost of QBE of the second cross claim?
70 On my findings this does not arise.
2 (d) Whether the costs orders against the defendants should be joint and several or should be apportioned?
71 It was suggested that costs should be apportioned in accordance with the result on liability in accordance with s 109ZJ of the Environmental Planning and Assessment Act 1979. The third defendant submitted that this would be a fair result which would reflect the intent of the legislation.
72 The plaintiffs' submissions on this aspect were as follows:
"The general rule which the plaintiff's Outline of Submissions have assumed, but not stated directly, is that costs are not generally apportioned between parties, but rather, unsuccessful parties are liable for costs on a joint and several basis (see Ryan v South Sydney Junior Rugby League Club Ltd [1975] 2 NSWLR 660 at 663; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201 at 210; 42 FLR 213; Rushcutters Bay Smash Repairs Pty Ltd v H McKenna Netmakers Pty Ltd [2003] NSWSC 670) (unless and to the extent that, the proceedings against them involved separate and discrete issues) (see Mt Gambier Co-op Milling Society Ltd v Williams [1921] SASR 185; Thiess Watkins White Construction Ltd (in liq) v Witan Nominees (1985) Pty Ltd [1992] 2 Qd R 452 at 454)
Having a different outcome on costs in comparison to damages is not "unfair" as suggested by the third defendant. Rather, such an outcome is appropriate in that it recognises that, although a party should only be liable for damages in the proportion that it was at fault, the proportion of the Court's time spent in considering arguments (and therefore the amount of costs incurred) may not be divided in the same proportion as liability is divided. The plaintiff's submit that this is such a case.
Generally, costs are compensatory rather than punitive, and the joint and several liability for costs is an important principle ensuring that a successful plaintiff is compensated for its costs incurred. This protection and vindication could be compromised if costs are apportioned and one party is unable or unwilling to pay.
This issue, and the relevant authorities, was considered in some detail by Gzell J in Rushcutters Bay Smash Repairs Pty Ltd v Mckenna Netmakers Pty Ltd & Ors [2003] NSWSC 670 at [2]"
'[2] Ordinarily, costs will follow the event and, ordinarily, an order for costs made against two or more defendants is joint and several as between them ( Ryan v South Sydney Junior Rugby League Club Ltd [1955] 2 NSWLR 660 at 663). The justification for the joint and several liability is that a plaintiff as the successful party is, prima facie, entitled to its costs of the action and if one of the unsuccessful defendants is unable or unwilling to meet its share of the obligation, the misfortune should be that of the "partners in crime" and not that of the plaintiff ( Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201 at 210). " (at [16] His Honour also noted that "partners in crime" was used in a metaphorical sense and did not require any element of criminality in a literal sense.)'
His Honour went on to consider authorities supporting a departure from the above rule and considered that it would only be appropriate in situations where the evidence is not interconnected and the arguments by the plaintiff as against the defendants were disengaged from one another ( Rushcutters Bay Smash Repairs Pty Ltd v Mckenna Netmakers Pty Ltd & Ors [2003] NSWSC 670 at [9] to [10]). There is no such justification for a departure from the general rule in the present case. "
73 It is notable that the legislation is silent on the topic. It would have been easy to incorporate different cost consequences if it was appropriate to displace the usual well-established rule. In my view, the appropriate order is that the usual rule should apply with the defendants being jointly and severally liable.
3. Costs as between the third defendant and the first defendant in their separate District court proceedings which are now proceedings 55019/03 which were also the subject of the reference.
74 It is agreed that given there will be judgment for the plaintiffs in these proceedings against the defendant in the sum of $171,025.67 and it is agreed that the defendant in these proceedings should pay the plaintiffs' costs on the ordinary basis.
4. Costs as between the third defendant and the plaintiffs in proceedings 550737/03
75 The costs of the adoption proceedings are dealt with above and it is appropriate that the third defendant pay the plaintiffs' costs of the reference and the rest of the proceedings.
Interest on costs.
76 The plaintiffs sought interest on costs and this was opposed by only the third defendant.
77 The plaintiffs referred to Joseph Lahoud & Anor v Victor Lahoud & Ors v Victor Lahoud & Ors [2006] NSWSC 126, Campbell J set out the principles to be applied when considering interest on costs under section 101 of the Civil Procedure Act 2005. Campbell J stated (at [82] - [83]) as follows:
" [82] … There is no requirement, before an order for payment of interest on costs is made, for the Court to be satisfied that the circumstances of the case are out of the ordinary: Grogan v Thiess Contractors Pty Ltd & Anor [2000] NSWSC 1101 at [10] per Barr J; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liq) & Ors [2002] NSWSC 280 at [23]-[25] per Einstein J; Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 at [10] per Grove J; Davies v Ku-ring-Gai Municipal Council [2003] NSWSC 1010 at [7] per Austin J.
[83] To the extent to which the plaintiffs have been out of pocket as a result of having to pay their lawyers' costs and disbursements, it is appropriate that the compensation which is recognised in the Court's order for costs take into account the fact that the plaintiffs have been out of pocket in that way: Hughes Bros v The Trustees of the Roman Catholic Church [1999] NSWSC 1051 at [60 ]; Grogan v Thiess Contractors Pty Ltd & Anor [2000] NSWSC 1101 at [12]; Woods v Woods [2001] NSWSC 1108 at [29]; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liq) & Ors [2002] NSWSC 280 at [17]; Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 at [10]; Optus Networks Pty Ltd & Ors v Leighton Contractors Pty Ltd & Ors [2005] NSWSC 156 at [9]; Roads and Traffic Authority v Cremona (No 3) [2005] NSWCA 13 at [34]. Given the length of time the proceedings have been on foot and the extensive preparation, the amount by which the plaintiffs have been out of pocket could be large. It is relevant that the plaintiffs, and the defendants, each conduct businesses and so the amounts which the plaintiffs have had to pay to finance the litigation is likely to be money which otherwise could have been put to a productive use. Conversely, the defendants, by not being required to pay costs until some time in the future when the costs are agreed or assessed, are likely to have been able to retain, for their own productive use, the amount of those costs."
78 As was pointed out by the plaintiffs, those principles enunciated by Campbell J have subsequently been applied by the Court of Appeal in Leda Pty Ltd v Weerden (No. 2) [2007] NSWCA 283 at paragraphs [7] - [8].
79 This action dates back to 2003 and the events occurred some years earlier. It is a suitable case for interest on costs. In Lahoud v Lahoud, Campbell J canvassed the issues surrounding the formulation of an appropriate order for the payment of interest on costs and made the following orders:
"3. In this order:
X - equals the total amount of costs and disbursements which the plaintiffs have paid or are liable to pay to their legal advisers in connection with these proceedings.
Y - equals the total amount of costs and disbursements allowed on assessment to the plaintiffs in connection with these proceedings.
The Allowed Percentage equals ((y/x ) x 100)%
Order the defendants to pay to the plaintiffs interest on costs and disbursements, at the rates set out in Schedule 5 Uniform Civil Procedure Rules, on the Allowed Percentage of each amount of costs and disbursements actually paid by the plaintiffs, from the date of payment by the plaintiffs of each such amount of costs and disbursements until the first to occur of:
(a) such time as the defendants have paid the costs due to the plaintiffs under any order made in these proceedings, or
(b) any further order relating to interest on costs in these proceedings.
4. Reserve further consideration of whether interest on costs should continue to run."
80 An order in similar terms should be made in this case.