I delivered reasons for judgment in this matter on 8 September 2020 [1] and afforded opportunity for the parties to try to resolve amongst themselves dispositive orders, including costs. The parties remain divided on the question of costs. I will return to the other dispositive orders at the conclusion of my determination of the dispute about costs.
To recapitulate, and stating the matter broadly, the plaintiff brought a claim for its unpaid costs of supplying carpentry and joinery services to the defendant across three different sites. That claim was defended partly on the basis that even if the claim was established, it was extinguished or reduced in its value on the basis that the works on two of the sites were defective and that the defendant/cross-claimant was entitled to rectification costs.
Both claims substantially failed. The plaintiff was unable to establish agreement to terms for payment that it contended for. The cross-claimant failed to establish any intention to carry out the renovation works even in respect of works which did not comply with the specifications and plans, and this took its case out of the general run of cases in which the principles of Bellgrove v Eldridge (1954) 90 CLR 613 applied. The Court did, however, acknowledge an entitlement in the cross-claimant to receive nominal damages for proof of defective works at two of the sites.
With this background, the plaintiff says that on the question of costs, the practical result was that both parties' claims substantially failed with the consequence that the parties should bear their own costs. That characterisation, it says, accords with the reality that the hearing time was essentially equally divided between the admission of evidence for the two respective claims.
The defendant/cross-claimant maintains that though it failed on obtaining an order for damages under the principle in Bellgrove v Eldridge, its 'success' in obtaining an order for nominal damages, underpinned by findings that the works were indeed defective in relation to two of the sites, meant that it should not have to pay the plaintiff/cross-defendant's costs on the cross-claim since it could not be said that the plaintiff/cross-defendant was successful. Accordingly, there should be no costs order in relation to the cross-claim. In effect, neither party could be said to have been successful in relation to the cross-claim.
But on the plaintiff's claim, the defendant says it was clearly successful. Thus, the defendant contends, the plaintiff should pay the defendant's costs on the plaintiff's failed claim. This, the defendant submits, should be the subject of a lump sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW) (the 'CP Act'). To that end, it attached to its submissions a breakdown of actual legal costs (slightly exceeding the sum of $200,000) for barristers, solicitors and experts and, after allowing certain discounts, it contends that the sum of $100,000 is a reasonable figure.
As to this last application, the plaintiff submits that no notice had been given to the plaintiff that such order would be sought. At any rate, so the plaintiff submitted, the breakdown provided was inadequate for proof for an application of that kind.
In reply, the defendant said that it was not a precondition for its application that it serve notice. It also said that it was justified in proceeding in the way that it did, having regard to the content of without prejudice correspondence received from the plaintiff. As will become apparent, it has become unnecessary to consider the defendant's application for the Court to consider the content of that correspondence.
[2]
DETERMINATION
The power to order costs is discretionary: s 98 of the CP Act. The usual rule is that costs follow the event: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), however, as the wording of the rule plainly indicates, the Court may depart from the general rule in the circumstances.
In this case, there were two claims for damages. They were, technically, two 'events'. Save for a qualification, conventionally, in light of the failure of both sides to obtain substantial damages, to the extent that each side successfully resisted their adversary's respective claims, the costs outcome, overall, should reflect that practical result.
But the cross-claimant submits that a qualification should attach to its claim, since it at least obtained an order for nominal damages. In that circumstance, the cross-claimant submits that it cannot be said that the cross-defendant, as a contract-breaker, was 'successful'.
In Grant v Brewarrina Shire Council (No. 3) (2003) 125 LGERA 348, Lloyd J considered English [2] and Australian decisions, before determining that it cannot be said that a claimant who only establishes an entitlement to nominal damages, for the purposes of the ordinary costs rule, is necessarily to be regarded as successful. The Australian decisions which he cited, which included the High Court's decision in Connolly v Sunday Times Publishing Co Limited and E W Finn (1908) 7 CLR 263, clearly indicated that in such circumstances, the party obtaining nominal damages may not recover its own costs. That is the position adopted by the cross-claimant in this case. But Lloyd J was guided by the English authorities to determine, in the circumstances of that case, towards ordering that the claimant, in whose favour nominal damages were awarded, should not only be deprived of its own costs, but should be required to pay the costs of the other party. Lloyd J also referred to Oshlack v Richmond River Council (1998) 193 CLR 72, in which McHugh J at 97 [70] (Brennan CJ agreeing) identified the position of a claimant, who merely obtains an order for nominal damages, paying the other side's costs as an exception to the 'usual order' as to costs.
As noted at [195]-[197] of my earlier reasons, in particular, I found that the defendant's cross-claim was essentially defensive in nature and I further find that, but for the plaintiff prosecuting its own claim for unpaid costs, it would not have been brought at all. As it turns out, with hindsight, it may now appear that it was unnecessary for the defendant to have brought it at all to successfully defend the plaintiff's claim. But having brought it and only obtaining a somewhat tokenistic result, occupying significant time and expense, it would be appropriate for the cross-claimant to pay the cross-defendant's costs to reflect the practical result that it failed to obtain substantial damages to offset whatever damages the plaintiff recovered, which was the object of the cross-claim.
That being so, I agree that the practical result is as the plaintiff contends: two claims have been brought which have both failed, and the Court should exercise its discretion in a way that reflects that practical outcome. It would be a lopsided result to entertain a lump sum order in favour of the defendant for its costs of the statement of claim, but not make substantially the same order in relation to the cross-defendant's costs of the cross-claim. The defendant/cross-claimant has not disputed that if, as I have found, the practical outcome would see the plaintiff pay the defendant's costs of the statement of claim and the cross-claimant pay the cross-defendant's costs of the cross-claim, the likely result will be that each side's costs order will substantially offset the other side's costs order. Accordingly, the defendant's application for a fixed lump sum order for its costs of the statement of claim is rejected. In my opinion, the proper order will see the parties bear their own costs of the proceedings.
[3]
ORDERS
I make the following orders:
1. The Statement of Claim is dismissed.
2. I order the cross-defendant to pay the cross-claimant the sum of $300 as nominal damages, but otherwise dismiss the cross-claim.
3. No order is made as to costs.
[4]
Endnotes
Repfix Industries Pty Ltd v FBD Group Pty Ltd [2020] NSWDC 514. What follows assumes familiarity with those reasons.
Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 All ER 685 and Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873.
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Decision last updated: 07 October 2020