Sequel Drill & Blast P/L v Whitsunday Crushers P/L

SUPREME COURT OF QUEENSLAND

CITATION: Sequel Drill & Blast P/L v Whitsunday Crushers P/L (No 2) [2009] QCA 239

PARTIES: SEQUEL DRILL & BLAST PTY LTD (plaintiff/appellant) v WHITSUNDAY CRUSHERS PTY LTD (defendant/respondent)

FILE NO/S: Appeal No 347 of 2009 / DC No 2223 of 2004

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal – Further Order

ORIGINATING COURT: District Court at Brisbane

DELIVERED ON: 21 August 2009

DELIVERED AT: Brisbane

HEARING DATE: Judgment delivered 31 July 2009 Further order delivered 21 August 2009

JUDGES: Chief Justice, Fraser JA and Chesterman JA / Judgment of the Court

ORDER: That the respondent pay 50 per cent of the appellant’s costs of and incidental to the appeal

CATCHWORDS: PROCEDURE – COSTS – RECOVERY OF COSTS – where appellant was successful in its appeal but only with respect to one ground – where appellant had numerous other grounds of appeal and these grounds occupied the majority of the hearing – whether it was reasonable for the appellant to pursue the appeal – whether costs should follow the event or an alternative order should be made / Uniform Civil Procedure Rules 1999 (Qld), r 681(1), r 766(1)(d) / Interchase Corporation Limited (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No. 3) [2003] 1 Qd R 26; [2001] QCA 191, cited / Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, cited / Williams (as liquidator of Scholz Motor Group P/L (in liq) v Peters (No 2) [2009] QCA 228, distinguished

COUNSEL: I A Erskine for the appellant / M Steele for the respondent

SOLICITORS: Results Legal Solutions for the appellant / Clarke Kann Solicitors for the respondent

1. THE COURT: On 31 July 2009 the Court allowed an appeal by the plaintiff ("Sequel") against so much of the judgment in the District Court as reflected success by the defendant ("Whitsunday") on its counter-claim. The Court rejected Sequel's arguments on its many grounds of appeal in which it challenged the whole of Whitsunday's judgment on its counter-claim for $48,696. Sequel succeeded only on the separate ground of appeal that there should be a deduction from the amount of Whitsunday's counter-claim of $5,170.

2. The Court has received written submissions as to costs, delivered pursuant to leave granted by the Court. Sequel submitted that it succeeded in the appeal despite opposition by Whitsunday; that the appeal was necessary to attain justice between the parties; that the issues on which it did not succeed were fairly arguable; that it would be unjust to require it to pay Whitsunday's costs of the appeal in circumstances in which, absent the appeal, the inappropriate judgment in the District Court would not have been varied; and that the just order is either that Whitsunday should pay 50 per cent of Sequel's costs of the appeal or that there should be no order as to costs. Whitsunday submitted that in circumstances in which Sequel failed on most of its grounds of appeal and most of the argument in the appeal was directed to those grounds Sequel should pay Whitsunday's costs of the appeal.

3. Rule 681(1) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) provides that costs of a proceeding are in the discretion of the Court but follow the event unless the Court orders otherwise. The rule which specifically relates to appeals is r 766(1)(d), which simply provides that the Court of Appeal "may make the order as to the whole or part of the costs of an appeal it considers appropriate". Although r 766(1)(d) does not express the general principle under which a successful appellant is usually given costs in its favour, that general principle remains applicable. In Oshlack v Richmond River Council (1998) 193 CLR 72, which concerned a provision conferring a discretionary power to award costs in general terms, McHugh J explained why a successful party is usually given costs:

"[67]The expression the 'usual order as to costs' embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is granted in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party [Latoudis (1990) 170 CLR 534 at 543, per Mason CJ: at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

[68]As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice."

4. The application of the general principle may lead to costs orders which reflect different results on separate events or issues, unless the Court considers that some other order is more appropriate: see Interchase Corporation Limited (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No. 3) [2003] 1 Qd R 26 at [84], per McPherson JA.

5. Williams (as liquidator of Scholz Motor Group P/L (in liq) v Peters (No 2) [2009] QCA 228, upon which Sequel relied, does not support its argument. In that case the appellant succeeded on all issues in her appeal: see paragraph [11]. Sequel succeeded on only one issue and only to the very limited extent of $5,170, which was little more than 10 per cent of the total amount at stake in the appeal. The issue on which Sequel succeeded did not involve reference to contentious evidence. The arguments on that issue were very brief. The Court’s resolution of the issue, which included reference to the evidence and arguments, occupied only three of the thirty-five paragraphs of Fraser JA’s reasons for judgment in the appeal. Had that been the only issue, there might have been a slim record, one or two page written outlines, and a very brief hearing. The costs of the appeal must have been increased significantly by Sequel's extensive but unsuccessful attacks on the whole of the counter-claim. Those issues were thought to require both a three volume record running to about 400 pages and references in the parties’ submissions to contentious evidence and many authorities. There may be a difficulty in apportioning costs on issues in an appeal of this character, but if costs of issues were awarded the net result would probably be that Whitsunday would recover some of its costs from Sequel.

6. However, although those matters justify a significant reduction in the costs awarded to Sequel, an order in its favour to some degree is appropriate when regard is also had to other important factors. First, it was reasonable for Sequel to pursue an appeal to vindicate its entitlement to increase its judgment by an amount which, though relatively very small, was not merely nominal. Secondly, Whitsunday’s resistance to Sequel’s appeal in relation to the $5,170 was distinctly unreasonable. Though the point was not specifically flagged in Sequel’s notice of appeal of 8 January 2009, the notice did cover it and the argument which the Court accepted was clearly articulated in Sequel’s outline of submissions dated 30 January 2009. Despite that, Whitsunday’s written outline did not present any contrary argument. The likely reason for that became apparent at the hearing: Whitsunday did not have a reasonable argument. It should have conceded the point when it was served with the notice of appeal, and certainly no later than when it was served with Sequel’s outline of submissions. Finally, it is also material that, although Sequel failed on all other issues, it did have reasonable arguments on those issues and its pursuit of them was not unreasonable.