(b) the defendants succeeded on the issue that the consent orders of 26 November 2008 gave effect to a contract between the parties and that on the proper construction of the contract the guarantees could not be called upon until the conclusion of any appeal, whether or not it was an appeal in relation to the particular orders the subject of the stay. These were discrete issues. Had the plaintiffs conceded those questions, the application could have been dealt with when the matter was first listed before the court for directions on 18 September 2009.
4 The defendants referred to and relied upon the judgment of Campbell J (as his Honour then was) in Nardell Coal Corp Ltd (in liq) v Hunter Valley Coal Processing Pty Ltd [2003] NSWSC 642; (2003) 46 ACSR 467; 21 ACLC 1505 at [143]-[149] where his Honour deals with authorities bearing on the question of whether a plaintiff who successfully seeks an indulgence may nonetheless be liable to pay costs, or may not be entitled to costs.
5 I do not consider that such cases are analogous to the present. As the solicitors for the plaintiffs rightly submit, it is a mistake to conflate the grant of an indulgence with the exercise of a discretion. The fact that the exercise of a discretion is involved does not itself warrant departure from the usual rule that costs follow the event. Whilst the parties reached an agreement for the stay of orders to operate until the conclusion of any appeal, I found that because their agreement was embodied in the form of interlocutory orders which were inherently susceptible to being varied, they did not intend to exclude the court's jurisdiction to modify interlocutory orders. In invoking the court's jurisdiction to modify its interlocutory orders where there had been a material change of circumstances, the plaintiffs were not seeking an indulgence. I do not consider that the authorities discussed by Campbell J in Nardell Coal Corp Ltd (in liq) v Hunter Valley Coal Processing bear on the present question.
6 Nor do I accept that if costs follow the event this would discourage the settlement of disputes. The policy of encouraging negotiated settlements is relevant to whether the power to vary or set aside the consent orders should be exercised. But where, as I have found, those orders should be varied in the light of changed circumstances, it is no derogation from that policy for costs to follow the event.
7 The defendants succeeded on the issues of whether the consent orders embodied and gave effect to an underlying contract between the parties and on the proper construction of the orders. Those were two grounds upon which the defendants resisted the plaintiffs' application. Notwithstanding that success, the defendants failed in their resistance because I found, contrary to the defendants' submission, that there was nonetheless jurisdiction to vary the orders and the jurisdiction to do so should be exercised in the light of the changed circumstances. I could see no proper basis for maintaining the stay and insisting on the continuance of the plaintiffs' bank guarantee when the defendants had withdrawn almost all the grounds of appeal relating to the orders of 19 December 2007.
8 The costs of the application were somewhat increased by the plaintiffs' unsuccessful contentions as to whether consent to the orders gave effect to a contract and as to the construction of that contract. The more significant consideration is that it was not reasonable for the defendants to have resisted the lifting of the stay, and to have insisted on the maintenance of the plaintiffs' bank guarantee in an unchanged amount, when there remained no grounds for challenging the orders which were the subject of the stay, and there was no possibility of the plaintiffs' bank guarantee being called on for its full amount.
9 In Cretazzo v Lombardi (1975) 13 SASR 4, Jacobs J (at 16) warned against a too ready apportionment of costs according to the success or failure of a party on particular issues of fact or law. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 the Court of Appeal (Beazley, Ipp and Basten JJA) said (at [38]):
" [38] The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this court in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows:
Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported) .
In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.
If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 at [27].
Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).
A separable issue can relate to 'any disputed question of fact or law' before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].
Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2) , citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.