Court of Appeal (WA)|2012-11-28|Before: Buss JA

SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2012] WASCA 227 (28 November 2012)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2012] WASCA 227

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2011] WADC 212

Practice and procedure - Costs - Appellant (plaintiff) succeeded in part at trial - No order as to costs - Whether appellant entitled to portion of costs - Application of O 66 r 1(3), O 66 r 2(a), Rules of the Supreme Court 1971 (WA)

Practice and procedure - Prejudgment interest - Supreme Court Act 1935 (WA), s 32 - Whether appellant entitled to interest from breach of contract or trial

Rules of the Supreme Court 1935 (WA), O 66 r 1(1), O 66 r 1(3), O 66 r 2(a)

Respondent to pay 50% of appellant's costs of the action

Respondent to pay interest on judgment sum from trial to judgment

Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)

Apache Northwest Pty Ltd v Department of Mines and Petroleum [2012] WASCA 167

Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)

Cardno BSD Pty Ltd v Water Corporation [No 2] [2011] WASCA 161

Collins v Westralian Sands Ltd (1993) 9 WAR 56

Cox v McDonald (Unreported, WASCA, Library No 9103, 14 October 1991)

Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261

Fire and All Risks Insurance Co Ltd v Callinan [1978] HCA 31; (1978) 140 CLR 427

Keet v Ward [2011] WASCA 139

Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569

Phillips Fox (A Firm) v Westgold Resources NL [2000] WASCA 85

Rio Tinto Exploration Pty Ltd v Graphite Holdings Pty Ltd [2007] WASCA 276

Souter v Condor Developments Pty Ltd [2011] WADC 212

Souter v Condor Developments Pty Ltd [2011] WADC 212 (S)

2 NEWNES JA: This is an appeal against orders in respect of costs and pre-judgment interest made after trial in the District Court by O'Neal DCJ.

3 The appeal arises out of proceedings which the appellant brought against the respondent claiming damages for breach of a contract for the purchase of an apartment 'off the plans'. On 30 November 2011, the primary judge delivered his reasons for decision, in which he found that the appellant had made out his claim in part and was entitled to damages in an amount of $72,000: Souter v Condor Developments Pty Ltd [2011] WADC 212.

4 Subsequently, the primary judge heard argument on the questions of interest and costs. On 16 February 2012, his Honour held there should be no order as to the costs of the action and he refused the appellant's claim for pre-judgment interest on the damages: Souter v Condor Developments Pty Ltd [2011] WADC 212 (S). His Honour accordingly gave judgment for the appellant in the sum of $72,000 with no order as to costs.

5 The appellant contends that the primary judge erred in refusing the appellant's claims for costs and interest.

6 In October 2005, the appellant entered into an agreement with the respondent to purchase an apartment in a building called Condor Tower. The apartment was purchased 'off the plans'. Settlement appears to have occurred on 30 July 2009 (not, it seems, 3 August 2009, as stated in the grounds of appeal).

7 Following settlement, the appellant commenced proceedings against the respondent alleging that the apartment did not correspond in certain respects with the terms of the sale contract and with representations made to him by agents of the respondent. In particular, the appellant alleged that under the contract he was entitled to:

'a car parking bay of 55 sq m', by virtue of an express written term of the contract;

carpets in the bedrooms and bamboo floors in the living areas of the apartment, by virtue of an express written term;
air-conditioning, by virtue of a term that was partly written and partly oral;
a store room, by virtue of a term that was partly written and partly oral; and
permanent vertical screening between the apartment's balcony and the adjoining apartment, by virtue of an implied term.

8 To the extent the terms were alleged to be oral, the appellant relied upon statements he said were made to him by a Ms Thomas, a registered real estate sales representative employed by the respondent's real estate agent, and Mr Briggs, the principal of the respondent's real estate agent.

9 The appellant claimed that the respondent breached the contract by:

supplying a car bay of only 46 sq m, instead of 55 sq m;
covering the floor in the living areas with carpet, instead of bamboo;
not providing air-conditioning;
not providing a store room; and
not providing a balcony partition.

10 The appellant claimed damages for breach of contract, and also under the Trade Practices Act 1974 (Cth), alleging that the oral statements made to him by Ms Thomas and Mr Briggs as to the provision of air-conditioning and a store room were misleading or deceptive. (The misleading and deceptive conduct claim in relation to the statements attributed to Mr Briggs was abandoned on the third day of the trial.) The appellant claimed, among other things, damages of $172,000 for breach of contract.

11 The respondent denied any liability to the appellant. It alleged, among other things, that the contract did not provide for air-conditioning, a store room or a balcony partition. It further alleged that insofar as there had been variations to the specifications of the apartment, the respondent was entitled under the contract to make the variations and the contract expressly excluded any claim for damages in respect of such variations.

12 The claim was heard by the primary judge over four days in May 2011. Reasons for decision were delivered on 30 November 2011. His Honour found that the appellant had made out his claim in contract in relation to the car bay, the floor covering and the balcony partition, but not in relation to the store room and the air-conditioning. In relation to the car parking bay, however, the primary judge did not accept the appellant's argument that the reduction in the area meant that he had lost space to park an additional car ([205]), resulting in a claimed loss of $102,000, but he found the appellant had nevertheless lost potential storage space and awarded damages on that basis [212]. His Honour rejected the appellant's claims of misleading or deceptive conduct in their entirety.

13 The primary judge assessed the appellant's damages on the basis of expert reports tendered at trial by the appellant, being a report dated 23 December 2010 provided by Mr Scott Bellerby, a licensed valuer (with respect to the value of the reduced car parking bay) and a report dated 19 November 2010 provided by Mr Kevin Windross, a chartered quantity surveyor (with regards to the cost of replacing the flooring and installing a privacy screen). It is apparent from the reports that the amounts arrived at reflected the value of the car bay, and the cost of replacing the flooring and installing a privacy screen, respectively as at November 2010.

14 On the basis of those reports, his Honour concluded that the appellant was entitled to damages in the sum of $72,000, made up as follows:

$45,000 for the reduced garage area;
$19,000 to remove the carpet and replace it with bamboo flooring; and
$8,000 to install a privacy screen.

15 The question of costs and the appellant's claim for pre-judgment interest were argued before the primary judge on 17 January 2012. The appellant sought an order that the respondent pay his costs of the action. That was resisted by the respondent which submitted that the appellant should pay 70% of the respondent's costs and the respondent should pay 30% of the appellant's costs. Alternatively, the respondent argued there should be no order as to costs. The appellant also sought an order for pre-judgment interest from the date of breach (30 July 2009) to judgment. The respondent opposed an award of interest.

16 As I have said, the primary judge made no order as to costs and declined to award pre-judgment interest.

Reasons for decision of the primary judge Costs of the action

17 The primary judge considered that while all of the appellant's claims arose from one transaction, the substantial matters in issue were not, in the terms used in Keet v Ward [2011] WASCA 139 [24], 'in substance one concept' ((S) [8]). Rather, there were three topics at trial around which the issues of fact revolved. They were the breach of contract claim, the misleading and deceptive conduct claim, and the remedy sought ((S) [9]). His Honour went on to examine the basis of each of those claims, noting that the claims based on oral statements attributed to Mr Briggs had been abandoned on the third day of trial and those based on oral statements attributed to Ms Thomas had failed. The primary judge observed in relation to damages that the main issue at trial had been the appellant's claim for the loss of room to park an additional vehicle in the car bay, an issue in respect of which his Honour considered the time consumed was in inverse portion to its merits ((S) [22] - [24]).

18 The primary judge found, however, that there had been conduct on the part of both parties which had unnecessarily prolonged the trial ((S) [28]).

19 His Honour then turned to what was appropriate to do substantial justice in the circumstances of the case. He observed that the time and effort devoted to proving the matters on which the appellant had been successful was at least equal to the time and effort devoted to causes of action on which the appellant had been unsuccessful. He considered that the limited success of the appellant was offset by the effort involved in pursuing causes of action that were 'abandoned, based on unproven oral representations and an issue [which I take to be the claim for the loss of a car space] that was simply so unreasonable that it was bound to fail' ((S) [32]).

20 The primary judge concluded that it was inappropriate and unnecessary to apportion costs by attributing them to particular issues or causes of action. In his Honour's view, fairness required that there be no order as to costs ((S) [33]).

21 The primary judge rejected the appellant's claim for pre-judgment interest on the damages. His Honour noted that ordinarily damages for breach of contract were assessed as at the date of breach. The breach had occurred at the end of July 2009, at the time of settlement. However, the damages were based on estimates and a valuation that were 'far closer' in time to the date of trial than to the date of the breach ((S) [36]). His Honour noted that he had assessed the damages, based on the expert reports, at the date of trial and concluded that it was not therefore appropriate to award pre-judgment interest ((S) [37]).

22 The appellant relied upon the following grounds of appeal:

The primary court erred in law, further or alternatively in fact, in holding that the appellant was not entitled to recover any of his costs of the action from the respondent. The primary court should have held that the appellant was entitled to recover all, alternatively a substantial percentage, of his costs of the action from the respondent.
The primary court erred in law, further or alternatively in fact, in holding that the appellant was not entitled to pre-judgment interest on the amount of damages awarded to the appellant by the primary court. The primary court should have held that the appellant was entitled to pre-judgment interest, pursuant to s 32 of the Supreme Court Act 1935 (WA) on the amount of damages awarded to the appellant by the primary court at the rate of 6% per annum from 3 August 2009 (date of settlement of the sale and purchase of Apartment 151) to 16 February 2012 (date of primary court's decision).

23 Before turning to the grounds of appeal, I should mention that leave to appeal from the order as to costs is not required in this case because the appeal is from a decision of a judge of the District Court: see Cardno BSD Pty Ltd v Water Corporation [No 2] [2011] WASCA 161 [9] - [11], [98] - [102]. That highlights a long-standing anomaly. If the appeal had been brought from a decision of a judge of the general division of this court, leave to appeal would have been required by virtue of s 60(1)(e) of the Supreme Court Act 1935 (WA). Section 60(1)(e) provides, in effect, that no appeal lies from an order of a judge or master 'as to costs only', except with the leave of the judge or master or of this court. (An appeal against a costs order is an appeal 'as to costs only' notwithstanding that it is brought together with another, unrelated, ground of appeal: see Apache Northwest Pty Ltd v Department of Mines and Petroleum [2012] WASCA 167 [105]).

24 There is, however, no statutory requirement equivalent to s 60(1)(e) of the Supreme Court Act in relation to an appeal as to costs from a decision of the District Court.

25 This anomaly has been the subject of comment previously by this court. It was raised more than 20 years ago in Cox v McDonald (Unreported, WASCA, Library No 9103, 14 October 1991) and again in Collins v Westralian Sands Ltd (1993) 9 WAR 56, 58 - 59, where Malcolm CJ called for legislative action. More recently, in Cardno, Martin CJ expressed regret that the legislature had not taken steps to bring appeals as to costs from the District Court into line with such appeals from the general division of this court [9] - [11]. I would respectfully endorse his Honour's comments (as I did in Cardno at [12]). The object of limiting such appeals by requiring that leave be obtained applies with no less force to appeals from the District Court. The present position has no basis in principle or logic and can only be explained as a legislative oversight.

27 It is trite law that the court has a very wide discretion as to costs, albeit it is a discretion to be exercised judicially. The general rule is that a successful party is entitled to an order for costs: O 66 r 1(1), Rules of the Supreme Court 1971 (WA). There are, however, two well-established exceptions to that rule to which it is necessary to refer.

28 First, where a party, although generally successful, has failed on some issue or issues which increased the costs of the action, the court may order the party to pay the costs of those issues: O 66 r 1(3). But that is a power to be exercised with caution and not as a matter of course. While parties should be encouraged to litigate only those matters which are properly and reasonably in issue, parties should not be dissuaded by the risks of an adverse costs order from canvassing all issues which might be material to the proper determination of a case: Keet v Ward [18]. Moreover, any practice of determining costs on the basis of a painstaking analysis of which party won on which issue would simply add to the time, costs and uncertainty of litigation: see Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) [6]. Such an approach may also fail to do justice in cases where the issues were intertwined or overlapped, or there was only one substantive issue. The exercise of the power to adjust an order for costs by reference to particular issues upon which an otherwise successful party has failed will ordinarily be appropriate only where the party has failed on discrete and severable issues which have added to the costs of the action in a significant and readily discernible way: Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) [7].

29 Where the court considers that an order as to costs should reflect the failure of the successful party on some issues in the action, the better approach will often be to award the successful party a proportion of its costs, or to make no order as to costs, rather than attempt to award costs to the respective parties on an issue by issue basis: Phillips Fox (A Firm) v Westgold Resources NL [2000] WASCA 85 [28]. Where a party is awarded only a proportion of its costs, the exercise of discretion involved will inevitably be more a matter of art than science, depending upon matters of impression and evaluation, and mathematical precision will be illusory: Amaca [6]; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261, 272.

30 Secondly, where a plaintiff pleads two or more causes of action but succeeds on only some of those causes of action, the general rule is that the plaintiff is entitled to costs on the causes of action on which it was successful and the defendant is entitled to costs on the causes of action on which it was successful, as if separate actions had been brought: O 66 r 2(a). Again, and for similar reasons, an order of that kind is not to be made as a matter of course. It is necessary for the court to look at the realities of the case and attempt to do substantial justice in the particular circumstances. In some cases, while it might be strictly correct to say there are different causes of action involved, there may have been only one contest in substance. That will often be so where all causes of action arise out of the one course of dealings, the one transaction, or the same facts, in which case there would usually be one order for the general costs of the action, moulded as necessary to ensure that substantial justice is done: Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569, 574 - 575; Keet v Ward [24].

31 A decision as to costs involves an exercise of discretion. The legal principles which govern the review of discretionary decisions by an appellate court are uncontroversial. An appellate court will only intervene where there has been an error of the kind identified in House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505; that is, where the judge has acted upon a wrong principle, mistaken the facts, taken into account an irrelevant consideration or failed to take into account a relevant consideration, or where although the precise error is not discernible the result is so unreasonable or unjust that the court may infer there has been a failure properly to exercise the discretion.

32 In his submissions, the appellant's counsel sought to cover all of those bases. It is unnecessary, however, to follow that course. Suffice it to say that, in my opinion, error is to be inferred from the decision of the primary judge that there should be no order as to costs.

33 In view of the limited nature of the appellant's success, there were undoubtedly powerful reasons to deny the appellant the whole of his costs. The appellant was successful on some only of the claims pleaded. As I have said, he was successful on his claims in contract in respect of the car bay, the floor covering, and the dividing screen. In respect of the car bay, he did not recover on the primary basis upon which he claimed and instead of the sum of $102,000, he recovered an amount of $45,000. He was unsuccessful on his claims in contract, and for misleading or deceptive conduct, in respect of the air-conditioning and the store room. Moreover, the claims of misleading or deceptive conduct relating to the statements allegedly made by Mr Briggs were abandoned on the third day of the trial.

34 That inevitably meant that a good deal of time and cost was wasted. As mentioned earlier, the primary judge concluded that the time and effort devoted to the claims on which the appellant had failed was at least equal to the time and effort devoted to those on which the appellant had been successful. His Honour did not, however, make any finding that there had been conduct of the appellant which would disentitle him to an order for costs, and his Honour concluded that in various respects both parties had been responsible for unnecessarily prolonging the trial.

35 In those circumstances, it is not, with respect, apparent how the primary judge reached the conclusion that fairness required there be no order as to costs. While approximately half of the action was devoted to issues on which the appellant was unsuccessful, the appellant was nevertheless successful in recovering damages of $72,000 in circumstances where the respondent had maintained throughout that it had no liability at all to the appellant. While the appellant fell a good deal short of complete success, he was nevertheless successful to a significant extent.

36 In my view, in the absence of a finding of conduct which would disentitle the appellant to costs, a sound exercise of the discretion would not lead to the result that the appellant was not entitled to recover anything by way of costs. It is to be inferred from the unreasonableness of the finding that there has been a failure by the primary judge properly to exercise the discretion.

37 I would therefore set aside the decision of the primary judge that there be no order as to costs. It is then open to this court to exercise the discretion afresh. There is sufficient material before us to enable that to be done and that is the appropriate course.

38 In exercising that discretion, I do not accept the appellant's contention that he is entitled to an order for the whole of his costs of the action. Having regard to the appellant's limited success, that would not be a just result. It is not, however, a case where it would be appropriate to endeavour to award costs on the basis of particular issues. The appropriate course instead is to award the appellant a portion of his taxed costs.

39 I have set out the relevant considerations above. It is unnecessary to canvass them again. Having regard to the extent to which the appellant was successful at trial, in the circumstances of this case I consider the appropriate order is that the respondent pay one half of the appellant's taxed costs of the action.

40 The court has a wide discretion under s 32 of the Supreme Court Act to award interest on the amount of the judgment sum 'for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect'.

41 The general (although not inflexible) rule is that damages are assessed as at the date the cause of action accrued, which in contract is the time of the breach: Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351, 355, 367, 371. An award of interest up to the date of judgment is an award of interest in the nature of damages: Fire and All Risks Insurance Co Ltd v Callinan [1978] HCA 31; (1978) 140 CLR 427, 431. The purpose is to compensate a plaintiff for the loss or detriment they suffer by being kept out of the judgment sum between the date of breach (when they theoretically became entitled to it) and the date of judgment: Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 [16]; Rio Tinto Exploration Pty Ltd v Graphite Holdings Pty Ltd [2007] WASCA 276 [46] - [47], [94]. See also Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60, 66.

42 Following the entry of judgment, a plaintiff is entitled to interest on the judgment sum pursuant to s 8(1) of the Civil Judgments Enforcement Act 2004 (WA).

43 As mentioned earlier, the primary judge declined to award pre-judgment interest on the damages because the award of damages was based on expert estimates which were far closer in time to the date of trial than to the date of the breach and his Honour had made the assessment of damages as at the date of trial ((S) [37]). I take his Honour to mean that because he assessed the damages as at the date of trial, rather than the date of breach, an award of pre-judgment interest was unnecessary to fully compensate the appellant for his loss.

44 In my view, the exercise of his Honour's discretion miscarried. It is implicit in his Honour's reasons that he proceeded on the basis that the question of interest related to the period up to trial. The relevant issue, however, was whether the appellant was entitled to interest, not simply to the date of trial, but to the date of judgment. The trial took place in May 2011. Judgment was entered some nine months later, on 16 February 2012. There was, therefore, a delay of some nine months between the time at which the amount of the damages was determined and when the appellant became entitled to recover the damages. It is not suggested there were any factors which would justify the appellant being denied pre-judgment interest for that period.

45 In those circumstances, the only question was whether the appellant was entitled to pre-judgment interest from the date of the breach to the date of judgment. As to that, I do not accept the appellant's submission that the experts' assessments are to be taken as the measure of the loss as at the date of the breach, on 30 July 2009. It is apparent from the experts' reports that in each case the assessment was made based on costs and values some 16 months later, as at November 2010. In the particular circumstances of this case, in the absence of evidence as to the amount of the loss as at the date of the breach, the failure to award pre-judgment interest from the date of the breach has not been shown to be in error. As the primary judge assessed the appellant's damages on the basis that the expert reports reflected the appellant's loss as at the date of trial, it was appropriate that interest on the damages should run from the trial until judgment.

46 The primary judge erred in concluding that the appellant was not entitled to pre-judgment interest. I would set aside his decision refusing an award of pre-judgment interest and award interest to the appellant from 26 May 2011 (the last day of the trial) until 16 February 2012. That interest should be at the rate of 6% per annum.

the appeal be allowed;
the decision of the primary judge that there be no order as to costs is set aside;
the decision of the primary judge that there be no award of interest on the amount of the damages payable to the appellant is set aside;
the respondent is to pay one half of the appellant's taxed costs of the action; and
the respondent is to pay to the appellant interest on the sum of $72,000 at the rate of 6% per annum from 26 May 2011 to 16 February 2012.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2012] WASCA 227 (S)

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2011] WADC 212

Costs - Appellant successful in smaller amount than claimed - No apportionment of costs

1 JUDGMENT OF THE COURT: On 9 November 2012, we allowed an appeal against a decision of O'Neal DCJ, who had decided there should be no order as to the costs of the trial and that the appellant (plaintiff) was not entitled to interest on the damages of $72,000 which he was awarded by his Honour. We found that the appellant was entitled to an order for half of his costs of the action, having regard to the extent of his success on the issues he advanced in support of his claim, and to interest on the judgment sum from the end of the trial, rather than from the date of the respondent's breach of the contract as the appellant sought.

2 When judgment was delivered the respondent sought an opportunity to make submissions on the costs of the appeal. Accordingly, directions were given for the filing of written submissions and it was ordered that the question of costs be decided on the papers. Those written submissions were subsequently filed.

3 It was submitted by the respondent that there should be no order as to the costs of the appeal or alternatively that the appellant is entitled to only a portion of his costs. That, it was argued, was because, in the result, the appellant was successful to the extent of only about half the amount claimed by way of costs and interest respectively.

4 On the respondent's cross-appeal, the respondent says that no steps were taken in the cross-appeal beyond the filing by the respondent of a notice of intention to appear on the appeal, on which it ticked the box indicating that it intended to cross-appeal. That notice was filed on 7 March 2012. Nothing further occurred in the cross-appeal and, on 18 May 2012, the respondent's solicitors wrote to both the court and the appellant's solicitors to say that the respondent was not proceeding with the cross-appeal. No grounds of cross-appeal were ever filed or served.

5 The appellant's position is that while he recovered less than he sought, he was successful in respect of both issues on the appeal. All of the matters raised in relation to the costs of trial were necessary in order for this court to determine the appropriate portion of costs to which the appellant was entitled. There was, therefore, nothing, by way of wasted costs. On interest, once the question of whether interest should run from trial was raised by the court, the appellant did not press for interest from the breach. Again, there were no wasted costs. The appellant should therefore recover its costs of the appeal.

6 The relevant authorities on costs have been canvassed in the primary judgment and it is unnecessary to repeat them. While it is the case that on the appeal the appellant recovered only something in the order of half the amounts he sought, the respondent resisted the entitlement of the appellant to any costs or interest at all. Had the appellant pitched his claim on the appeal at the level at which he was ultimately successful, it would still have been necessary to canvass much of the same material and it is difficult to see how there would have been any significant saving in costs.

7 This is not a case where there should be an apportionment of costs. The appropriate order is that the respondent pay the appellant's costs of the appeal to be taxed. As the cross-appeal never got out of the starting blocks, there should be no order in respect of the costs of the cross-appeal.

Judgments Enforcement Act 2004

SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2012] WASCA 227 (9 November 2012)

At a glance

Court

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Before

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Judgment (92 paragraphs)

SOUTER -v- CONDOR DEVELOPMENTS PTY LTD [2012] WASCA 227 (28 November 2012)

Legislation Cited (3)

Cases Cited (8)