Costs - Whether successful party who fails on particular issue should be deprived of costs of that issue - Relevant principles - Whether matter of unusual difficulty, complexity or importance

Costs - Indemnity costs - Calderbank offers - Whether rejection of offers unreasonable

District Court of Western Australia Act 1969 (WA)

District Court Rules 2005 (WA)

Legal Profession Act 2008 (WA)

Strata Titles Act 1985 (WA)

Supreme Court Act 1935 (WA)

Trade Practices Act 1974 (Cth)

Appeal upheld and costs orders made by the primary judge varied

Amaca Pty Ltd (formerly James Hardie and Co Pty Ltd) v Moss [2007] WASCA 162 (S)

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

Calderbank v Calderbank [1975] 3 All ER 333

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

EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59

Ford Motor Company of Australia Limited v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1

Frigger v Lean [2012] WASCA 66

Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435

House v The King [1936] HCA 40; (1936) 55 CLR 499

Keet v Ward [2011] WASCA 139

McGarry v The Queen [2001] HCA 62; (2001) 207 CLR 121

Mickelberg v The State of Western Australia [2007] WASC 140 (S)

Naidoo v Williamson [2008] WASCA 179

Nikolaou v Papasavas, Phillips and Co [1989] HCA 11; (1989) 166 CLR 394

Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 (S)

Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516

Re Bond Corporation Holdings Ltd (1990) 1 WAR 465

Sakari Resources Ltd v Purvis [2016] WASCA 24 (S)

Shire of Manjimup v Cheetham [2010] WASCA 225

Sino Iron Pty Ltd v Mineralogy Pty Ltd [No. 2] [2017] WASCA 76 (S)

Souter v Condor Developments Pty Ltd [2012] WASCA 227

Strzelecki Holdings Pty Ltd v Jorgensen [2016] WASCA 177

Strzelecki Holdings Pty Ltd v Jorgensen [No 3] [2015] WADC 115

Strzelecki Holdings Pty Ltd v Jorgensen [No 4] [2018] WADC 19

Yara Australia Pty Ltd v Oswal [2012] WASCA 264

1. This appeal and cross-appeal concern a decision as to the costs of proceedings determined following a trial in the District Court in 2014 and 2015 (Action). The Action comprised a claim by Strzelecki Holdings Pty Ltd (Strzelecki) and a counterclaim by the Jorgensens. The Action concerned the alleged breach of a contract for the sale of land (Contract) by which the Jorgensens agreed to purchase from Strzelecki an apartment (Apartment) in a residential and commercial complex in Mandurah (Complex) 'off the plan'. The outcome of the decision of the primary judge (Primary Decision)[1], and an appeal to this Court (Appeal Decision)[2], was that the claim by Strzelecki was dismissed, and the counterclaim by the Jorgensens was allowed.
2. After the Appeal Decision, the primary judge heard submissions from the parties in relation to the costs orders which should be made in respect of the Action. His Honour published a decision on the question of costs (Costs Decision)[3] and made the following orders (Costs Orders):
   1. The Plaintiff [Strzelecki] is to pay two thirds of the Defendants' [Jorgensens'] costs (including reserved costs) of the Action from commencement to 15 October 2013, the costs to be taxed if not agreed.
   2. The Plaintiff [Strzelecki] is to pay the Defendants' [Jorgensens'] costs (including any reserved costs) of the Action from 16 October 2013 on an indemnity basis so that the Defendants [Jorgensens] are to recover all of their costs incurred except insofar as they are of an unreasonable amount or have been unreasonably incurred so that, subject to those exceptions, the Defendants [Jorgensens] are completely indemnified for their costs, the costs to be taxed if not agreed.
3. Strzelecki appeals against the Costs Orders on three grounds. They are set out below. In so far as the appeal against order 1 of the Costs Orders is concerned, Strzelecki's complaints, in essence, are that the primary judge erred in making an order that Strzelecki pay two thirds of the Jorgensens' costs to 15 October 2013, when an issue that the Jorgensens pleaded in their defence and counterclaim (DCC), but on which they were unsuccessful, dominated much of the pleadings, and of the trial, and that order 1 was plainly unreasonable and unjust in all of the circumstances. In so far as the appeal against order 2 of the Costs Orders is concerned, Strzelecki contends that the primary judge erred in concluding that an offer or offers to settle, made by the Jorgensens on, or shortly prior to, 15 October 2013, were Calderbank offers[4], and that his Honour erred in concluding that Strzelecki's rejection of the offer or offers was unreasonable, so as to justify an indemnity costs order. Strzelecki submitted that the indemnity costs order was plainly unreasonable and unjust in those circumstances.
4. The Jorgensens filed a cross-appeal in respect of the Costs Orders. They contend that the primary judge erred in respect of order 1 of the Costs Orders by ordering that Strzelecki pay only two thirds of their costs from the commencement of the Action to 15 October 2013. They contend that they should have been awarded all of their costs to that point, essentially on the bases that they were successful in the Action; that in so far as they pleaded, in their defence, a number of matters on which they were unsuccessful, those matters were not improperly or unreasonably raised; and that in those circumstances, order 1 was plainly unreasonable and unjust.
5. Strzelecki and the Jorgensens sought leave to appeal, in respect of the appeal and cross-appeal respectively. The applications for leave to appeal in each case were referred to the hearing of the appeal and the cross-appeal. However, previous decisions of this Court have established that leave to appeal is not required because the appeal is from a decision of a judge of the District Court.[5] The Jorgensens require an extension of time within which to cross-appeal, because they were one day late in filing their Notice of Cross Appeal. The Jorgensens' application for an extension of time in which to cross-appeal was referred to the hearing of the appeal and cross-appeal.
6. For the reasons outlined below, the appeal should be allowed, both of the Costs Orders should be set aside, and in lieu thereof there should be an order in the following terms:
   1. The plaintiff is to pay two thirds of the defendants' costs (including reserved costs) of the Action, including the costs of the hearing on 27 July 2017 and 6 February 2018, those costs to be taxed if not agreed.
7. In so far as the cross-appeal is concerned, an extension of time in which to cross-appeal should be granted, but the cross-appeal should be dismissed.

1. The long history of this Action, and its outcome, are set out in the Primary Decision, and in the Appeal Decision. However, for ease of reference, the following summary provides some context for the discussion of the issues raised in the present appeal.

1. The Jorgensens entered into the Contract with Strzelecki to purchase the Apartment in May 2007. The Contract was conditional upon certain events occurring, one of which was the registration of the proposed strata plan which was annexed to the Contract (Contract Plan). The Contract also contained a condition that 'the purchaser acknowledges that the property is zoned tourism which limits occupancy by any individual to a maximum of 90 days' (Use Restriction). That condition reflected the fact that the land on which the Complex was to be built was zoned for tourism under the relevant planning instruments.
2. The Jorgensens paid the agreed deposit, and the balance of the purchase price was to be paid on settlement, after the Complex was built.
3. Between 2008 and 2010, and before the registration of a strata plan for the Complex, Strzelecki endeavoured to secure a change in the Use Restriction which applied under the relevant planning instruments. It ultimately succeeded in securing the removal of the Use Restriction in respect of some of the apartments. Strzelecki also sought to achieve the same outcome by varying the strata plan it proposed to lodge in relation to the Complex. It lodged a strata plan for registration in which the Use Restriction applied only to those apartments that it had already sold (November Plan). However, the November Plan was never registered. The strata plan which was registered (December Plan) was endorsed with a Use Restriction which applied to all of the apartments.
4. The Complex was completed and a certificate of title was issued for the Apartment. On 22 March 2011, Strzelecki advised the Jorgensens that it was ready, willing and able to settle the sale of the Apartment. However, settlement did not occur because a dispute arose between the parties, which concerned, amongst other things, whether all of the apartments in the Complex would, in fact, be used for short-stay accommodation. On 1 April 2011, Strzelecki issued a default notice under the Contract, and on 21 April 2011, it gave the Jorgensens a notice purporting to terminate the Contract for their breach in failing to settle.
5. Strzelecki then commenced these proceedings against the Jorgensens in the District Court for breach of the Contract. It sought a declaration that it was entitled to the deposit, and damages for the alleged breach of contract by the Jorgensens.
6. In the Jorgensens' DCC, they sought a declaration that the Contract was void or unenforceable, the return of their deposit, damages for breach of the Contract or of a collateral contract, and a permanent injunction against Strzelecki. In summary, the planks of the Jorgensens' counterclaim were as follows.
7. First, the Jorgensens alleged that Strzelecki had acted in breach of the express or implied terms of the Contract, or of a collateral contract. The express terms were said to include a term to the effect that the residential portion of the Complex was to be used exclusively for short-stay accommodation. The implied terms were said to include terms that Strzelecki would act in good faith in giving effect to the Contract, that it would not take steps to deprive the Jorgensens of the benefit of the Contract, and that it would not offer to sell any apartment in the Complex other than on terms that the purchaser would use the apartment exclusively for short-stay accommodation. The Jorgensens contended that Strzelecki breached those terms, that that breach manifested an intention to repudiate the Contract, that the Jorgensens accepted that repudiation, and thereby terminated the Contract, and that as a result, they were entitled to the return of their deposit, and any accrued interest.
8. Secondly, the Jorgensens alleged that prior to their entry into the Contract, agents of Strzelecki made representations to them to the effect that the residential portion of the Complex would be exclusively occupied by tourists or short-stay residents, and that Strzelecki would only enter into agreements for the sale of apartments on the basis that they would be used for short-stay accommodation (Representations). The Jorgensens alleged that after the Contract was entered into, Strzelecki acted in breach of the Representations and in doing so, evinced an intention to repudiate the Contract, which the Jorgensens accepted, as a result of which they were entitled to the refund of their deposit.
9. Thirdly, the Jorgensens alleged that after the Contract was entered into, Strzelecki engaged in conduct which was unconscionable, or in breach of various provisions of the Trade Practices Act 1974 (Cth), or which gave rise to an estoppel against any claim to damages, or constituted a failure by Strzelecki to mitigate its loss.
10. Fourthly, the Jorgensens alleged that Strzelecki had failed to comply with the requirements of s 69C and s 69D of the Strata Titles Act 1985 (WA) (ST Act). They contended that s 69C(1) required a vendor under a proposed strata lot to provide written notice to a purchaser of full particulars of any 'notifiable variation', as soon as possible after the vendor became aware of the notifiable variation.[6] The Jorgensens contended that if a vendor failed to comply with the notice requirement, the purchaser had a right to avoid the contract by notice in writing given to the vendor before the settlement.[7] The ST Act also provided that if the vendor provided a notice which substantially complied with the notice requirement, and the purchaser was materially prejudiced by any matter in the notice by which the purchaser had not agreed to be bound, the purchaser had a right to avoid the contract by a notice in writing within 7 days of receiving the notice from the vendor.[8]
11. The Jorgensens contended that Strzelecki failed to give them notice of three notifiable variations (Variations), namely the change to the Use Restriction which was made in the November Plan (the Use Variation), a variation to the proposed strata plan to increase the area of the strata lot for the Apartment by 7.7% (the Area Variation), and a variation of the proposed strata plan which reduced the area of common property in the car park of the Complex and transferred that area into a ground floor commercial strata lot (the Carpark Variation). The Jorgensens contended that they gave notice of Strzelecki's failure to comply with its statutory obligations by accepting its repudiation of the Contract prior to settlement, or by filing their DCC in the Action.
12. The trial of the Action took nine days. A number of witnesses gave evidence. That evidence primarily concerned the terms of the Contract and any Representations made; Strzelecki's conduct in securing, or attempting to secure, the Variations, and the extent of the information provided by Strzelecki to the Jorgensens in relation to the Variations to the Contract Plan; what the Jorgensens knew of the Variations and what they did about them; and the process by which the strata plans were lodged at Landgate for registration.
13. In summary, the primary judge found that the Contract contained an implied term that the parties would act in good faith; the November Plan which Strzelecki lodged for registration differed in material particulars from the Contract Plan in respect of the Use Variation, the Area Variation and the Carpark Variation; Strzelecki was subject to the obligation in s 69C of the ST Act to provide notice of each of those Variations; Strzelecki's obligation to give the notice was not (at least in respect of the Use Variation) affected by the fact that the December Plan did not differ from the Contract Plan in respect of the Use Restriction; Strzelecki did not give the notice required under the ST Act; the Jorgensens retained a right to avoid the Contract by giving notice in writing prior to settlement, notwithstanding that they had, by their own endeavours, become aware of Strzelecki's attempts to secure the Variations of the strata plan; the Jorgensens' statutory right to avoid the Contract was not extinguished by Strzelecki's purported termination of the Contract; and that by filing the DCC on 6 September 2011, the Jorgensens gave Strzelecki notice in writing of their election to avoid the Contract pursuant to the ST Act. In addition, the primary judge found that Strzelecki's conduct in calling on the Jorgensens to settle while it was in breach of its statutory obligations constituted a breach of its contractual duty of good faith, and was unconscionable; and that Strzelecki's purported termination of the Contract, when it was in breach of its contractual and statutory obligations, was wrongful and invalid.

1. In the Appeal Decision, this Court discerned three separate bases for the primary judge's decision to dismiss the Action and allow the counterclaim. Those three bases were that Strzelecki's purported termination of the Contract was ineffective because it was in breach of its implied contractual obligation to act in good faith by failing to honestly comply with s 69C of the ST Act; Strzelecki's purported termination was ineffective because it had acted unconscionably in calling on the Jorgensens to settle when they were, by virtue of Strzelecki's conduct, ignorant of the existence of a notifiable variation and of their right to avoid the Contract; and because, in the absence of an election by the Jorgensens to proceed, the purported termination of the Contract by Strzelecki could not have extinguished the Jorgensens' right to avoid the Contract. Each of these bases depended on a failure by Strzelecki to comply with the obligation in s 69C of the ST Act to give full particulars of a notifiable variation of the Contract Plan.[9]
2. In so far as the Use Variation was concerned, this Court held that the primary judge had erred in his conclusion that the November Plan was different from the Contract Plan in that it restricted the use of some apartments (namely those which had already been sold) to short-stay accommodation, and removed the Use Restriction on the remaining apartments. That was because the Contract Plan did not actually impose any restriction on the uses to which apartments in the Complex could be put.[10] In so far as the November Plan sought to impose a Use Restriction on the apartments which had already been sold, it merely reflected the same restriction which had initially applied under the relevant planning instruments, and so could not be regarded as giving rise to a material change.[11] In so far as the unsold apartments were concerned, the only change in relation to the use of those apartments had resulted from an amendment to a planning instrument, and that was not a 'notifiable variation' for the purposes of s 69C of the ST Act.[12]
3. In so far as the Area Variation was concerned, this Court held that the primary judge erred in concluding that it was a 'notifiable variation'. The Contract specified that variations in area of less than 10% were not treated as significant and could occur without any change in the purchase price. The court held that this contractual provision was a relevant, but not controlling, consideration and, in all the circumstances, the 10% threshold presented as an objectively significant threshold for the floor area increase. The court found that the 7.7% change in the area of the Apartment was not a material change in the strata plan.[13]
4. In the appeal, Strzelecki did not challenge the primary judge's finding that a notifiable variation occurred by reason of the Carpark Variation, or the finding that it did not give the Jorgensens written notice of that variation. As this Court noted, the appeal thus proceeded on the basis that Strzelecki had failed to comply with its obligations under s 69C of the ST Act.[14] Having regard to its conclusions in respect of the Use Variation and the Area Variation, this Court concluded that the only contravention of s 69C of the ST Act which had been established concerned the Carpark Variation.
5. This Court concluded that the primary judge's findings that Strzelecki had breached an implied term of good faith and acted unconscionably could not stand, for reasons which need not be elaborated on here.[15] That left the third basis identified by this Court for the primary judge's decision, namely that in the absence of an election by the Jorgensens, Strzelecki's purported termination of the Contract did not, and could not, as a matter of law, extinguish the Jorgensens' right to avoid the Contract. This Court held that a vendor's termination for a breach of contract for the sale of a strata lot did not extinguish a purchaser's right to avoid that contract pursuant to s 69D of the ST Act.[16] Once the Jorgensens exercised their statutory right to avoid the Contract, the Contract was set aside entirely, and the parties' rights and obligations would be determined as if they had never entered into the Contract.[17] Accordingly, this Court held that the primary judge correctly concluded that Strzelecki's purported termination of the Contract did not extinguish the Jorgensens' statutory right to avoid the Contract, and from the point when they exercised that right, they ceased to be liable to Strzelecki for the damages it claimed for their alleged breach in failing to settle.[18]
6. Accordingly, while Strzelecki succeeded in a number of its grounds of appeal, it did not succeed in impugning the primary judge's orders, and the appeal against the primary judge's decision was dismissed. This Court ordered that Strzelecki should pay 85% of the Jorgensens' costs of the appeal, including any reserved costs, as taxed or agreed.

1. Following the outcome of the appeal against the primary decision, the primary judge made the Costs Orders in relation to the costs of the Action.
2. The Jorgensens sought orders that Strzelecki pay their costs up to 11 October 2013 without regard to certain limits imposed by the applicable costs scale (scale),[19] and thereafter on an indemnity basis, or alternatively, that Strzelecki pay the Jorgensens' costs of the proceedings throughout, without regard to certain limits imposed by the applicable scale. Strzelecki initially sought an order that the Jorgensens pay 50% of its costs of the Action. However, Strzelecki's eventual position was that each party should bear their own costs up to 14 February 2014 (to reflect the date when the Jorgensens first amended the DCC to plead Strzelecki's failure to comply with its obligations under the ST Act)[20] and that thereafter, Strzelecki should be required to pay 25% of the Jorgensens' costs.
3. The basis for Strzelecki's submission on costs was that the Jorgensens were unsuccessful on all the issues they raised in the trial apart from compliance with the ST Act, and that those other issues dominated the trial.[21] The learned primary judge found that while the Jorgensens raised issues on which they were ultimately unsuccessful, those issues were not improperly or unreasonably raised.[22]
4. Strzelecki contended that as the only issue on which the Jorgensens succeeded, namely Strzelecki's failure to provide notice of the Carpark Variation, was first pleaded in their re-amended DCC dated 21 February 2014, they could not claim for their costs prior to that point. The learned primary judge rejected that contention, because Strzelecki was subject to the obligation to provide notice of the Carpark Variation pursuant to the ST Act, it did not do so, and it ultimately failed in the action it commenced by reason of its own failure to comply with the law.[23]

The primary judge's reasoning in relation to order 1 of the Costs Orders

1. The learned primary judge concluded that Strzelecki should pay two thirds of the Jorgensens' costs, including the reserved costs, of the Action from its commencement until 15 October 2013. His Honour appears to have concluded that that order should be made, having regard to the following considerations.
2. First, his Honour considered the extent to which the Carpark Variation issue accounted for the time taken in relation to the pleadings and at trial. The primary judge accepted that the subject matter of the trial 'substantially related to the law of contract and evidence as to the contract'[24] rather than the issues arising from the ST Act and accepted that a substantial part of the pleadings, evidence and argument concerned the alleged Representations.[25] He also accepted that the ST Act issues 'played no part in the litigation' until mentioned in an offer to settle made by the Jorgensens immediately prior to a pre-trial conference on 15 October 2013. However, he also observed that from that point onwards, the ST Act issues 'began to loom large'.[26]
3. Secondly, his Honour noted that while the ordinary approach was that a successful party would recover their costs, the court in the exercise of its discretion to award costs could depart from that approach, having regard to a variety of considerations, including the issues on which a successful and unsuccessful party had succeeded, whether the conduct of a successful party had resulted in costs being unnecessarily or unreasonably incurred, and whether the successful party had introduced an issue or issues on which it ultimately failed, but which increased the costs of the proceedings.[27] The primary judge noted that the general approach was to avoid tallying up 'wins' and 'losses' on issues raised in a case, and instead to focus on the exercise of the costs discretion to achieve an outcome most consonant with the justice of the case, and which was not reached as a matter of arithmetic.[28]
4. Thirdly, his Honour noted that there may be a difference in approach to the apportionment of costs as between unsuccessful plaintiffs and defendants, based on the premise that a defendant has no choice but to defend a plaintiff's action (other than to settle). Consequently, '[a] defendant who proves substantially successful in defending an action should not be penalised in costs on issues on which the defendant failed to the same extent as the plaintiff, who elected to sue'.[29] In this respect, his Honour concluded that the Jorgensens 'were faced with a "crippling" judgment in the event they did not defend the action. They were clearly unwilling litigators and made a number of attempts to settle the litigation'.[30]
5. Finally, the primary judge had regard to the fact that Strzelecki had conceded (in the appeal) that the Carpark Variation was a notifiable variation, and thus that it had acknowledged its failure to comply with its obligations under the ST Act. He noted that Strzelecki nevertheless purported to terminate the Contract, sue the Jorgensens for damages and rejected all of their attempts to settle the Action.[31]

The primary judge's reasoning in relation to order 2 of the Costs Orders

1. In order 2 of the Costs Orders, the learned primary judge concluded that from 15 October 2013, Strzelecki was to pay the Jorgensens' costs of the Action, including reserved costs, on an indemnity basis, to be taxed if not agreed. His Honour appears to have reached that conclusion on the basis that offers to settle made by the Jorgensens in October 2013 were Calderbank offers,[32] and that Strzelecki's rejection of those offers was unreasonable in all of the circumstances.
2. The first of the offers made by the Jorgensens in October 2013 was in a letter dated 11 October 2013 from the Jorgensens' solicitors to Strzelecki's solicitors in advance of a pre-trial conference listed for 15 October 2013 (first Calderbank offer).[33] It was in that letter that the Jorgensens' solicitors first claimed that the Jorgensens were entitled to avoid the Contract, on the basis that Strzelecki had failed to inform the Jorgensens of the Use Variation, and thus that it had breached s 69D of the ST Act. Strzelecki's solicitors rejected the first Calderbank offer.[34]
3. On 14 October 2013, the Jorgensens' solicitors wrote again to Strzelecki's solicitors urging further consideration of their offer.[35]
4. The dispute was not settled at the pre-trial conference on 15 October 2013. On 16 October 2013, the Jorgensens' solicitors wrote to Strzelecki's solicitors offering to settle on a different basis (second Calderbank offer).[36] That offer was rejected by Strzelecki's solicitors with a counter-offer made on the same day.[37]
5. The learned primary judge considered whether it was reasonable for Strzelecki to reject the first and second Calderbank offers, having regard to the well-established factors which inform that assessment of reasonableness.[38] The learned primary judge found that the offers were made well prior to the commencement of the trial in August 2014, and that the second Calderbank offer was expressly left open for acceptance for 14 days, which was ample time for Strzelecki to consider it.[39] He found that the offers were clear in their terms.[40] He also found that both the first and second Calderbank offers were offers of substance, which involved substantial compromises on the part of the Jorgensens, and which would have resulted in Strzelecki being paid substantial sums of money.[41] The learned primary judge noted that the second Calderbank offer specifically raised the issue of indemnity costs.[42] Finally, his Honour concluded that from the point at which the first Calderbank offer was made, which referred to the Jorgensens' intended reliance on Strzelecki's failure to comply with its obligations under the ST Act, Strzelecki should have reassessed its prospects of success in the Action.[43] He rejected Strzelecki's submission that the first Calderbank offer could not be assessed on that basis because it did not specifically refer to the Carpark Variation, or any failure by Strzelecki to give notice of that variation.[44] Instead, his Honour concluded that the reference in that offer to the ST Act, and to Strzelecki's obligations under that Act, was significant in the context of an offer to settle 'because it squarely raised a matter, albeit not then pleaded, which was of some consequence'.[45]
6. Evidently, his Honour concluded that Strzelecki's unreasonable rejection of either the first or the second Calderbank offer, warranted an order that Strzelecki pay the Jorgensens' costs on an indemnity basis from 16 October 2013 onwards. He observed that from that point onwards, the issues arising under the ST Act, which had been referred to for the first time in the first Calderbank offer, 'began to loom large'.[46]

Principles in relation to appeals against costs orders

1. As orders as to costs involve the exercise of a discretion, the well-established principles applicable to appeals against discretionary decisions apply in respect of costs decisions. An appellate court is not entitled to substitute its own decision for the decision under appeal merely because it would have reached a different decision, or because it considers that a different result would be more just and equitable. Instead, before it intervenes, an appellate court must be satisfied that the order made stands outside the limits of a sound discretionary judgment.[47] In order to establish that that was so, an appellant must establish either an express error (namely that the primary judge acted upon a wrong principle, mistook the facts, took into account an irrelevant consideration, or failed to take into account a relevant consideration) or demonstrate that an error can be inferred.[48] An error may be inferred if the order under appeal is shown to be unreasonable or plainly unjust.[49]

1. The grounds of appeal are:
   1. Having correctly identified that a specific issue (on which the respondents failed) namely the tourist/short-stay representation issue, ultimately unsuccessful, dominated much of the pleadings and the trial [95], the primary Court erred in fact and law in making an order that the appellant pay two thirds of the respondents' costs (including reserved costs) of the action from commencement to 15 October 2013 to be taxed if not agreed.
   2. The primary Court erred in fact and law in making an order that the appellant pays the respondents' costs of the action (including reserved costs) from 16 October 2013 on an indemnity basis to be taxed if not agreed.
   3. The primary Court erred in law in making the orders the subject of this appeal in that the order is plainly unreasonable and unjust.
2. Strzelecki seeks that the Costs Orders be set aside, and in lieu thereof, that orders in the following terms be made:
   1. The parties bear their own costs of the action up to and including 21 February 2014;
   2. The appellant [Strzelecki] pay 25% of the respondents' [Jorgensens'] costs of the action (including reserved costs) from 22 February 2014 to be taxed if not agreed;
   3. The respondents [Jorgensens] pay the appellants' [Strzelecki's] costs of the hearing before the Honourable Judge Eaton on 27 July 2017 and 6 February 2018 [the hearing of the argument on costs, and the hearing at which the Costs Orders were made following publication of the Costs Decision].
3. As we have already observed, 21 February 2014 was the date on which the Jorgensens amended their DCC to plead a failure by Strzelecki to comply with the ST Act by failing to notify them in relation to the Carpark Variation.

Disposition of the appeal - ground 1 and ground 3 (in so far as it pertains to order 1 of the Costs Orders)

1. Before turning to consider Strzelecki's submissions in relation to order 1 of the Costs Orders, it is convenient to recall the well-established principles applicable to the award of the costs of an action.
2. The costs of any action in the District Court may be paid or apportioned between the parties in such manner as a District Court judge directs.[50] Subject to the District Court of Western Australia Act 1969 (WA), a District Court judge has the same power in relation to the payment of costs by any party as a judge of the Supreme Court.[51] Subject to any inconsistency between the District Court Rules 2005 (WA) and the Rules of the Supreme Court 1971 (WA) (RSC), the RSC apply to and in respect of any case in the District Court.[52] The Supreme Court has a wide discretion to award costs in respect of all proceedings in the Court.[53] Despite its breadth, the discretion to award costs is not unfettered, and must be exercised judicially.[54]
3. Without limiting the Court's wide discretion as to costs, the starting point in relation to the award of costs under the RSC is that the Court will generally order that the successful party to the action or matter recover their costs.[55] It was incumbent on Strzelecki, as the unsuccessful party, to satisfy the primary judge that there were good reasons why it should not pay the Jorgensens' costs.[56]
4. What constitutes 'success' in proceedings is to be determined by the reality of the circumstances involved in the case.[57] The Court may depart from the general rule that costs follow the event and modify a costs order to take into account matters such as any unreasonable conduct of a generally successful party, or to the failure of that party on one or more specific issues. The exercise of the discretion in that way is recognised by a number of rules in the RSC,[58] together with the practice of the Court, and authority.[59] So, for example, if the Court is of the opinion that the conduct of a successful party - either before or after the commencement of the litigation - has resulted in costs being unnecessarily or unreasonably incurred, the Court may deprive that party of costs, either wholly or in part, and it may further order that party to pay the costs of an unsuccessful party, either wholly or in part.[60] In the present case, Strzelecki did not contend that the issues raised by the Jorgensens, and on which they were unsuccessful, were raised unreasonably or improperly.[61]
5. Under O 66 r 1(3) RSC, where a party, though generally successful in an action, has, by the introduction of some issue or issues on which it has failed, increased the costs, the Court may order such party to pay the costs of such issue or issues. It is well-recognised that an order that a successful party recover only a portion of its costs, where it has not been wholly successful, should not be made as a matter of course, for at least two reasons. First, it is often the case that a successful party will not succeed on every issue raised. Secondly, to attempt, in every case, an analysis of which party was successful on which issue would add uncertainty and complexity to the outcome of litigation, and add to the time and cost of costs arguments.[62] Consequently, the power to apportion costs in this way should only be exercised where there are discrete and severable issues on which the generally successful party failed, and which added to the cost of the proceedings in a significant and readily discernible way.[63] Furthermore, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if, by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case.[64]
6. Where the Court decides, in the exercise of its discretion, to modify the usual costs orders to reflect the limited success of the successful party, that power will be exercised broadly, and as a matter of impression, and without any attempt at mathematical precision (which is likely to prove illusory in any event).[65] That approach reflects the fact that it may be difficult to separate the factual and evidentiary substratum of different issues,[66] the fact that some issues are more important than others, and the fact that some issues are subsidiary to others.

1. In respect of ground 1 of the grounds of appeal, Strzelecki's submissions in essence advanced four contentions.
2. Strzelecki's first contention was that the primary judge 'ignored the fact that the [Jorgensens] were ultimately successful on an extremely narrow basis and in a manner that was not advanced at trial'.[67] Strzelecki submitted[68] that the apportionment of costs should have had regard to the realities of the case, which included the fact that the Jorgensens raised a large number of issues in their pleadings, evidence and in their submissions, on which they failed; that the issues on which the Jorgensens were unsuccessful, especially the alleged Representations, occupied a substantial part of the pleadings, evidence and argument at trial;[69] and that the sole ground on which the Jorgensens were successful at trial was pleaded on the basis that the Contract was invalidly terminated by Strzelecki, whereas the Court of Appeal held that the Contract could be avoided even if it had been validly terminated by Strzelecki.[70]
3. Secondly, Strzelecki submitted that the Jorgensens did not plead reliance on the ST Act until September 2011 and at that point, only relied on Strzelecki's alleged failure to notify them of the Use Variation, on which they were unsuccessful; and that it was not until 21 February 2014, nearly 3 years after the commencement of the Action, and after the Action had been listed for trial, that the Jorgensens amended the DCC to raise the only issue on which they were ultimately successful - namely Strzelecki's failure to notify the Jorgensens in relation to the Carpark Variation.[71] The contention at the heart of those submissions appeared to be that none, or few, of the costs incurred in the period of almost 3 years before that amendment was made, related to any issue on which the Jorgensens were successful, and yet Strzelecki had been required to pay two thirds of the Jorgensens' costs during that period.
4. Thirdly, Strzelecki contended that the only issue on which the Jorgensens were successful occupied 'approximately 25% of the costs of the action'.[72] Strzelecki submitted that settling on the figure of two thirds of the Jorgensens' costs to 15 October 2013 was 'without textual warrant'.[73]
5. Fourthly, Strzelecki submitted that the primary judge made no attempt to explain the exercise of his discretion in reaching his ultimate conclusion as to the Costs Orders.[74] Strzelecki submitted that the 'unexplained basis for attributing only 33% of the cost to the vast majority of the trial' revealed an 'inherent [error] of principle'.[75]

No error shown in relation to Order 1 of the Costs Orders

1. Although ground 1 alleged an error of fact and law on the part of the primary judge, no express error was identified, other than that the learned primary judge reached the wrong conclusion as to the appropriate apportionment of costs. That complaint is, in truth, no different from the inferred error the subject of ground 3, namely that it was unreasonable and plainly unjust to require Strzelecki to pay two thirds of the Jorgensens' costs from the commencement of the Action until 15 October 2013.
2. Strzelecki has not established that order 1 of the Costs Orders was unreasonable or plainly unjust.
3. The first and second contentions advanced by Strzelecki must be rejected. His Honour started from the orthodox position that costs follow the event. He concluded that despite the fact that the Jorgensens succeeded in their counterclaim, Strzelecki should not be required to pay all of their costs, having regard to the fact that the Jorgensens did not succeed on all of the issues they had raised. His Honour clearly took into account the fact that the issues on which the Jorgensens were unsuccessful, including the Representations, occupied a substantial part of the pleadings, evidence and argument.[76] The learned primary judge also clearly had regard to the fact that the Jorgensens did not plead the only issue on which they were successful - Strzelecki's failure to notify them of the Carpark Variation - until the amendment made on 21 February 2014,[77] although his Honour noted that other aspects of Strzelecki's compliance with the ST Act had been raised well before that time. He noted that from October 2013 - when the Jorgensens relied upon Strzelecki's non-compliance with the ST Act in making the first Calderbank offer - that issue 'began to loom large'.[78]
4. In so far as Strzelecki's second contention is concerned, it appears to assume that the ST Act issues eventually raised by the Jorgensens had no factual or legal connection with the remaining issues in the Action. However, there was clearly some commonality in the underlying factual substratum. Further, in so far as the ST Act issues concerned the interaction between Strzelecki's obligations under the ST Act, and its right to terminate the Contract, there was also an overlap in the legal issues concerning termination of the Contract.
5. Furthermore, while order 1 of the Costs Orders pertains to a period of about 2½ years from the commencement of the Action until October 2013, the Action was not actively litigated throughout that period. The learned primary judge clearly also took that consideration into account. As his Honour noted, from March 2012, the Action was on the inactive cases list, and subsequently dismissed for inaction, until it was reinstated in July 2013.[79]
6. As the trial judge, the learned primary judge was able to bring to bear his knowledge of the pleadings, the factual matters underlying the issues raised, and the conduct of the Action as a whole, in order to make an assessment of what apportionment of the costs of the Action would be just. Strzelecki has not established that the learned primary judge's discretion miscarried, in respect of any aspect of the analysis undertaken by his Honour.
7. Turning next to Strzelecki's third contention, it is, with respect, without merit. It proceeds on the premise that the apportionment of costs can or should be undertaken on some precise mathematical basis, having regard to the number of issues on which a successful party has won or lost. As the authorities to which we have referred at [49] - [52] make clear, that approach is misconceived.
8. As for Strzelecki's fourth contention (at [57] above), the grounds of appeal did not include any contention that the learned primary judge erred in law in failing to give adequate reasons for the Costs Orders. Consequently, the adequacy of the learned primary judge's explanation does not arise for separate consideration in this appeal.
9. Ground 1, and ground 3 in so far as it pertains to order 1 of the Costs Orders, are not established.
10. It is convenient at this point to deal with the Jorgensens' cross-appeal, which pertains only to order 1 of the Costs Orders.

1. The grounds of the cross-appeal are:
   1. The Primary Court erred in law or in fact in making an order that the Appellant [Strzelecki] pay only two thirds of the Respondents' [Jorgensens'] costs (including reserved costs) of the action from commencement to 15 October 2013.

(i) the Appellant [Strzelecki] had breached its statutory obligations under the Strata Titles Act 1985 (WA) in failing to give notice of the deletion from the [Contract Plan] of the [Carpark Variation];

(ii) it notice had been given, the Respondents would have had the opportunity to avoid the [Contract] (and avoided the entire proceedings);

(iii) although the Respondents [Jorgensens] were successful and the Appellant's [Strzelecki's] Action was dismissed, in defending the proceedings the Respondents raised defence issues on which they were ultimately unsuccessful - however, those defence issues were not improperly or unreasonably raised;

(b) In the premises of the matters set out above, the Primary Court should then have found the Respondents were entitled to all their costs of the proceedings including those from its commencement to 15 October 2013 - the costs to be taxed if not agreed.

1. The Primary Court erred in making the order the subject of this cross appeal in that the order is plainly unreasonably and unjust.

1. The Jorgensens seek that order 1 of the Costs Orders made by the learned primary judge be set aside, and that in lieu thereof, the following order be made:[80]

The Plaintiff [Strzelecki] is to pay the Defendants' [Jorgensens'] costs of the Action (including reserved costs) from commencement to 15 October 2015, the costs to be assessed or taxed if not agreed.

1. In addition, the Jorgensens seek an order that those costs be paid on an indemnity basis. They seek the following order:[81]

The appellant [Strzelecki] is to pay all the costs incurred by the Respondents [Jorgensens] except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that, subject to these exceptions, the Respondents [Jorgensens] be completely indemnified by the Appellant [Strzelecki] for their costs and expenses, the costs to be assessed or taxed if not agreed.

1. Counsel for the Jorgensens submitted that it was an error of principle for the primary judge to have made a deduction from the proportion of costs recovered by the Jorgensens, to reflect the fact that they were not successful on all issues.[82] There was no such error of principle. The learned primary judge's approach was consistent with the court's rules and relevant principles discussed above at [49] - [52].
2. Counsel for the Jorgensens also submitted that the approach taken by the primary judge was contrary to the general principle that, provided that a successful defendant has acted reasonably in running its defence, it should not be deprived of the recovery of all of its costs, even if it was not successful in respect of all issues.[83] To the extent that that submission contended for the existence of a principle different from the general rule that a successful party is ordinarily entitled to its costs, it ought to be rejected. Counsel for the Jorgensens relied on the decision in Mickelberg v The State of Western Australia[84] as authority in support of the principle for which he contended. However, the passage on which counsel relied simply reflected the principles outlined at [49] - [52] above. No authority supports the principle now advanced by counsel for the Jorgensens, and the principle for which counsel contended does not sit comfortably with the express rules of the Court, and the authorities which have discussed those rules, and to which we made reference at [49] - [52].
3. Counsel for the Jorgensens submitted that the primary judge's decision that the Jorgensens were entitled to recover only 66% of their costs from the commencement of proceedings until 15 October 2013 was an error, in that the primary judge appeared to have acted on a wrong principle. However, counsel for the Jorgensens conceded that the learned primary judge had referred to the correct principles.[85] Counsel for the Jorgensens also submitted that the learned primary judge had given weight to an irrelevant factor (which was not specified) or had failed to give sufficient weight to relevant factors (none of which were specified).[86] No express error of the kind alleged was shown.
4. Counsel for the Jorgensens further submitted, in respect of ground 1, that the primary judge's decision on order 1 of the Costs Orders was so plainly unreasonable as to enable this Court to conclude that the discretion had not been exercised properly.[87] In other words, both grounds of appeal in respect of the cross-appeal were directed to the same implied error, that order 1 of the Costs Orders was so plainly unreasonable and unjust as to permit an error to be inferred.
5. Finally, counsel for the Jorgensens submitted that the learned primary judge failed to give reasons for his conclusion that Strzelecki should pay only two thirds of the Jorgensens' costs to 15 October 2013.[88] In the absence of any ground of appeal challenging the failure to give reasons, he submitted that the absence of reasons supported the conclusion that the reduction in the costs awarded to the Jorgensens was plainly unreasonable, so as to permit an error to be inferred in the primary judge's exercise of discretion.[89]
6. The approach taken by the learned primary judge, which we have already outlined at [32] - [36] above, reveals that his Honour clearly brought to bear his knowledge of the pleadings, the issues raised by the parties, the time occupied by those issues in the Action, and the general conduct of the Action, and formed the view that there should be a departure from the general rule that costs follow the event. He assessed the extent of the departure from that general rule which would be just as warranting an order that Strzelecki pay only two thirds of the Jorgensens' costs up to 15 October 2013. The Jorgensens have not established that the learned primary judge's discretion miscarried, in respect of order 1 of the Costs Orders.
7. In so far as the Jorgensens seek that order 1 of the Costs Orders should be set aside, and in lieu thereof an order made that Strzelecki pay their costs from commencement to 15 October 2013 on an indemnity basis, the Jorgensens did not advance any basis on which an indemnity costs order should be made for the period prior to the date of the Calderbank offers.
8. We would grant the Jorgensens an extension of time of one day in which to file the cross-appeal, but the cross-appeal should be dismissed.

Disposition of the appeal - ground 2 and ground 3 (in so far as it pertains to order 2 of the Costs Orders)

1. We return, now, to the balance of Strzelecki's appeal, which concerns order 2 of the Costs Orders. Ground 2 of Strzelecki's grounds of appeal contends that his Honour erred in fact and law in making order 2 of the Costs Orders.
2. The learned primary judge concluded that after 15 October 2013, Strzelecki should pay the Jorgensens' costs on an indemnity basis, having regard to its unreasonable rejection of the first and second Calderbank offers. That indemnity costs order permitted the Jorgensens to recover all of their costs, except those which were unreasonable in amount, or unreasonably incurred.[90]
3. The learned primary judge appears to have concluded that Strzelecki's rejection of the Calderbank offers was unreasonable, notwithstanding that, at the time at which the Calderbank offers were made, the only allegation that the Jorgensens had pleaded in relation to Strzelecki's breach of the ST Act concerned the Use Variation. His Honour took the view that that did not matter because '[t]he reference to the provisions of the [ST] Act and to the vendor's obligations in that regard in the context of an offer to settle ... squarely raised a matter, albeit not then pleaded, which was of some consequence'.[91] It appears (although he did not say so expressly) that the learned primary judge was of the view that once the Jorgensens alleged that Strzelecki had breached the ST Act in respect of the Use Variation, Strzelecki should also have realised that it was in breach of its obligation under the ST Act in respect of the Carpark Variation and should therefore have appreciated that its position in the litigation was weaker. His Honour's conclusion appears to have been informed by his view that vendors of strata units are in a position to know of notifiable variations under the ST Act and that the ST Act therefore required a degree of diligence on their part in order to ensure compliance with the provisions of the ST Act.[92]
4. Before turning to the parties' submissions in relation to ground 2 of the grounds of appeal, it is convenient to recall the principles in relation to costs in light of Calderbank offers. There must be some special or unusual feature of a case to warrant an award of indemnity costs.[93] One well-recognised basis for an award of indemnity costs is that the unsuccessful party unreasonably rejected a Calderbank offer.[94] The party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in their favour.[95]
5. The mere fact that the recipient of a Calderbank offer is ultimately worse off than they would have been had the offer been accepted, does not mean that its rejection was unreasonable.[96] Instead, in determining whether the rejection of the offer was unreasonable, all relevant facts and circumstances must be considered.[97] Ordinarily, regard should be had to at least the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success, assessed as at the date of the offer (and not with the benefit of hindsight as to the result of the proceedings); the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejection of it.[98]
6. Strzelecki advanced a number of bases for its contention that the primary judge erred in fact and in law in ordering that Strzelecki pay the Jorgensens' costs from 16 October 2013 on an indemnity basis. As counsel for Strzelecki acknowledged, the best of those arguments was that the reasonableness of Strzelecki's refusal of the Calderbank offers made in October had to be assessed by reference to the pleadings as they stood or were proposed at the time of the offers, which at that stage made no reference to the Carpark Variation.[99] He submitted that although the pleadings as they then stood alleged that Strzelecki had failed to notify the Jorgensens of a notifiable variation of the proposed strata plan, the only failure then pleaded was Strzelecki's alleged failure to notify the Jorgensens of the Use Variation.[100] It was not until February 2014, after the Calderbank offers expired, that the Jorgensens further amended their DCC to plead that the Carpark Variation was a notifiable variation about which Strzelecki had failed to give them notice, in breach of the ST Act.[101]
7. Counsel for Strzelecki further submitted that the recipient of a Calderbank offer is not obliged to consider any future amendment that may be raised at a later time in the proceedings, and that the reasonableness of that party's refusal to accept a Calderbank offer could not be judged by reference to later amendments.[102] He accepted that in assessing all of the circumstances relevant to the reasonableness of the rejection of a Calderbank offer, it would be relevant to take into account a proposed amendment of the pleading,[103] but submitted that that was not the case here, because the Carpark Variation had not been raised by the Jorgensens at all at the time when the Calderbank offers were made.[104]
8. Counsel for the Jorgensens submitted that the fact that the DCC, as at October 2013, did not expressly refer to the Carpark Variation was irrelevant. The question of Strzelecki's failure to comply with its obligations under the ST Act had been raised, even if that specific breach had not been raised; the fact that that issue had been raised should have caused Strzelecki to reassess its prospects of success; and it knew or ought reasonably to have known of its breach in respect of the Carpark Variation, given that that breach had occurred by November 2010.[105] Counsel's submission, in effect, was that the first Calderbank offer raised the issue of Strzelecki's compliance with s 69D of the ST Act, in circumstances where Strzelecki was then under an obligation to give notice of the Carpark Variation and had failed to do so, and that Strzelecki ought to have anticipated that that was the case, and in the circumstances, it was open to the primary judge to find that it was unreasonable for Strzelecki to have refused that offer.[106]
9. We are unable to accept the submissions of counsel for the Jorgensens. The reasonableness of Strzelecki's conduct in refusing the Calderbank offers must be assessed without the benefit of hindsight, and having regard to the strength of the parties' cases as they then stood. At the time when the Calderbank offers were made, the DCC did not contain an allegation that Strzelecki had breached its obligations under the ST Act by virtue of its failure to notify the Jorgensens of the Carpark Variation. Even though the first Calderbank offer made a general reference to Strzelecki's breach of s 69D of the ST Act, the Jorgensens' solicitors went on to explain, in that offer, what was meant by that reference, namely Strzelecki's alleged failure to notify the Jorgensens of the Use Variation.[107] Furthermore, at the time of the Calderbank offers, there was no indication that the Jorgensens intended to further amend the DCC to allege a breach of the ST Act arising from Strzelecki's failure to notify the Jorgensens of the Carpark Variation. It was not until February 2014 that the Jorgensens further amended the DCC but by then the second Calderbank offer had long since expired.[108]
10. As for the submission that although Strzelecki's breach of the ST Act had been pleaded only in relation to the Use Variation, it ought nevertheless to have caused Strzelecki to reassess its prospects in the litigation, having regard to other possible breaches of the ST Act, that submission is without merit. It may be inferred that Strzelecki's assessment was that its prospects in respect of the only alleged breach of the ST Act then advanced - the Use Variation - were good. It cannot be assumed that at the time of the receipt of the Calderbank offers, Strzelecki was conscious of its breach of the ST Act in respect of the Carpark Variation. There was no evidence, or finding, as to when Strzelecki became aware of its obligation to notify the Jorgensens in respect of the Carpark Variation. It is well-established that a party's erroneous prediction about the prospects of litigation, on the basis of which it rejects a Calderbank offer, may not be regarded as unreasonable if that party was not, at the time, and for good reason, in possession of sufficient information to make a proper assessment of its prospects, or if the circumstances upon which its assessment was based later changed.[109]
11. In any event, Strzelecki was entitled to assess the Calderbank offers having regard to the strength of the Jorgensens' case as it was advanced, either by pleadings or a communicated proposal to amend the pleadings, at the time the offers were made. Strzelecki was not required to undertake an assessment by reference to a case that the Jorgensens had not then advanced, and might never advance. To assess the reasonableness of a party's rejection of a Calderbank offer by reference to other potential causes of action that might be open to its opponent to run, but which had not been advanced, would be both unfair and divorced from the realities of litigation, which is decided on the basis of the case advanced by each party in its pleadings.
12. Ground 2 of the grounds of appeal should be upheld. Strzelecki has established an express error of principle in the exercise of the primary judge's costs discretion, in that his Honour assessed the reasonableness of Strzeleki's refusal of the Calderbank offers by reference to a case which the Jorgensens did not then advance. In view of that conclusion, it is unnecessary to deal with the other submissions advanced by Strzelecki in support of ground 2, or with ground 3 of the appeal (to the extent that it pertained to order 2 of the Costs Orders).

1. As ground 2 of the grounds of appeal has been made out, the exercise of the trial judge's costs discretion under s. 64 of the District Court of Western Australia Act has miscarried.
2. The award of indemnity costs by order 2 of the Costs Orders reflects one aspect of the costs of the Action as a whole, and no error of principle has been established in making order 1. However, the Costs Orders made by the primary judge constituted one instance of the exercise of the costs discretion under s 64, albeit one which was expressed by two components. An error in either of those components is thus an error which infects the exercise of the discretion as a whole. Once that discretion has been shown to have miscarried in a material respect, the whole of the costs discretion falls to be exercised again according to law.[110] It is therefore necessary for this court to consider, afresh and for itself, the orders which should be made for the costs of the whole Action (including those incurred before 16 October 2013) under s 64, or remit that matter for reconsideration.
3. Remittal of the question of costs to the learned primary judge is not open (in light of his Honour's retirement) but such a course would have had little attraction in any event, in view of the protracted history of the Action. This Court has before it all of the material which was before the learned primary judge, and is therefore in a position to exercise the costs discretion afresh. That is clearly the appropriate course in this case. However, to adopt that course is not to understate the difficulty for an appeal court in making determinations about the apportionment of the costs of an action as a whole, particularly in cases such as this, where numerous legal and factual issues were in dispute and where the successful party did not enjoy complete success.
4. The orders Strzelecki sought in the event that the Costs Orders were set aside are set out at [45] above.
5. In the course of dealing with the cross-appeal, we discussed the orders the Jorgensens sought in the event that order 1 of the Costs Orders was set aside. Counsel for the Jorgensens also submitted that if this Court found that the primary judge erred in making order 2, then in exercising its discretion to substitute an alternative costs order, this Court should order that Strzelecki pay the Jorgensens' costs of the proceedings, or alternatively of the proceedings from 16 October 2013, to be taxed without the limits imposed by items 3(b), 3(c), 17, 20(a) and 20(c) of the applicable scale, and with an allowance for transcripts (a special costs order) pursuant to s 280(2) of the Legal Profession Act 2008 (WA) (LP Act).[111] (For the sake of completeness, we note that the Jorgensens' solicitors made other Calderbank offers later in the course of the Action,[112] and after the amendment of the DCC, to include an allegation that Strzelecki breached the ST Act by failing to notify the Jorgensens of the Carpark Variation. However, the Jorgensens did not contend, on the appeal, that the learned primary judge should have made an indemnity costs order on the basis that Strzelecki's rejection of those offers was unreasonable.)
6. The Jorgensens were successful in the Action. However, they were not wholly successful. They were unsuccessful in respect of a significant number of issues. In our view, this is clearly a case where some apportionment should be made to reflect the fact that the Jorgensens were not wholly successful.
7. Having reviewed the affidavits tendered in evidence in the trial, the transcript of the trial, and the opening and closing submissions filed by counsel, and bearing in mind that the apportionment of costs should be undertaken as a matter of impression and not mathematical precision, we have reached the view that, subject to the question of special costs (which we discuss below) the just apportionment of costs in this case would be reflected in an order that Strzelecki pay two thirds of the Jorgensens' costs of the Action. We have reached that conclusion for the following reasons.
8. First, in our view, the Action as a whole can properly be regarded as having three components: Strzelecki's claim for relief (namely a declaration and an award of damages) for the Jorgensens' alleged breach of the Contract; that part of the DCC which advanced claims pursuant to the ST Act; and the balance of the DCC which comprised all remaining defences and claims (alleged breach of implied terms or of the terms of a collateral contract, breach of the Representations, unconscionability, estoppel, and Strzelecki's alleged failure to mitigate). Broadly speaking, the Jorgensens were successful in two of these three components of the Action - Strzelecki's claim was dismissed, and the Jorgensens' succeeded in respect of that part of the DCC which relied on the ST Act. That broad analysis supports the conclusion that Strzelecki should be required to pay the Jorgensens' costs for the two components of the Action in which the Jorgensens were successful, but not for the third component.
9. Secondly, in our view, as a matter of broad impression, these three components of the Action should be regarded as approximately equivalent, in terms of their significance in the Action as a whole. That assessment takes account of the fact that the focus of the proceedings changed over time. By way of example, although the ST Act issues were not raised until October 2013, as the learned primary judge observed, they began to 'loom large' from that point on. That assessment also takes account of the progress of the trial. Four days of the trial[113] were taken up with the evidence of witnesses, which appears to have largely focused on evidence relevant to the terms of the Contract and the Representations, and factual issues relating to the ST Act claims. The first four days of the trial[114] and the final day of the trial, were taken up with legal argument (objections and questions of further discovery) and the parties' opening and closing submissions. The ST Act issues received significant attention in those submissions.
10. Thirdly, although the Jorgensens ultimately succeeded only in respect of one of their ST Act claims, in our view it is not appropriate to reduce the measure of their success on that component of the Action on that account. While each of the ST Act claims had a different factual basis, there was a common factual substratum in relation to the amendments to the proposed strata plan. Further, each of the ST Act claims gave rise to identical legal issues. These included the construction of the ST Act (and in particular, what constituted a 'notifiable variation'), and whether the Jorgensens' right to avoid the Contract, as a result of Strzelecki's failure to comply with its obligations under the ST Act, survived, despite Strzelecki's purported termination of the Contract for the Jorgensens' failure to settle.
11. We turn, next, to consider whether a special costs order should be made.

Whether a special costs order should be made

1. The principles in relation to special costs orders are well-established. Ordinarily, the taxation of bills of costs charged by a legal practice is regulated by costs determinations made by the Legal Costs Committee established under the LP Act.[115] However, the applicable limits under the scale of costs set out in such costs determinations are able to be raised or removed by the Court pursuant to the power in s 280(2) of the LP Act, which provides:

(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.

1. The principles concerning special costs orders under s 280(2) of the LP Act are well-established. They were recently set out in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2][116] where this Court said:

By s 280(1) of the Act, a party's recoverable costs are confined, in effect, by the scale limits. To that extent, s 280(1) is protective of the party charged and, more generally, serves the due administration of justice by limiting the allowable scope for legal costs. Section 280(2) operates as an exception to s 280(1) of the Act. Section 280(2) of the Act operates to give the successful party the opportunity to recover those costs which have been reasonably and properly incurred where, in the court's opinion, the scale is inadequate because of the unusual difficulty, complexity or importance of the matter. To that extent, s 280(2) of the Act is protective of the successful party to the litigation and, on that account, also serves the administration of justice by facilitating, within the limits imposed by the statutory criteria, the operation of the general principle that a successful party is entitled to its costs of the litigation. Even where orders are made under s 280(2) of the Act, it nevertheless remains the task of the taxing officer to consider the reasonableness of and necessity for the work undertaken, and to make a judgment about the remuneration reasonably required.

Before such a power will be exercised, the court must form an opinion that has two components. First, the court must form the view that the maximum amount allowable under the relevant scale item is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant cost determination. Secondly, the court must also form the opinion that the inadequacy of the costs allowable under a costs determination arises because of the 'unusual difficulty, complexity or importance of the matter'. Issues of the kind which arise are addressed as matters of impression, rather than as matters of detailed evaluation, precision or science.

For the purposes of exercising the powers conferred by s 280(2) of the Act, it will not ordinarily be necessary for the court to determine what amount should be allowed on taxation, but only whether there is a fairly arguable case that a greater amount should be allowed than that which is allowable under the relevant determination: Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd.

A fairly arguable case to that effect will not be established merely because a party incurred greater costs than those allowable under the relevant determination. However, depending on the particular case and all the circumstances, the fact that a party has applied significantly greater legal resources to each step in the litigation than those for which allowance is made under items of the relevant determinations, when viewed in the context of the difficulty, complexity or importance of the matter, may sustain the conclusion that there is a fairly arguable case that each of the items identified is inadequate (and thereby the amount of costs allowable in respect of the matter is inadequate) because of the unusual difficulty, complexity or importance of the matter.

The word 'unusual' in s 280(2) of the Act qualifies only the 'difficulty' of the matter, and not its 'complexity' or 'importance'. The word 'unusual' in this context means unusual having regard to what one might describe as the usual run of civil cases determined in the court. That essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases: Wainwright v Barrick Gold of Australia Limited. Also, the reference to 'importance' in this context allows the court to have regard to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties, or because of the significance of the issues to other prospective parties, or to the public or community generally: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq).

In Kidd v The State of Western Australia, this court observed, with reference to Electricity Generation, that the question of unusual difficulty, complexity or importance arises in respect of the proceedings as a whole and not in respect of each individual item in the relevant costs determination. In Electricity Generation, Martin CJ observed:

'[T]here are no words within [s 280(2)] which suggest that the court is required to assess the difficulty, complexity or importance of the work done in respect of each and every item in the relevant determination before exercising the power conferred by s 280(2). The natural and ordinary meaning suggested by the words used is that the 'matter' is the matter in respect of which legal services were provided.'

1. The Jorgensens applied to the primary judge for special costs orders under the LP Act. In support of their application for a special costs order, the Jorgensens relied on an affidavit sworn by their solicitor, Mr Bernard Cummins, to which he annexed a draft bill of the Jorgensens' costs.[117]
2. In submissions to the learned primary judge, Strzelecki conceded that there was 'ultimately some complexity' in the Action, but submitted that that complexity did not arise from the issues which had absorbed the time of the parties, and of the Court, during the course of the Action and of the trial.[118]
3. The learned primary judge concluded that the aspects of the Action which concerned the ST Act were

of some importance and complexity. It is the case that those issues played no part in the litigation until mentioned in an offer made by the Jorgensens immediately prior to the pre-trial conference of 15 October 2013. Thereafter they began to loom large.[119]

1. It appears to have been for that reason that his Honour declined to make a special costs order in respect of the Jorgensens' costs for the period from the commencement of the Action until 15 October 2013.[120] Special costs did not arise for consideration in respect of the period after 15 October 2013 because his Honour had ordered that Strzelecki pay the Jorgensens' costs on an indemnity basis.
2. Counsel for the Jorgensens submitted that the unchallenged evidence in the affidavit filed on behalf of the Jorgensens was that their costs of the Action were substantially above the scale allowances, so that the bill could reasonably be expected to exceed the scale limits on a taxation. Counsel also submitted that the Action was one of unusual difficulty, having regard to the length of the trial and the number of issues, that it was complex because of the number and nature of the issues, and was of importance, both to the Jorgensens, given the financial ramifications for them of the litigation, and more widely, because contracts of sale for 'off the plan' apartments were commonplace.[121]
3. We are not persuaded that the special costs order sought by the Jorgensens should be made, for three reasons.
4. First, the Jorgensens have not established, in respect of each of the items for which they seek to lift the limits of the applicable scale that there is a fairly arguable case that the bill will properly tax at an amount greater than the scale limits. By way of example, the draft bill of costs indicates that the work done in the preparation of the DCC (items 3(b) and (c)) amounted to $8,580, which is the same as the limit under the scale. Similarly, in respect of counsel's fees for the second, third, fifth and sixth days of the trial, those fees either did not exceed the maximum amount allowed under the scale, or alternatively only exceeded the maximum under item 20(c) by a small margin. In those circumstances, it cannot be said that it is fairly arguable that the amounts allowed on a taxation for those items of work would exceed the maximum permitted for those items under the scale.
5. Secondly, in respect of the work covered by items 17 and 20(a), and the work covered by item 20(c) (in respect of counsel's fees for the fourth, seventh and eighth days of the trial), there is a fairly arguable case that the bill of costs will tax at an amount greater than the maximum limit for those items under the scale. However, we are not persuaded that the inadequacy of the costs allowable for those items under the scale arises because of the unusual difficulty, or the complexity, or the importance, of the Action. By way of example, in respect of the work covered by item 20(c) (counsel fees) on the fourth, seventh and eighth days of the trial, the draft bill indicates that on each of those occasions, the trial resumed after having been adjourned part-heard for at least a few weeks. In each case, the fees for counsel greatly exceeded the counsel fees charged for the second, third, fifth and sixth days, because on each of those occasions, counsel's fees included a large number of hours by way of 'refresher'. On the basis of the information presently available, we are not satisfied that the limit under the scale for work done under item 20(c) will be inadequate because of the unusual difficulty, complexity or importance of the Action. Instead, the more compelling explanation for the disparity appears to be that, on each occasion, counsel required considerable time to refresh his preparation for the hearing, whereas the scale item does not include any component for a 'refresher' when a trial is resumed after being part-heard.
6. Thirdly, we are not persuaded that the Action overall can be said to have involved unusual difficulty, complexity or importance. As we have already noted, the learned primary judge concluded that the ST Act issues were of 'some importance and complexity'.[122] That finding is not challenged on the appeal. However, the ST Act issues were not the only issues which were ventilated in the proceedings. The other issues of significance in the Action, particularly the alleged breach of the Representations, do not appear to have involved unusual difficulty, or complexity or importance. Consequently, we are not persuaded that the Action as a whole can be described as involving unusual difficulty, or complexity or importance. For that reason, even if the Jorgensens had established that there is a fairly arguable case that the bill of costs will tax at an amount greater than the maximum limit for each of the items in question, there is no basis on which to conclude that the inadequacy of the costs allowable under the scale arises because of any unusual difficulty, or complexity or importance of the Action.
7. In view of these conclusions, it is unnecessary to express any view as to whether a special costs order under s 280(2) of the LP Act can properly be made in a case such as this, where a successful party is awarded only a proportion of its overall costs of an action, having regard to the fact that it was not successful on all of the issues it raised.

Costs of the costs hearing before the primary judge

1. Counsel for Strzelecki submitted that as a consequence of order 2 of the Costs Orders, Strzelecki was required to pay the Jorgensens' costs, in respect of the costs hearing before the primary judge, on an indemnity basis.[123] As the Costs Orders are to be set aside, the question arises whether a separate order should be made in respect of the costs of the costs hearing before the primary judge.
2. Counsel for Strzelecki submitted that '[t]he costs of the hearing on costs should be considered and determined on the usual principles of the relative success of the parties assessed on a party to party basis'.[124]
3. It is apparent that at the costs hearing, the Jorgensens were successful, in that costs orders were made in their favour. However, they were not wholly successful. That outcome remains the same in light of this appeal.
4. Having regard to the fact that the Jorgensens were not wholly successful, to our mind the just result would be to require that Strzelecki pay two thirds of the Jorgsensens' costs of the costs hearing also.
5. The order which should be made in lieu of the Costs Orders is that:

The plaintiff is to pay two thirds of the defendants' costs (including reserved costs) of the Action, including the costs of the hearings on 27 July 2017 and 6 February 2018, to be taxed if not agreed.

1. The orders which should be made on the appeal and the cross-appeal are as follows:
   1. The appeal is allowed.
   2. The orders made by Eaton DCJ on 6 February 2018 are set aside, and in lieu thereof, the following order is made:

'1. The plaintiff is to pay two thirds of the defendants' costs (including reserved costs) of the Action, including the costs of the hearings on 27 July 2017 and 6 February 2018, to be taxed if not agreed'.

1. The time in which the Respondents may file their cross-appeal is extended to 7 March 2018.
2. The cross-appeal is dismissed.
3. Given that neither party has been wholly successful in the present appeal, an advance copy of these reasons will be provided to the parties so that they have the opportunity to confer and to attempt to reach agreement on the costs orders which should be made in respect of the appeal itself. Having regard to the lengthy history of the dispute between the parties, it will be most regrettable if further costs have to be incurred in a hearing in relation to the costs of the present appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Strzelecki Holdings Pty Ltd v Jorgensen [No 3] [2015] WADC 115.

[2] Strzelecki Holdings Pty Ltd v Jorgensen [2016] WASCA 177.

[3] Strzelecki Holdings Pty Ltd v Jorgensen [No 4] [2018] WADC 19.

[4] Calderbank v Calderbank [1975] 3 All ER 333.

[5] Cardno BSD Pty Ltd v Water Corporation [No 2] [2011] WASCA 161 [9] - [11] (Martin CJ), [12] (Newnes JA), [95] - [102] (Murphy JA); Souter v Condor Developments Pty Ltd [2012] WASCA 227 [23] - [25] (Newnes JA, Buss JA & Murphy JA agreeing).

[6] A notifiable variation occurred if, before the registration of the purchaser as the proprietor of the lot, the registered or proposed strata plan was varied in a material particular, or the registered strata plan differed in a material particular, from the proposed strata plan: Strata Titles Act 1985 (WA) s 69C(3).

[19] The applicable scales for the relevant periods when work was done appear to be the Legal Practitioners (Supreme Court) (Contentious Business) Report 2010; Legal Practitioners (Supreme Court) (Contentious Business) Report 2012; Legal Practitioners (Supreme Court) (Contentious Business) Report 2014.

[20] The date of 14 February 2014 is incorrect. The DCC was re-amended to plead Strzelecki's failure to comply with its obligations under the ST Act on 21 February 2014.

[28] Costs Decision [96], quoting G E Dal Pont Law of Costs (3rd ed) [8.7].

[38] Costs Decision [86], referring to Ford Motor Company of Australia Limited v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [19] (Buss JA).

[47] House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505; Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 520 (Mason & Deane JJ).

[48] House v The King (504 - 505).

[49] House v The King (504 - 505).

[50] District Court of Western Australia Act s 64(1).

[51] District Court of Western Australia Act s 64(3).

[52] District Court Rules pt 1 r 6.

[53] Supreme Court Act s 37(1); Naidoo v Williamson [2008] WASCA 179 [39] (Steytler P, Pullin JA & Murray AJA agreeing).

[54] Frigger v Lean [2012] WASCA 66 [53].

[56] cf Nikolaou v Papasavas, Phillips and Co [1989] HCA 11; (1989) 166 CLR 394, 407; Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) [5].

[57] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [70] (McHugh J).

[58] Amaca Pty Ltd (formerly James Hardie and Co Pty Ltd) v Moss [2007] WASCA 162 (S), [6]; see, for example, RSC O 66 r 1(2), r 1(3) and r 2(a).

[59] See, for example, Keet v Ward [2011] WASCA 139 [18] - [21]; Souter v Condor Developments Pty Ltd [2012] WASCA 227 [28] - [29] (Newnes JA, Buss JA & Murphy JA agreeing).

[62] Bowen [6]; Oshlack [67] - [68] (McHugh J).

[65] Amaca [6]; Shire of Manjimup v Cheetham [2010] WASCA 225 [7].

[70] Appellant's submissions [10.13].

[74] Appellant's submissions [17]; appeal ts 21.

[80] Respondents' orders wanted in the cross-appeal: WAB 67.

[81] Respondents' orders wanted in the cross-appeal: WAB 67.

[84] Mickelberg v The State of Western Australia [2007] WASC 140 (S) [43] (Newnes J).

[85] Respondents' submissions in the cross-appeal [23].

[86] Respondents' submissions in the cross-appeal [23].

[87] Respondents' submissions in the cross-appeal [23].

[90] EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59, 71; Re Bond Corporation Holdings Ltd (1990) 1 WAR 465, 479.

[93] Yara Australia Pty Ltd v Oswal [2012] WASCA 264 [33] (Murphy JA, McLure P agreeing).

[94] Lo Presti [16], [23] (Buss JA, Wheeler JA agreeing); Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 (S) [9].

[96] Lo Presti [18]; Sakari Resources Ltd v Purvis [2016] WASCA 24 (S) [13].

[98] Lo Presti [19], citing Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23], [89].

[100] Re-amended defence and counterclaim [16.1.5], [19A.3]; BAB 73, 77.

[101] Re-amended defence and counterclaim [19B]; BAB 77 - 78.

[105] Respondents' amended submissions [30] - [31].

[109] Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 [13] (Byrne J), quoted in Lo Presti [20].

[110] See, by analogy, McGarry v The Queen [2001] HCA 62; (2001) 207 CLR 121 [3], [8] - [9].

[111] Respondents' amended submissions [35].

[113] 30 and 31 March 2015, 1 April 2015 and 26 May 2015.

[114] 11 August 2014, 24, 25 and 26 November 2014.

[115] Legal Profession Act s 280(1).

[116] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No. 2] [2017] WASCA 76 (S) [11] - [16].

[121] Respondents' amended submissions [37] - [38].