Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd [2020] ACTSC 131 | Case summary

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title: Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No. 4)

Citation: [2020] ACTSC 131

Hearing Date: 6 April 2020

Decision Date: 18 May 2020

Reasons Date: 28 May 2020

Before: Penfold J

Decision: The Court: (a) declares that 10% of the total costs of the matter are attributable to the cleaning claim; and

(b) orders that the plaintiff pay 90% of the defendant’s costs as agreed or assessed.

Catchwords: PRACTICE AND PROCEDURE — Costs — where plaintiff unsuccessful in major claim but successful in one of four minor claims — where plaintiff awarded nominal damages of $20 — where plaintiff sought costs order in its favour — whether plaintiff “substantially successful” — whether defendant “bound to fail” in minor claim — whether defendant could have avoided proceedings — whether defendant took unreasonable approach to particulars — plaintiff’s contribution to “unnecessary complexity” — significance of level of nominal damages awarded — whether plaintiff had other “realistic lawful options” in relation to successful claim. PRACTICE AND PROCEDURE — Costs — where plaintiff unsuccessful in major claim but successful in one of four minor claims — where plaintiff awarded nominal damages of $20 — where plaintiff sought costs order in its favour — Leases (Commercial Tenancies) Act 2001 (ACT) — parties to meet own costs unless court orders otherwise — public policy concerns — risk of discouraging tenants’ claims — Court Procedures Rules 2006 (ACT) — court may attribute specified percentage of costs of proceeding to specified issue or part of proceeding — desirability of avoiding costs order requiring assessment of costs of both parties. PRACTICE AND PROCEDURE — Costs — application by plaintiff for stay of any costs order — intention to appeal not as such a basis for staying costs order — no claim by plaintiff of hardship, impact on business, or delay in hearing of appeal — no basis for staying costs order.

Legislation Cited: Court Procedures Rules 2006 (ACT) r 1705 Leases (Commercial Tenancies) Act 2001 (ACT) s 154 Cases Cited: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Roadshow Films Pty Ltd v iiNet Limited (No.4) [2010] FCA 645; 269 ALR 606 Lewis v Australian Capital Territory [2019] ACTCA 16 Leda v Brenda Hungerford Pty Ltd [2018] ACTCA 17; 13 ACTLR 252 Volanne v International Consulting and Business Management [2015] ACTCA 25 Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 3) [2020] ACTSC 53 Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd [2011] ACTSC 47 Lewincamp v ACP Magazines (No. 3) [2008] ACTSC 81 State of New South Wales v Stevens [2012] NSWCA 415; (2012) 82 NSWLR 106 Jireh International Pty Ltd v Western Export Services Inc (No 2) [2011] NSWCA 294 NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685 Australian Conservation Foundation Inc. v Forestry Commission of Tasmania (1988) [19 FCR 127] 81 ALR 166

Texts Cited: G. E. Dal Pont, Law of Costs (4th edition), LexisNexis Butterworths, 2018

Parties: Supabarn Supermarkets Pty Ltd (Plaintiff) Cotrell Pty Ltd (Defendant)

Representation: Counsel D Hassall (Plaintiff) P Walker SC (Defendant) J Larkings (Defendant)

Solicitors Snedden Hall & Gallop (Plaintiff) Dentons (Defendant)

File Number(s): SC 1030 of 2009

Introduction

On 10 March 2020 I handed down a written judgment in Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 3) [2020] ACTSC 53 (the principal judgment), setting out my reasons for concluding that the plaintiff, Supabarn, had made out only one small aspect of its large case against the defendant, Cotrell. This was a success which the plaintiff had already conceded would entitle it to nominal damages only. I also indicated an inclination to order the plaintiff to pay the defendant’s costs, subject to hearing from the parties.
The parties provided brief written submissions and submissions in reply, and a hearing was listed. The plaintiff attached a large bundle of documents to its original costs submissions (the plaintiff’s bundle), and before the costs hearing provided an affidavit from its solicitor attaching further documents (the plaintiff’s affidavit).
After investigating their files, neither party made a claim for costs on other than the usual basis.

Background

The plaintiff, Supabarn, operated a supermarket in a shopping centre known as Kaleen Plaza (the Centre) owned by the defendant, Cotrell. The plaintiff took action against the defendant in respect of breaches of various clauses of the Lease under which it occupied premises in the Centre, and claimed damages for losses caused by those breaches: at the beginning of the trial those losses were asserted to be around $12 million but by the end of the trial the amount claimed had been adjusted to $7.8 million.
The facts of the case, and the way it was conducted, are set out in detail in the principal judgment, but are summarised as necessary in this judgment. In these reasons I use the same abbreviations used in the principal judgment.
The principal judgment sets out the clauses of the Lease and the Supplemental Deed that were in issue in the proceedings, but it is useful to set out the key clause of the Lease at this stage:

Management of Centre

10.7 The Landlord must conduct, manage and operate the Centre as a high quality retail shopping centre and in an efficient manner at all times.

Evidence

The documents contained in the plaintiff’s bundle and the plaintiff’s affidavit evidenced many (but by no means all) of the dealings between the parties starting in 2003, not long after the plaintiff had begun complaining about the defendant’s compliance with aspects of the Lease, through to 2009 when the plaintiff began the proceedings, and continuing until late 2013, by which time the hearing had run for 15 days, with several more days listed in 2014.

2003

On 3 February 2003, Eric Koundouris on behalf of Supabarn wrote to Dr Solomon on behalf of Cotrell. Mr Koundouris complained about his “frustration at [Dr Solomon’s] indecisiveness and lack of performance regarding several outstanding matters (some serious) regarding” the Centre. The letter requested the installation of an air lock, urged the carrying out of a list of “essential repairs” which included addressing water leaks, painting, new lighting and better maintenance of existing lighting, and cleaning of the public car park and walkways, asserted that “the landlord is now obliged to significantly upgrade the Centre, the minimum works of which having already been outlined”, and threatened action “to seek the relief available to us under our regulated lease”.
On 29 August 2003, Eric Koundouris on behalf of Supabarn wrote to Dr Solomon on behalf of Cotrell to express his concerns “at [Dr Solomon’s] lack of interest in [his] own Centre”. The letter:

(a) mentioned Cotrell’s failures to: (i) install an air lock;

(ii) repair the leaking roof;

(iii) paint inside the common areas;

(iv) install additional lighting in the arcade;

(v) clean the public carpark and walkways; and

(vi) improve the servicing and maintenance of the exterior of the building and carpark lighting;

(b) complained that the painting of the outside gutters had used a colour so similar to the existing colour as to be unnoticeable and was again “only a cosmetic attempt at revitalizing or giving the Centre a real facelift”;

(c) noted the development of the nearby Gungahlin Town Centre and more generally the increase in competition from other shopping centres;

(d) asserted an understanding that Cotrell would reciprocate for Supabarn’s investment in the supermarket by spending “serious money” to upgrade the shopping centre; and

(e) foreshadowed a possible application for rent reductions in the future.

2004

On 8 June 2004, James Koundouris on behalf of Supabarn wrote to Dr Solomon on behalf of Cotrell about matters mentioned in the August 2003 letter that had still not been attended to, and complaining in particular about the air conditioning in the common areas, Cotrell’s alleged overcharging for cleaning, and problems with repairs and maintenance. The letter concluded:

This letter will serve as a final opportunity for you to engage with us to discuss our concerns and find a solution suitable to us.

Should you not arrange to meet with us within [one (1) month] from the date of this letter we propose to bring proceedings against you for a range of issues already canvassed by Counsel.

On 3 July 2004, Supabarn’s solicitor wrote to Cotrell’s solicitor in reply to a letter to Supabarn, apparently from Cotrell’s solicitor, dated 25 June 2004 (not provided). The letter from Supabarn’s solicitor:

(a) complained about the air conditioning and air lock issues;

(b) indicated that Supabarn:

remains totally dissatisfied with respect to not only the two items raised in your letter but the general malaise of the Centre and your client’s responsibility to conduct it as “a high quality Retail Shopping Centre”

In one last attempt to try to resolve my client’s concerns would your client now give serious thought to a substantive response to all the allegations previously raised ….

I suggest a meeting be scheduled for that purpose.

On 13 May 2005 James Koundouris on behalf of Supabarn wrote to Cotrell, care of the managing agent JLL, complaining of Cotrell’s failure:

to … upgrade the Centre to the standard of “a high quality retail shopping centre” which was to be managed in an efficient manner at all times as specified in [the Lease].

2006

On 21 June 2006 Supabarn’s solicitor wrote to Cotrell’s solicitor:

(a) complaining about breaches of clauses 10.6 and 10.7 of the Lease, in that the shopping centre “has not been kept clean nor conducted, managed or operated as a high quality retail shopping centre in any manner”;

(b) demanding “a capital works program to upgrade the centre to the standard required by the Lease”;

(c) claiming that over the term of the Lease (including the 20 years covered by Supabarn’s two options to extend) Supabarn will suffer losses with a net present value of approximately $28.5 million;

(d) noting that Supabarn “is open to a reasonable commercial arrangement for the settlement of this sum”; and

(e) noting Supabarn’s instructions to commence proceedings if “the above points” are not addressed to the satisfaction of Supabarn.

On 26 July 2006 Cotrell’s new solicitor wrote to Supabarn’s solicitor:

(a) noting his client’s view that “the Centre is being run professionally and properly”;

(b) denying the breaches asserted in the 21 June 2006 letter; but

to consider any legitimate issues raised by your client as it would with any of the tenants at the Centre and to take appropriate professional advice on how to address them in a reasonable and commercial manner to the benefit of all of the tenants in the Centre.

On 3 August 2006, Supabarn’s solicitor replied to Cotrell’s solicitor, suggesting among other things that Cotrell “will be able to provide records of the capital works expended in achieving the requirements of clause 10.7”, and going on:

… it is demonstrable that your client’s endeavours, if any, have fallen short of the standard required by the lease. Kaleen Plaza is not a “high quality retail shopping centre” and our client submits that your client has made no endeavour to make it so.

Our client awaits advice of your client’s endeavours to fulfil its obligations to render the centre to the state required by the lease. As an entirely separate matter, we await advice of your client’s program for rectifying the deficiency in your client’s obligations under clauses 10.6 and 10.7.

On 2 July 2007, Supabarn’s solicitor wrote to Cotrell’s solicitor, referring to correspondence in September 2006, enclosing a report prepared by Colliers International, and saying:

The Colliers report essentially concludes that your client has failed to conduct, manage and operate the Kaleen Shopping Centre as a high quality retail shopping centre in an efficient manner at all times. Consequently, we are of the view that your client is in breach of clauses 10.6 and 10.7 of the Lease.

As a consequence of your client’s breaches of the lease, we are of the view that your client may be liable to our client for significant damages over several years and has a reasonable prospect of success in recovering such damages from your client.

We … propose that a meeting occur between the parties to seek to reach an amicable resolution to the potential damages for which your client may be liable.

…

If we do not hear from you prior to 5.00pm on 20 July 2007 our client intends to commence proceedings in this matter against your client.

2009

On 2 February 2009, Supabarn’s solicitor wrote to Cotrell care of JLL:

(a) setting out clauses 10.5, 10.6, 10.7, 10.9 and 10.14 of the Lease;

(b) asserting various breaches of those clauses as detailed in an attached Schedule of Landlord’s Defaults (which listed 79 particulars of breaches under 19 different headings);

(c) referring to the plaintiff’s previous complaints about the defendant’s failure to fulfil its obligations under the Lease; and

(d) giving notice that:

unless by … 13 February 2009 Cotrell satisfies Supabarn that it has commenced to fulfil and is likely to fulfil in the future, all of Cotrell’s obligations under the said Lease and Deeds and to remedy the substance of the breaches set out in the Schedule of Landlord’s Defaults, then Supabarn will commence legal proceedings against Cotrell for specific performance …, damages … and for such other relief as it is advised.

On 13 February 2009, Cotrell’s solicitor wrote to Supabarn’s solicitor, enclosing a detailed response to the 79 particulars (as well as to several of the headings), and saying:

Based on discussions with its managing agent at Jones Lang LaSalle, Mr Kevin Armstead, our client is satisfied that Kaleen Plaza is being managed and maintained properly and does not accept your assertion that it has failed, and is failing, to meet its obligations under the Lease.

…

We trust that your client will be satisfied with our client’s responses. We request that before any such claims are made in future, a meeting be convened to discuss, and it is hoped, resolve your client’s concerns in a more efficient way with the Plaza’s managing agent.

On 16 February 2009, Supabarn’s solicitor wrote to Cotrell’s solicitor as follows: The responses provided are not satisfactory. They appear to be a mere exercise in denial of the facts.

…

The kind of response outlined in your letter now leaves my client no practical choice but to enforce its rights by means of Court determination rather than assertion and counter-assertion. Before the Court our clients’ respective assertions will become matters of contested evidence and will be resolved with finality. We expect that our client’s version of the facts is likely to prevail.

On 30 June 2009, Cotrell’s solicitor wrote to Supabarn’s solicitor rejecting Supabarn’s offer to buy the Centre for approximately $5 million, and offering to sell the Centre to Supabarn for $10 million, on conditions including “the discontinuance of the current proceedings with each party to meet its own costs incurred to date”.
On 10 July 2009, Cotrell’s solicitor wrote to Supabarn’s solicitor:

(a) saying that the 3 July 2009 request for discovery (not included) was too wide, and did not “have proper regard to the pleadings or the Magistrate’s indication that your request should limit discovery to a reasonable scope by requesting documents relating to particular issues during particular periods”;

(b) requesting particulars of Supabarn’s claim;

(d) explaining that the request for disclosure was made in general terms because it was Supabarn’s claim and “you have refused to particularise or conclusively identify the basis on which each part of your claim arises as we have requested”.

The final paragraph of that letter says that “the table [of obligations said to be breached] does need to be exhaustive and binding on your client to be able to assist the efficient conduct of this matter. … We cannot rely on your indicative view”.
On 4 August 2009, the Registrar of the Magistrates Court ordered Supabarn to answer Cotrell’s then current request for further and better particulars at least 10 days before the hearing date of an unidentified application in the proceedings that had been adjourned to a date to be fixed.
On 26 November 2009, Supabarn’s solicitor wrote to Cotrell’s solicitor in response to the request for “exhaustive and binding” particulars made by Cotrell on 10 July 2009. The letter attached documents described as a Plaintiff’s Schedule of Particulars, a Plaintiff’s Schedule of Breaches, a “Map of the Centre with grid references” and the “Plaintiff’s response to the defendant’s request for further and better particulars” (only the Schedule of Breaches was attached to the material in the plaintiff’s bundle).

2010

On 2 March 2010, Cotrell’s solicitor wrote to Supabarn’s solicitor in response to a letter dated 26 February 2010 (not provided); the letter:

(a) noted an understanding between the parties that “any meaningful development of the Centre will require the Centre to be expanded as a whole and not just an expansion of Supabarn”, and that this would involve Cotrell bringing “another major tenant and potentially another food retailer” into the Centre; and (b) accordingly, sought Supabarn’s written consent under cl 10.16 of the Lease to “another food retailer” coming into the Centre as part of such an expansion.

On 15 July 2010, Supabarn’s solicitor wrote to Cotrell’s solicitor referring to formal settlement negotiations conducted in February 2010 and proposing as terms of settlement that Supabarn would buy the Kaleen shopping centre for $6.5m plus GST, subject to the discontinuance of all proceedings with each party paying its own costs.
On 4 August 2010, Cotrell’s solicitor wrote to Supabarn’s solicitor advising that Cotrell rejected Supabarn’s offer, inviting Supabarn, if “genuinely interested in purchasing the Centre … to make an offer in line with the Centre’s current market value”, and referring to a JLL valuation report dated 18 January 2010.
On 9 August 2010, Supabarn’s solicitor replied to the 4 August letter:

(a) disputing the validity of the JLL valuation;

(b) suggesting that the Centre’s value was “around $7.5 million less the costs of refurbishment” (those costs being estimated elsewhere in the letter as $1.5 million);

(c) referring to Supabarn’s belief that “it can verify lost sales of between $5 million- $6 million as a result of your client’s multiple failures in relation to its lease obligations”; and

(d) offering to withdraw its proceedings in return for:

(i) Cotrell’s commitment to a Works Program to upgrade the Centre at a cost of around $1.5 million, and to a timetable for the Works Program, with consequences for failing to meet the timetable; and

(ii) Cotrell’s payment of damages of $3 million.

On 30 September 2010, Cotrell’s solicitor wrote to Supabarn’s solicitor referring to Supabarn’s letter of 9 August 2010 and a “without prejudice meeting” on 28 September. The letter advised that Cotrell rejected the settlement offer made in the 9 August letter, but suggested a settlement under which:

(a) Cotrell would sell the Centre to Supabarn or a nominee for $9.95 million plus GST;

(b) the parties would execute a deed of settlement providing for the proceedings to be discontinued with release by Supabarn of all claims pursuant to the proceedings; and

On 29 October 2010, Cotrell’s solicitor wrote to Supabarn’s solicitor in reply to a letter dated 28 October 2010 (not provided); the reply:

(a) noted that Cotrell denied any breach of the lease agreement;

(b) indicated its support for an application to the ACT Civil and Administrative Tribunal (ACAT) opposing a development approval given in relation to the Giralang proposal (a proposal by Woolworths to build a supermarket in the adjoining suburb of Giralang) but its preference to be separately represented before ACAT; (c) offered to match Supabarn’s contribution to the cost of jointly engaging experts to make representations to ACAT against the approval; and

(d) offered:

to meet its own costs, the reasonable costs of your client and the reasonable costs of the other objectors currently being funded by your client in relation to the ACAT proceedings (up to a total amount of $200k), on the basis that your client discontinues the Supreme Court proceedings.

On 1 November 2010, Supabarn’s solicitor wrote to Cotrell’s solicitor describing the settlement offer made in the 29 October 2010 letter as “laughable”, and giving further comments, and an ultimatum, about Cotrell’s potential involvement in the challenge to the Giralang development.
On 23 December 2010, Supabarn’s solicitor wrote to Cotrell’s solicitor with a revised settlement offer under which:

(a) Supabarn would buy the shopping centre from Cotrell for a total of $7.3 million with settlement to take place two years after exchange;

(b) Cotrell would remain a party to the Giralang proceedings but at no cost to it; and

(c) upon the sale contract becoming unconditional, Supabarn would discontinue the proceedings against Cotrell and “all related claims for costs, damages etc between the parties [would] be released”.

2011

On 3 March 2011, Cotrell’s solicitor wrote to Supabarn’s solicitor:

(a) referring to an invitation issued on 7 February 2011 by James Koundouris, via Kevin Armstead of JLL, for Cotrell to “name its price” for the Kaleen shopping Centre;

(b) responding with an offer to sell the property for $9.5 million; and

On 9 March 2011, Cotrell’s solicitor wrote to Supabarn’s solicitor:

(a) referring to a letter from Supabarn’s solicitors dated 7 March 2011 (not provided);

(b) denying any offer (on 26 November 2010 or at any other time) to sell the property for $7.9 million; and

(c) noting that during a meeting referred to in the 7 March letter, Cotrell had offered to reduce the asking price from $9.95 million to $9.5 million.

On 11 March 2011, Supabarn’s solicitor wrote to Cotrell’s solicitor claiming that at a meeting in November 2010, Cotrell offered to sell the shopping centre for $7.9 million, and mentioning “impending development applications” relating to Woolworths’ proposal to build a supermarket at Giralang.
On 4 September 2013, Supabarn’s solicitor wrote to Cotrell’s solicitor making an offer identified as a Calderbank offer, being to discontinue the proceedings on the making of the following payments:

(a) $3.5 million to Supabarn (inclusive of interest) representing Supabarn’s damages as a result of Cotrell’s breaches;

(b) $3 million to a trust account for the refurbishment of the Kaleen Plaza Shopping Centre to the standard of a high quality retail shopping centre in accordance with an annexed “Scope of Works and Timetable for commencement and completion”;

The last letter in the material before me was from James Koundouris on behalf of Supabarn to Dr Solomon of Cotrell, dated 2 December 2013. The letter:

(a) pointed out that there were likely to be delays in the handing-down of the judgment when the hearing was ultimately completed some time in 2014;

(b) noted the failure of “two formal and numerous informal mediations”;

(d) suggested that Supabarn’s loss “approximates $10 million”;

(e) noted the then recent decision permitting the development of a Woolworths supermarket at the Giralang local centre (Argos Pty Ltd v Simon Corbell, Minister for the Environment and Sustainable Development [2013] ACTCA 51); and

(f) pointed out that the “market place” is aware that the Kaleen shopping centre is for sale but that any buyer:

… will acquire it in the knowledge:

(i) of the proceedings;

(ii) of the contingent liability of having to upgrade the centre to the standard of a high quality retail shopping centre;

(iii) that it needs to maintain that standard for the term of the lease which, if the option is exercised, will expire in 2029;

(iv) that should the upgrade not occur to the required standard, Supabarn can continue to prosecute its claim against the buyer, as landlord, to enforce its rights under the lease; and

(v) the impact of the redevelopment of Giralang centre and Woolworths supermarket.

The letter then said that “Any buyer will have to work with and satisfy Supabarn about the quality of the centre” and concluded with:

… a fresh offer to buy the Centre [for $4.5 million with a 12 month delayed settlement] which recognises Cotrell’s breach of its lease, Supabarn’s loss, the cost of prosecuting the claim (legal, expert evidence, et cetera) and the impact of the Court of Appeal decision in the Argos case.

The real dispute: significance of plaintiff’s success

The parties were generally in agreement about the principles that should be applied in determining where costs should fall; the real dispute was about the facts to which those principles should be applied. Specifically, the dispute was about the significance of the plaintiff’s success, which as noted related only to one aspect of its claim and involved only an award of nominal damages.
The plaintiff sought an order for the defendant to pay up to 50% of the plaintiff’s costs, while the defendant said that the plaintiff should pay all the defendant’s costs.
Before dealing with the arguments made by the parties, it is necessary to outline (in more detail than would ordinarily be necessary) several aspects of the proceedings, and key aspects of the judgment, on which the parties based their respective claims. This is because, apart from their “substantive” submissions about the proper costs orders, each party has asserted that the other party’s submissions misrepresent the principal judgment:

(a) Counsel for the plaintiff in written submissions described the defendant’s submissions as “misconceived”, and said that they “blithely ignore important legal and factual details and judicial findings” and “are posited on untrue and misleading assertions about what [the Court] has decided”.

(b) Counsel for the defendant said that the plaintiff’s costs submissions “quite plainly mischaracterise the true outcome of the proceedings”, and in oral submissions said:

the best I can say [about the plaintiff's primary submissions] is that the plaintiff is seeking to draw a very different impression about your Honour's conclusions than I did, or I think anybody else on the defendant's team has about your Honour's judgment. And I would ultimately submit those conclusions are not just incorrect and should be rejected; they are very substantially outside the reality …

Addressing the parties’ substantive costs submissions has accordingly required more discussion and exposition of the principal judgment (and more repetition of certain propositions) than would normally be necessary or appropriate.

The plaintiff’s case

The pleadings

There was no suggestion that the plaintiff’s case had gone beyond the matters raised by the pleadings. However, a comparison of the pleadings (specifically, the Second Further Amended Statement of Claim (SFASC) filed in August 2013), and the plaintiff’s conduct of the case as explained in its oral and written costs submissions, may explain some of the more surprising aspects of the plaintiff’s application for costs. In particular, it might explain why some of the plaintiff’s costs submissions appear to have been prepared by a person who did not understand how the plaintiff’s case was conducted.
The SFASC pleaded (at [11] – [21]) four provisions of the Lease and one provision of the Supplemental Deed. In relation to three of the Lease clauses, including cl 10.7, the plaintiff pleaded (respectively at [12], [14] and [18]) a breach of the clause constituted “by doing or omitting to do each of the acts identified in the Schedule”. In relation to cl 10.13, the plaintiff pleaded (at [21]) that “Each of the acts identified in the Schedule not done by Cotrell is a breach of clause 10.13 of the Lease.”
The Schedule of Particulars of Breaches occupied five pages in the SFASC. It identified 80 different failures organised under two levels of headings, as follows:
Onsite Services (a) Cleaning and General Building Maintenance (b) Security, Fire Control and Safety 2. Tenant management (a) Trading Hours (b) Tenant Presentation (c) Lease Renewal Plans (d) Tenant Mix 3. External services and Centre administration (a) Marketing and promotions (b) Capital and recurrent works programs (c) Administration 4. Infrastructure/Function of Centre (physical appearance and functionality) (a) Air conditioning (b) Lighting (c) Signage (d) Car park characteristics (e) Fire Control Infrastructure and Security (f) Other capital works
It is clear that, despite the plaintiff’s reliance, in each relevant paragraph pleading a breach, on “each of the acts identified in the Schedule”, none of the asserted breaches related to, or relied on, all of the acts identified in the Schedule. For instance, cl 10.6 (the obligation to “keep the Common Areas in good repair, clean and adequately lit”) could not have been breached by:

(a) the defendant’s asserted failure to “ensure that tenants do not operate at inconsistent trading hours” (Schedule item 2.(a)(i)); or

(b) the defendant’s asserted failure to “market and promote the Centre on a regular basis or to plan adequate marketing and promotion for the Centre” (Schedule item 3.(a)(i)).

This flaw in the SFASC was identified in the Defence to the SFASC as tending “to prejudice, embarrass or delay the fair trial of these proceedings”.
The plaintiff’s claim in relation to cl 10.7 of the Lease (at [2] above) was pleaded as follows:

Lease Clause 10.7 – failure to manage and operate

By clause 10.7 of the Lease Cotrell covenanted as landlord that Cotrell must conduct, manage and operate the Centre as a high quality retail shopping centre and in an efficient manner at all times.
From on or about the Date and up to the date hereof and continuing, Cotrell, in breach of its obligations under the Lease, has failed and continues to fail, to conduct, manage and operate the Centre: (a) as a high quality retail shopping centre; and

(b) in an efficient manner at all times;

by doing or omitting to do each of the acts identified in the Schedule.

It is likely that some or even many of the failures identified in the Schedule did amount to breaches of cl 10.7. However, at trial, the plaintiff conceded:

(a) that it could not prove any loss caused by most of the failures; and

(b) that most of the failures which were to be the subject of evidence, if made out, would entitle it to nominal damages only.

The plaintiff’s claim for substantial damages (at [4] above) relied on two breaches of cl 10.7 that were identified in the Schedule (items 2(d)(i) and 4(f)(ii)) as follows:

The defendant has failed to ensure a proper and appropriate tenant mix at the Centre.

The defendant has failed to carry out any capital works or improvements at the Centre to make it consistent with a high quality retail shopping centre

However, neither cl 10.7 nor any other Lease clause explicitly imposed obligations on the defendant that would have been breached by either of those asserted failures. Accordingly, the first of the two main issues arising in the plaintiff’s case was whether cl 10.7 (according to the plaintiff, when read together with cl 10.13) could be construed to include the relevant obligations (the second main issue was proving that the breaches had caused the substantial losses claimed). On the other hand, there was no particular controversy about any relevance of cl 10.7 in relation to the plaintiff’s claims of other breaches.
In short, while the SFASC pleaded a breach of cl 10.7 (by reference to both of the quality standards specified in that clause) arising from each of the 80 acts identified in the Schedule, the asserted breaches focussed on by the plaintiff at all relevant points of the trial were the defendant’s pleaded failures to “ensure a proper and appropriate tenant mix at the Centre” and to “carry out any capital works or improvements at the Centre to make it consistent with a high quality retail shopping centre”, and the real dispute was whether cl 10.7 required the defendant to carry out either of those activities at all.

The five claims

Thus, the core of the plaintiff’s case at trial was the claim (the major claim) that two clauses of the Lease (clauses 10.7 and 10.13) obliged the defendant to refurbish the Centre (the refurbishment obligation) and upgrade its tenancy mix (the tenancy mix obligation), and that in the relevant circumstances this should have been done by the end of 2004. The plaintiff claimed that the defendant’s failure to do those things had caused losses entitling it to substantial damages. The defendant disputed that the two clauses had imposed the obligations asserted by the plaintiff, and accordingly said that there had been no breach as asserted in the major claim.
Independently of the major claim, the plaintiff made four minor claims, conceding that the claims would, if upheld, entitle it to nominal damages only. Those claims were as follows: (a) two claims of breaches of Lease clauses in respect of particular aspects of shopping centre management (cleaning, and keeping the Centre free of water leaks), where the meaning of the clauses concerned was not in dispute;

(b) one claim of a breach of part of cl 8.1 of the Supplemental Deed between the parties, where the meaning of the relevant part of that clause (requiring installation of an air lock), and the breach, were not in dispute, but the defendant relied on an estoppel to defeat the claim;

(c) one claim of a breach of another part of cl 8.1 of the Supplemental Deed (relating to compatibility of air conditioning systems), where the meaning of the relevant part of that clause, and the defendant’s compliance with it, were both disputed.

The outcome of the five claims can be summarised as follows:

Claim Relevant Outcome Summary of findings clauses for the plaintiff: 1. Major claim 10.7, 10.13 Failure The clauses did not require the defendant to refurbish the Centre or to improve its tenancy mix. 2. Minor claim 1: 10.6, 10.7, Success The clauses did require the Breach of cleaning possibly 10.13 defendant to provide cleaning at the obligation Centre (10.6, possibly 10.13) to a standard appropriate for a HQRSC (10.7), and the defendant had breached that obligation. 3. Minor claim 2: 10.6, 10.9 Failure The defendant had not breached the Breach of repair obligation to keep the Centre in good obligation by not repair (10.6) and structurally sound preventing water and in a good state of repair (10.9), leaks so as to prevent water leaks. 4. Minor claim 3: Supplemental Failure: The defendant had not installed the Breach of obligation Deed 8.1 air lock, but the plaintiff was to install air lock estopped from enforcing the obligation. 5. Minor claim 4: Supplemental Failure: The defendant had cooperated as Failure to Deed 8.1 required by the clause as properly cooperate in construed, and the systems were not installation of shown to be incompatible. compatible air conditioning systems in the plaintiff’s supermarket and the common areas of the Centre

My conclusions about the major claim (and in particular about clauses 10.7 and 10.13) were set out in the principal judgment as follows:
I consider that the meaning to be given to cl 10.7, read in the light of all the other provisions of the Lease including those specifically relied on by Supabarn, is that it required the Centre to be run by Cotrell, day to day on a continuing basis, and including maintenance, repair and at least some aspects of tenancy management, in a manner, or at a standard, appropriate to a high quality retail shopping centre. I do not understand this proposition to be disputed as far as it goes. 390. However, for the reasons set out above in response to the various submissions made on behalf of Supabarn, I have not been convinced by Supabarn’s claim that cl 10.7 (whether or not read in conjunction with cl 10.13) also required the Centre to be a high quality retail shopping centre, and accordingly imposed on Cotrell:

(a) an obligation to undertake a refurbishment that would turn the Centre, in its “cosmetic aspects”, into a high quality retail shopping centre; and

(b) an obligation to achieve a high quality tenancy mix in the Centre.

I can see nothing in the language of cl 10.7:

(a) of itself;

(b) in the context of the Lease as a whole (and noting cl 10.13 in particular); or

(c) in the context of the Lease and other material available in construing the Lease as a registered instrument (at [165]–[170] above);

that would require, or permit, such a construction of cl 10.7.

…

As to cl 10.13, which … refers only to things that need to be done “for the essential operation of a retail shopping centre”, I am satisfied that it refers to a limited class of “things” that need to be done to enable any kind of shopping centre to operate day to day. At this point there is no need to make a finding about what things are properly described as “required for the essential operation of a retail shopping centre”, so (in the absence of relevant submissions) I merely note that the description would cover, at least, things that ensure:

(a) basic services such as protection from the elements (perhaps including air conditioning), electricity, light, water and toilet facilities;

(b) access for customers and staff;

(d) a basic level of cleanliness.

My conclusion that the minor claim about cleaning had been made out was set out in the principal judgment as follows:

Cleaning – conclusions

For the purpose of assessing the cleaning services provided at Kaleen Plaza, I do not see any need to explore in any detail the standards implied by the concept of a high quality retail shopping centre. This is because, taken altogether, and even noting the action taken around 2004 to remove a particular delinquent cleaner (and possibly to engage new cleaning contractors), the evidence (including that given by Mr Sukroo) satisfies me that the cleaning provided by Cotrell at Kaleen Plaza was generally inadequate even for an “average” or a “good quality” retail shopping centre (being the rating descriptions used by Mr McKinnon at [831] below) and certainly did not meet the standard required of a high quality retail shopping centre. Accordingly I find that on numerous occasions, from as least as early as 2003 and continuing into 2013, Cotrell was in breach of cl 10.6 when read in the light of cl 10.7.

Conclusions – breaches of Lease provisions

I am satisfied that cl 10.7 and possibly cl 10.13 as I have construed those provisions were breached by Cotrell to the extent that Cotrell’s obligations in respect of cleaning services under cl 10.6 were not performed at a standard appropriate to a high quality retail shopping centre.
The references in [603] to clauses 10.7 and possibly clause 10.13 invoked my conclusion at [389] of the judgment that cl 10.7 required the defendant to operate the shopping centre “in a manner, or at a standard, appropriate to a high quality retail shopping centre”, and at [395] of the judgment that matters required for the essential operation of a retail shopping centre (cl 10.13) probably included “a basic level of cleanliness”. Those conclusions were reached for the purposes of the major claim, and in fact amounted to a rejection of propositions that were fundamental to the major claim.
In relation to the successful claim that the cleaning obligation had been breached, the evidence was clear that the defendant had provided cleaning at the shopping centre, and the plaintiff did not assert that there had been a complete failure to clean the Centre. The only question was whether the cleaning services that had indisputably been provided satisfied the standard required by the Lease. Clause 10.6 did not set a standard against which to assess whether the defendant had kept “the Common Areas … clean”. As indicated in [602], the finding of a breach of cl 10.6 required applying a standard to the cleaning obligation, and cl 10.7 was identified as the source of that standard.

How the plaintiff’s case was conducted

The significance of the major claim (about clauses 10.7 and 10.13, the refurbishment and tenancy mix obligations, and the breaches of those asserted obligations), and the distinction between that and the minor claims, was repeatedly demonstrated in submissions made on behalf of the plaintiff. A number of those submissions are quoted at Appendix A; the following extract, from the Amended Plaintiff’s Submissions in Reply, is adequate to make the point for present purposes:
The Plaintiff’s claim for damages (other than nominal damages ([Amended Final Submissions] para 321)) relies on breaches of clauses 10.7 and 10.13 of the Lease.

…

The failures causing breaches of clauses 10.7 and 10.13 are the failure to ensure that the physical elements of the Centre, what Mr Leyshon called its “cosmetic appearance”, the structure, fittings, fixtures and furnishings which constitute the physical structure and amenity of the Centre and the tenancy mix … at the Centre, are those of a high quality retail shopping centre ….

…

… The Plaintiff has confined its case for substantial damages to breach of the clause 10.7 and 10.13 obligations. Mr McKinnon’s damages assessment is relied on to quantify loss flowing from breach of those obligations. He did not attempt to quantify loss for the other breaches alleged.
I note also that the documents provided by the plaintiff for the purposes of the costs application included a letter (at [37] above) from James Koundouris on behalf of the plaintiff to Dr Solomon on behalf of the defendant dated 2 December 2013, when the hearing had already run for 15 days, which said, among other things:

You are aware that the central issue prosecuted by Supabarn in these proceedings is that, despite entering into a contract with Cotrell to spend in excess of $4m to expand and modernise an old and tired Jewell supermarket, Cotrell failed to meet its side of the bargain, namely to upgrade its Centre to the standard of a high quality retail shopping centre.

At trial, while conceding that the breaches asserted in the four minor claims entitled it to no more than nominal damages, the plaintiff insisted that those claims were maintained, and had to be determined. It seems likely that the plaintiff’s insistence reflected either or both of a wish for explicit vindication in what appears to have been a long and unpleasant struggle between the parties about the running of the Centre, and a wish to protect the capacity to make exactly the submissions that the plaintiff has now made about its entitlement to costs.

Outcome of plaintiff’s case

The major claim asserted that clauses 10.7 and 10.13, when read together, imposed the refurbishment obligation and the tenancy mix obligation, and that those obligations had been breached by the defendant’s asserted failures to refurbish the Centre and to upgrade its tenancy mix. Those were the only breaches that the plaintiff claimed had caused it demonstrable loss, and that claim was entirely unsuccessful.
In the principal judgment, I concluded that, properly construed, the clauses did not impose either of the asserted obligations. This involved rejecting the meanings for the clauses asserted by the plaintiff, and finding that cl 10.7 had the meaning asserted by the defendant (see [384] – [397] of the principal judgment).
Accordingly, I concluded that there had been no breach of either cl 10.7 or cl 10.13 of the kind described at [8] of the Amended Plaintiff’s Submissions in Reply (quoted at [60] above), and no breach of a kind said to cause quantifiable loss as described at [130] of those submissions (also quoted at [60] above).
On the other hand, I did find that cl 10.6, which explicitly imposed a cleaning obligation on the defendant, and cl 10.7 and possibly cl 10.13 (each with the meaning asserted by the defendant), had been breached by the defendant’s failure to perform the cleaning obligation to the required standard. This was the claim identified at [55] above as “Minor claim 1”.
None of the three other minor claims was upheld.

Impact of the several claims on the proceedings

Finally as to the nature of the proceedings, I note that the major claim absorbed by far the majority of the hearing days, gave rise to by far the majority of the evidence and the parties’ submissions, and generated by far the bulk of the judgment. Not only did the time occupied by, and the material relating to, the minor claims constitute a small fraction of the total time and material, but the complexity of the major claim was greater by several orders of magnitude than the complexity of the minor claims.
Furthermore, this far greater complexity did not entirely reflect the inherent difficulties of the subject matter, the state of the authorities, or the sophistication of the argument on which the major claim was based, but owed much to the complexities introduced by the plaintiff (as well as those not articulated, perhaps deliberately) in the exposition of its obscure but substantive claim.
As to the cleaning claim as such, it is apparent from the judgment that the defendant’s refusal to concede that it had breached the cleaning obligation, whether or not that refusal was unrealistic, did not have any significant impact on my consideration of that asserted breach.
The defendant’s submissions made it clear that the defendant regarded the criticisms of the cleaning as trivial, but did not offer any substantive challenge to the evidence offered. The plaintiff sought to undermine the credibility of Mr Sukroo, who had been managing the Centre on behalf of the defendant and who gave evidence about cleaning arrangements in the Centre, but there was nothing in Mr Sukroo’s evidence that required me to make a choice between that evidence and the evidence relied on by the plaintiff.
Thus, the only decision I needed to make about the cleaning claim was whether the totality of the (relatively straightforward) evidence before me was enough to establish that the defendant had breached its obligation to provide cleaning at a standard suitable for a high quality retail shopping centre. I note in passing that none of the extensive evidence given about the attributes of a high quality retail shopping centre referred to different standards of cleaning that might be suitable for shopping centres of different qualities, and accordingly did not require me to engage with the details of such cleaning standards.

Overview of submissions

The plaintiff’s costs submissions initially canvassed several options, as follows:

(a) That the parties should bear their own costs.

(b) That the defendant should pay the plaintiff’s costs attributable to specified aspects of the proceedings, that proportion to be estimated by the Court and expressed as a percentage (counsel said that the proportion should be at least 25%).

(c) That the defendant should pay 50% of the plaintiff’s costs, reflecting the significance of its success in the cleaning claim.

In submissions in reply, and in oral submissions, counsel for the plaintiff focussed on the claim for the defendant to pay 50% of the plaintiff’s costs.
The defendant submitted that:

(a) costs should follow the event;

(b) the event was “that the defendant has been successful insofar as the Court has dismissed the whole of the plaintiff's claims, save for the single finding relating to the nominal damages of $20.00”;

(c) the plaintiff conducted its case in a manner that obscured the real issues for determination, and made unreliable, misleading or question-begging submissions (by reference to the principal judgment at [27] and [1054]); and

(d) accordingly, the plaintiff should pay the whole of the defendant’s costs.

Plaintiff’s submissions

Having noted the plaintiff’s intention to appeal the principal decision, counsel for the plaintiff made submissions about the basis on which it was entitled to a significant proportion of its costs, and suggested some bases on which its entitlement under a split costs order could be calculated. The plaintiff also sought an order staying whatever costs order was made until the final determination of its appeal.
The plaintiff’s claim that the defendant should pay some of its costs depended largely on the proposition that it had been “substantially successful” in the proceedings; this submission was supported by claims:

(a) to the effect that the defendant was always “bound to fail” in the aspect of the case in which it had in fact failed;

(b) relying generally on the material summarised at [8] to [38] above, that the defendant had behaved unreasonably in the 10 years leading up to the trial (both before and after the commencement of proceedings);

(c) that “the Lease was Cotrell’s Lease and legal costs caused by any shortcomings in it as to the intent and scope of its clauses should be borne by Cotrell and not Supabarn”;

(d) that if the defendant had responded differently to the plaintiff’s claims, the proceedings might not have been necessary at all.

Counsel for the plaintiff also:

(a) challenged my comment at [1055] of the principal judgment about the plaintiff’s contribution to the complexity of the proceedings;

(b) made an obscure submission about the level of nominal damages awarded;

(d) warned about the risk of discouraging tenants from taking action against landlords; and

(e) noted the need for judges to hesitate before depriving successful parties of their costs.

Defendant’s submissions

The defendant responded to the plaintiff’s submissions by rejecting the plaintiff’s assertion of substantial success and submitting that the plaintiff should be ordered to pay the whole of the defendant’s costs, because:

(a) the plaintiff had been substantially unsuccessful (having sought damages of $7.8 million but having obtained nominal damages of $20);

(b) the plaintiff had been “vindicated” in relation to a small aspect of its claim, but this was not “real vindication” given that it was the only successful aspect of the claim, that no actual loss was proved, and that the “vindication” was “worth only $20”, which is “out of all proportion” to the time and money absorbed by the proceedings;

(i) the number of expert reports relied on by the plaintiff (said to be “at least eight”), which required the defendant to obtain reports in response); and

(ii) the length of the hearing (18 days); the outcome of the case was “vastly out of proportion to the enormous judicial resources allocated to the determination of this matter and the enormous cost the defendant has had to bear to defend the claim”; and

(d) accordingly, the plaintiff should be regarded as having been entirely unsuccessful.

The defendant opposed the plaintiff’s application for any costs order to be stayed pending the appeal.

Was the plaintiff substantially successful?

Importance of success in relation to cl 10.7

The claim of substantial success depended on a proposition to the following effect: because cl 10.7 was central to the plaintiff’s case, and to the major claim in particular, any finding of a breach of cl 10.7 was a substantial win for the plaintiff and therefore entitled it to a substantial costs order.
The proposition was articulated in various forms in the plaintiff’s submissions, most dramatically in the plaintiff’s written submissions in reply, as follows:

What Cotrell by its Counsel asserts at para. 12 of Cotrell’s Submissions is simply incorrect and (with respect) is misleading. Notably, at their sub-paragraph 12(b) they rely upon paragraphs “[602] – [603]” of the Court’s Reason. Cotrell does so with reference to their assertions in para. 12(b) that Supabarn has “arguably been vindicated by a [sic] small aspect [sic] of its claim in the form of the finding [sic] that the defendant breached one [sic] of the Clauses of the Lease …” That is patently incorrect, as at para [603] of the Reasons, this Court has expressly found, stated and held that Cotrell breached not merely one lease Clause obligation, but at least two such obligations (under Clauses 10.7 and 10.6) “and possibly” the obligation under Clause 10.13. Cotrell’s para. 12(b)(i) then dares to assert: “this finding was one [sic] of several claims of this matter relating to the alleged breaches of the Lease and all [sic] other [sic] claims [sic] were unsuccessful [sic].” That is patently incorrect: as this Court has clearly held otherwise at para. [603] of its Reasons, viz., Cotrell breached Clauses 10.7 “and possibly Clause 10.13”, as well as Cl. 10.6. Have they read the Reasons [602]-[603]?

(Emphasis, and use of “[sic]”, in original)

The plaintiff’s proposition ignores the fact that the case, in effect, involved two versions of cl 10.7:

(a) cl 10.7 as construed by the plaintiff to include a requirement that, within an unspecified time after the Lease was executed, the defendant was obliged to refurbish the Centre and upgrade its tenancy mix;

(b) cl 10.7 as construed by the defendant to relate to the day to day operation of the shopping centre, and to require that operation to be at the standard of a high quality retail shopping centre.

In its costs submissions, the plaintiff asserted repeatedly that while the claim described above as the major claim did require a particular construction of clauses 10.7 and 10.13, the claims of breaches of other obligations (especially relating to cleaning and water leaks) also involved breaches of cl 10.7 and in some cases possibly cl 10.13.
Those propositions were true as far as they went (and indeed my finding about cleaning did refer to clauses 10.7 and 10.13); however, it was misleading to suggest that the impact of clauses 10.7 and 10.13 in relation to the minor claims raised the same issues as those raised in the major claim, and accordingly that the plaintiff’s success in relation to the cleaning claim meant that it had also been also successful in its substantial claim that:

(a) clauses 10.7 and 10.13 meant something additional to what they meant in the context of the minor claims; and

(b) the defendant’s breaches of those clauses entitled the plaintiff to substantial damages.

The major claim made by the plaintiff about what cl 10.7 meant (so as to justify the claim for millions of dollars in damages) was founded on an approach to cl 10.7 which was discussed at [384] of the judgment:
Articulating the proposition that cl 10.7 requires the Centre to be a high quality retail shopping centre provides a clue to the kind of reading of cl 10.7 that would be required to support Supabarn’s claim of breach and resulting loss. The clause would need to be construed to add an obligation on the Landlord to turn the Centre into a high quality retail shopping centre with a high quality tenancy mix, but (presumably) without losing what appears to be the current obligation to conduct, manage and operate the Centre at a high standard. That is, for Supabarn’s purposes the clause needs to be read as imposing two quite different obligations, one of which involved a refurbishment obligation and a tenancy mix obligation, and the other of which could be described as a management obligation. A reading along the following lines would achieve Supabarn’s aim:

10.7 The Landlord must ensure that the Centre is a high quality retail shopping centre with a high quality tenancy mix, and must also conduct, manage and operate the Centre as a high quality retail shopping centre and in an efficient manner at all times.

That claim was rejected, for reasons set out at [386] to [394] of the principal judgment. That is the basis on which item 1 of the table set out at [55] above describes the major claim as having failed.
The plaintiff’s proposition also overlooks (or perhaps ignores) the fact that the reference to cl 10.7 in relation to the breach of cl 10.6 (at [603] of the principal judgment) applied the meaning of cl 10.7 that was asserted by the defendant and upheld, not the meaning of cl 10.7 that was asserted by the plaintiff in the major claim and rejected.

Mathematical approaches to “substantial success”

Counsel for the plaintiff made two attempts to apply a mathematical approach to the claim for a costs order in the plaintiff’s favour.

Number of clauses mentioned in relation to cleaning claim

First, counsel submitted (at [10] of his first written submissions):

The Plaintiff’s claims with respect to the Defendant’s breaches of its Cleaning obligations (and therewith breaches of Cl. 10.7 and Cl. 10.13) under the Lease were Three of some Six various bases or grounds of the Plaintiffs overall claim in regard to breaches of the Lease (including breaches of Clauses 10.5, 10.6, 10.7, 10.9, 10.9 [sic] and 10.13 thereof and breach of Clause 8.1 of the Supplemental Deed between the Parties) as referred to in the Court’s Reasons. Accordingly, it is appropriate that the Defendant should pay at least 50% of the Plaintiff’s overall costs as agreed or to be assessed, in respect of the portions of the proceedings which related to the claim in respect of the Defendant’s three various breaches of the Lease (as indeed found by the Court: Reasons [602] and [603]) by breaching its Cleaning obligations under the Lease. Those portions of the Plaintiff’s case and the Defendant’s Defence and denials as to those portions of the Plaintiffs claim in the case, were not any minor or merely subsidiary parts of the proceedings, but were indeed of major significance in themselves and were clearly so, in association with the Plaintiff’s various other claims, including as to Cl. 10.7 and Cl.10.13.

This submission can be summarised as follows:

(a) Six different clauses of the contractual documents were relied on in the plaintiff’s claims.

(b) The conclusion about the claim relating to cleaning, in which the plaintiff was successful, involved mention of three of the clauses.

I note first that references to cl 10.5 were abandoned in the SFASC, which means that the plaintiff’s submission should presumably be read as applying only to five different clauses and as generating a claim for 60% of its costs to be paid by the defendant (although the claim is no more convincing for that revision).
Counsel for the defendant made the point that the significance of a breach of a contract does not depend on how many contractual clauses or covenants are required to impose the obligation said to have been breached. This might seem to be a statement of the obvious: one might as well suggest that contravening a legislative provision creating a criminal offence would involve the commission of multiple offences if the provision creating the offence relied, for instance, on concepts defined in another provision of the legislation. However, the proposition was apparently not obvious to counsel for the plaintiff.
It is correct, as already noted, that the one aspect of the claim in which the plaintiff succeeded involved the interplay of two or possibly three of the relevant clauses (clauses 10.6, 10.7 and 10.13). It is not correct that the plaintiff’s success resulted from it making out all its claims in relation to three of the relevant clauses; to the contrary, the plaintiff’s success in relation to cleaning relied on an interpretation of clauses 10.7 and 10.13 as proposed by the defendant and as upheld in the principal judgment. The plaintiff entirely failed to make out its claims about the two of those clauses (clauses 10.7 and 10.13) that were said to entitle it to damages of nearly $8 million in respect of quite different asserted breaches of the two clauses.

Number of paragraphs relating to cleaning claim

Another mathematical approach on which to base a costs assessment was hinted at by counsel in his first costs submissions, as follows:
The fact that the Court has, in its Reasons, dealt with the aspects of the case which related to the Defendant’s breaches of its Cleaning obligations in some considerable detail, also reflects the point that the Defendant’s breaches of its Cleaning obligations (and of those two other obligations) under the Lease were by no means minimal aspects of the case, nor of the course of the proceedings, as the Cleaning claims and related issues were raised in the case, both as to Cl. 10.6 and also in regard to the said other two breaches claimed, by the Plaintiff in its pleadings, by the Defendant in its pleadings, and in the evidence before the Court and in submissions by both of the Parties in the proceedings: see the Court’s Reasons, and particularly at [521] to [603].
Counsel’s attempt to support its claim that my reasons “dealt with the aspects of the case which related to the Defendant’s breaches of its Cleaning obligations in some considerable detail” by reference to the reasons “at [521] to [603]” was, on a charitable view, careless. The principal judgment was in fact arranged as follows:

(a) at [521] I referred to my conclusions about the constructions of clauses 10.7 and 10.13 that were raised in the major claim;

(b) at [522] I identified the claim of cleaning breaches as one of the two claims that needed to be considered by reference to the clauses as I had construed them;

(d) at [580]-[603] I dealt with the claim about cleaning (which thus occupied 24 paragraphs rather than 83 paragraphs as implied).

However, the plaintiff’s reliance on the numbers of paragraphs of the judgment devoted to each topic invites an equivalent assessment of the judgment as a whole. I note that:

(a) the other two minor claims, arising under the Supplemental Deed, occupied 76 paragraphs;

(b) the total number of paragraphs devoted to the minor claims was accordingly 157 (or 159 including the two introductory paragraphs, [521] and [522]);

(c) the total number of paragraphs in the judgment was 1055, meaning that nearly 900 paragraphs either dealt directly with, or were required as part of the background to, the major claim;

(d) the plaintiff’s approach, using correct figures, would have justified a submission that the plaintiff’s success in relation to cleaning represented success in a matter constituting not quite 2.3% of the proceedings.

Counsel’s suggestions, that the cleaning claim had been dealt with in the judgment “in some considerable detail”, and that the breaches relating to cleaning were “by no means minimal aspects of the case”, are not made out by an accurate counting of paragraphs in the judgment, or indeed even by counsel’s careless counting.
I am not convinced by the proposition that the significance of any element of a multi-faceted claim can be assessed by counting the judgment paragraphs devoted to the element; however, a party who does seek to demonstrate the significance of a claim by counting paragraphs is in my view obliged to do so accurately. I note also that such a party undermines the weight of its submissions more generally when it reveals that the factual basis for its submissions cannot necessarily be trusted.

Was the defendant “bound to fail” in the cleaning claim?

Counsel for the plaintiff submitted, in effect, that the defendant’s denial of the cleaning breach was always bound to fail, but that the same could not be said of the plaintiff’s major claim, as follows:

[6]. … Cotrell’s continued denial of its clear breaches of its Cleaning obligation and other related obligations (including Cl. 10.7 and Cl.10.13), indeed stretching over many years, and maintained throughout the whole course of the proceedings, was unreasonable and stubborn. That therefore lead [sic] to the costs for those portions of the proceedings to be incurred by the Plaintiff, which would not otherwise have been incurred. Conversely, the Plaintiff’s case on all points of its claim was always an arguable case and based upon a contract and the tenor of clauses in it; and in no sense can it be said the Plaintiff’s case was ever bound to fail – whilst the Defendant’s denials of its Cleaning obligations and its denial of liability for its breaches of Clauses 10.7 and 10.13, were always bound to fail. Further, as found by the Court Cotrell thus also breached Cl.10.7, 10.13.

In written submissions, counsel for the plaintiff noted, uncontroversially, that “The Court’s discretion on costs is to be exercised judicially and not punitively”, and went on:

an award of costs is properly an indemnity to a successful party for the costs it has incurred because of the other party’s opposition to its claim(s). Here, the Defendant indeed had no defence, either on the facts or on the law, to the Plaintiff’s claims in respect of the Defendant’s breaches of its Cleaning obligations (and therewith breaches of C. 10.7 and Cl.10.13), yet the Defendant has persisted in its denials and defence of all those claims, thus causing the Plaintiff to incur costs with respect to those three aspects of the matter, which costs could otherwise have been avoided if the Defendant had not deliberately and over the many years since 2009, chosen to deny and to defend the just claims of the Plaintiff about the Defendant’s very blatant breaches as to Cleaning and therewith breaches of its obligations under Clauses 10.7 (and 10.13) of the Lease.

The assertion that the breaches of clauses 10.7 and 10.13 found in the judgment related to the breach of the cleaning obligation is accurate. That accurate assertion, however, undermines the plaintiff’s claim that its success in the cleaning claim by reference to clauses 10.7 and 10.13 represented an important and substantive victory, and does so because the plaintiff’s major claim did not rely on the impact of those two clauses on the defendant’s obligations to provide cleaning but relied on giving the clauses a significantly different meaning and impact.
I am not convinced by either the plaintiff’s assertion that the defendant’s attempt to defend the cleaning claim was always “bound to fail”, nor the plaintiff’s assertion that its own case “on all points of its claim was always an arguable case and based upon a contract and the tenor of clauses in it”. Even if both those assertions were accepted, requiring the defendant to pay 50% of the plaintiff’s costs of the whole proceedings would seem to include a punitive element, given the overall impact of the successful cleaning claim. On the other hand, the plaintiff’s proposition that the defendant’s defence of the cleaning claim was bound to fail is consistent with a view of the cleaning claim as a minor and straightforward claim, and entirely inconsistent with counsel’s submission that the success of the cleaning claim was a substantial victory for the plaintiff entitling it to have half its costs paid by the defendant.

Could the proceedings have been avoided by the defendant …

… by conceding the cleaning breach?

In oral submissions, counsel for the defendant submitted that a concession of the cleaning claim by the defendant would have had no impact at all on the rest of the proceedings. The response from counsel for the plaintiff was rather curious:

We say that Cotrell maintained a full defence and full denials throughout the proceedings. And we simply say that if Cotrell had conceded its clear breaches which your Honour has found, these proceedings would not or might not have even been necessary, so Supabarn would not have had to incur any of, or at least 50 per cent of, its legal costs.

It was not clear what exactly counsel for the plaintiff meant by suggesting that if the defendant had conceded “its clear breaches which your Honour has found” – that is, the cleaning claim – “these proceedings would not or might not have even been necessary, so Supabarn would not have had to incur any of, or at least 50 per cent of, its legal costs”. In particular, I am not sure whether counsel’s reference to 50% was intended to reflect an assessment of the chance that the proceedings would have remained necessary, or simply a further attempt to suggest that the cleaning claim in which the plaintiff succeeded had absorbed 50% of the resources devoted to the case as it was in fact run.
Counsel’s response to the defendant’s claim did not provide a convincing rebuttal of that claim, and nor is the claim rebutted by the evidence before me about the dealing between the parties in the 10 years before the trial began.
When I pressed counsel for the plaintiff about the possible impact of a concession by the defendant about the cleaning claim, there was the following exchange:

HER HONOUR: … Mr Walker put the proposition that what you are saying - what you seem to be saying is that if Cotrell at some point had conceded that it had breached its cleaning obligations, being obligations by reference to high quality retail shopping centres, and that it was prepared to make a payment of nominal damages in respect of that, that the rest of the matter would have gone away. Are you putting that to me?

MR HASSALL: I'm putting to your Honour that if Cotrell had conceded its breach to 10.7 and 10.6 and had come to some accommodation about those, either attending to them and starting to - - -

HER HONOUR: But, sorry, so an accommodation quite different from what was sought during the case? An accommodation of some serious damages, not nominal damages?

MR HASSALL: Well, your Honour's proposition is looking at a position where there might not have been proceedings had Cotrell done something to perform its obligations under those clauses 10.6 and 10.7 - - -

…

HER HONOUR: That is not what Mr Walker was putting.

MR HASSALL: Well, Mr Walker was reading - Mr Walker was arguing that when one -looking at it in hindsight, as it were, he is trying to say, as I understand him, that - to be fair to him, that Cotrell - Supabarn ran a case, it ran - it also added the refurbishing matter and somehow one reads that back. Our modest proposition is just this: that prior to the proceedings starting, had Cotrell tended to its legal obligations under 10.7 and 10.6, that the proceedings might not have even – have eventuated.

In an attempt to make out that “modest proposition”, the plaintiff referred to material included in the plaintiff’s bundle and the plaintiff’s affidavit and summarised at [8] to [38] above.
There were two problems with the “modest proposition”.
First, as already noted, the plaintiff has submitted to the effect that my decision about the cleaning claim by reference to cl 10.7 meant that the plaintiff had been successful in its substantive claim that cl 10.7 had been breached. Having regard to that submission, one could reasonably assume that the premise of the plaintiff’s “modest proposition”, being that the defendant had “tended to its legal obligations under 10.7 and 10.6”, referred not only to the cleaning obligation but also to the refurbishment obligation said by the plaintiff to be imposed by cl 10.7. It may well be the case that if the defendant had agreed to refurbish the Centre as demanded by the plaintiff from an early stage in the parties’ dealings, the proceedings might not have eventuated – but this is not the same as the implication of the plaintiff’s submissions which was challenged by counsel for the defendant, namely that if the defendant had conceded a breach of the obligation to provide high quality cleaning, there would have been no proceedings.
Secondly, the material evidencing the 10 years of dispute between the plaintiff and the defendant makes it clear that, right from the beginning, the plaintiff’s complaints had related to far more than simply the cleaning failures.
The first two items in that material, dating from 2003, mention among other things the defendant’s obligation “to significantly upgrade the Centre”, and the second item also expresses an expectation that the defendant would spend “serious money” on such work (at [8] and [9] above).
There are further references to upgrades in May 2005 and in June and August 2006, and the references continue in correspondence dated after proceedings began in 2009.
Given the history of the demands for the Centre to be upgraded, I am satisfied that there was no point during the dispute between the parties (either before or after proceedings began) when an admission by the defendant of a breach in relation to cleaning, an undertaking to do better in the future, and an offer of nominal damages (even accompanied by an apology) would have resolved the plaintiff’s complaint and prevented the commencement or the continuation of the proceedings.
Accordingly, I reject the plaintiff’s “modest proposition” to the extent that it suggests that if the defendant had been more conciliatory about its cleaning failures at any point in the years between 2003 and 2009, the proceedings might never have eventuated.

… in some other way?

On the other hand, it is clear that from shortly after the proceedings were begun in 2009, there were various points at which the matter might have been resolved by an agreement by the defendant to sell the Centre to the plaintiff at an apparently low price and to pay substantial damages, and possibly an amount in respect of costs, to the plaintiff (at [20] to [38] above).
Having regard to the exchanges between the parties after the proceedings were commenced, I reject any possibility that the matter could have been resolved at any point thereafter by any action that could reasonably (given the outcome of the proceedings) have been expected of the defendant.

Was the defendant’s approach to particulars etc unreasonable?

The plaintiff said that the material summarised at [8] to [38] above showed the defendant’s generally unreasonable approach to the plaintiff’s complaints. Counsel identified the defendant’s insistence on detailed particulars “and so forth”, and what counsel described as a “combative and unrelenting stance throughout the course of the proceedings”, as a significant contribution to the complexity of the proceedings “from the very earliest stages of these proceedings, and as far back as when the matter was in the Magistrates Court”.
Counsel for the plaintiff noted:

(a) that the defendant had “from the earliest stages …demanded an exhaustive and binding approach as to the particulars”;

(b) that:

Supabarn has acted reasonably throughout and indeed it has made to Cotrell various proposals to resolve the dispute. … We say that that letter [referred to in this judgment at [17] above] shows that Cotrell had full opportunity to avoid this litigation. But we say that it also for years and years failed to perform its lease obligations and it refused Supabarn's repeated requests for performance of any of those obligations that were in play in the case.

The worst of these, your Honour, in our submission, that Cotrell well knew the evidence and that the evidence was against it. That evidence was on not just cleaning breaches, but was evidence that went to breach of clause 10.7, the high quality obligation.

this court has found breaches of 10.7 and 10.6, whereas [the defendant’s solicitor’s] letter has a global denial, or does not accept the assertion it has failed or is failing to meet its obligation under the lease. … those obligations included the ones brought against Cotrell.

(d) that:

at all stages Supabarn has been complaining not just about cleaning but about a number of things and in particular about breaches of clause 10.7 which is at the centre of the case.

(e) in the context that the parties had taken part in “two formal and numerous informal mediations”, that:

Supabarn has engaged in those mediations and has - it would, in our submission, that this is evidence of Supabarn acting reasonably, whereas Cotrell say it has denied its - I mean Cotrell participated in mediations as well but Cotrell had denied, consistently denied, any breach of clause 10.7 or 10.6.

(f) that:

… we do not cavil with the proposition that refurbishment took up a lot of the time in the case [but] be that as it may, it remained the case that Supabarn maintained its claim that Cotrell breached clause 10.7 not merely by the failure to honour the refurbishment aspect but that it did generally by reference to the other things that it did not do.

I have already noted that the defendant was indisputably providing cleaning services to the Centre, under a contract with a cleaning company, and that the dispute about cleaning related to the standard of those services. In that context, it was not obviously unreasonable for the defendant at each point to ask for details of the problems, since those problems would need to be taken up with the contracted cleaners. Similarly, once the plaintiff commenced proceedings, the defendant was presumably entitled to understand the claims it was required to meet.
It is interesting to note that the documents provided by the plaintiff included a letter dated 10 July 2009 from the defendant’s solicitor:

(a) referring to an indication by a Magistrate that the plaintiff’s request for discovery was too wide; and

(b) noting that the defendant’s claim for discoverable documents was also widely expressed because the plaintiff had “refused to particularise or conclusively identify the basis on which each part of [the plaintiff’s] claim arises as [the defendant had] requested.”

This suggests:

(a) that the plaintiff had also made at least one excessive request in pre-trial processes; but also

(b) that, at least by 2009 and at least to some extent, the defendant’s demands for particulars may have been justified by the requirements of the usual pre-trial processes.

I note also that, especially at the earliest stages of the dispute, many of the plaintiff’s complaints were expressed in very general and sometimes emotive ways, including, for instance:

(a) at [8] above: “indecisiveness and lack of performance”;

(b) at [9] above: “lack of interest in your own Centre”, and that painting of the gutters did not use a colour obviously different from the existing colour and was “only a cosmetic attempt at revitalizing or giving the Centre a real facelift”; and

It is not surprising that the defendant, which relied on engaging professional managers and other service providers to run the Centre on a day to day basis, at various points sought more specific complaints to which it could respond adequately.
I am not satisfied that the defendant’s approach to particulars of the plaintiff’s claim provides any useful support to the plaintiff’s application for an order that the defendant pay up to 50% of the plaintiff’s costs.
No doubt the defendant’s demands for particulars of the cleaning breaches (even if reasonable) complicated the work of the parties’ solicitors, and certainly the cleaning claim generated a large volume of paper (mainly photographs of parts of the shopping centre) that was ultimately exhibited in several large folders.
On the other hand, the cleaning issue generated relatively brief oral evidence and even briefer submissions from each party, and required only brief consideration in the course of determining the plaintiff’s claims. Nor was there any complexity in either the evidence or the submissions about the cleaning claim, in contrast to, for instance, the evidence about the losses asserted, or the submissions about the construction of the Lease, in relation to the major claim.
I am not satisfied that the defendant’s requests for detailed particulars played any role in the unnecessary complexity mentioned in my judgment as a basis for making a costs order against the plaintiff.
I note in passing that counsel for the defendant pointed out that if the defendant’s requests for particulars were in fact excessive, that is a matter that the plaintiff could take up with the taxing officer on any assessment of costs.

The Lease was the defendant’s lease?

There is no evidence before me now, and nor was there in the principal proceedings, that “the Lease was Cotrell’s Lease” as asserted by counsel for the plaintiff (at [77(c)] above). There was no submission in the principal proceedings that I should apply anything in the nature of a “contra proferentem” rule in construing the disputed clauses of the Lease.
Even if the Lease was in fact provided by the defendant, I can see no basis for accepting that the plaintiff was not in a position to negotiate contractual terms and had effectively no choice but to accept the contract offered by the defendant. I note in particular the plaintiff’s reliance on its status as an experienced operator of supermarkets that competed with Woolworths and Coles (see, for instance, [158], [406] and [946] of the principal judgment); while that experience would not necessarily equip the plaintiff to negotiate the details of contractual terms, it would suggest a capacity to obtain appropriate legal and commercial advice in any contract negotiations.
Furthermore, the principal judgment did not identify any “shortcomings” in the Lease as such; rather, I found that the Lease did not say what the plaintiff needed it to say in order to make out its major claim.
I reject the suggestion that the source of the Lease is relevant to costs in this case, even if the Lease was in fact provided by Cotrell.

Did the plaintiff contribute to unnecessary complexity?

At [1055] of the principal judgment, I mentioned as possibly relevant to costs “Supabarn’s disproportionate contribution to the unnecessary complexity of this matter”, explained as follows:
I have also noted various problematic aspects of the manner in which Supabarn has conducted its case, including:

(a) changes in the content of its case at least in the four years after the case was begun in the Magistrates Court, and in some respects after the trial began; (b) the provision of multiple (often but not entirely repetitive) submissions, coupled with a failure to articulate the vital assumptions on which its case depended; (c) the making of unreliable, misleading or question-begging submissions; and (d) internally organised (even excessively organised) submissions which were remarkably difficult to follow (see endnote 1).

Counsel for the plaintiff disputed that the plaintiff had made a “disproportionate contribution to the unnecessary complexity” of the matter, but without addressing any of the “problematic aspects” of the plaintiff’s conduct of the case. Counsel did however refer to material found on the court file, and some other material, in submitting that there were other reasons for the complexity of the matter.

Designation of proceedings as “major matter”

The court file shows that the proceedings were designated by Master Harper as a “Major Matter”: The plaintiff’s submission deserves to be quoted in full:
First, this matter was, as early as 12 February 2010, designated by the Master Harper, a highly experienced Judicial Officer and former Senior Civil Litigation Practitioner, as a “Major Matter”: … and the case ultimately involved the several very important arguable grounds of claim under the Lease and the said Deed and it was accordingly indeed a major matter of legal dispute, and duly litigated as such in the Commercial Leases jurisdiction of this Territory.
Master Harper’s designation of the matter was clearly correct by reference to the plaintiff’s case as it was run, but the plaintiff was entirely unsuccessful in those aspects of the claim that justified its designation as a “major matter of legal dispute”. I reject any implication that his Honour would have designated the cleaning claim, as such, as a “Major Matter”.

The matter was inherently complex

The plaintiff correctly said that the matter was “of its very nature” a complex and unusual matter. Counsel’s submission that most of the complexity “arose from the law relating to interpretation of contracts, and particularly as to the role of ‘commercial sense’ in regard to contracts” is correct up to a point.
Certainly the relevant law is inherently complex, but it is in my view not quite as complex as it was rendered in many of counsel’s somewhat idiosyncratic submissions, including some which I explicitly rejected as not correctly representing the authorities concerned or as otherwise unreliable, misleading or question-begging. In any case, my complaint related to “unnecessary” rather than to “inherent” complexity.
There were also many submissions about “commercial common sense” that seemed to have little connection with reality (see for instance the discussion about the Lease’s “common commercial purpose” at [324] to [360] of the principal judgment).

Other matters

Level of nominal damages

Counsel for the plaintiff challenged my reference at [1055] to “the minimal scope of Supabarn’s final success” by saying:

that seems based on a very narrow view, as to the level of nominal damages which the Court has chosen to “set” in this matter.

I do not understand this comment at all; perhaps counsel meant to suggest that I should not have assessed the scope of the plaintiff’s success as minimal having regard to the level of nominal damages specified, or perhaps he was trying to say something entirely different.
Counsel might, however, find the following extracts from State of New South Wales v Stevens [2012] NSWCA 415; (2012) 82 NSWLR 106 informative. McColl JA, with whom Ward JA agreed, said at [28]: Lord Halsbury's statement in The Mediana (at 116) that "the term 'nominal damages' does not mean small damages" was not a licence to award a large sum by way of nominal damages. As his Lordship explained in a passage to which Griffiths CJ referred with approval in Baume v Commonwealth, "[t]he extent to which a person has a right to recover what is called by the compendious phrase damages, but may be also represented as compensation for the use of something that belongs to him, depends upon a variety of circumstances, and it certainly does not in the smallest degree suggest that because they are small they are necessarily nominal damages." In other words, Lord Halsbury was distinguishing between an award of nominal damages and small damages. As I have explained, the former are awarded because the plaintiff has established an infraction of a legal right but no damages, whereas the latter are compensatory. Both may be small, but in the case of nominal damages, that is because they are "a sum of money that may be spoken of, but that has no existence in point of quantity": Beaumont v Greathead per Maule J.

(Citations omitted.)

In the same case, Sackville AJA made it clear (at [75]) that nominal damages are “token” damages, and (at [77]) that “Lord Halsbury’s observations provide no warrant for awarding nominal damages for breach of contract in other than a token amount.”
The award of nominal damages in the amount of $20 was clearly a token award, and not in any sense a compensatory award. The award would still have been token rather than compensatory if it had been $1 or $100, and neither of those different awards would have altered the assessment of the plaintiff’s success as having “minimal scope”.
If counsel’s submission was intended to make any kind of point about the specific amount, or “level”, of nominal damages awarded, it must be rejected. Any other point that counsel might have been trying to make has been entirely lost on me.
I note, however, that the submission made on behalf of the defendant (at [79(b)] above) that the plaintiff’s “vindication” was “worth only $20” seems also to miss the point that nominal damages should be recognised as token damages rather than small damages.

Absence of “realistic lawful option” for plaintiff

In written submissions, counsel for the plaintiff noted that:

the Plaintiff was not only fully entitled to sue for damages in respect of Cotrell’s breaches of its Obligations in the Lease, but … the Plaintiff had no other realistic lawful option open to it, but to sue Cotrell at law for those breaches; and Cotrell continued to deny and to challenge the Plaintiff’s clear evidence as to the breaches which the Court has found Cotrell committed…”.

This proposition may be correct in the sense that, apart from taking legal action, the plaintiff had no other “realistic lawful option” to pursue the defendant over its failure to comply with its cleaning obligation. It may be that a threat not to exercise the option to renew the Lease in 2009 (either at all, or without a renegotiation of the provisions relating to cleaning) would have had some impact, but it may also be that leaving the Centre was not a “realistic” option given what the plaintiff had spent on upgrading the supermarket early in the first term of the Lease.
However, the absence of any other “realistic lawful option” for the plaintiff to pursue improved cleaning does not mean that compliance with the cleaning obligation under the Lease could only have been pursued in conjunction with a far more complex and less convincing claim that the defendant, by agreeing to the Lease, had not only agreed to provide proper cleaning services, but had also agreed to undertake an unspecified refurbishment of the shopping centre and upgrade of its tenancy mix early in the remaining few years of the first term of the Lease.

Public policy concerns

Counsel for the plaintiff made submissions by reference to public policy and the danger of permitting the defendant to receive its costs despite the plaintiff having won on one aspect of the claim, as follows:

As a matter of public policy and judicial policy in regard to commercial leases in this Territory, Plaintiffs who are tenants under such leases ought not to be discouraged by the fear of adverse costs orders of the particular kind stated at Reasons [1055] (as an “inclination” of the Trial Judge) that is to say, an order against the Plaintiff here without any order that the Defendant pay the Plaintiff’s costs as to the breaches of important obligations (Cleaning Cl.10.6; Failure thus to Operate, manage and Conduct Centre as a High Quality Shopping Centre Cl. 10.7; and breach of the obligation in Clause 10.13). This Defendant Cotrell has continued throughout the proceedings to maintain its Defences and denials in that regard, which were always clearly untenable. Indeed, this is shown further by the point, made by the Court in its Reasons at [601], that Cotrell’s Counsel had sought to retreat “glibly” behind very general assertions about the prevalence of graffiti and assertions that cobwebs were “invisible”. Further, this aspect of the costs matter is consistent with the position, well recognized in the caselaw, that a Plaintiff is not to be dissuaded from canvassing all issues and arguable claims that might be reasonably material to a case by the risk or fear of an adverse costs order: see Australian Conservation Foundation Inc. v. Forestry Commission of Tasmania (1988) [19 FCR 127] 76 LGRA 381; 81 ALR 166 at 169; and NRMA Ltd v Morgan (No. 3) [1999] NSWSC 768; BC 9904387 at [24]. Indeed, this is part of the rationale behind the principle of Courts making “Split Costs Orders” and recognises that a Plaintiff should not be mulct in full costs if he or she duly succeeds in substantial parts of their claim. Here, the parts succeeded in were not minor parts but they were substantial parts; and the Defendant Cotrell has wilfully persisted in a wholly untenable defence in regard to its agreed Cleaning obligations under the commercial Lease and its Cleaning breaches thus also breached Clauses 10.7 and Clause 10.13.

Scope for canvassing all issues

In Australian Conservation Foundation Inc. v Forestry Commission of Tasmania (1988) 81 ALR 166 (ACF v Forestry Commission) at 169 Burchett J dealt with applications for costs orders following the dismissal of the plaintiff Foundation’s application for judicial review under Commonwealth legislation. It is not apparent to me that his Honour said anything to the effect claimed by counsel for the plaintiff, although he did say:

A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to rise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately the question is one of discretion and judgment.

Burchett J’s statement clearly referred to defendants. No doubt many statements made by reference to a party with a particular role in a civil dispute apply equally, or with appropriate changes, to parties with other roles in such a dispute, but it is not clear to me that Burchett J’s statement about the position of a defendant is necessarily and in all respects equally applicable to a plaintiff.
In particular, the proposition that a defendant (who would rarely if ever have volunteered for such a role) is generally entitled to raise every reasonable defence to the proceedings does not necessarily imply that a plaintiff (who chooses whether to initiate civil proceedings at all) is entitled to expand that litigation in all directions, reasonable or not, without accepting the attendant risks, and there may be very good reasons for not encouraging plaintiffs in such an approach.

Risk of discouraging tenants’ claims

In NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 (NRMA v Morgan), Giles J said:

24 Principles according to which some other order may be made are fairly well established. If a party fails on some issues, the circumstances may make it reasonable that he be deprived of the costs of those issues, or even be ordered to pay the other party's costs of those issues. For this purpose, issues may be issues in a pleading sense of bases of claim, or may be disputed questions of fact or law. But it must be remembered that parties should not be dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case, and unless a particular issue or group of issues is clearly dominant or separable from the balance of the proceedings it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the issues on which he was successful and those on which he failed.

Giles J’s reminder that “parties should not be dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case”, may be readily accepted, as also the proposition that “it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the issues on which he was successful and those on which he failed”. In the current case, for instance, it would be inappropriate to seek to minimise the plaintiff’s success in relation to cleaning by pointing out that I had not accepted the plaintiff’s submissions about the unreliability of Mr Sukroo’s evidence about cleaning.
However, the qualification of those propositions in cases where “a particular issue or group of issues is clearly dominant or separable from the balance of the proceedings” is relevant in the current case.
As already explained, the plaintiff’s proceedings involved one major claim and four minor claims, and although they all arose (directly or indirectly) out of the same Lease and the same relationship between the landlord and the tenant, they were clearly five separate claims that could have been pursued (and not necessarily even less efficiently) in two, three or possibly even five separate proceedings. Each claim was clearly severable from the rest of the claims.

Conclusions

As such, I do not see NRMA v Morgan, or indeed ACF v Forestry Commission, as a basis for concluding that a costs order in favour of the defendant might inappropriately dissuade another plaintiff tenant “from canvassing all issues and arguable claims that might be reasonably material to a case by the risk or fear of an adverse costs order”.
Nor do I see that this is a case in which making a costs order against the plaintiff would discourage tenants under commercial leases from taking reasonable action against their landlords because of the risk that, having proved a breach of an “important obligation”, they might nevertheless find themselves subject to an order to pay their landlord’s costs. Making a costs order against the plaintiff would not show that a tenant who succeeds in action against a landlord in one or more important respects might still be deprived of the benefit of a costs order simply because the tenant has failed in some other minor respect. At most, it might deter a tenant with a relatively simple claim from joining that claim with a large, complex, resource-intensive and far less straightforward claim.
I am not persuaded that the precedent effect of making a costs order against the plaintiff in this case would have any unfortunate public policy outcomes.

Need to hesitate before depriving successful party of costs

Finally, the plaintiff submitted that “Judges in Australia have repeatedly said that the Court should approach the task of depriving a successful party of his, her or its costs with some hesitancy”.
This is clearly a proper approach for judges to adopt – but it does not mean that, having hesitated long enough to consider all the arguments put by each side, and the nature and context of each party’s success, a judge may not decide to make a costs order in favour of a defendant who has successfully defended the bulk of the claims brought against it in the proceedings but has failed to defend one small (and relatively insignificant) part of the proceedings.

Relevant law

The parties in their written submissions referred to standard authorities about the making of costs orders, which canvassed the usual approaches to costs as well as the scope for making “split” orders to take account of unusual aspects of the proceedings or the outcome.

Undisputed principles

Some of the applicable principles did not appear to be in dispute. Those principles included the following:

(a) that the Court’s discretion on costs must be exercised judicially (see Cowdroy J in Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd [2011] ACTSC 47 at [24] to [28] and the cases cited there),:

(b) that the general principle is that costs follow the event in civil litigation;

(c) that the application of this general principle may be affected where a plaintiff has been awarded only nominal damages, as explained by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 (Oshlack) at [70]:

Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won.

(Citations omitted.)

(d) that where “discrete issues are involved”, the apportionment of costs may be desirable: see Roadshow Films Pty Ltd v iiNet Limited (No.4) [2010] FCA 645; 269 ALR 606 (Roadshow Films), where Cowdroy J said:

Various other authorities have also held that apportionment of costs between parties should be ordered. However the authorities suggest that apportionment should only be made if a reason exists justifying a departure from the usual rule that successful party be awarded costs. Bray CJ in Cretazzo at 11 observed as follows:

I think the guiding principle still stands as it left the House of Lords in the famous case of Donald Campbell & Co. v Pollak, that the general discretion is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation. [Footnotes omitted].

…

The above decisions did not make reference to the question whether apportionment should be made only in cases of ‘exceptional circumstances’ as referred to by Fisher J in Nicholas at ALR 208; FLR 220, nor whether ‘exceptional circumstances’ should be readily recognised as was suggested by Wilcox in Razzi at FCR 69 ; ALR 430. The current trend appears to favour apportionment in appropriate cases without such cases necessarily being classified as ‘exceptional’.

Dal Pont’s Law of Costs

The defendant provided a lengthy extract from G. E. Dal Pont, Law of Costs (4th edition), LexisNexis Butterworths, 2018, pp.231-234, as follows:

Award of nominal damages 8.40 As costs usually follow the event, and the event equates to 'success' in the suit, the court must first decide whether a party has in fact been successful. It was once said that the award of nominal damages to a plaintiff are 'a mere peg on which to hang costs'. In other words, for costs purposes, a plaintiff awarded nominal damages was treated as having succeeded. In more recent times, however, courts have doubted whether a plaintiff who recovers only nominal damages should, vis-a-vis the costs discretion, be regarded as successful. In fact, the modern view seems to be the converse of the historical one, such that 'the event will be regarded as going against a party who recovers nominal damages only'.

The matter ultimately rests on the facts of each case. The award of nominal damages will not necessarily deny success for costs purpose if some other right is vindicated by the judgment. An example is an action in tort for assault where the damages are nominal but the injury to dignity is not. More generally, if the aim of the suit is to establish a legal right, wholly irrespective of whether any substantial remedy is obtained, a plaintiff who recovers nominal damages may, to that extent, properly be regarded as a successful plaintiff. But in other circumstances, especially if the aim of the suit is to secure a substantial award of damages, an award of nominal damages may be seen as a failure by the plaintiff to establish the claim. For example, in Walsh v Kerr, the plaintiffs established that the defendants' misrepresentation induced them to enter into a contract to purchase a hotel but did not establish any legally recognisable loss. Tipping J entered judgment for the plaintiffs for $10, but let costs lie where they fell on the basis that the plaintiffs in substance had failed. If a court considers a plaintiff has in substance lost the case, it may even be appropriate to require him or her to pay the defendant's costs. …

8.42 The notion that an award of nominal damages is no longer a peg upon which to hang costs aligns with modern case management trends. The Western Australian Court of Appeal has observed, to this end, that '[i]t would be contrary to modern notions of the efficient and cost-effective use of judicial resources to enable a party to recover its costs for a pyrrhic victory, having substantively failed in the action'. The increasingly pervasive concept of proportionality in costs, moreover, has seen judges reduce the costs a 'successful' party may recover to reflect the proportion, as compared to the amount claimed, it secured in damages upon adjudication, also taking into account the disproportion between the 244 damages award and the costs incurred in pursuing the claim. There is New South Wales case authority to the same effect in the defamation context, even against the backdrop of dedicated costs provisions in defamation legislation.

(Citations omitted. Emphasis added by the defendant.)

Limited recovery by plaintiff: Jireh International

The plaintiff drew attention to footnote 244 to [8.42] of Law of Costs (quoted at [166] above), which referred among other things to Jireh International Pty Ltd v Western Export Services Inc (No 2) [2011] NSWCA 294 (Jireh International), as follows:

See, for example, … [Jireh International] at [12]-[13] per Macfarlan JA, with whom Young JA and Tobias AJA concurred (who noted that notwithstanding that the judgment that the respondent obtained represented only a small proportion of its claim, it should be regarded as having been successful for the purposes of the rule that prima facie ‘costs follow the event’, but nonetheless reduced the respondent’s entitlement to costs to reflect that [sic] its limited recovery, allowing it 65 per cent of its costs)

Counsel for the plaintiff:

(a) in written submissions, said that:

consistent with that approach Supabarn should have 50% of its costs as it has had a proportionate success upon three obligations; and in a case where Cotrell long unreasonably denied its clear breaches.

(b) in oral submissions, mentioning Jireh International, said:

65 per cent of the costs were awarded and we are not asking for 65, we are saying that our costs should be at least 50 per cent.

The plaintiff’s submissions offer no clue to why the decision in Jireh would suggest that in the current case the plaintiff should be awarded 50% of its costs. Presumably the plaintiff relies on the facts that in Jireh International, the ultimate result of the proceedings was that the plaintiff received a relatively small award of damages, and its entitlement to costs was reduced “to reflect … its limited recovery”.
However, I note the following aspects of Jireh International:

(a) The plaintiff’s claim as stated in the last version of the Statement of Claim was for damages of $36 million for breach of contract.

(b) At first instance, the court:

(i) rejected all six arguments made by the defendant to the effect that either there had never been a contract or, if there had been a contract, it was not able to be enforced; (ii) upheld the plaintiff’s argument that the contract should be read to include a term under which the defendant was liable to pay certain commissions to the plaintiff in circumstances not explicitly addressed in the contract;

(iii) upheld the defendant’s argument about the meaning of the expression “ex-factory price” as used in the contract; and

(iv) awarded the plaintiff damages of roughly $9.6 million.

(c) On appeal, the defendant challenged several of the court’s findings about whether there was a contract between the parties that could be enforced, and the court’s conclusion about the defendant’s liability to pay certain commissions to the plaintiff.

(d) The Court of Appeal:

(i) rejected the defendant’s challenges relating to the status of the contract and its enforceability;

(ii) overturned the first instance finding that the defendant was liable to pay commissions to the plaintiff in circumstances not explicitly addressed in the contract; and

(iii) as a result of narrowing the scope of the defendant’s obligation to pay commissions to the plaintiff, reduced the damages payable to the plaintiff to just under $1.2 million.

In its decision about the costs of the first instance and appeal proceedings, the Court of Appeal said:
The approach to be taken in determining an issue such as the present was described by Hodgson JA in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 in the following terms:

"In a case such as this, a court must make a broad evaluative judgment, which to a considerable extent must be based on impression derived from its own hearing of the case and its own consideration of the evidence and submissions below and submissions on appeal, rather than by detailed references to the contents of particular parts of transcripts, exhibits and submissions" (at [6]).

Notwithstanding that the judgment that WES obtained represented only a small proportion of its claim, WES should in my view be regarded as having been successful for the purposes of the rule that prima facie "the costs follow the event" (Uniform Civil Procedure Rules, r 42.1). Certainly the proportion of the claim recovered was low but nevertheless WES obtained a substantial judgment, for an amount in excess of $1,000,000 before interest.
I consider however that there is force in a submission made by Jireh that WES's claim was so large that it could be regarded as capable of threatening the continued existence of any but the most extraordinarily large company. It was therefore one that was liable to be met with resistance involving an element of desperation that might not have been present if the claim had been for a much lower amount, for example, one in the vicinity of that for which judgment was ultimately recovered. This factor may to some extent explain why Jireh raised such broad-ranging grounds of opposition to WES's claim. In these circumstances I consider that WES's entitlement to costs should be reduced to some extent to reflect the fact that it recovered only a small proportion of its claim.
In WES's favour on the question of costs is that it not only recovered a substantial judgment but also, when account is taken of the outcome of the appeal, was successful on most of the issues that were litigated, including those concerning intention to create legal relations, misleading and deceptive conduct and breach of fiduciary duty. These issues appear to have consumed most of the time taken in preparation for and during the hearing at first instance.
Taking these factors into account, my view is that Jireh should be ordered to pay 65 per cent of WES's costs of the proceedings at first instance, other than such parts of the interlocutory proceedings as were the subject of costs orders in Jireh's favour (these orders being preserved).
The Jireh International case can be distinguished in important respects from the current one.
Both at first instance and on appeal, the plaintiff/respondent in Jireh International was successful “on most of the issues that were litigated”, including issues that “appear to have consumed most of the time taken in preparation for and during the hearing at first instance”, and was awarded substantial damages (albeit nowhere near as substantial as it had claimed). Here, the plaintiff was successful on one of the issues that was litigated, being an issue that consumed little time during the hearing, involved little complexity of either argument or evidence, had no implications for any other part of the proceedings, and produced only an award of nominal damages.
In Jireh International, the Court of Appeal’s determination, that the successful plaintiff should have only 65% of its costs of the first instance hearing, mainly or entirely reflected the Court’s acceptance of the argument that the very high level of damages originally claimed by the plaintiff meant that the defendant’s extensive and time-consuming defence involved:

an element of desperation that might not have been present if the claim had been for a much lower amount, for example, one in the vicinity of that for which judgment was ultimately recovered.

That argument was seen by the Court of Appeal as a basis on which to depart from the starting point that costs follow the event, the event being in that case (even on appeal) a substantive finding in favour of the plaintiff on the central issue in the case, and a not insubstantial award of damages. In the current case, by contrast, there has been a substantive finding, and an award of nominal damages, in favour of the plaintiff on only one of four minor stand-alone claims against the defendant, and a substantive finding against the plaintiff on its major claim against the defendant. As submitted by the defendant, it is not easy to identify “the event” in the current case as success by the plaintiff.
I cannot see that the costs order made in Jireh International provides any basis on which to order that the plaintiff in this case, successful only on one of its five independent claims and then only to the extent of nominal damages, should have any of its costs paid by the defendant, and the fact that the plaintiff seeks only 50% rather than 65% of its costs is entirely irrelevant.

Limited recovery by plaintiff: Lewis

The defendant pointed to Lewis v Australian Capital Territory [2019] ACTCA 16 (Lewis), in which the Court said in respect of a claim for costs of the first-instance matter in which the appellant had been awarded nominal damages of $1.00: 66. [ ... ] it was submitted by the appellant, that if his vindication meant no more than his entitlement to a declaration of the unlawfulness of the decision that put him in prison then he should at least be entitled to that declaration and an order for costs in his favour. The finding made by the primary judge about the unlawfulness of the [Sentence Administration Board]'s action is no different to a declaration. As far as costs are concerned, it is plain that this action was primarily a quest to obtain damages. The appellant failed in that regard and the primary judge endeavoured, through his costs orders, to achieve a just result. As precisely stated by the High Court in Gray v Richards (No 2) [2014] HCA 47; 315 ALR 1 at [2]:

The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

(Square brackets and emphasis added by the defendant.)

In Lewis, the Court of Appeal upheld the order made at first instance that, despite the appellant having been awarded nominal damages, each party was to pay its own costs of the proceedings.

Leases Act s 154 and Leda

The defendant also drew attention to the decision of the ACT Court of Appeal in Leda v Brenda Hungerford Pty Ltd [2018] ACTCA 17; 13 ACTLR 252 (Leda), in which the Court considered s 154 of the Leases (Commercial Tenancies) Act 2001 (ACT) (the Leases Act). That section is as follows:

154 Costs The parties in a proceeding under this Act must bear their own costs unless the Magistrates Court or Supreme Court makes an order about costs.

In Leda, the Court of Appeal at [106] and [114] approved Refshauge J’s conclusions, quoted at [105], [117] and [119], that:

a provision such as s 154 of the Leases Act should apply to the whole of the controversy being considered by the Court, not just those parts “directly” under or referable to the Leases Act, unless those latter issues are “colourable” or trivial.

…

Similarly, it should be clear that the overriding consideration should be the interests of justice and fairness to the parties which should be the ultimate touchstone for any order, whether that be that there be no order as to costs or that there be an order that a party bear the costs of another party.

…

[Section 154] should be construed as requiring the Court to give primacy to the consideration that each party should pay its or their own costs unless the Court considers that some other order is appropriate.

The Court of Appeal went on to say:
His Honour further noted that the “Leases Act gives no direct considerations or principles on which the Court should act.” 121. It would seem apparent from the starting position in s 154 that a factor in exercising the discretion must be to promote affordable litigation between landlords and tenants, perhaps in particular in favour of the latter.
In this case the proceedings started with a ‘conventional’ suit by a landlord seeking recovery of outstanding rent and outgoings. This is precisely the type of proceeding which the Act might be thought to promote on a basis which minimises costs. The Court can see no reason why the discretion should be exercised in respect of the claim brought by TTC against BHPL.
The claims by BHPL against TTC and Leda fall into a different category. They were extensive claims which, either before the primary judge (in respect of TTC) or before this Court (in respect of Leda) entirely failed. They were based on representations which were never proved and were derived from the evidence of Ms Hungerford, the principal of BHPL, who the primary judge found to be an unreliable witness.
Unlike the claim by TTC, the counterclaim and Third Party Claim occupied significant court time and no doubt incurred significant costs in their defence.
In the view of the Court the discretion should be exercised to recognise that TTC and Leda were required to defend unjustified, detailed and extensive claims against them. The just result must be that BHPL pay the costs of both TTC and Leda in the court below.
In summary, no costs order was made in respect of the original claim by the landlord for recovery of unpaid rent and outgoings, but the tenant was ordered to pay the costs (including at first instance) of the plaintiff landlord, and the third party, in defending the counterclaim and the third party claim.
It was clear that some and possibly all of the plaintiff’s claim in the current case was or could have been brought under the Leases Act. Having regard to the approach taken by Refshauge J and by the Court of Appeal in Leda, I do not need to deal with whether all aspects of the plaintiff’s case fell under the Leases Act, but accept that the claim invoked s 154 of that Act.
However, neither party submitted that each party should bear its own costs, and each party sought an order for the other party to pay some or all of its costs. I have treated the parties’ approach as a concession by each of them (with which I agree) that this was a case in which it was open to the Court to depart from the default position stated in s 154 by making an order about costs for the purposes of that section.
The defendant then noted that the plaintiff’s claim was not a “conventional suit” in that it was not a rent-recovery claim such as began the proceedings in Leda, and that it required the defendant “to defend unjustified, detailed and extensive claims against it, which occupied significant court time and expense to the defendant”, and submitted that the “fair result would be that the plaintiff should have to pay the costs of the “substantively unsuccessful proceedings”.

Rule 1705

The parties also noted r 1705 of the Court Procedures Rules 2006 (ACT), which makes explicit the Court’s powers to make an appropriate apportionment by percentage or other basis:

1705 Costs—for issue or part of proceeding (1) The court may make an order for costs in relation to a particular issue in, or a particular part of, a proceeding. Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule. (2) For subrule (1), the court may declare what percentage of the costs of the proceeding is attributable to the issue or part of the proceeding to which the order relates.

Consideration

Despite the plaintiff’s repeated assertions, I am satisfied that the plaintiff’s success in its proceedings related to one minor aspect of the overall proceedings, and that the claim which succeeded occupied a minor proportion of the resources devoted to the proceedings by the parties (including the plaintiff) and by the court. In particular I note that the successful claim:

(a) rested on a construction of cl 10.7 of the Lease (and cl 10.13 to the extent relevant) that was undisputed, and as such demanded little of anyone’s attention or effort in the conduct and determination of the case (although I do accept that much effort was devoted by Supabarn and its employees, including before the proceedings were commenced, to the making, evidencing and recording of relevant complaints over an extended period); and

(b) was absolutely unrelated to the construction of clauses 10.7 and 10.13 relied on by the plaintiff to found its claim for damages estimated, in the end, at nearly $8 million.

To that extent the cleaning claim was entirely severable from the rest of the proceedings (and could readily have been determined in the Magistrates Court). If the plaintiff’s proceedings had involved only the cleaning claim, the statement by the Court of Appeal in Leda that a factor in exercising the discretion under s 154 of the Leases Act “must be to promote affordable litigation between landlords and tenants, perhaps in particular in favour of the latter” would have suggested either that the parties should bear their own costs, or conceivably that a costs order should be made in favour of the successful tenant.
However, in the current case, the tenant (the plaintiff) has succeeded in one minor claim and has been awarded nominal damages, but has failed not just in three other fairly minor claims but also in the major, most resource-intensive, and most complex claim.
I consider that the proposition set out in Oshlack (that awarding costs in favour of a defendant where the plaintiff has obtained only nominal damages may be justified “on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won”) may be applicable in the current case. On the other hand, I note the summary by Professor Dal Pont quoted at [166] above that:

The award of nominal damages will not necessarily deny success for costs purpose if some other right is vindicated by the judgment. An example is an action in tort for assault where the damages are nominal but the injury to dignity is not.

Two points may be made about the current case:

(a) First, the award of nominal damages in respect of the cleaning claim amounted to complete success in that claim; in particular, since only nominal damages were claimed, the award of only nominal damages did not detract from the plaintiff’s success in establishing the claim. (b) Secondly, it seems likely that the plaintiff (or at least its owners) saw the defendant’s approach to cleaning the Centre as an affront, and that any sense of affront would have been contributed to by what I described in the judgment (at [593]) as the defendant’s “dismissive” attitude, in the hearing, to the plaintiff’s complaints about cleaning.

Thus, I consider that the outcome of the cleaning claim provided not only nominal damages but probably a minor sense of vindication to the plaintiff, and accordingly I am not satisfied that it would be appropriate to make an unqualified costs order in favour of the defendant.
Next, I note the following:

(a) That even the most forceful submissions of counsel for the plaintiff (for instance at [82] above) have not persuaded me away from the view that the plaintiff’s success in the cleaning claim:

(i) related to one only of the five separate claims made in its proceedings; and

(ii) despite involving cl 10.7 of the Lease, did not amount to success in the major claim that was based on cl 10.7 and that was said by the plaintiff to entitle it to millions of dollars in damages.

(b) Cowdroy J’s conclusion, quoted at [165(d)] above), that:

The current trend appears to favour apportionment in appropriate cases without such cases necessarily being classified as ‘exceptional’.

(c) My conclusion at [176] above that the plaintiff’s reliance on Jireh to support an order for the defendant to pay 50% of its costs is misplaced.

(d) Refshauge J’s comment (quoted at [181] above) that the “Leases Act gives no direct considerations or principles on which the Court should act”.

(e) The Court of Appeal’s view (also quoted at [181] above) that “a factor in exercising the discretion [under s 154 of the Leases Act] must be to promote affordable litigation between landlords and tenants, perhaps in particular in favour of the latter”.

(f) That the plaintiff has not persuaded me that the propositions at [1054] and [1055] of the principal judgment (about the minimal scope of the plaintiff’s success and its contribution to the unnecessary complexity of the proceedings) are unsustainable.

I am satisfied that a costs order in some form should be made in favour of the defendant.

Stay of costs order

As noted, the plaintiff sought a stay of any costs order pending the appeal, but made no specific submissions in support of that application.
The defendant submitted that the fact that there was to be an appeal was not as such a reason for staying any costs order, citing Lewincamp v ACP Magazines (No 3) [2008] ACTSC 81 (Lewincamp), in which Besanko J: (a) (at [7]) noted Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685 as applicable authority to the effect that, while it is not necessary for an applicant for a stay to show special or exceptional circumstances, the applicant must demonstrate “a reason or appropriate case to warrant the exercise of discretion in his or her favour”; and

(b) at [8] and [9] indicated that none of arguable grounds of appeal, an absence of hardship to the respondent, and the fact that the appeal would probably be heard “in the reasonably near future”, amounted to a “sound reason” for ordering a stay.

As well, the defendant pointed to Volanne v International Consulting and Business Management [2015] ACTCA 25, in which Burns J granted a stay on the basis that:

(a) as in Lewincamp, there were arguable grounds of appeal, there was no hardship to the respondent, and the appeal would be heard within a reasonable time; but

(b) in contrast to Lewincamp, requiring the appellant to pay the judgment sum was likely to detrimentally affect his business interests.

There is no evidence before me about the impact of any likely costs order on either party, and accordingly no basis that I can see for staying the costs order that I shall make.

Conclusions

I am satisfied, having regard to s 154 of the Leases Act, that the parties should bear their own costs in relation to the cleaning claim, but that the plaintiff should pay the remainder of the defendant’s costs.
However, I do not propose to make costs orders that would require agreement or assessment about which of the costs incurred by each party related to the cleaning claim. I consider that a fair and just (and more efficient) outcome is available in reliance on r 1705, and accordingly I shall give effect to my conclusion at [199] by:

(a) declaring that 10% of the total costs of the matter are attributable to the cleaning claim; and

(b) ordering that the plaintiff pay 90% of the defendant’s costs as agreed or assessed.

I certify that the preceding two hundred [200] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Penfold.

Associate: A Alrifai

Date: 28 May 2020 Appendix A: The nature of the Plaintiff’s case

[See [60] above]

Amended Final Submissions (16 June 2014) 2. … it is desirable to state Supabarn’s submissions on clauses 10.7 and 10.13 of the Lease in a summary way. The parties agreed both that the Centre would be operated as a high quality retail shopping centre (clause 10.7); and the supermarket would be operated consistently with the Centre having that quality (clause 6.5).

An important part of a shopping Centre is its physical amenity, appearance and feel; the “cosmetic” aspect …. The physical attractiveness of a Centre is important …
Clause 10.7 required [Cotrell] to ensure that the Centre was a high quality retail centre in two respects. First, in its physical, or cosmetic, aspect. Second, as to the quality and mix of tenants.

…

The result is that Cotrell failed to conduct the Centre as a high quality retail centre. The Centre should have been refurbished by the end of 2004 … with a high quality tenancy mix to deliver services shoppers were seeking. Those failures were a breach of contract by no later than the end of 2004.

…

Breach was a cause of the supermarket’s lost sales.

…

The result is that damages are to be assessed on the basis that, in law, Cotrell’s breach cause the loss of sales.

Amended Plaintiff’s Submissions in Reply (2 July 2014) 4. The questions [which the parties agree need to be decided] are:

(a) What is the proper construction of clauses 10.7 and 10.13 of the Lease, in particular:

(i) Does the expression, “conduct, manage and operate the Centre as a high quality retail shopping centre” in clause 10.7 include the physical aspect, and tenancy mix, of st the Centre (I question) and

(ii) What matters are required to be done for the essential operation of a retail shopping nd centre as described in clause 10.13? (2 question);

…

(c) If clause 10.7 required the shopping centre to be “high quality” in its physical, or cosmetic, th aspect …, and as to tenancy mix, did the Defendant breach those obligations …? (9 question);

(d) if clause 10.13 obliged Cotrell to do anything required to be done for the essential th operation of a retail shopping centre, did Cotrell breach that obligation? (10 question);

(e) Did Cotrell breach any, and if so, which of the obligations in: th (i) Clause 10.6 (keep the Common Areas in good repair and clean); (11 question); th (ii) Clause 10.9 (keep the Centre in sound structural repair); (12 question);

(iii) Clause 8.1 of the Supplemental Deed as to: … …

(g) Did breaches of clause 10.7 and/or 10.13 of the Lease cause any, and if so what, loss? th (17 question). It is accepted that breaches of clauses 10.6, 10.9 of the Lease, and clause 8.1 of the Deed, if breached, give rise to nominal damages only.

Plaintiff’s oral opening submissions (16 September 2013) So far as the lease is concerned, Supabarn sues for breaches of clause 10.5 - which I’ll come to in some detail – broadly, services; 10.6, repairs, maintenance and cleanliness; 10.7, the obligation to conduct, manage and operate a high-quality retail shopping centre; 10.9, structural repairs; 10.13, obligation to undertake all matters essential to the operation of the centre. It also sues for breach of provisions of a development deed, the supplementary development deed, clause 8.1, concerning air-conditioning.

Amongst the papers there are what I would describe as labyrinthine requests and answers to particulars which I don’t propose to go to. It’s enough to say that all of the breaches that we allege are particularised. And while the evidence will show many breaches of lease conditions as to repair, maintenance and cleanliness, those breaches have a relevance to the primary case, which is a failure to operate the centre as a high-quality retail centre and a failure to do all things essential for the operation of such a centre. Those breaches, quite independently of their role in terms of breaches of the provisions I’ve identified, show the quality of the centre over time.

Can I say at the outset what would appear from the written submissions, the proper construction of clause 10.7 in the context of the lease, 10.13, is a central question in the case. I’ll come to some observations about the defendant’s construction in a moment, but the plaintiff’s case is that the Kaleen centre was never a high-quality retail shopping centre from 1999 and it was not at the date of the lease a high-quality retail shopping centre and it is not now.

The question of whether there’s an obligation to refurbish is, in a sense, not the central question – that is, the central question is whether the centre has the quality of a high-quality retail centre, and the answer to that is that it did not, and the question then becomes, in terms of assessing damages, what would be necessary to make it the high-quality retail shopping centre, and the answer is refurbishment.

Plaintiff’s oral closing submissions (14 July 2014) Now, there are two points which I wish to emphasise at the outset, a way of confining the plaintiff’s case. The first is this. It’s apparent from our written submissions that the claim for substantial damages has been confined to two breaches of the lease. That’s breach of clauses 10.7, that’s the high quality retail shopping centre clause, and 10.13, the matters essential clause. We accept that if we can’t establish breach of those provisions, then we cannot succeed on the claim under section 81 of the Leases (Commercial and Retail) Act which is the 15th question in the issues that I’ve provided to your Honour. We also accept that if the claims for breach of 10.7 and 10.13 of the lease succeed, then we can’t do any better under the claim under section 81 so in a sense, the claim under section 81 is forensically neutral. That’s the first point.

…

The second point are the claims for breaches of clauses 10.6 which is the clause relating to the keep clean and in good repair the common area and 10.9 which is the structural obligation and the various claims in relation to water leaks and cleanliness. Clause 8.1 of the supplemental deed relating to the air conditioning and the airlock. They’re questions 11, 12, 13 and 14 in the list of issues and we do not contend that those breaches, if established, give rise to anything other than nominal damages.

Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd

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