Awarding Costs Against Successful Litigants

(2) For subrule (1), the court may declare what percentage of the costs of the proceeding is attributable to the question or part of the proceeding to which the order relates.

[9] The application was unsuccessful. The usual order as to costs in those circumstances is that the costs of the successful party to an application are paid by the unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (“Oshlack“) at 96-97 [66]-[68] per McHugh J. There are exceptions to the usual order or circumstances in which it is not made. The difference between the majority and minority in Oshlack was as to the width of the exceptions to the usual order or circumstances in which it is not made. McHugh J (with whom Brennan CJ was in general agreement) was in the minority and he said (at 97-98 [69]-[70]) (footnotes omitted):

The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:

“No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.”

[10] The majority (Gaudron, Gummow and Kirby JJ) took a broader view of the exceptions to the usual order or circumstances in which it is not made. Gaudron and Gummow JJ said (at 88 [40]):

(See also at 120-123 [134] per Kirby J and Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56 at [26] per Gleeson CJ, Gummow, Hayne and Crennan JJ.)

(emphasis added)

[32] The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said:

Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.

[33] Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748:

[34] Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent’s Notice of Contention. This is not to say that so-called “discrete issues”, for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter.

…

[36] Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261:

This case is a classical example of that sentiment.

(emphasis added)

[23] (In) … Australian Conservation Foundation v Forestry Commission of Tasmania 81 ALR 166 at 169 … Burchett J said:

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 opposed to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at a reasonable point along the path of assault.

[24] Notwithstanding these stern warnings, which I accept are appropriate, this does appear to me to be an exceptional case. The Finchs failed on the only contested question of fact which took up three quarters of the time at trial. It was both dominant and separable. That by itself may not, I apprehend, justify an order depriving them of their costs or obliging them to pay their opponents. The real point is that their defence to that issue was baseless and they must have known it had no substance. They put their opponent to the costs of proving an issue, expensive as it turned out, on which the justice of the case was against them. Essentially the fact is that their opposition to the plaintiff on that point was not genuine. Moreover it remains disturbing that their defence should have utilised the invented evidence of their solicitor.

(emphasis added)

[11] There are a number of reasons why the undoubted discretion that I have should be exercised in favour of the defendant. In the context of this case the defendant effectively succeeded. The costs incurred by the plaintiff relevant to the limited issues on which the plaintiff succeeded are swamped by the costs that the defendant has had to incur in defeating the claims made against her. The damages that the plaintiff succeeded in winning were nominal. It was guilty of relevant misconduct relating to the litigation in the sense discussed in Oshlack v Richmond River Council (1998) 193 CLR 72 per McHugh J at p97 citing the judgment of Devlin J in Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874; Brennan CJ at p 75 agreeing generally. Its success was extremely limited. It subjected the defendant to a three day trial instead of a construction argument — and one that could have been done (and very nearly was done) on the papers. If it is necessary that there be “special circumstances” related to the case, as I think that there does to disentitle a successful plaintiff, even a nominally successful one, then they are present here.

(emphasis added)