Re-opening of Argument and Issue Based Division of Costs

Following upon the substantive report of the decision of the Court of Appeal in the last issue of Hearsay, the  Queensland Court of Appeal, in Enkelmann & Ors v Stewart & Anor (No 2) [2023] QCA 198 (29 September 2023) ruled  on an application by the appellants – who were successful on each of the grounds argued in the notice of appeal but failed in the appeal on the back of the respondents’ notice of contention – for leave to reopen argument on the issue of costs.  The order sought by the appellants was that the court ought exercise its discretion to dispose of the issue of costs by reference to the respective enjoyment of success of the parties on the appeal and notice of contention respectively.  The decision is a useful one for practitioners in relation to both reopening and disposition of costs.

The court wrote:

[1]  Paragraph 52 of Practice Direction 3 of 2013 of the Supreme Court of Queensland requires that any party who wishes to make submissions or further submission on costs after the hearing of an appeal must apply for leave to do so in their written outlines of argument and/or orally at the hearing.

[2]  In relation to the appeal in the present proceeding, the appellants did not take that course. To the contrary, their outline had submitted that costs should follow the event and at the hearing nothing was said to the contrary and no leave was sought to make further submissions. On 1 August 2023, the Court dismissed the appellants’ appeal with costs. A formal order was produced by the registry and sealed on that date.

[3]  On 8 August 2023, the appellants sought “reconsideration of the question of costs.” These reasons explain why the Court has refused the appellants’ application.

Background

[4]  The appellants appealed from an order that they disclose certain solicitors’ file notes of oral comments made by an expert witness in conference with their solicitors and counsel.

[5]  The appellants’ grounds were that the learned primary judge had erred in finding that legal professional privilege in the solicitors’ file notes had been abrogated by r 212(2) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) and had also erred in the alternative finding that the appellants had waived their privilege by disclosing the expert’s reports before the trial. The respondents joined issue with the appellants, opposing the appeal and submitting the primary decision should be affirmed on alternative grounds.

[6]  In reasons published on 1 August 2023, the appellants’ grounds of appeal were upheld but the respondents’ contention that the appellants had waived the relevant privilege at the trial was also upheld. So, the appeal was dismissed.

[7]  The respondents had raised the ultimately determinative point in their Notice of Contention. The respondents did not file their Notice within the time limited by the rules. They sought and obtained the Court’s leave to file it at the commencement of the hearing on 17 July 2023. The appellants did not oppose leave. From that time, the appellants were exposed to the risk that they might not succeed in the appeal, even if they persuaded the Court of the soundness of their grounds of appeal. The appellants had been aware of this possibility from 23 June 2023, when the respondents served their Notice, about 24 days before the appeal was heard.

[8]  As mentioned, in their written outline of argument the appellants sought an order that costs should follow the event. At that time, the respondents had not given notice of their ultimately successful contention. But they had by the time the appellants filed their reply outline on 30 June 2023 and the appellants did not seek a different costs order. No submission to the contrary was made at the hearing of the appeal on 17 July 2023, nor was leave sought to make further submissions.

Appellants’ submissions

[9]  In written submissions settled by counsel, the appellants submit, and we would accept, that their failure to comply with the practice direction in relation to the making of further submissions on costs was due to an oversight by counsel.

[10]  The appellants submit they have a “respectable argument” for an order other than the extant order that costs follow the event. Their argument has two parts.

[11]  The first part is that the proper interpretation of r 212(2) had direct implications for both parties in the proceeding, who had engaged at least six different experts to give evidence at the trial. Both their grounds of appeal are said to have been of significance to litigants in other proceedings involving expert evidence. The appellants say they succeeded on the points of importance to the parties in the proceeding and, perhaps, to other litigants generally. The second part of their costs argument is that most of the written submissions and the hearing concerned the appellants’ grounds of appeal. Little time or effort was directed to the respondents’ contention about waiver at the trial.

[12]  On this basis, the appellants seek an “appropriate acknowledgment” of their “success by issue” based on “the relative effort devoted to each issue”. They describe a “rough apportionment of costs ‘intelligently made’” as a preferable outcome, citing two decisions in the Trial Division.1

Respondents’ submissions

[13]  The respondents note, correctly, that the appellants have not identified the rule or power under which they advance their application. For their part, the respondents characterise the application as one which seeks to re-open the question of costs, acknowledging that inadvertent error is one of the recognized classes of case in which a court may grant leave to re-open. They submit that leave would not be granted unless the appellants had demonstrated “exceptional circumstances”. In this regard they rely on statements referring to such a requirement made in-

(a) cases dealing with applications to re-open after the close of argument and when judgment is reserved;2 and in

(b) cases where application is made to re-open orders made once judgment has been given and orders made.3

[14]  Indeed, they go further to submit that the appellants should be required to demonstrate a substantial injustice in addition to “exceptional circumstances”. They submit that the appellants neither demonstrate exceptional circumstances nor that there would be a substantial injustice if their application was refused. Accordingly, leave to re-open should be refused or, if granted, no different costs order should be made. The respondents also seek an order that the appellants should pay the costs of the application to re-open on an indemnity basis.

Principles to be applied

[15]  The appellants’ application could be characterised as an application to re-open. However, it could also be characterised as an application under the slip rule,4 it being clear that the power of correction extends to cases where a matter, through counsel’s inadvertence, was not dealt with at the hearing.5

[16]  Whether the application is dealt with as an application for leave to re-open or an application under the slip rule, the critical question is whether the justice of the case favours an exercise of discretion to permit the proposed argument to be made, bearing in mind the overriding philosophy expressed in r 5 of the UCPR. Without being exhaustive, or unduly prescriptive, relevant considerations in a case such as the present would necessarily include—

(a) the public interest in litigation being conducted efficiently and to finality at the time of the listed appeal hearing;6

(b) the modification to that course contemplated by the fact and terms of paragraph 52 of Practice Direction 3 of 2013;

(c) the expectation of the Court and the parties that parties will comply with the Practice Direction;

(d) the explanation for the non-compliance with the Practice Direction;

(e) the extent of any delay in bringing the application;7

(f) the prejudice which the applicants might suffer if the application is refused, noting that a consideration of the merits of the argument which is sought to be advanced may shed light on that question;8

(g) the prejudice to the respondents if the application is allowed.9

[17]  The present discretion is untrammelled although it must be exercised judicially, having regard to the considerations which are relevant to it. Observations made in previous cases in different contexts cannot be regarded as laying down rigid rules confining its exercise. Such observations may be better regarded as emphases made in particular cases in response to particular considerations which justified such emphases. Thus in De L v Director-General, NSW Dept of Community Services [No 2] , the High Court referred to its undoubted jurisdiction to re-open its judgments or orders, where the interests of justice so required; acknowledged statements in previous cases that a heavy burden was cast upon an applicant for re-opening to show that such an exceptional course was required “without fault on his part”, that is “without the attribution of neglect or default to the party seeking reopening”, but nevertheless concluded the case was a proper one for re-opening despite the fact that there had been fault on the part of the applicant.10 We do not accept the submission that in the present context, the justice of the case requires the appellants to demonstrate exceptional circumstances (let alone lack of fault), as though that was some form of condition governing the exercise of the present discretion.

Consideration of leave

[18]  In the trial division when a judge makes determinative orders and publishes reasons for judgment, a party may advance an application to the judge for a particular order in relation to costs. The practice of this Court is that its judgments are published in open court by a single judge of appeal who may or may not have formed part of the coram which decided the appeal. No costs application can conveniently be made to that judge. The Practice Direction is an attempt to regulate that position so that the Court will know whether it should deal with costs in its judgment on the merits or give the parties an opportunity to be heard on costs.

[19]  Thus it is commonplace in circumstances analogous to the present that a party in the appellants’ position advances a submission at the hearing that they would like to be heard on the question of costs after the Court has decided the appeal. The Practice Direction contemplates and approves that course. By the orders the Court makes when it publishes its judgment the Court will then determine the merits of the appeal and give the parties the opportunity to be “heard” on the question of costs by making directions permitting them to deliver further written submissions on costs.

[20]  There is no doubt that if such a submission had been made in the present case, that opportunity would have been afforded the parties. The result would have been that the Court would not have dealt with costs in its judgment on the merits but would have given directions for the reception of written submissions on costs. The written submissions which this Court has received on the present application would still have been received, they would merely have been limited to the merits of the costs argument and would not have dealt with the question of leave.

[21]  In this case, the application was brought promptly and its need explained by counsel as being due to inadvertence. The respondents have not identified why they would be prejudiced if the application were to be allowed. If there were merits in the costs argument which the appellants seek to advance, we would have been inclined to grant leave. The problem for the appellants is that we do not think that they advance a persuasive case as to why costs should not follow the event.

[22]  Relevant principle was identified in Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [16] to [17] in these terms:

The general approach is that there must be special or exceptional circumstances to warrant depriving a successful party of its costs and the mere fact that the successful party has been unsuccessful on some issues will ordinarily not be sufficient to do so: Courtney v Chalfen [2021] QCA 25 at [5] . On an appeal, for example, where a party has succeeded on one of two ways to the same outcome, the Court of Appeal might well regard the costs of the second way on which that party failed as not so distinct conceptually or practically as to warrant making a costs order which reflected that party’s failure: Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd at [1] . On the other hand, one circumstance in which it might be appropriate to award costs of a particular question or part of a proceeding is where that matter is definable and severable and has occupied a significant part of the proceeding: see Courtney v Chalfen , in which the Court of Appeal referred with approval to the decision of McMurdo J (as his Honour then was) in BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2) [2009] QSC 64 at [8] .

Of course, it does not follow that an issues-based costs order should always be made in circumstances analogous to those described by McMurdo J in BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2) . Where there are multiple issues which are determined in different directions as between the parties, a court might form an overall impression having regard to the significance of the issues, the way they were determined, and the amount of time and cost spent on them, and order one party to pay a proportion of another party’s costs as a way to reflect fairly the parties’ comparative success or failure in the outcome which was obtained. Courts often prefer to avoid the complicated form of costs assessment that would follow if different issues are determined in different directions as between the parties and costs were to be awarded in respect of issues. In this regard, in Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (No 2) [2019] NSWCA 173 , the New South Wales Court of Appeal observed at [9] where taking such an approach might result in a protracted assessment process:

… It is more efficient, and fairer, for the court simply to net-off [orders for issues in different directions as between the parties], which it is entitled to do (see Day v Humphrey [2018] QCA 321 at [13] per the court). Such an assessment will, undoubtedly be ‘rough and ready’ (Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5] ), and that is entirely permissible.

[23]  The appellants do not seek any costs occasioned by the late service or filing of the Notice of Contention. The respondents did not cause the appellants additional costs in the appeal by conducting themselves as “ever moving opponent[s]”, unlike the applicant in Mio Art Pty Ltd v Macequest Pty Ltd (No 2) ,11 which the appellants cite. The hearing of the appeal did not extend beyond its one-day estimate, notwithstanding the respondents joining issue with the appellants’ grounds of appeal. There is no analogy here with the additional three days’ hearing occasioned by the defendants’ conduct in Todrell Pty Ltd v Finch (No 2) ,12 which they also cite.

[24]  Simply put, to succeed in the appeal, the appellants had to prevail in both their grounds and also had to defeat the respondents’ contention. The respondents’ success in the appeal is no less a success for being based on their Notice of Contention. This is a case for the application of the general approach identified in Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) . We would not encourage parties to pursue appeals that are likely to be dismissed, in the expectation of recovering some of their costs by succeeding on issues or points ultimately not determinative of their legal rights. We would rather parties identify at an early stage the likely outcome of an appeal and, where their legal rights are unlikely to be altered, resolve their appeal on appropriate terms.

[25]  The final orders made on 1 August 2023 should stand. In light of our observations at [20] above, there is no occasion for the making of an indemnity costs order. The costs of the application should be dealt with in the same way as the costs of the appeal. To avoid any possible debate in the event there has to be any formal assessment of the costs, we would make a separate order to that effect.

Final disposition

[26]  The appellants’ application for leave to make further submissions on costs should be refused. The appellants should pay the respondents’ costs of the application.

Order

1. The application for leave to make further submissions on costs is refused.
2. The appellants are to pay the respondents’ costs of the application.

Counsel for the appellants: N H Ferrett KC with D J PyleCounsel for the respondents: G J Handran KC with M O JonesSolicitors for the appellants: Shine LawyersSolicitors for the respondents: 23Legal

1  Mio Art Pty Ltd v Macequest Pty Ltd (No 2) [2013] QSC 271 ; Todrell Pty Ltd v Finch (No 2) [2008] 2 Qd R 95 .

2  Westpac Banking Corporation v Heslop [2020] QSC 121 , at [11]–[12] where Bradley J cited observations made by Sofronoff P in Mackellar Mining Equipment Pty Ltd v Thornton (2019) 367 ALR 171 at 185 [58] (Morrison JA and Boddice J agreeing), citing Spotlight Pty Ltd v NCON Australia Ltd (2012) 46 VR 1 at 5 [17], 7 [26] (Harper and Tate JJA and Beach AJA).

3  Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 , 301–303 and De L v Director-General, NSW Dept of Community Services [No 2] (1997) 190 CLR 207 at 215 .

4  Rule 388 of the UCPR.

5  Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd [No 2] (1988) 62 ALJR 151 at 152 , which was an example of a costs submission inadvertently not made, and see also Thompson v Macmillan [2023] QCA 183 .

6  Davies v Davies (No 1) [2019] QSC 293 per Bradley J at [10]; Gallagher v Boylan [2013] 1 Qd R 204 at [18] per Fraser JA.

7  Davies v Davies (No 1) [2019] QSC 293 per Bradley J at [10]; Gould v Vaggelas (1985) 157 CLR 215 at 276 per Gibbs CJ, Wilson, Brennan and Dawson JJ; L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 597 per Mason ACJ, Wilson and Deane JJ cited in Thakral Fidelity Pty Ltd v Cmr of Stamp Duties (No 2) [2001] 1 Qd R 428 at [6] per McPherson JA.

8  Davies v Davies (No 1) [2019] QSC 293 per Bradley J at [10]; Gould v Vaggelas (1985) 157 CLR 215 at 275 per Gibbs CJ, Wilson, Brennan and Dawson JJ.

9  Davies v Davies (No 1) [2019] QSC 293 per Bradley J at [10]; L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 597 per Mason ACJ, Wilson and Deane JJ cited in Thakral Fidelity Pty Ltd v Cmr of Stamp Duties (No 2) [2001] 1 Qd R 428 at [6] per McPherson JA.

10  De L v Director-General, NSW Dept of Community Services [No 2] (1997) 190 CLR 207 at 215 –216 .

11  [2013] QSC 271 at [26] (Jackson J).

12  [2008] 2 Qd R 95 (Chesterman J) (as his Honour then was).