MM Holdings Pty Ltd v Oaten[2010] QDC 188

DISTRICT COURT OF QUEENSLAND

1. [1]
   I gave judgment on 29 April 2010 in this proceeding for the plaintiff against the defendant in the sum of $7,637.00 inclusive of interest and I reserved costs. The parties have made submissions in writing as to reserved costs.

2. [2]
   The relief obtained by the plaintiff in this proceeding is a judgment that, when the proceeding began, could have been given in a Magistrates Court.  The plaintiff accepts that in these circumstances UCPR r 697(2) applies to limit its costs.  It provides:

1. “(2)
   The costs the plaintiff may recover must be assessed as if the proceeding had been started in the Magistrates Court, unless the court orders otherwise.”

3. [3]
   No formal offers of settlement pursuant to the rules were submitted. The plaintiff submits that in these circumstances it should be awarded costs calculated at the Magistrates Court of Queensland scale.

4. [4]
   The defendant has submitted that the claim failed on all but one of the principal issues raised, referred me to BHP Coal Pty Ltd v O & K Orenstein & Coppel AG [2009] QSC 64 at [6] – [8] and urged that the defendant is entitled to his costs in the order of 80% of the proceeding representing the proportion of the issues in the case upon which he succeeded.  I accept that 80% is a fair representation of the numerical proportion of the issues in the case upon which the defendant succeeded. However reading those passages from the BHP Coal persuades me that the submission has no merit and that this is not a case where costs should be apportioned on the basis of the proportion of issues won.

5. [5]
   The BHP Coal case involved argument as to costs of a trial with 90 hearing days. It was unusual in the length of hearing and the easily distinguishable issues which the court had to consider at different times in the hearing. It was distinguishable from the more typical case before me where the hearing occurred in one day followed by written submissions on merits and subsequent submissions on costs. The factors to be taken into account in considering the proper exercise of the discretion as to costs where litigants in the Supreme Court are partly successful in a trial with 90 hearing days and easily identifiable and divisible issues have little similarity with those in the District Court where a small claim is involved, is heard in a day and where issues upon which a party is successful and unsuccessful are mixed in a single day’s hearing.  With small claims such as this one the costs of various issues are not easily separated.

6. [6]
   For the proper approach in the case before me I refer to the judgment of his Honour Justice McMurdo in the BHP Coal case and respectfully edit it to extract only the passages from [7] – [8] which are particularly applicable to the matter before me. His Honour wrote (citations omitted):

“[7]  … The general rule remains that costs should follow the event and r 684 provides an exception. Necessarily the circumstances which would engage r 684 are exceptional circumstances, and the enquiry must be: what is it about the present case which warrants a departure from the general rule? … In Oshlack v Richmond River Council, McHugh J explained the basis for the usual order as to costs as follows: “The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party, the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for costs of the unsuccessful litigation. As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.”

[8]  Thus in Todrell Pty Ltd v Finch & Ors, Chesterman J approved this passage from the judgment of Einstein J in Mobile Innovations Ltd v Vodafone Pacific Ltd:

“Notwithstanding that the court has power to deprive a successful party of costs, or even order a successful party to pay costs, that is a course to be taken in unusual cases and with a degree of hesitancy.”

I adhere to the view I expressed in Australand Corporation (Qld) Pty Ltd v Johnson& Ors  that ordinarily the fact that a successful plaintiff fails on particular issues does not mean that the plaintiff should be deprived of some of its costs, although it may be appropriate to award costs of a particular question or part of a proceeding where that matter is definable and severable and has occupied a significant part of the trial.”

7. [7]
   After short hearings where the parties cannot easily define which parts, such as which days, were devoted to unsuccessful issues and also where the sums at stake in the litigation and for costs are relatively small there are benefits in applying the general rules at UCPR r 684(2) and at UCPR 681(1) to avoid putting the parties to the expense of applications for costs and to avoid requiring the court to take the time necessary to consider and properly give reasons for accepting or rejecting each argument raised in support of the application for costs. Where the hearing was limited to one day, the arguments about how much of a day would have been required if the successful party had confined itself to only the issues on which it was successful might involve long argument. This matter has, for example, required a half day of court time to properly explain reasons for rejecting the defendant’s various unsuccessful submissions on costs.

8. [8]
   I decline to order that the defendant be entitled to his costs of 80% of the proceeding. I find in accordance with the authority to which I have referred that nothing about the losing litigant’s winning of 80% of the issues requires departure from the general rule that costs should follow the event.

9. [9]
   It was submitted for the defendant that if I rejected his application for 80% of the costs of the proceeding I should order no costs on four other bases. The bases and my findings are:

1. (a)
   The plaintiff was largely unsuccessful – I accept that the plaintiff was largely unsuccessful but find in accordance with the authority to which I have referred that nothing about that feature requires departure from the general rule that costs should follow the event. I note the plaintiff was required to set the matter down for trial at least to prove the party with whom it contracted;

2. (b)
   All of the evidence called by the plaintiff was of no relevance to the issue upon which it succeeded – I reject that submission. There was success on the substantial issue as to identity of the proper defendant.

3. (c)
   Mr Oaten’s evidence was generally preferred to the evidence of Mr McIvor – I reject that submission. However, the need to consider a submission as to the generally preferred proportion of parties’ oral evidence reveals how time consuming arguments as to costs can become if the general rule is not treated as a general rule. Mr McIvor’s evidence was unpersuasive on only one material point, namely whether his recollection was accurate that certain alleged conversations noted in the defendant’s electronic record did not occur. The defendant’s success on the major issue did not otherwise require acceptance of the evidence of the defendant or the rejection of the evidence of the plaintiff so much as a favourable interpretation of a document.  

4. (d)
   The plaintiff’s case lacked clarity and particularity making it difficult for the defendant to answer the case against it.  I accept that submission as accurate.  However, the point upon which the plaintiff succeeded was clearly pleaded and the defendant did not specifically respond to it in his defence and should be taken to have admitted it.  Even the defendant in his evidence admitted it.  I reject the submission that on this particular point the plaintiff’s case lacked clarity and particularity.  The defendant ought to have seen from his own pleading and on the basis of his own instructions that the plaintiff should succeed on that point unless the defendant could satisfy the court that the defendant was not a party to the contract.  The plaintiff succeeded in establishing that the defendant was a party to the contract and was required to do so at trial.  The defendant submits that the quantum of damages was inferred rather than evidenced directly.  I reject that submission.  The quantum appears in the pleading and Mr Oaten’s evidence was consistent with the quantum. It is not unfair to the defendant to reject this submission as a basis for applying the general rule as to costs. The defendant was at all times at liberty in several ways to avoid the risk of costs being ordered against it because of the small claim upon which the plaintiff has been successful.

10. [10]
    It is appropriate to order that the plaintiff recover costs against the defendant to be assessed as if the proceeding had been started in the Magistrates Court.