FEDERAL COURT OF AUSTRALIA

Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 325

COSTS – split trial – apportionment of costs – when granted

Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 referred to

Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Limited [1951] WN 205 referred to

Cretazzo v Lombardi (1975) 13 SASR 4 doubted

Inn Leisure Industries Pty Ltd v D F McCLoy Pty Ltd (1991) 28 FCR 172 doubted

Civil Procedure Rules 1998 (UK) O 44.3(4)(b)

Federal Court Rules O 29

BAULDERSTONE HORNIBROOK PTY LTD v QANTAS AIRWAYS LIMITED

V 643 of 1999

FINKELSTEIN J

11 APRIL 2003

MELBOURNE

THE COURT ORDERS THAT:

1.         There be judgment for the respondent in respect of the causes of action pleaded by and the relief claimed pursuant to paragraphs 5-26, 32-38 and 45-54 (all inclusive) of the Applicant’s Fourth “A” Amended Statement of Claim.

2.         The costs of the proceeding to date be reserved pending the trial of the remaining causes of action.

3.         On or before 4.15pm on 2 May 2003 the respondent shall provide to the applicant (with a copy to the court) a copy of its proposed further amended defence.

4.         Provided the applicant will consent to the amendment of the amended defence in accordance with the form proposed by the respondent, on or before 4.15pm on 23 May 2003 the applicant shall file and serve a reply to the further amended defence.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

RULING (No. 3)

1                     Although costs are always at the discretion of the judge, and courts have traditionally been reluctant to enunciate principles upon which this discretion should be exercised, the general rule is that costs will follow the event of an action.  The event which costs follow is the event of the litigation.  That is, the successful party will receive his costs and the loser will pay them, unless of course, there is good reason for directing a different result.

2                     In this case there is not, as yet, a successful party.  While the respondent has had some success (achieved at considerable expense) that success has only been partial.  Pursuant to O 29 there was a split trial.  In the first stage, a number of causes of action put forward by the applicant failed.  There is still one outstanding claim and whoever wins that contest will be the true successful party, at least on a narrow view.  Compare Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Limited [1951] WN 205 and Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 where a broader view was taken in relation to the identification of the successful party in an action.

3                     Although it does not claim to be the successful party, the respondent seeks costs for that part of the proceeding to date in which it has been successful.  It does so on the basis that it is reasonable that it should have these costs.  In effect the respondent asks that the costs be apportioned.  Courts have, on occasion, been loath to apportion costs.  In Cretazzo v Lombardi (1975) 13 SASR 4, 16 Jacobs J said:

“But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law.  The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.  There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike.  I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.”

See also Inn Leisure Industries Pty Ltd v D F McCLoy Pty Ltd (1991) 28 FCR 172, 174 where French J said an apportionment of costs may be made “where there are special circumstances”. 

4                     In my opinion, in deciding what order to make about costs, courts should consider, among other things, whether a party has succeeded on part of his case even if he has not been wholly successful.  The days when a plaintiff could, with impunity, mount an attack on several fronts, some with little prospect of victory, in the hope of a direct hit and the recovery of all costs must be put behind us.  Litigation is too expensive for courts to sanction this approach.  Indeed it should be discouraged.  The English courts have taken the initiative. There the judges have adopted a rule requiring a judge to have regard to, among other things, “whether a party has succeeded on part of his case, even if he has not been wholly successful”: see O 44.3(4)(b) of the Civil Procedure Rules 1998 (UK).

5                     Furthermore, in a case where there has been a split trial of disputed questions of fact or law and it is possible at each stage of the case to identify the successful party, the ordinary rule which is applied after a final hearing should also be applied to the split trial.  That is, there is no justification for implying to the discretionary power to award costs a limitation to the effect that costs should only be ordered once the outcome of the whole action is known.

6                     If this be the correct approach, as I think it is, one might ask why I have not given the respondent its costs of the recent trial but have, instead, stood them over for further argument.  The reason is simple.  It has two aspects.  First, the outstanding claim is not unconnected with the causes of action that have already been litigated.  The pleadings have not yet closed in respect of the outstanding claim so the degree of overlap remains a matter of speculation.  It is possible that the overlap will be significant.  It may even turn out that the outstanding cause of action is so closely connected to the issues already litigated that the party that ultimately succeeds should have the whole of the costs of the action.  The second aspect, which is connected to the first, is the possibility that the applicant may recover a far greater sum than it would have recovered if it had succeeded in the claims that have already been litigated.  Although that in itself would not be a sufficient reason to deny to the respondent its costs to date in my opinion, when this is considered in combination with the first aspect, it is sufficient to convince me that I should defer dealing with the costs.

Associate:

Dated:              11 April 2003