WATERS v P C HENDERSON (AUSTRALIA) PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and PRIESTLEY JJA 6 July 1994, 6 July 1994 [1994] NSWCA 338 PRACTICE & PROCEDURE — Commercial Division — reference to referee and report back — orders made as to costs and interest — no error as to principle on interest — whether costs should have been ordered by reference to particular issues won or lost — held: No errors of principle — reasons for restraint in appellate disturbance of costs orders explained. PRACTICE & PROCEDURE — interest — costs — discretionary orders by Judge in Commercial Division — reference of question to referee — each party partly successful — held; (1) No error shown in discretionary order as to interest. Judge referred to proper principle that interest is to compensate party for being kept out of its entitlement; (2) No error sufficient to entitle the Court of Appeal to disturb the exercise of the Judge's discretion on costs had been demonstrated — observations by Mahoney JA and Priestley JA (Kirby P agreeing) on the reasons for not disturbing discretionary judgments on costs, particularly in commercial litigation. INTEREST — purposes of — compensation for being kept out of entitlement to moneys as found by litigation. COSTS — discretionary orders — separate issues — whether possible and convenient — whether clear error of principle shown — held: Appeal dismissed. Supreme Court Rules Pt52 rll. Mahoney JA This appeal arises from a decision by Cole J in the Commercial Division given on 25 October 1991. There had been before his Honour a proceeding in a commercial dispute involving a claim by the plaintiff for recovery of moneys for goods and, I think, services and a cross-claim by the defendant. His Honour ultimately found the amount due from the defendant to the plaintiff to be $73,635.93. He made an award of interest of $39,410.35 and gave judgment accordingly for $113,046.28. He ordered that the defendant pay the plaintiff's costs in the terms to which his Honour referred in his judgment. An appeal has been brought to this Court against his Honour's judgment in relation to interest and in respect of costs. The question was raised at the commencement of the appeal as to whether, having regard to the provisions of s101 of the Supreme Court Act, leave to appeal is necessary in relation to the appeal as to costs. There is, it has been accepted, an appeal as of right in relation to interest and the question has arisen whether, notwithstanding the existence of a right of appeal as of right in relation to interest, it is necessary to have leave in respect of the appeal as to costs. My recollection is that the practice has been that leave has to be obtained in relation to that matter. But that is not a matter which, in the present case, it is necessary to decide. I do not determine the question. If leave to appear were necessary, I would grant it. The Court has dealt with the argument upon the basis that the appeal as to costs is a matter before this Court. I shall assume that both matters are before the Court for decision. 2 UNREPORTED JUDGMENTS In relation to the issue of interest the learned judge accepted the plaintiff's case that the claim had been made by the plaintiff for a sum of money due to it and that interest should be awarded to it from the date on which the amount was due. It was contended that, having regard to the correspondence between the parties, there had been an agreement or arrangement - and I put the matter generally so as to comprehend the way the submissions were put - that the plaintiff would not receive the sums of money in question unless and until the defendant had received those sums from a third party. Reference was made inter alia to two letters, of 28 February 1990 and 3 July 1990. I do not think that those letters establish the kind of agreement or arrangement to which reference has been made. I think the learned judge came to that conclusion. He did not think that there was any such agreement or arrangement established by the correspondence. On that basis the objection to the award of interest that was made fails. However, putting that aside, I do not think there was anything in the present case which would warrant a departure from the general rule to which the judge referred. In these circumstances, therefore, I would dismiss the appeal as far as it relates to the award of interest. His Honour made an order as to costs. It is not necessary for me to repeat the detail of the judge's orders in relation to costs. The proceedings were dealt with before the judge and, as the court has been informed, the matter was referred to a referee. As his Honour records, each party was partly successful in relation to matters that came before the referee. The learned judge, in dealing with the question of costs, said: "The principle is, in essence, that the successful party is entitled to its costs unless there is some competing fact such as settlements and the like which require special consideration." His Honour then continued: "Tt is simply not possible, nor would it be efficient, for the Court to seek to isolate each of the multitudinous issues which arise in construction disputes and try and make an appropriate order for costs in respect of each particular item." His Honour treated the present matter as if it were, to use his term, a construction dispute. In a sense it was. It was concerned with the erection of premises (or, more accurately, the equipping of them) in the Darling Harbour complex. His Honour knew the circumstances of the case and thought that was an appropriate analogy. I do not think this Court is in a position nor would I differ from him in adopting that analogy. However that be, I do not differ from him in relation to the principle in question. In determining appeals in relation to costs the courts have traditionally taken the view that unless there be a clear error of principle warranting intervention, the courts will not interfere. There is, in my opinion, considerable good sense in this. Quite often the amount involved is disproportionate to the costs of the appeal. In the present case the court has before it appeal papers aggregating some 350 pages. These papers have been placed before the Court in order to determine essentially the issue of costs and whether the Court will interfere with the discretionary order which the judge made. I do not know what precisely is the proportion of the costs of the appeal to the amount of costs in question. But the costs incurred to determine the costs appeal must be not insignificant. This, as I said, is one of the reasons which has led the courts in the past not to intervene in orders as to costs except in circumstances such as the authorities establish. URJ WATERS v P C HENDERSON (AUSTRALIA) PTY LTD (Mahoney JA) 3 Second, I think there is good sense in not interfering with costs orders because quite often - and the present case is an illustration of this - the difficulty that arises in the making of the costs order lies in the application of settled principles to the facts of a particular case. It is difficult to assign particular amounts of costs to particular issues and it is difficult to decide, in retrospect, how much time was occupied upon one issue or the other and who was the successful party in relation to each of them. These are matters which a judge who has dealt with the matter may determine by his impression of the case as it was before him; an appeal court is in a more difficult situation in deciding such matters. Third, in matters dealing with commercial disputes, it is important that this Court does not unnecessarily interfere particularly in relation to orders for costs. In saying this I do not mean that, if a case for interference has been made out, the Court will not interfere. If there be a clear error as to principle or the like, the Court will, of course, interfere. But, for the reasons I have indicated, ordinarily the circumstances of disputes of this kind are such that the Court wisely does not intervene. In the present case, it has been submitted, in effect, that the reason why the Court should intervene is that different parties were successful in relation to different issues or successful to different degrees and that the judge should, therefore, have differentiated between the different issues and made different orders as to costs. It was suggested that the matter could be divided into three or four separate issues and orders made accordingly, and that the judge was wrong in dealing with the matter as if there were numerous issues. In my opinion the principles in this regard are properly stated in the Supreme Court Act and Rules. S76 of the Supreme Court Act provides that the Court has a discretion with full power to determine by whom and to what extent costs are to be paid. In the Rules, Pt52 rll provides that: "Tf the Court makes any order as to costs, the Court shall, subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs." In the notes to the Rules, Pt52.11.2, the following appears: "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." Reference is made to cases, some of which I have considered. They appear generally to support the principle which is stated in the Practice. I think that was the principle to which his Honour had regard in the present case. I do not think that it would have been appropriate for his Honour to attempt to determine which issues were won by particular parties, to what extent they were won, and what was the amount of time spent on each of the issues so as to apportion costs accordingly. I think that would have been contrary to the trend of decision in relation to the exercise of discretion as to costs. T have dealt with this matter at some length - perhaps at unnecessary length - in deference to the submissions made by Mr Wilson and Mr Stevenson. But, in the circumstances, I am of the opinion that it is not appropriate for the Court to 4 UNREPORTED JUDGMENTS interfere with the judge's discretionary order. I would dismiss the appeal in relation to costs. I would propose that the appeal generally be dismissed with costs. Priestley JA I agree with the conclusions reached by Mahoney JA on both interest and costs but in regard to the costs question I have had somewhat more hesitation than he has had in reaching the conclusion that the argument for the appellant should be rejected. The reason for this is that, in light of the analysis of the issues which were fought before the referee which was made in this Court, I thought there was considerable force in the submissions for the appellant that it would have been not a particularly difficult task to make a quick evaluation of distinct issues that were before the referee and to make a somewhat more particular costs order than the trial judge thought appropriate. However, against the feeling of sympathy with the submissions put for the appellant there has to be put the consideration of the prevailing regime concerning costs, the making of orders by trial judges and the attitude the Court of Appeal has consistently taken to appeals sought to be brought in regard to costs orders. As Mahoney JA has said, this Court will only interfere with what a trial judge has done when there has been a clear error of principle by the trial judge in his decision, or in his reasoning leading to his particular costs orders. In the present case the trial judge took what might be called the global view as against the more particular view which the appellant contended was the correct approach to take. Had the more particular view been taken by the trial judge and analysis made of the three principal issues which were before the referee, then somewhat different costs orders may have been made. The difference in result, however, would not necessarily have been very great. On any approach the respondent would have had to have the general costs of the reference. In circumstances where a trial judge has to make a choice between the global approach, which was followed by the trial judge here, and the more particular approach, one consideration to be taken into account is whether the exercise of going into the issues with more particularity than the global approach requires is going to be worthwhile, in the sense of the amount of time effort and general lawyer hours spent, when compared to the possible difference in result. In the present case the trial judge took the view, putting it broadly, that the global approach was the more efficient one. Although I think his reliance upon the practice, which he said has now been followed for some years in the construction list in regard to cases where there are multitudinous issues, came, perhaps, close to being reliance on an inappropriate analogy, I have held back from reaching such a conclusion because of awareness that the details of the entire litigation were much more readily apparent to the trial judge than to this Court and I am not in the end persuaded it would be right to say that he was actually making an error in principle in his reliance on the analogy which I have had some doubts about myself. Over all Cole J was operating in an area where trial judges are left with large discretion; this is for the very good reason, amongst others, that, taking the generality of cases, it will be more efficient for the conduct of litigation if detailed examination of costs orders on appeal is restricted to cases where it is pretty clear that something has gone badly wrong. I do not think that can be said in the present case. I agree with the orders proposed by Mahoney JA. URJ WATERS v P C HENDERSON (AUSTRALIA) PTY LTD (Kirby P) 5 Kirby P I also agree with the orders proposed. On the matter relating to interest I agree with what Mahoney JA has said. I have nothing to add. On the appeal, so far as it related to the challenge to Cole J's orders in respect of costs, I agree with Mahoney JA in terms of the agreement which has been expressed by Priestley JA. I, therefore, agree that the appeal must be dismissed with costs. The order of the Court, accordingly, is that the appeal is dismissed. The appellant must pay the respondent's costs. Appeal dismissed with costs. Counsel for the Appellant: J R Wilson Solicitors for the Appellant: David Brown and Partners Counsel for the Respondent: J W J Stevenson Solicitors for the Respondent: Kemp Strang & Chippindall