Court of Appeal Supreme Court New South Wales Medium Neutral Citation: McGrath v Sturesteps; Sturesteps v HIH Overseas Holdings Ltd (in liquidation) (No 2) [2011] NSWCA 331 Hearing dates: 8 August 2011 Decision date: 07 December 2011 Before: Bathurst CJ at [1]; Macfarlan JA at [16]; Sackville AJA at [17] Decision: (1) The appellants pay the respondent's costs of the proceedings at first instance up to and including 19 February 2010. (2) The respondent pay to the appellants their costs of the proceedings to the extent that such costs were incurred after 19 February 2010. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: COSTS - general rule that costs follow event - trial costs - multiple issues - multiple trials - apportionment Legislation Cited: Corporations Act 2001 (Cth) s 556(1)(h) Cases Cited: House v The King (1936) 55 CLR 499 Category: Costs Parties: Anthony Gregory McGrath (First Appellant / First Cross Respondent) Christopher John Honey (Second Appellant / Second Cross Respondent) HIH Casualty & General Insurance Limited (in liquidation) (Third Appellant / Third Cross Respondent) George Osvald Sturesteps (Respondent / Cross Appellant) Representation: Counsel F Gleeson SC / R Foreman (Appellants / Cross Respondents) B W Rayment QC / A Metcalfe (Respondent / Cross Appellant) Solicitors Blake Dawson (Appellants / Cross Respondents) Benjamin & Khoury Solicitors (Respondent / Cross Appellant) File Number(s): CA 2010/224161 Decision under appeal Citation: [2010] NSWSC 169 [2010] NSWSC 896 [2010] NSWSC 903 Before: Brereton J File Number(s): SC 258096/2006 Judgment 1BATHURST CJ: By orders made on 30 September 2011, the Court allowed this appeal, dismissed the cross-appeal and made certain consequential orders. The Court directed the parties to file written submissions as to the appropriate order in respect of the costs before the primary judge. The appellants' submissions 2The appellants submitted that HIH Casualty & General Insurance Limited (in liquidation) ("HIH Casualty") should pay 40 percent of the respondent's costs of the appeal. They submitted that the issues raised in the proceedings were severable and pointed to the fact that the respondent was unsuccessful in his United States apartment claim, his claim for United States losses and expenses, and his claim for interest. They submitted in effect that there was no proper basis for any of these claims. 3The appellants further stated that to the extent the respondent was successful, he recovered only a small proportion of what he claimed he was entitled to be paid in priority in the administration. In a table attached to their submissions they pointed to the fact that had the respondent been entirely successful on the issues raised and on the priority question he would have received a dividend of $6,242,373.88, whereas the dividend to be paid as a result of his success in the litigation amounted to $1,173,943.36. The table also demonstrated that of the total amount claimed by the respondent as his entitlement to proof in the liquidation, namely $7,731,732.77, he was admitted to proof in an amount of $2,755,752.68. Further, the amount of $1,385,866 referred to in the table under the heading "Notice" does not appear to have been pressed in the proceedings. The respondent's submissions 4The respondent submitted that he had significant success in the proceedings. He pointed out that at the trial HIH Casualty submitted that the plaintiff was not entitled to any unpaid wages, unpaid superannuation, accrued annual leave, long service leave or retrenchment benefits. He submitted that the issues on which he failed did not involve any unnecessary prolongation of the litigation. He submitted that only one of the primary judge's findings in his first judgment was reversed on appeal, namely, whether the service with a related company of HIH Casualty was to be taken into account when calculating his retrenchment benefit. 5In relation to the priority question, the respondent submitted that HIH Casualty did not succeed on its primary submission, namely, that there should be no priority, and the amount ordered as a priority for retrenchment payment, namely $132,523.42, was more than a nominal amount. He submitted that the amount that was ordered to be paid in priority represented what was the fallback position of each party. 6In these circumstances, the respondent submitted that the order for costs made by the primary judge should not be disturbed. Consideration 7The trial judge in considering the question of costs in his judgment of 27 May 2010 made the following comments: "[59] The defendants submitted that having regard to the issues on which they succeeded at trial, Mr Sturesteps should recover only 50 per cent of [his] costs. In my view, this was a case in which the plaintiff substantially succeeded. It is not one in which it is appropriate to segregate the costs between particular issues, none of which can be identified as having been associated with any particular elaboration or elongation of the litigation and many of which overlapped. I would decline to apportion the plaintiff's costs in the way suggested. ... [62] At the outset, I will address the costs of the mediation generally. Because this was a court-ordered mediation, I regard the costs of the mediation as sufficiently associated with the proceedings, that they should be regarded as costs of the proceedings and included in the costs that the third defendant must pay the plaintiff." 8Although, having regard to the reversal of some parts of his Honour's judgment on appeal, the Court is not constrained by the principles governing a review of a discretionary judgment in House v The King (1936) 55 CLR 499, the view of the primary judge that it was not an appropriate case to segregate the costs between particular issues remains of considerable significance. 9As the respondent pointed out, the only issue in the judgment of 19 February 2010 which was reversed on appeal was whether, as a matter of construction of the service agreement of 24 September 1999, the period of service for the calculation of the retrenchment payment included service with an associated company of HIH Casualty. This issue did not occupy a significant amount of time in the proceedings leading to the judgment of 19 February 2010, as the proceedings focused to a significant extent on the question of whether the respondent's employment with HIH Casualty commenced on 12 December 1988 or on the date of execution of the service agreement. 10Finally, it must be borne in mind that at the time the proceedings were instituted, none of the claims of the respondent had been admitted to proof in the liquidation of HIH Casualty. The respondent in those circumstances had significant success at the trial. 11In these circumstances there seems to me to be no reason to disturb the orders of the primary judge on the question of costs, at least up to the date of his first judgment, 19 February 2010. 12The priority question, so far as it related to the retrenchment payment and the question of interest, was dealt with in a subsequent hearing in respect of which the trial judge gave judgment on 27 May 2010. The respondent was unsuccessful on the interest claim. So far as the retrenchment claim was concerned, the approach taken by the appellants was that none of the respondent's entitlement to retrenchment payment was attributable to a priority day for the purpose of s 556(1)(h) of the Corporations Act 2001 (Cth), whilst the respondent contended it was all to be attributed to such days. The primary judge found in favour of the respondent, a decision reversed on appeal although not to the extent contended for by the appellants. Nonetheless, the appellants enjoyed significant success on this issue. In addition, the appellants were successful before the primary judge in their resistance to the respondent's claim for declaratory relief and mandatory orders. 13The third judgment delivered by his Honour, the judgment of 3 June 2010, so far as it related to these proceedings (as distinct from the claim against Mrs Sturesteps), related to the apportionment of accrued but unpaid annual leave between priority and non-priority days. The appellants' argument was accepted by the primary judge and his judgment on this issue was affirmed on appeal. 14In these circumstances it seems to me that the appellants enjoyed substantial success on the issue the subject of the judgments of the primary judge of 27 May 2010 and 3 June 2010, which issues were decided subsequent to and separately from the issues the subject of the judgment of 19 February 2010. It seems to me that the appellants are entitled to their costs in respect of the determination of these issues. 15I therefore propose the following orders: (1) The appellants pay the respondent's costs of the proceedings at first instance up to and including 19 February 2010. (2) The respondent pay to the appellants their costs of the proceedings to the extent that such costs were incurred after 19 February 2010. 16MACFARLAN JA: I agree with Bathurst CJ. 17SACKVILLE AJA: I agree with Bathurst CJ. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 December 2011