Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 13 June 2008
• Neutral Citation: [2008] FCAFC 107
• Court: Full Federal Court (Australia)

FEDERAL COURT OF AUSTRALIA

Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107

COSTS – appellant successful overall but not on all issues – discretion to apportion costs on an issue by issue basis – whether departure from usual rule is appropriate

Probiotec Ltd v University of Melbourne (2008) 244 ALR 96

Lord Woolf, Access to Justice (Interim Report, June 1995)

BOWEN INVESTMENTS PTY LTD v TABCORP HOLDINGS LTD

VID 504 of 2007

FINKELSTEIN, RARES & GORDON JJ

13 JUNE 2008

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 504of 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BOWEN INVESTMENTS PTY LTD Appellant

AND: TABCORP HOLDINGS LTD Respondent

JUDGES:	FINKELSTEIN, RARES & GORDON JJ
DATE OF ORDER:	13 JUNE 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The respondent pay 70 per cent of the appellant’s costs of the trial.

2. The respondent pay the appellant’s costs of the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 504 of 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BOWEN INVESTMENTS PTY LTD Appellant

AND: TABCORP HOLDINGS LTD Respondent

JUDGES:	FINKELSTEIN, RARES & GORDON JJ
DATE:	13 JUNE 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

FINKELSTEIN AND GORDON JJ

1 When judgment on the appeal was handed down the respondent sought leave to file submissions on costs. Directions for that purpose were made. The parties’ submissions have been filed. These reasons deal with the question of costs.

2 The respondent first of all contends that, as regards the trial, the appellant failed on most of the grounds it had pleaded and argued and, accordingly, the appellant should pay a substantial proportion of the respondent’s costs (it suggests 50 to 80 per cent) or alternatively that there should be no order as to costs.

3 We think there is force in the argument that the appellant should not benefit from the usual rule that costs follow the event. For many years the traditional rule has been that the winner (once the winner is properly identified) is entitled to recover his costs of the trial. It sometimes happens that there is a departure from the traditional rule and the costs order takes account of the success of the parties on particular issues. But to date the award of costs on an issue by issue basis has only been accepted in limited cases and then only when the circumstances are exceptional.

4 This approach is, if we may be permitted to say so, quite unfair. Its effect is that a winner is entitled to all of his costs even if he raises a plethora of issues on which he is unsuccessful. The unfairness of the traditional rule has been recognised in England where, following Lord Woolf’s interim report, Access to Justice (June, 1995) [at para 25.22], the Civil Procedure Rules were modified to require the judge to have regard to the circumstance (if it occurs) that the unsuccessful party has succeeded on some issues: see r 44.3(4)(b). In Western Australia, the Supreme Court Rules provide that costs should follow the event of each pleaded cause of action: see r 66(2)(a). This is narrower than the English approach but certainly more reasonable than adherence to the traditional rule.

5 We do not believe there is any need to wait for a change in the Federal Court Rules to adopt an issue by issue approach here. Costs are in the court’s discretion. Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied. It is not suggested that such an approach requires a precise arithmetical apportionment of the costs as between the winner and loser of discrete issues. No doubt the assessment will often be rough and ready. But it will have the virtues of both fairness and reasonableness, which are often lacking in the application of the traditional rule.

6 At trial the appellant pleaded a case in tort (for waste), for rectification of the lease, for breach of ss 52 and 53(g) of the Trade Practices Act 1974 (Cth) and for breach of ss 51AA and 51AC of that Act. In each of those causes of action it failed. On the other hand, much of the evidence tendered, not only by the appellant but also by the respondent, was relevant to the single cause of action upon which the appellant was successful both at trial and on the appeal (its claim for breach of contract). Put another way, if the appellant had confined its claim to the cause of action upon which it succeeded, the work involved in both preparing for trial and the trial time itself would not have been substantially different. In these circumstances it is, in our view, reasonable to deprive the appellant of 30 per cent of its trial costs. It would be perverse to impose upon the appellant any obligation to pay the respondent a portion of its costs and we would decline to make any order to that effect.

7 So far as the costs of the appeal are concerned, we are in no doubt that they should be borne in full by the respondent. The respondent asserts that the appellant was ultimately successful on the appeal on a construction of the lease that was not pleaded by the appellant and not argued by it on appeal and that otherwise it was largely unsuccessful on the claims it pursued on the appeal. The respondent estimates that the time taken up on the unsuccessful arguments occupied about 80 per cent or more of the time before the Full Court.

8 The respondent’s description of what occurred on the appeal does not accord with our own recollection. It is true that the appellant did make passing reference to some of the claims in which it was unsuccessful at trial. But the principal issue raised on the appeal, and the issue that was fully argued before the Full Court, was the correct manner in which damages should be assessed for the breach of the lease that was found by the trial judge to have occurred. On that issue the appellant was wholly successful even if it did not identify each and every argument upon which its success depended. Anyway, a successful party should not be punished for not identifying the successful argument, when his failure to do so did not really add to the length of the hearing.

9 We are of the view that so far as the appeal is concerned the usual order as to costs should prevail.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finkelstein and Gordon.

Associate:

Dated: 13 June 2008

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 504 of 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BOWEN INVESTMENTS PTY LTD Appellant

AND: TABCORP HOLDINGS LTD Respondent

JUDGES:	FINKELSTEIN, RARES & GORDON JJ
DATE:	13 JUNE 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

RARES J

10 I have had the benefit of reading the reasons of Finkelstein and Gordon JJ in draft on the issue of costs. I agree with their Honours’ reasons for their assessment that the appellant should receive 70% of the costs of the trial, with the proviso that the respondent may set off in full the benefit of O 7 made by the primary judge on 19 October 2006, as a result of an adjournment which was granted when the appellant changed its case and amended its statement of claim.

11 However, I do not consider that the interests of justice would be served by making an order that the appellant receive its full costs of the appeal. Its arguments were radically different from those which the Court identified and upon which the appellant ultimately succeeded.

12 Ultimately, the discretion to order costs under s 43(2) of the Federal Court of Australia Act 1976 (Cth),...