Background
The Supreme Court of New South Wales previously delivered judgment in a matter concerning the validity of a notice issued by the Department of Customer Service to Prestigious Plumbing Pty Ltd. This notice required the production of documents and information under s 127 of the Home Building Act 1989 (NSW).
Prestigious Plumbing had sought a declaration that the notice was entirely invalid. The Court found that an “entitlement disclosure condition” should be implied into the Act, and consequently, parts of the notice (specifically paragraphs 2(a), (b), and (c) of Schedule A) were declared invalid. However, these invalid portions were deemed severable from the remainder of the notice. Overall, the plaintiff’s summons was dismissed subject to this partial invalidity.
Following this outcome, the Court sought submissions from both parties regarding costs. Prestigious Plumbing argued that its partial success in having parts of the notice declared invalid constituted the relevant “event” for costs, suggesting the defendants should pay its costs, or at least 50% of them. Conversely, the defendants contended that the dismissal of the overall summons was the pertinent “event,” and given their “substantial success” in largely defending the notice’s validity, they argued that the plaintiff should pay their costs, or at least 75% thereof.
The Court’s Holding
Price AJA, presiding over the Supreme Court of New South Wales, affirmed the general rule that costs follow the event but emphasized the Court’s broad discretion under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) and s 98(1) of the Civil Procedure Act 2005 (NSW) to make alternative orders, especially in cases with mixed outcomes. The “event” was understood as the practical result of the claim.
The Court acknowledged that neither party achieved complete success. While the defendants secured “substantial success” in upholding the majority of the notice’s validity, making the overall result “clearly in their favour,” the plaintiff also attained “a measure of success” by having specific parts of the notice invalidated. Given these circumstances, the Court determined that an apportionment of costs was appropriate and fair.
Applying a “broad brush approach” based on impression and evaluation, the Court ordered Prestigious Plumbing Pty Ltd (the plaintiff) to pay 65% of the defendants’ costs on an ordinary basis. This decision reflected the defendants’ greater overall success in the litigation, despite the plaintiff’s partial victory on specific points.
Key Takeaways
- Courts in New South Wales exercise broad discretion in awarding costs, particularly when litigation results in a mixed outcome for the parties.
- The “event” to which costs typically follow refers to the practical and overall result of the claim, not necessarily victory on every single issue.
- In cases of divided success, courts may apportion costs using a “broad brush” or impressionistic approach rather than a detailed, item-by-item calculation.
- A party achieving “substantial success” in defending the core of a claim, even with some concessions, is likely to be awarded a significant proportion of their costs.
Why It Matters
This ruling provides important guidance on how Australian courts in New South Wales approach the complex issue of costs in litigation where outcomes are not clear-cut. It reinforces that judicial discretion plays a crucial role in ensuring fairness when neither party achieves a complete victory, balancing the degree of success on key issues. For litigants and their legal advisors, the decision highlights that even partial success may not exempt a party from bearing a substantial portion of the opposing side’s costs if the overall practical result of the proceedings favors the adversary. It underscores the need for a realistic assessment of the “event” and the potential for cost apportionment when considering settlement or proceeding to judgment in disputes with multiple, severable issues.