Mackinnon v BlueScope Steel (AIS) Pty Ltd & Ors (No 2) [2009] NSWCA 229 (31 July 2009)

Last Updated: 3 August 2009

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Mackinnon v BlueScope Steel (AIS) Pty Ltd & Ors (No 2) [2009] NSWCA 229


FILE NUMBER(S):
40533/2007
40838/2007
40839/2007

HEARING DATE(S):
Written Submissions

JUDGMENT DATE:
31 July 2009

PARTIES:
Dr Angus Mackinnon by his tutor Nantia Mackinnon - Appellant
BlueScope Steel (AIS) Pty Ltd - First Respondent/Cross-Appellant
Dr Angus Mackinnon by his tutor Nantia Mackinnon - First Cross Respondent
Dalmau & Associates Pty Ltd - Second Cross Respondent
Draft One Communications Pty Limited - Third Cross Respondent
McKenzie & Associates Pty Limited - Fourth Cross Respondent

JUDGMENT OF:
Ipp JA Macfarlan JA Hoeben J

LOWER COURT JURISDICTION:
Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S):
20429/1999

LOWER COURT JUDICIAL OFFICER:
Patten AJ

LOWER COURT DATE OF DECISION:
20/07/2007

LOWER COURT MEDIUM NEUTRAL CITATION:
[2007] NSWSC 774

COUNSEL:
B Toomey QC/E Romaniuk - Appellant/First Cross Respondent
M Joseph SC/Ms V Heath - Cross Appellant/First Respondent
PE Blacket SC - Appellant/Third Cross Respondent
PJ Gow - Appellant/Fourth Cross Respondent

SOLICITORS:
Keddies Lawyers - Appellant/First Cross Respondent
Sparke Helmore Lawyers - Cross Appellant/First Respondent
Henry Davis York - Third Cross Respondent
Kennedys Lawyers - Fourth Cross Respondent

CATCHWORDS:
COSTS – application by successful appellant for indemnity costs – Calderbank letter sent by appellant before hearing of appeal – whether genuine offer to compromise proceedings – whether reasonable for respondent to refuse offer – whether conduct of appeal by appellant required adjustment to costs order – costs of cross-appeals where no decision on merits.

LEGISLATION CITED:
Uniform Civil Procedure Rules 2005

CATEGORY:
Consequential orders

CASES CITED:
Commonwealth v Gretton [2008] NSWCA 117
Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]

TEXTS CITED:


DECISION:
Appellant's application for indemnity costs refused.
First Respondent to pay Appellant's costs of the appeal.
Each party to pay its costs of cross-appeals.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40533/2007

40838/2007

40839/2007

IPP JA

MACFARLAN JA

HOEBEN J

Friday 31 July 2009

Dr Angus MACKINNON by his tutor Nantia MACKINNON v BLUESCOPE STEEL LIMITED formerly known as BHP STEEL (AIS) PTY LIMITED and Ors (No 2)

DRAFT ONE COMMUNICATIONS PTY LIMITED v BLUESCOPE STEEL LIMITED formerly known as BHP (AIS) PTY LIMITED (No 2)

MCKENZIE & ASSOCIATES PTY LIMITED v BLUESCOPE STEEL LIMITED (No 2)

JUDGMENT

1 IPP JA: I agree with Hoeben J.

2 MACFARLAN JA: I agree with Hoeben J.

3 HOEBEN J: On 8 May 2009 the following orders were made by the Court:

(1) Appeal allowed.

(2) Cross-appeal allowed in part.

(3) Judgment for the first respondent and Dalmau in the court below be set aside.

(4) The order for the dismissal of the first, fifth and sixth cross-claims be set aside.

(5) The costs orders of Patten AJ made 7 November 2007 be set aside.

(6) Direct that a new trial be held in respect of the principal proceedings and the first, fifth and sixth cross-claims.

(7) The application for leave to appeal in matter No 40838/2007 be dismissed.

(8) The application for leave to appeal in matter No 40839/2007 be dismissed.

(9) The costs of the first trial, including the first, fifth and sixth cross-claims, be determined by the trial judge in the new trial.

(10) The matter be listed for directions concerning the costs of this appeal, the first respondent’s cross-appeal and the applications for leave to appeal by Draft One and McKenzie.

4 Directions were made in relation to the costs of the appeal on 20 May 2009. I directed that submissions as to costs should be made in writing and time limits were imposed for the filing and service of submissions in chief and in reply. This judgment relates to the costs of the appeal.

Appellant’s submissions

5 By letter dated 6 January 2009, addressed to the first respondent’s solicitors and marked “Without Prejudice Save as to Costs”, the appellant put forward the following offer:

“1 We refer to the above matter and the proceedings in the New South Wales Court of Appeal (“Appeal proceedings”).

2 This letter is to:

2.1 Put forward a settlement offer in the Appeal proceedings (“the settlement offer”); and

2.2 Be relied upon in an application for indemnity costs relying upon the decision of Calderbank v Calderbank and the general law, both statutory and judicial.

The Settlement Offer

3 The appellant makes the following settlement offer in the Appeal proceedings:

3.1 The appellant’s appeal be allowed;

3.2 The matter be remitted to the Supreme Court of New south Wales for a new trial on all issues;

3.3 The first respondent pay the appellant’s party and party costs of the appeal as assessed or agreed (“the costs component”).

4 The settlement offer remains open for acceptance up until 4.00pm on 3 February 2009 (“the time of expiry”).

5 In respect of the costs component of the settlement offer:

5.1 The costs relate only to the costs up to the time of expiry; and

5.2 If the settlement offer is accepted before the time of expiry the appellant will attend the Court of Appeal and make all necessary arrangements for the settlement offer to be given effect by the Court of Appeal, including mentioning the appearance of the respondent parties (if the respondent parties do not wish to appear).

6 If the settlement offer is accepted before the time of expiry the compromise contained in the settlement offer includes the saving of costs to all parties after the acceptance of the settlement offer, particularly lengthy preparation for and conduct of 9 days of hearing in the Court of Appeal.

Basis of Offer

7 The appellant relies upon the matters set out in the appellant’s primary submissions and reply submissions.

8 On an objective reading of the trial judge’s reasons it is evident that the trial judge failed to make relevant primary and ultimate findings of fact and erred in the application of the relevant legal principles so that it is inevitable that the Court of Appeal will set aside the judgment.

9 The first respondent’s notice of contention must fail because:

9.1 It requires the Court of Appeal to make a finding (that the appellant’s psychological and/or psychiatric injuries resulted from schizophrenia) which the trial judge expressly refused to make: see Red 558, para 453];

9.2 The trial judge’s failure to set out his reasons for finding that the appellant had not discharged his onus of proving that he suffered from the medical condition for which he contended was a serious error in judicial process;

9.3 The voluminous oral and written evidence on the subject raised a substantial issue which was “plainly a matter of difficulty” ibid, and which the Court of Appeal could not possibly resolve; and

9.4 The unresolved issue must be submitted to a court for determination on a retrial.

Extension of Time

10 An extension of the time of expiry will be allowed if a request in writing establishes reasonable grounds for why it is necessary.

Costs Application

11 In the event that the respondents (or some of them) do not accept the settlement offer and the appellant obtains orders in the Appeal proceedings as favourable to the appellant as the settlement offer, the appellant will rely upon this letter and correspondence in respect of it as the basis of an application that the appellant’s costs be paid on an indemnity basis from the time of expiry”.

6 On 20 January 2009 the solicitors for the first respondent replied to the appellant’s letter in the following terms:

“We refer to your offer of settlement made by letter on 6 January 2009.

To allow our client to properly consider the offer we request clarification as to the following.

The letter is silent as to the costs of the original trial. What offer, if any, is made?

The letter refers to non-acceptance by some respondents: is the offer made jointly to all respondents?

We propose to rely upon this letter if any issue should arise in the future as to the form and nature of the proposal contained in the letter of 6 January 2009.

We will await your earliest reply.”

7 No reply was made by the appellant to that letter. No further correspondence took place in relation to the appellant’s offer. It was not accepted.

8 The appellant submits that the orders in the appeal were as favourable to him as the settlement offer. He seeks an order that the first respondent pay his costs of the appeal, the Notice of Contention and the Cross-appeal. He also seeks an order that the first respondent pay those costs on an indemnity basis from 4pm on 3 February 2009, being the date when the offer expired.

9 At the time the appellant made the offer, the Court had allocated hearing dates for the appeal and the appellant and first respondent had filed and served written submissions. The first respondent’s written submissions addressed its Notice of Contention.

10 Beazley JA collected the principles relevant to a Calderbank offer in Commonwealth v Gretton [2008] NSWCA 117:

“41 There are public policy considerations that underpin the making of favourable costs orders where a Calderbank offer has been made. In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA said at [14]:

“... the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants.”

See also Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322

42 The public policy in encouraging settlement also finds statutory encouragement: see the Civil Procedure Act, s 56. Section 131 of the Evidence Act also provides statutory acknowledgment that Calderbank offers may be received into evidence.

43 The making of a Calderbank offer does not automatically result in a favourable costs order, notwithstanding that the judgment is more favourable to the party making the offer than the terms of the offer. Rather, as Giles JA stated in SMEC Testing Services Pty Ltd v Campbelltown City Council at [37]:

“...the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure ...”

See also Jones v Bradley (No 2) at [8].

44 Two general ‘rules’ have emerged relating to Calderbank offers, namely, that to justify the making of an order for costs on an indemnity basis, the offer must be a genuine offer of compromise, which it is unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]- [5]; Leichhardt Municipal Council v Green at [21]-[24], [36]. However, as this Court (Santow, Bryson JJA, Stein AJA) pointed out in Leichhardt Municipal Council v Green at [8], the ‘common law principles’ that have been developed in relation to costs “operate merely as guides to how the discretion might appropriately be exercised”. The principles or rules to which I have just referred fall within that category.

45 The discretion is to be exercised having regard to all the relevant circumstances in the case. The question that had been raised in Leichhardt Municipal Council v Green was whether there had been a genuine offer of compromise. As the Court said at [21]:

“There is little appreciable difference between saying that an offer should not in the court’s discretion attract costs sanctions in the circumstances and saying that an offer is not a genuine offer of compromise in the circumstances. Both depend upon a value judgment of the offer and the conduct of the parties in the circumstances of the claim.”

46 The onus is on the party making a Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour: see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61.”

11 Applying those principles to the appellant’s offer, I am not prepared to conclude that it was a genuine attempt to compromise the matter. This is despite the fact that the offer set out a reasoned basis for why the appeal should succeed. I appreciate that given the findings of the trial judge and the relief sought (a retrial), the only concession which could be made by the appellant in any offer was in relation to costs. This offer, however, made no such concession. It offered no more than the saving of future costs to be incurred after the date of the expiry of the offer or its acceptance, whichever occurred first.

12 Even if it were a genuine attempt to resolve the matter, the real question is whether it was unreasonable for the first respondent not to accept the offer. In my opinion it was not. There were substantial matters for determination in the appeal and they required the Court’s full consideration. Although the first respondent’s submissions on the appeal were found to be wrong, they were not unarguable. It should also not be forgotten that after a lengthy and hard fought trial the first respondent had been successful in obtaining judgment in its favour. In the context of assessing a “walk away” offer, these are important considerations.

13 Not only did the offer have no real element of compromise, it was ambiguous in its terms. It was silent on what was proposed as to the costs of the trial. Despite a reasonable request for clarification by the first respondent, such clarification was not provided. Similarly the somewhat cryptic reference to “respondents (or some of them)” in paragraph 11 of the offer was not explained despite the first respondent’s reasonable request to do so.

14 In the circumstances confronting the first respondent at the time, I am not persuaded that it was unreasonable for it not to accept the appellant’s Calderbank offer. It follows that I am not prepared to order that the first respondent pay any of the appellant’s costs of the appeal on an indemnity basis.

First Respondent’s Submissions

15 The first respondent while acknowledging that costs would normally follow the event submitted that the circumstances of this appeal were such that the Court should make a different order. The first respondent proposed that it should pay the appellant’s costs of filing the Second Further Amended Notice of Appeal and of the hearing of the appeal on 30 and 31 March 2009 and that otherwise it should pay only one third of the appellant’s costs of the appeal.

16 In support of that proposition the first respondent submitted that there had been repeated non-compliance by the appellant with the rules and directions of the Court. It submitted that this had lengthened the period for preparation and had thereby increased the costs of the first respondent.

17 The first respondent referred specifically to the following matters:

(i) The filing of the Notice of Appeal out of time.

(ii) Failure to comply with the rules for filing written submissions and the red book.

(iii) Failure to comply with the order of the Registrar of 14 February 2008 as to the filing of an Amended Notice of Appeal, the red book and written submissions.

(iv) The need for a contested motion on 17 March 2008 in which the appellant sought further time.

(v) Failure to comply with the order of the Registrar to file and serve the red book by 28 March 2008.

(vi) The need for a motion by the first respondent for the joining of all interested parties to the appeal heard by Bell JA on 17 April 2008.

(vii) The necessity for the appellant to file a Further Amended Notice of Appeal following directions by Bell JA on 6 June 2008.

(viii) Failure to comply with the orders of the Court in November and December 2008 requiring the service of an annotated judgment by 21 January 2009.

18 The first respondent submitted that in the appellant’s Second Further Amended Notice of Appeal he had made 89 challenges to material findings of fact by the trial judge. At the hearing of the appeal the appellant’s oral argument had focused on only 22. The first respondent submitted that this had involved a substantial waste of resources on the part of the first respondent in seeking to meet issues which ultimately were not relied upon by the appellant. The first respondent submitted that the appellant had not given notice of the real basis on which the appeal was presented until further submissions were filed approximately two business days before the hearing of the appeal.

19 There is some force in the first respondent’s submission that considerable delay occurred before the appeal was properly prepared. The appearances before the Registrar on 14 February and 17 March 2008 achieved little and that is why the Registrar ordered that the appellant pay the costs of 17 March. For the reasons set out by the Registrar in his judgment, I am of the opinion that the appellant should also pay the costs of the appearances on 14 February 2008.

20 That having been said, the difficulty of the task confronting the appellant at the time needs to be appreciated. Judgment had been entered against him after a trial lasting 94 days. Senior and junior counsel, who had appeared for the appellant at trial, were unavailable to appear on the appeal. In order for the appeal to be prepared, new counsel had to master 7000 pages of transcript, 180 exhibits (some of which comprised lengthy documents and medical reports) and 800 pages of written submissions relied upon by the parties at trial. Because of the appellant’s impecuniosity representation would have to be on a no win, no pay basis. It is not surprising that although a number of counsel were approached, it was not until March 2008 that the appellant obtained the services of senior and junior counsel for the appeal.

21 The first respondent’s complaint that the appellant’s delay caused additional costs to be incurred sits uneasily with the contents of the correspondence passing between the solicitors. The effect of that correspondence is that the first respondent was unable to prepare for the appeal because of the general nature of the grounds of appeal and the absence of written submissions. It is also clear from the transcripts that from the time the matter came before Bell JA for case management in April 2008 it proceeded in an orderly and expeditious way given the inevitable complexity associated with its preparation.

22 Although the appellant missed some time limits after April 2008, those defaults involved a matter of days and could not in any realistic way have prejudiced the first respondent in its preparation. Moreover, the first respondent’s submission that the appellant failed to comply with the orders made in November and December 2008 in effect seeks to canvass the judgment of Allsop P of 6 March 2009 in which his Honour refused its application to have the appeal dismissed for want of prosecution.

23 While there was undoubtedly delay between July 2007 when judgment was handed down and March 2008 I am not persuaded that the first respondent suffered prejudice or any real detriment except in respect of the unproductive appearances before the Registrar on 14 February and 17 March 2008. Thereafter it is clear that the preparation of the appeal proceeded appropriately under the management of Judges of this Court. Accordingly, the first respondent has failed to establish that the appellant’s entitlement to his costs of the appeal should be reduced because of delays in its preparation.

24 The first respondent’s complaint that it was unreasonable for the appellant to confine the ambit of the appeal is somewhat curious. This Court has often been critical of prolix and unnecessarily long appeals but rarely does it receive a complaint that an appeal has been unduly focused or confined.

25 Despite the unusual nature of the first respondent’s complaint, its factual basis has not been made out. When this matter came before the Court for final directions on 27 February 2009, the following exchange took place between senior counsel for the appellant and the bench:

“HOEBEN J: Are you prepared to bind yourself in that way Mr Toomey, that when the appeal is run you’ll be running it essentially on the structure of the red book, on internal inconsistencies within his Honour’s reasoning process and the judgment? Because that’s the effect of what you’re submitting, as I understand it.

TOOMEY: Yes. Your Honour we will no doubt refer to some passages and transcript. ...

HOEBEN J: Mr Toomey then, returning to my question which led to this, are we, or am I correct in understanding that so far as the appellant is concerned you’ll be confining your submissions essentially to the red book and to these folders which you’ve taken us to?

TOOMEY: Indeed, your Honour. ...

ALLSOP P: But as I understand Mr Joseph’s complaint, and it’s something that I’m not presently able to judge for myself, there’s a disconformity between the structure of the two bodies of documents.

TOOMEY: With respect, that is simply not so. No doubt if one can get one’s opponent to do all the work for one it’s a jolly good thing to do, but we have we submit provided proper documentation in very full and careful submissions drafted by Mr Romaniuk, and in our annotated judgment taken together with the passages of transcript we will rely upon. Mr Joseph was in this case for 94 days. It can’t be suggested that he doesn’t know what the evidence was and that the references will not be enough for him to be able to decide whether the submissions are any good and whether the Notice of Appeal is any good.

ALLSOP P: Can I ask you this. For references that are made in exhibit 1 and in the equivalent material about the blue books, does that in effect conform or do those conform to such references as are made in narrative fashion as it were in Mr Romaniuk’s submissions?

TOOMEY: Yes, your Honour. It’s always unwise to confine oneself, but as we intend to run the appeal at this stage it will be on the submissions with cross references to the transcript and the judgment and the transcript references we will take your Honour to are those in exhibit 1 ...

HOEBEN J: Mr Joseph as I – and I may be misinterpreting what Mr Toomey has said – but as I understood what he was putting to the Court is what he’s going to do when he runs this appeal is to accept, except where traversed, the findings of fact in the red book. Is that correct Mr Toomey?

TOOMEY: Yes, your Honour.

HOEBEN J: And on the basis of those findings say that the end result was wrong. It cannot be properly based upon these earlier findings, there’s an inconsistency or the findings should lead to another result.

TOOMEY: I’m sorry, can I just add, your Honour and failure to make findings where his Honour simply sets out evidence and says “X” without saying why he finds it.

HOEBEN: But you confine yourself essentially to the red book and the other material you refer to, exhibit 1 and the references to the blue book?

TOOMEY: Yes, your Honour.”

26 When the appeal was heard, senior counsel for the appellant did exactly as he indicated that he would do on 27 February 2009. He directed the Court’s attention to inconsistencies within the judgment and to the extent that he relied on evidence, it was evidence that was referred to in exhibit 1, which was before the Court and available to the first respondent on 27 February 2009. The oral submissions on the hearing of the appeal did no more than supplement the submissions in the annotated judgment which was also before the Court on 27 February and which had been served on the first respondent on 10 February.

27 I am not satisfied that the first respondent was misled by the form of the Second Further Amended Notice of Appeal into doing work and preparing to meet a case which was different to that put forward when the appeal was run.

28 The general rule under the common law and under rule 42.1 of the Uniform Civil Procedure Rules 2005 is that subject to certain limited exceptions a successful party in litigation is entitled to an award of costs in its favour. As was said by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]:

“The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for costs of the unsuccessful litigation.”

29 With the exception of the appearances on 14 February and 17 March 2008 I am satisfied that the general rule should apply. Accordingly, the appellant having succeeded, he should have his costs of the appeal.

Applications for leave to appeal against costs orders and first respondent’s cross-appeal

30 McKenzie and Draft One sought leave to appeal against the trial judge’s order that the first respondent pay half of their costs (principal judgment [5], [7]). As a consequence of the appellant’s success in the appeal these applications for leave to appeal had to be dismissed (principal judgment [133] – [142]).

31 The first respondent seeks orders that McKenzie and Draft One pay its costs of those applications for leave to appeal on two bases. The first is that costs should follow the event, i.e. the applications for leave to appeal having been dismissed, the unsuccessful applicants should pay the successful opponent’s costs.

32 The second basis is that the first respondent had invited McKenzie and Draft One to defer the hearing of their applications for leave to appeal until after the outcome of the appellant’s appeal was known. Draft One agreed with that proposal but McKenzie did not. In due course McKenzie sought and obtained an order that its application for leave to appeal be heard following the principal appeal. When Draft One learned that McKenzie would not consent to the first respondent’s proposal, it changed its position and adopted the same approach as McKenzie.

33 It is clear from the correspondence passing between the solicitors for the first respondent, McKenzie and Draft One that the first respondent based its submissions that the hearing of the applications for leave to appeal should be deferred, pending the outcome of the principal appeal, on the possibility that the appeal might be successful.

34 In response McKenzie and Draft One submitted that the approach suggested by the first respondent would increase costs and create practical difficulties for the Court. They submitted that the bench which heard the principal appeal should also hear the applications for leave to appeal since they would already be apprised of the facts.

35 The approach suggested by the first respondent would mean reconstituting the same bench some time after judgment was handed down in the principal appeal. That could create some practical problems, apart from the fact that by that time the bench may well have forgotten much of the material facts. If a different bench heard the applications for leave to appeal after judgment in the principal appeal was handed down, that bench would need to be informed about the relevant facts so that submissions, both written and oral, would be considerably longer.

36 They submitted that the advantages of the position adopted by them could be seen from the fact that when the costs argument took place at the conclusion of the principal appeal, it lasted less than an hour.

37 I agree with the submissions of Draft One and McKenzie. The most efficient and economical approach was to hear the arguments relating to the applications for leave to appeal immediately following argument in the principal appeal. Accordingly their conduct in advocating that approach is not conduct which would entitle the first respondent to a costs order against them.

38 The first respondent’s submission that costs should follow the event has the advantage of simplicity but little else to recommend it. The applications for leave to appeal were not decided on their merits but as a result of the appellant’s success in the principal appeal. To apply the general costs rule in such circumstances would produce a somewhat arbitrary result.

39 In the circumstances an order that each party pay its own costs of the applications for leave to appeal has much to recommend it. This is particularly so since the time and work which was devoted to the preparation of the written submissions will not be wasted. If on the retrial a verdict is still entered in favour of the first respondent, all of the submissions relied upon in this appeal would be relevant. If on the retrial the appellant obtains a verdict, some of the submissions would still be relevant depending upon what findings of fact were made in the retrial and depending upon what was the result of the hearing of the cross-claims on their merits.

40 It seems to me that the fairest result in relation to the applications for leave to appeal is that each party should pay its own costs.

41 In relation to the first respondent’s cross-appeal which succeeded in part against Draft One, McKenzie and Dalmau, the same considerations apply. The first respondent’s partial success was a direct consequence of the appellant’s success in the principal appeal. To make a costs order on the basis that costs should follow the event in those circumstances, would not only be arbitrary but it would not properly reflect the contingent nature of that cross-claim.

Costs of this application

42 The appellant’s submissions were directed to obtaining an order for indemnity costs and rebutting the submissions of the first respondent which sought to reduce his entitlement to party party costs of the appeal. The appellant failed on the indemnity costs issue but was successful in keeping his costs of the appeal.

43 The first respondent’s submissions were directed towards reducing the appellant’s entitlement to costs of the appeal and to rebutting his claim for indemnity costs. It was successful on the indemnity costs issue but failed on the other.

44 Most of the submissions by both the appellant and the first respondent were directed to the question of whether the appellant’s conduct of the appeal disentitled him to a full costs order. The appellant succeeded on that issue and should receive some but not all of his costs. An order of that kind takes into account the appellant’s failure on the indemnity costs question. I am of the opinion that the appropriate order is that the appellant should have fifty percent of his costs of this application.

45 In relation to the costs dispute between the first respondent on the one hand and McKenzie and Draft One on the other, I have concluded that each should pay its own costs of this application. That result is consistent with the conclusion which I reached in relation to the costs of the appeal insofar as they related to the dispute between those parties.

Orders

46 The orders which I propose are as follows:

(1) Except for the appearances before the Registrar on 14 February 2008 and 17 March 2008 the first respondent is to pay the appellant’s costs of the appeal as agreed or assessed.

(2) The appellant is to pay the first respondent’s costs of the appearance before the Registrar on 14 February 2008 and in respect of 17 March 2008, the order for costs previously made by the Registrar stands.

(3) The first respondent is to pay 50 percent of the appellant’s costs of this application.

(4) In relation to the applications for leave to appeal by McKenzie and Draft One, each party is to pay its own costs.

(5) In relation to the cross-claim by the first respondent against McKenzie and Draft One, each party is to pay its own costs.

(6) In relation to the costs of this application, as between the first respondent on the one hand, and McKenzie and Draft One on the other, each party is to pay its own costs.

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LAST UPDATED:
31 July 2009