The practice of raising and pursuing numerous points, large and small, many of which are ultimately unsuccessful, is sometimes known as ‘trolley-load-litigation’, so named after the attendant avalanche of documents wheeled into court.
After the substantive trial, the court then turns its gaze to the issue of who will pay costs in the proceeding.
Courts do not consider costs as a penalty or punishment; but merely as a necessary consequence of a party having engaged in a litigation in which it has failed. Even so, generally, costs tend to follow the event, that is: the discretion is generally exercised to award costs to the successful party.
To run a matter ‘skinny’, I would contend that a potential litigant should not choose a medium sized or large generalist law firm with a track record in trolley-load litigation. Select a senior solicitor with strong experience, trust them to scope the brief to junior counsel – and if required, senior counsel – carefully then just run the best few points. Engage someone that just knows, and does not need to be told by s 24 of the Civil Procedure Act, that there is an ‘overarching obligation’ for legal practitioners to take reasonable endeavours to ensure that costs are reasonable and proportionate to the dispute.
Whether tactical reasons or billing imperatives account, as it were, for taking every point, good and bad, large and small, a couple of recent decisions illustrate that the courts are more minded to follow up a judgment on the main dispute with costs orders that reflect the extent to which a trolley-load of costs were thrown away by reason of one party, even where that party ‘won’ the substantive dispute.
In Actrol Parts Pty Ltd v Coppi (No 3)  VSC 758 (23 December 2015) the court dismissed the case and made an order for indemnity costs in the defendant’s favour against a plaintiff who commenced the proceeding and took it to trial on a point of principle and for nominal damages.
Actrol, represented by Lander & Rogers, commenced its proceeding against Mr Coppi by a generally endorsed writ dated 10 September 2014. The following paragraphs are direct excerpts of the judgment, including the paragraph numbers, for ease of reference:
“35. At a settlement conference on 2 October 2014, Actrol offered to settle the proceeding against Mr Coppi on the basis that (among other things) Mr Coppi pay Actrol $150,000 towards its legal costs of approximately $200,000.
36. Mr Coppi rejected the offer. Up to this point in time, he had incurred costs of about $23,000.
48. By (September 2015, Mr. Coppi) had incurred costs of about $149,000 in his defence of the proceeding. The letter of rejection dated 16 September 2015 made a counter-offer of settlement upon the basis that…Actrol pay Mr Coppi the sum of $115,000 towards his legal costs… in circumstances in which the plaintiff has so belatedly recognised that it has no realistic prospect for success in achieving an award of anything but nominal damages, at best.
50. By (20 November 2015), Mr Coppi had incurred costs of $230,000 in defending the proceeding.
63. Contrary to Actrol’s submissions, I find that it did breach the overarching obligation in s 24 of the Civil Procedure Act to take reasonable endeavours to ensure that costs are reasonable and proportionate.
67. Mr Coppi was entitled to defend himself against Actrol’s proceeding as he did. …He was entitled to ensure that there was equality of arms, which he did by engaging competent and experienced solicitors, and senior and junior counsel. As time passed, the legal costs on his side rose quickly in direct response to Actrol’s conduct of the proceeding.
71. From about mid-July 2015, Actrol’s solicitors began emphasising the significance of going to trial for nominal damages because this had ‘precedential value to the plaintiff in demonstrating that the plaintiff is willing to enforce its legal rights’.
72. The legal and other costs that Actrol incurred in the proceeding were in the vicinity of $600,000. There were reasonable endeavours that Actrol could have taken to ensure that such costs were not incurred, such as making reasonable settlement offers and, failing acceptance of such, bringing the proceeding to the court for a disposition hearing rather than an expensive trial. In my view, there was a clear, indeed egregious, contravention of Actrol’s overarching obligation to ensure costs were reasonable and proportionate.”
It is interesting – at least if you are me and don’t get out much – to compare the basis of this decision with the Federal Court of Australia’s reasoning in Apotex Pty Ltd v Les Laboratoires Servier (No 5) FCA 334
In substance, Servier lost on a discrete, narrow, single issue at a trial in which Apotex impugned and litigated the validity of Servier’s patent on numerous unmeritorious grounds. The successful applicant was ordered to pay 60% of Servier’s costs of the application to amend and 66.67% of Servier’s costs of the proceedings. Ouch. The court was not satisfied that the orders for costs ought be affected by the offers of compromise, as Servier’s refusal to accept Apotex’ offer did not seem ‘imprudent or plainly unreasonable’.
Accordingly, the court has an unfettered discretion on costs. Whatever arguments a party might put up, it is not always entitled to do so at the cost of the other side. A pyrrhic victory with a trolley-load of costs may be avoidable.
- 28 Jan, 2016
- Posted by Nicholas Weston
- 0 Comments