Advanced Arbor Services Pty Limited v Phung

CATCHWORDS : COSTS - application for costs of interlocutory hearing in related proceedings - application for interest on costs

LEGISLATION CITED : Civil Procedure Act 2005 Limitation Act 1969

Advanced Arbor Services Pty Limited v Phung [2009] NSWSC 1331 Dean v Phung [2009] NSWSC 201 Dean v Phung [2009] NSWSC 1333 CASES CITED : Mahony v J Kruschich (Demolitions) Pty Limited (1985) 156 CLR 522 Australian Development Corp Pty Limited v White Constructions (ACT) Pty Limited (In Liq) [2002] NSWSC 280 Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 Hexiva Pty Limited v Lederer [2006] NSWSC 1259 Liberty Grove (Concord) Pty Limited v Mirvac Projects Pty Limited [2008] NSWSC 216

PARTIES : Advanced Arbor Services Pty Limited (Plaintiff) Mark Phung (Defendant)

FILE NUMBER(S) : SC 2008/00289087; (formerly 20006/08)

COUNSEL : Mr SG Campbell SC; Mr MJ Walsh (Plaintiff) Mr D Nock SC; Mr A Hourigan (Defendant)

SOLICITORS : Turks Legal (Plaintiff) Guild Legal Limited (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST

2008/00289087 (formerly 20006/08) Advanced Arbor Services Pty Limited v Mark Phung

JUDGMENT (on Plaintiff's application for costs of interlocutory application and interest on costs) 1 JOHNSON J: Following the delivery of my principal judgment on 2 December 2009 (Advanced Arbor Services Pty Limited v Phung [2009] NSWSC 1331), the Plaintiff made application for costs and interest. On 17 December 2009, I determined a number of issues. What remains outstanding are:

(a) an application by the Plaintiff that the Defendant pay the Plaintiff's costs with respect to an interlocutory application determined by Hall J on 11 March 2009 ( Dean v Phung [2009] NSWSC 201);

(b) an application by the Plaintiff that the Defendant pay interest on costs under s.101 Civil Procedure Act 2005 . 2 The parties have furnished written submissions with respect to these issues, in accordance with directions of the Court. This judgment resolves the applications agitated in the written submissions.

Costs of Interlocutory Application Before of Hall J on 6 and 11 March 2009 3 On 2 December 2009, I ordered the Defendant to pay the Plaintiff's costs of the proceedings. The present application relates to a discrete interlocutory application before Hall J on 6 and 11 March 2009. 4 The present Plaintiff had commenced proceedings against the Defendant in this Court which were listed for hearing on 25 March 2009. In late 2008, Mr Todd Dean commenced separate proceedings against the Defendant. Thereafter, Mr Dean made application for an order to consolidate the two sets of proceedings with a view to the proceedings being heard together commencing 25 March 2009. 5 I referred to the interlocutory application before Hall J in March 2009 at [4] of my principal judgment: "Mr Dean has commenced separate proceedings in this Court against the Defendant for damages (20571/08). On 11 March 2009, Hall J ordered that the issue of liability in the two sets of proceedings be heard at the same time: Dean v Phung [2009] NSWSC 201. The hearing of the two matters came before me on 25 March 2009 and continued on 26 and 27 March 2009. In the course of the hearing, an admission of liability was made by the Defendant with respect to the proceedings brought against him by Mr Dean (T112). Agreement was reached as to the orders to be made to progress that litigation (T112, T123). I will deliver a short separate judgment in those proceedings, which will be handed down at the same time as judgment is given in the present proceedings."

That short separate judgment was delivered on 2 December 2009: Dean v Phung [2009] NSWSC 1333. 6 As Mr Dean's application affected the Defendant and the present Plaintiff, both were represented at the hearing before Hall J. The hearing extended over two days on 6 and 11 March 2009. The present Plaintiff supported Mr Dean's application for the proceedings to be consolidated with the hearing to proceed on 25 March 2009, at least with respect to liability. The Defendant resisted that application upon a number of bases. 7 Hall J (at [28]) concluded that the liability issues in the two sets of proceedings ought be determined at the same time, and that this course was free of any real prejudice and constituted the practical course bearing in mind the provisions of s.56 Civil Procedure Act 2005. At [30], Hall J ordered that the costs of Mr Dean's application be reserved to be determined at a future time by the trial Judge, and that the Plaintiff's application for costs was to be determined by the trial Judge. It is the latter application which falls for determination in this judgment.

8 The Plaintiff submits that the Defendant should pay its costs of the application before Hall J. It is submitted that the Plaintiff was directly affected by the application, which it supported, and succeeded over the objection of the Defendant. Although it was, in strict terms, Mr Dean's application and not that of the Plaintiff, it is submitted for the Plaintiff that its approach to the application served the overriding purposes of the Civil Procedure Act 2005 in facilitating the just, quick and cheap resolution of the real issues in dispute in the two sets of proceedings. 9 Mr Nock SC, for the Defendant, submits that costs of the application before Hall J should not be ordered in the Plaintiff's favour. He submits that the Plaintiff was not joined to Mr Dean's Notice of Motion by any act of the Defendant. Rather, he submitted, the Plaintiff sought to be present at the application to assist Mr Dean in obtaining the orders which he sought. The Defendant submits that the Plaintiff's application seeks a type of "Bullock order" for costs.

Decision 10 Although Mr Dean had commenced proceedings some time after the present Plaintiff, it was clear that, subject to an issue under the Limitation Act 1969, there were overlapping issues with respect to liability. Mr Dean was to be called in both sets of proceedings. 11 Mr Dean moved for consolidation of the two sets of proceedings under Rule 28.5 Uniform Civil Procedure Rules. The present Plaintiff had a direct interest in the outcome of that application and appeared, without objection by the Defendant, at the hearing before Hall J. 12 The claim of the present Plaintiff had been listed for hearing on liability and quantum commencing 25 March 2009. The appropriate way forward was that the two sets of proceedings be consolidated, with liability to be determined at a single hearing by a trial Judge. This is what Hall J ordered. The Defendant opposed Mr Dean's application. An affidavit read by the Defendant at the hearing before Hall J contended that the correct approach was to adjourn the hearing of the Plaintiff's claim fixed for 25 March 2009, until such time as Mr Dean was ready to proceed. Senior counsel for the Defendant urged such an approach on 6 March 2009 before Hall J (T7.44). The Defendant did not agree to a joint hearing of both proceedings with respect to liability, although there were clearly overlapping issues in that respect. 13 The practical sense of the approach adopted by Hall J on 11 March 2009 was demonstrated by the course taken by the parties at the hearing commencing 25 March 2009. On the second day of the hearing, Mr Nock SC stated that he had instructions to consent to a judgment in respect of liability in Mr Dean's case and, by leave, an Amended Defence dated 26 March 2009 was filed in Court. The effect of those amendments was that the Defendant admitted liability for negligence in Mr Dean's proceedings, but with an outstanding issue under the Limitation Act 1969. 14 I note that counsel for the Plaintiff and Mr Dean had urged the Defendant, in a letter dated 6 March 2009, to proceed by way of admission under s.70(1) Civil Procedure Act 2005 with respect to treatment and advice provided by the Defendant to Mr Dean, so as to activate the principle in Mahony v J Kruschich (Demolitions) Pty Limited (1985) 156 CLR 522 at 530. The Defendant declined to do so, and continued to resist the interlocutory application. In due course, the Defendant did make such an admission on 25 March 2009 (see the principal judgment at [6]). 15 The course urged by the Plaintiff before Hall J in March 2009, and opposed by the Defendant, sought to facilitate the just, quick and cheap resolution of the real issues in the proceedings, and actually served that purpose at the hearing before me. 16 The fact that the application before Hall J proceeded by Notice of Motion in Mr Dean's proceedings does not preclude an order for costs being made in favour of the present Plaintiff, which appeared at the hearing (without objection from the Defendant) and succeeded in retaining the hearing date of 25 March 2009 whilst, at the same time, facilitating the just, quick and cheap resolution of the real issues in dispute (on liability) in the two sets of proceedings. 17 The Court is empowered to order the Defendant to pay the Plaintiff's costs of the application determined by Hall J. The Plaintiff was directly affected by the application and was entitled to be heard. The Plaintiff succeeded in that application, with the beneficial consequences referred to in paragraphs [13]-[16] of this judgment. I propose to make the costs order sought by the Plaintiff.

Application for Interest Under s.101 Civil Procedure Act 2005

Submissions 18 The Plaintiff submits that its restitutionary entitlement, in all the circumstances of the case as found in the principal judgment of 2 December 2009, gives rise to the operation of s.101(4) and (5) Civil Procedure Act 2005. That provision allows for interest to be paid as from the dates on which the costs concerned were paid. 19 The Plaintiff submits that the discretion to award interest on costs arises where an applicant has been out of pocket from having paid legal costs during the course of litigation, and that no "special case" test is applicable: Australian Development Corp Pty Limited v White Constructions (ACT) Pty Limited (In Liq) [2002] NSWSC 280. The nature of the order for interest will be to apply to such amounts of costs as are assessed to be payable from the date on which the costs concerned were paid: Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 at [10]-[12]. 20 The Defendant advanced no submission in opposition to an order under s.101 for the payment of interest on costs. 21 It remains a matter for the Court to determine whether such an order ought be made.

Decision 22 The principles applicable, where application is made under s.101 for interest on costs, were summarised helpfully by Brereton J in Hexiva Pty Limited v Lederer [2006] NSWSC 1259 at [21]: "An order under s 101 for interest on costs recognises and compensates the costs creditor for having been out of pocket as a result of having to pay their lawyers' costs and disbursements, and there is no requirement before such an order is made that the circumstances of the case be out of the ordinary [ Grogan v Thiess Contractors Pty Ltd [2000] NSWSC 1101, [10], [12]; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liq) [2002] NSWSC 280, [17], [23]-[25]; Puntoriero v Water Administration Ministerial Corporation [2002] NSWSC 217, [10]; Lahoud v Lahoud [2006] NSWSC 126, [82]-[83]]. Not much if any evidence is required in support of such an application: it can be inferred from the nature of commercial litigation that parties are likely to have had to pay some amounts of costs and disbursements as the litigation progresses and in any event an order can be framed in such a way that interest will run only from the date on which there has been a payment [ Lahoud v Lahoud , [80]-[81]]."

See also Liberty Grove (Concord) Pty Limited v Mirvac Projects Pty Limited [2008] NSWSC 216 at [21]. 23 I am satisfied that the circumstances of the present case, as identified in my principal judgment, warrant the making of such an order.

Conclusion and Orders 24 I am satisfied that the orders sought by the Plaintiff ought be made. I propose to make orders to the following effect:

(a) the Defendant is to pay the Plaintiff's costs of the interlocutory application heard and determined by Hall J on 6 and 11 March 2009;

(b) pursuant to s.101(4) Civil Procedure Act 2005 , the Defendant is to pay interest on the Plaintiff's costs .

Short Minutes may be brought in to give effect to this judgment, and in particular, the form of order under s.101(4) Civil Procedure Act 2005 . **********

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