BTM1 v Scout Association of Australia New South Wales Branch

Relevant Legislation

1. Section 98 of the Civil Procedure Act 2005 ("the Act") provides the Court with a plenary power to make orders for costs. Section 98(1)(a) provides that costs are in the discretion of the Court. Section 98(1)(b) provides that the Court has full power to determine by whom, and to what extent, costs are to be paid. The Court is able also to determine whether costs are to be awarded on the ordinary basis or an indemnity basis: s 98(1)(c).
2. Rule 42.1 of the Uniform Civil Procedure Rules 2005 ("UCPR") (which are made pursuant to s 9 of the Act), provides: "42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
3. The effect of the application of the plaintiff is that costs should not follow the event, and that the Court should, within the meaning of r 42.1, make "some other order".

Plaintiff's Submissions

1. The plaintiff submits that the Court should make "some other order" because of the following matters: 1. the plaintiff was within his rights to commence proceedings in this Court in order to seek compensation from the defendant, and he was emboldened so to do by the insertion of s 6A of the Limitation Act 1969 (NSW); 2. the proceedings which were not an abuse of process at the outset, were only determined to be an abuse through no fault of the plaintiff because facts, which were solely within the defendant's knowledge, came to light after the plaintiff commenced proceedings; 3. the plaintiff could not have known that the proceedings were to be found by the Court to be such as to warrant a permanent stay. That was because the information adduced by the defendant upon which the Court's findings were based, was outside the knowledge, power or control of the plaintiff; 4. the plaintiff, as an individual, has already sustained significant financial loss and psychological damage as a consequence of the abuse which was admitted to have been perpetrated upon him by an identified individual; and 5. to make the plaintiff pay the costs of the defendant, including senior and junior counsel, would bring the plaintiff to financial ruin.

Defendant's Submissions

1. The defendant submitted that the matters advanced by the plaintiff were insufficient reason for the Court to vary its order that costs should follow the event.
2. In particular, the defendant submitted that the plaintiff was fully informed of the evidence upon which the defendant would rely to seek the order in the Notice of Motion many months before the hearing occurred. The defendant submits that this fact had the consequence, since the plaintiff fully resisted the order for a stay, that the ordinary costs order would be made.
3. As well, the defendant submits that the impecuniosity of the plaintiff, or else the financial consequences to him if the order for costs was made, are wholly irrelevant to the exercise of the discretion to order costs.

Legal Principles

1. In Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25, the High Court considered the decision of the Court of Appeal of the Supreme Court of the Northern Territory with respect to costs. In that decision, the High Court said this: "24. It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion 'cannot be narrowed by legal rule devised by the court to control its exercise', the formulation of principles according to which the discretion should be exercised does not 'constitute a fetter upon the discretion not intended by the legislature'. Rather, the formulation of principles to guide the exercise of discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power. 25. A guiding principle by reference to which the discretion is to be exercised - indeed, 'one of the most, if not the most, important' principle - is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the co-operation required of litigants, to ensure the 'just resolution of the real issues in civil proceedings with minimum delay and expense', that might have been taken into account to justify refusing the appellant an order for its costs." (citations omitted).
2. The High Court went on to deal with whether, of itself, the impecuniosity of an unsuccessful party was a relevant consideration of decisive quality in the exercise of the discretionary power to make a costs order.
3. The Court said: "26. Prior to the decision of the Court of Appeal in this case, the proposition that the impecuniosity of an unsuccessful party, without more, is not a sufficient reason for depriving a successful party of its costs had been accepted in every other Australian jurisdiction. … 27. In Board of Examiners v XY [2006] VSCA 190 at [33]-[34]; Chernov JA, with whom Neave JA agreed, identified difficulties of practice and principle that beset the approach of the Court of Appeal in the present case. As a practical matter, difficulties arise in determining the level of impecuniosity at which it would become a relevant consideration. There would also be substantial practical difficulties in determining, after the conclusion of the litigation, the unsuccessful party's financial standing. In point of principle, it is basic justice that a successful party should be compensated for expenses it has incurred because it has been obliged to litigate by the unsuccessful party. That consideration of basic justice does not lose its compelling force simply because the successful party happens to be wealthy; the successful party, whether rich or poor, did not ask to be subjected to the expense of unmeritorious litigation. The statutory power to order costs affords the successful party necessary protection against unmeritorious litigation; and unmeritorious litigation is no less unmeritorious because it is pursued by a person who is poor or who is a litigant-in-person."

Discernment

1. In the course of the Motion and when he applied for an order that each party pay their own costs of the proceedings, the plaintiff did not adduce any evidence about his financial status. He provided no material which set out his assets and liabilities, and did not attempt to identify what financial resources of any kind were at his disposal.
2. In his submissions, his solicitor asserted that an order for costs would bring him to "financial ruin". If the ground of impecuniosity was to be relied upon, as a ground of substance, then it needed to be established by evidence. It was not. Nevertheless, even assuming that such a ground was established by evidence, in the particular circumstances of this case, it would not be a sufficient basis for exercising the Court's discretion to make an order other than the costs follow the event.
3. An order for costs is not a punitive order but is made to compensate the successful party for the costs and expenses it has incurred in responding to the litigation which the plaintiff has brought against it.
4. In 2003, in the course of his judgment in New South Wales v Lepore (2003) 212 CLR 511; [2003] HCA 4 at [1], Gleeson CJ said, with respect to a claim made against a school authority for damages occasioned by the sexual abuse of a pupil by a teacher in its employ, this: "If a teacher employed by a school authority sexually abuses a pupil, is the school authority liable in damages to the pupil? No one suggests that the answer is 'No, never'. In Australia, at least until recently, an answer 'Yes, always' would also have been surprising. More information would have been required."
5. Claims of the kind made by the plaintiff here, namely for damages for sexual assault made against a party which did not itself perpetrate the sexual assault but rather is being sued for its failure to prevent the sexual assault occurring, or alternatively, as being vicariously liable for the damages which would be payable by the perpetrator because of its relationship to that perpetrator, are not capable of being regarded as always likely to succeed. Accordingly, plaintiffs embarking upon litigation which, depending upon the facts and circumstances, may have varying prospects of success are taking a risk that they may not succeed and may be subject to the usual order for costs. No doubt, when they initiate litigation in such circumstances, a diligent solicitor acting for them will have ensured that the risks of the litigation and the financial consequences of it are fully and properly explained.
6. As well in the course of litigation, it is always open to a plaintiff when new facts emerge, or circumstances change, to review the question of whether they should continue the proceedings or not.
7. The fact that a plaintiff may have an apparently good cause of action and on that basis commences proceedings is something which is common to all plaintiffs, regardless of the cause or causes of action sued upon.
8. The matters advanced by the plaintiff here seem to suggest that by reason of the events which occurred, the plaintiff had an entitlement to compensation which was to be vindicated by bringing proceedings at common law against a party who was not the perpetrator but against whom a right to recover damages was asserted.
9. The plaintiff's claim in fact was a proceeding which was one attended by all of the usual risks of litigation. The interlocutory proceedings brought by the defendant were available to the defendant providing it could establish, by evidence, that it was unable to respond to the proceedings, that it would not have had a fair trial and that the proceedings were, in accordance with the authorities, of an exceptional kind sufficient to warrant a grant of relief by way of permanent stay.
10. Whilst it may be accepted that the plaintiff did not know of the evidence upon which the defendant would rely at the time he commenced proceedings, it is certainly clear that for some significant period of time before the Motion was heard, the plaintiff was in possession of all of the defendant's evidence and its submissions. The plaintiff, together with his solicitor, had sufficient time to review that material, review the risks associated with the litigation being continued at that stage and to make a decision with respect to it. The plaintiff chose at that point to continue the litigation.
11. The order for costs that was made was that costs follow the event. As indicated earlier, the plaintiff now seeks that the Court otherwise order within the meaning of r 42.1 of the UCPR.
12. The matters advanced by the plaintiff, namely the entitlement to bring the proceedings, the reasonableness of the cause of action pleaded, the lack of knowledge of the evidence advanced by the defendant in support of its Motion for a permanent stay until some months prior to the hearing, and his impecuniosity are neither individually nor in combination matters which would cause this Court to otherwise order.
13. In those circumstances, I refuse the plaintiff's application that each party should be ordered to pay his and its own costs of the proceedings. The order for costs made on 28 April 2023 will remain.

Orders

1. The Court makes the following order: 1. The application by the plaintiff for a revised order for costs is dismissed.

Amendments 18 July 2023 - Typographical error [18] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2023