Burbidge v Wolf

PARTIES : Richard John Burbidge - plaintiff Freya Wolf - defendant

COUNSEL : R Corsaro SC/A C Casselden - plaintiff B R McClintock SC/M Christie/V Culkoff - defendant

SOLICITORS : Hicksons - plaintiff Steven Klinger - defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1343/06 Burbidge v Wolf JUDGMENT 1 His Honour: The remaining issues in these proceedings concern the disposition of the defendant's notices of motion of 22 September 2006 and 11 February 2008, and the appropriate costs order to be made. Submissions were made to the Court by senior counsel for each party on 11 March 2008. The notices of motion 2 By her notice of motion of 22 September 2006 (the appeal motion) the defendant appeals against the orders of McLaughlin AsJ made 30 June 2006 that her application for summary dismissal of the plaintiff's claim be dismissed, and that she pay the plaintiff's costs thereof. In reasons for judgment delivered 11 February 2008 I stated that I proposed to order that this notice of motion be dismissed. Relevantly, I said: "72. The defendant's notice of motion of 22 September 2006 was but briefly referred to during the hearing (T pp 25-27). Orders sought included an order extending time for the institution of an appeal from the decision of McLaughlin AsJ on 30 June 2006, that the appeal be determined at the same time as the hearing of these proceedings, and that the orders made be set aside. Senior counsel for the plaintiff indicated the claims were opposed. The motion was then put aside. Counsel for the defendant was invited to return to it at the end of the hearing (T p 27), but this did not happen. No further mention was made of the matter by counsel for either party. As the notice of motion did not proceed the proper order to make is that it be dismissed." 3 By her notice of motion filed 11 February 2008 (the variation motion) the defendant sought orders, in effect, that the judgment be varied to take into account, and to determine, the appeal motion. 4 In essence, the defendant's submissions were that it would be unjust if the appeal motion was dismissed as foreshadowed. As I understood them, the thrust of the submissions was that, because it was inevitable that the defendant would succeed on the appeal and the costs order would be set aside, if the appeal motion was dismissed the defendant would suffer an injustice because the costs order erroneously made would stand. 5 In response to the suggestion that during the hearing the appeal motion had been abandoned the defendant's counsel put that there may have been a misunderstanding, and that the costs order made by the Associate Justice remained an issue. Background 6 The issues raised by the notices of motion involve consideration of the following history. 7 By her notice of motion dated 28 February 2006 the defendant sought an order that: "1. the [sic] Statement of Claim filed herein be summarily dismissed pursuant to Part 13 r 13.4 Uniform Civil Procedure Rules 2005." 8 On 30 June 2006 McLaughlin AsJ dismissed the motion, and ordered the defendant to pay the plaintiff's costs, upon the basis that the defendant had failed to establish that the plaintiff's claim was hopeless, unarguable, or without substance. 9 Under Uniform Civil Procedure Rules Pt 49, r 49.4 an appeal lies to this Court from the Associate Justice's decision. Under r 49.8, an appeal is to be instituted by filing a notice of motion. Relevantly, this rule also provides: "49.8 Institution of appeal … (2) The appeal must be instituted within 28 days after the material date. … (4) The Supreme Court may extend the time allowed under subrule (2) at any time."

Thus, unless time is extended, the defendant was required to institute an appeal on or before 28 July 2006. 10 On 22 September 2006 the defendant filed the appeal motion, returnable on 29 September 2006. It sought the following orders: "1. An order extending the time for the appeal to the date of filing of this Notice of Motion pursuant to Part 49 r 8(4) of the Uniform Civil Procedure Rules 2005. 2. An order that the Appeal be determined at the same time as the hearing of the substantive matter. 3. The Appeal be allowed. 4. The Judgment and order of McLaughlin AsJ be set aside. 5. An order that the Plaintiff's Statement of Claim be dismissed. 6. The Plaintiff pay the Defendant's costs." 11 On 29 September 2006 and 15 December 2006 the proceedings were before the Court when consent orders were made for their pre-trial management. 12 On 20 February 2007 the proceedings were placed in the general list for the allocation of a hearing date. 13 On 12 September 2007 the date for hearing was fixed for 23 November 2007, when the hearing commenced before me. 14 On 11 February 2008 judgment was delivered in which I foreshadowed my intention to dismiss the appeal motion. On the same day the defendant filed the variation motion in which she sought the following orders: "1. the Judgment of the Honourable Justice Nicholas handed down on 11 February 2008 ("the Judgment") be varied in accordance with r 36.16 Uniform Civil Procedure Rules 2005 to take into account the Notion of Motion referred to in order 2. 2. the Defendant's Notice of Motion filed 22 September 2006 appealing against the orders of McLaughlin AsJ made 30 June 2006 (referred to in the Judgment at [72]) be determined in accordance with the written submissions of the parties previously provided to the Honourable Justice Nicholas and in accordance with the findings of his Honour in his Honour's Judgment of 11 February 2008. 3. the Plaintiff pay the Defendant's costs of this application." The variation motion 15 Should there be a variation to the judgment? Although no application to re-open was made under, e.g., Pt 29, r 29.6, the defendant, in effect, seeks to do so to permit the appeal motion to be heard and determined in circumstances where it was put aside during the trial. The ultimate purpose in seeking to have the appeal allowed at this late stage is to have the costs order set aside and an order for costs made in favour of the defendant. 16 This is a case in which judgment has been given, and the orders to be made have been foreshadowed, but no formal orders have yet been entered. It is well settled that only in exceptional cases will a court re-open a case such as this. In Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 Mason CJ said (p 303): "However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases." 17 In Metwally (No 2) v University of Wollongong [1985] HCA 28; (1985) 59 ALJR 481 the High Court of Australia said (p 483): "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had and [sic] opportunity to do so."

In this case, the defendant's counsel had ample opportunity to ventilate the several substantial issues raised by the appeal motion. During the trial, when it was timely and appropriate to argue the appeal motion, the defendant's case was confined to her defences to the plaintiff's claim. The court is entitled to look to the parties, particularly when legally represented, to advance or defend their own interests during the allocated time for hearing (cf: e.g. De L v Director General, NSW Department of Community Services (No 2) [1997] HCA 14; (1997) 190 CLR 207, p 223.) It was entirely reasonable to proceed to judgment on the basis that the appeal motion was no longer pursued. 18 The appeal motion raised several substantial issues discrete from those raised by the plaintiff's claim and the defences to it. It was supported by the affidavit of the defendant's solicitor of 20 September 2007 (to which I refer later), which the plaintiff may have challenged. Having regard to the above principles and having re-read the transcript of the trial, I am not persuaded that, in the proper exercise of the Court's discretion, the hearing should be re-opened after reasons for judgment were delivered in which the consequences of failure to deal with the appeal motion were made plain. I am unpersuaded there was any misunderstanding. Accordingly, I propose to order that the variation motion be dismissed. 19 It is therefore unnecessary to consider the defendant's submissions in support of its grounds of appeal under the appeal motion. However, I am comforted in rejecting the variation motion by the view that it was unlikely that the appeal motion would succeed. The appeal motion 20 Before the appeal could be entertained, the defendant required an extension of time under Pt 49, r 49.8(4), and an order that it be heard at the same time as the hearing of the substantive matter. For these indulgences she was required to establish grounds upon which the Court's wide discretion with regard to the interests of justice in the circumstances of the case should be exercised in her favour. 21 No submissions on her behalf were made to the Court in relation to these fundamental issues. Mere reference was made to the affidavit of the defendant's solicitor of 20 November 2007, although not to its contents. On the assumption that this was an invitation to do so, I read it. It had been filed on 23 November 2007, the date of the commencement of the hearing. Relevantly, it said: "4. The matter had already incurred significant costs, particularly given the small amount in dispute which is being claimed by the Plaintiff. It was my understanding that any appeal against the Judgment of McLaughlin AsJ would need to be heard separate from the substantive proceedings, which would incur further costs and Court time and, at the same time, delay the hearing of the substantive proceedings. On this basis the Defendant was reluctant to lodge an appeal. 5. Some time shortly prior to 22 September 2006 I received advice from Counsel that an appeal could be lodged on the basis that it could be dealt with and determined at the same time as the substantive hearing, without incurring any additional costs or Court time."

The discretion to extend time is conferred to be exercised for reasons shown. It ought not to be surrendered to an invariable practice ( Wentworth v Rogers (No 9) (1987) 8 NSWLR 388, p 393.) The grant of an extension of time under the rule is not automatic. The approach to an application for leave to appeal out of time requires acknowledgement of the proposition that the respondent to the application has a vested right to retain the judgment which is proposed to be the subject of appeal. The factors to be taken into account will depend upon the circumstances of the particular case, including the length of the delay, the reasons for the delay, whether the applicant has a fairly arguable case, and the extent of any prejudice suffered by the respondent to the application ( Tomko v Palasty (No 2) [2007] NSWCA 369, pars 55-57; Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516, par 4; Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458, p 459). 22 Furthermore, relevant to the exercise of any discretion under the Civil Procedure Act 2005 (the Act) or the Uniform Civil Procedure Rules is the statutory duty imposed upon the courts by s 56(2) of the Act which requires the court, in mandatory terms, to give effect to the overriding purpose to "… facilitate the just, quick, and cheap resolution of the real issues in the proceedings" ( Dennis v Australian Broadcasting Corporation [2008] NSWCA 37, per Spigelman CJ, par 29). 23 A significant factor in this case is that the underlying purpose of an application for summary dismissal is to bring the proceedings to an end. The defendant's case before his Honour was that the plaintiff's claim was so manifestly groundless that to allow it to proceed would involve useless expense ( General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, p 129). Its purpose was to have the plaintiff's claim summarily dismissed thereby avoiding costs, time and inconvenience which would be incurred if the matter proceeded to trial. Thus there was an obvious benefit to both parties, and to the Court, to raise and have finally determined at an early stage a challenge to the claim. The failure to institute the appeal within the prescribed time, or to promptly move for an extension of time within which to do so, and thereafter to prosecute the appeal expeditiously, deprived the appeal of its utility. By allowing the matter to proceed to trial the defendant negated the very purpose of the original application, and of an appeal to have his Honour's orders set aside and for the claim to be summarily dismissed. 24 According to the affidavit, explanation for the failure to proceed with the appeal, including an application for an extension of time, was the defendant's concern to avoid further costs and risk delay of the substantive proceedings. The affidavit shows that, at least from the time the appeal motion was filed, the defendant did not intend to proceed with the appeal motion, and deliberately left it to the hearing of the plaintiff's claim, apparently on the bold advice that the Court would determine the appeal then. 25 It is clear that the delay was not caused by inadvertence. The true explanation may be that her legal advisors simply failed to appreciate the importance of adhering to rules which prescribe the times by which steps in litigation are to be taken, particularly, in a case such as this, where the very purpose of the appeal would be lost if a decision was taken to allow the substantive claim to proceed. 26 In my opinion the interests of justice required the defendant to take the necessary steps to have the appeal heard and determined well before the commencement of the trial. The history of the conduct of the matter between 30 June 2006, the date of his Honour's orders, and the commencement of the trial on 23 November 2007 demonstrates that she had ample opportunity to do so. 27 Furthermore, upon dismissal of the plaintiff's application, the plaintiff, upon the expiry of the time for appealing, had a vested right to retain the judgment. In this case the plaintiff's right to have his case proceed to trial was established. If the defendant had intended any further challenge by way of appeal to that right it was, in my opinion, incumbent upon her to proceed promptly so that, if successful, costs and time involved in the preparation for and conduct of, a trial would have been avoided. In my opinion it would be patently unjust to the plaintiff for the Court to permit the defendant to press her appeal during or after the trial, in circumstances where she had ample opportunity to do so earlier. As it happened, the defendant was content to allow the plaintiff to proceed on the basis, as his Honour held, that he was entitled to a full trial of his case. 28 As it was relevant to the exercise of discretion, I also took into account the defendant's prospects on appeal. An appeal requires demonstration of error, and, unlike a review, is restricted to the reconsideration of the material before the primary decision-maker. It is self-evident from his reasons that his Honour correctly stated the relevant legal principles, including his reliance on General Steel Industries Inc. After evaluation of the various issues raised by the plaintiff's claim his Honour found that the defendant had failed to meet the test which would justify an order for summary dismissal. It is unnecessary to set out the bases upon which his Honour found that the defendant had failed before him. He was, in my opinion, correct to do so. In any event, having regard to the principles with respect to the conduct of appeals against the exercise of discretionary powers such as House v The King [1936] HCA 40; (1936) 55 CLR 499, and In re Will of Gilbert (decd) (1946) 46 SR NSW 318, no error was identified which would be likely to justify this Court interfering with the exercise of the discretion. In my view the defendant's prospects of success on appeal were remote. 29 The defendant's counsel made no submissions that there were grounds which justified an order for extension of time, and that the appeal be heard at the same time as the substantive claim. In my opinion no such grounds were established. Accordingly, I propose to order that the appeal motion, and the variation motion be dismissed with costs. Costs 30 The defendant seeks an order that the plaintiff pay her costs on a party/party basis up to 24 August 2006, and on an indemnity basis from 25 August 2006 to date. She also claims that the costs recoverable from the plaintiff should include her costs relating to the cross-claim against the first cross-defendant, Mr Malcolm Johns. 31 The plaintiff opposed the order. He submitted that the proper order is that he pay the defendant's costs of the proceedings on the ordinary basis, and these should not include the costs relating to the cross-claim. 32 The defendant bases her claim for indemnity costs on the principles in Calderbank v Calderbank [1975] 3 All ER 333, following offers to settle contained in letters of 26 September 2006 and 14 December 2006. 33 The letter of 26 September 2006 from the defendant's solicitors to the plaintiff's solicitors contained an offer to settle the proceedings on the basis that the plaintiff file a notice of discontinuance and both parties pay their own legal costs. It was open for a period of 28 days from the date of the letter. It was not accepted. 34 The letter of 14 December 2006 from the defendant's solicitors to the plaintiff's solicitors stated that the defendant was prepared to agree to a dismissal of the proceedings on the basis that both parties pay their own legal costs. The offer was open for a period of 14 days from the date of the letter. The plaintiff was invited to indicate whether more time was required. The letter contained a number of comments by way of explanation of the defendant's case, and pointing to weaknesses in the plaintiff's case. It is unnecessary to recite the details. The offer was not accepted. 35 On 12 September 2007 the trial was set down for, and proceeded on, 23 November 2007. 36 On 11 February 2008 judgment was delivered. 37 The defendant submitted that as a consequence of the plaintiff's failure to accept these "walk away" offers the Court should order costs on an indemnity basis, invoking the principles in Calderbank , for the period from the time of expiry of each offer. 38 The defendant submitted (T p 9) that the claim was not put on the basis that the plaintiff's case was hopeless, but on bases that the outcome for the defendant was better than it would have been had the offers been accepted; that the offers were genuine, and that the plaintiff's failure to accept either was unreasonable in the circumstances. The defendant relied upon the recognition in Leichhardt Municipal Council v Green [2004] NSWCA 341 (par 36) that a "walk away" offer can, in a particular case, be a genuine offer of compromise. 39 On the issue of unreasonableness, the defendant submitted, in effect, that there was much put before the plaintiff which, had he duly considered it, would have demonstrated his claim was doomed to fail. This included the letter of 20 December 2005 from the defendant's solicitors to the plaintiff's solicitors disputing any liability under a trust; annexures to the affidavit of the defendant's solicitor as well as other material which indicated non-compliance with the Legal Profession Act 1987 with the consequence that the plaintiff was barred from recovery of fees from the defendant. It was put that the plaintiff well knew he had no agreement with the defendant, and that his only arrangement was with Mr Johns. In short, it was put that the plaintiff failed to make any reasonable assessment of the facts or law relevant to the issues under his claim, and, had he done so, it would have been apparent that he could not circumvent the operation of the Legal Profession Act 1987 with the inevitable result that his claim would fail. In addition, it was put that that the offer of 14 December 2006 brought to the plaintiff's attention the difficulties which confronted him. 40 For the plaintiff it was submitted that, having regard to the costs orders in his favour made on the unsuccessful application for summary dismissal, it could not be said that the defendant had bettered the offer by the outcome of the substantive proceedings. It was put, without elaboration, that the offers were not genuine in that they were not genuine offers of compromise rather than calls on the plaintiff to capitulate and give up. It was also put that it had not been demonstrated that non-acceptance was unreasonable in circumstances where a claim for summary dismissal had been rejected, and it had been held that the plaintiff had an arguable case for trial. 41 Guided by the approach taken in Leichhardt Municipal Council (pars 36-41), in my opinion the offers, although optimistic and reflecting confidence in the strength of the defendant's case, were genuine offers of compromise which attracted application of the Calderbank principles. 42 The crucial question is whether the circumstances justify departure from the usual rule that only party/party costs can be recovered by the successful defendant by the exercise of a discretion to order indemnity costs in her favour. The authorities were reviewed in Leichhardt Municipal Council (pars 45-51, 56). They emphasise the width of the discretion, and the unusual or exceptional nature of an award of indemnity costs in relation to Calderbank letters. It is necessary for the defendant to show that the plaintiff's rejection of the offer was unreasonable under the general law because indemnity costs do not flow as a matter of course from unaccepted defendant's offers. 43 It is difficult to reconcile the defendant's written submissions that the plaintiff maintained a claim without reasonable prospects of success with her senior counsel's oral submissions (T p 9) that it was not put that the claim was hopeless. Nevertheless, with regard to the paucity of evidence to which I was referred there was nothing which demonstrated that the plaintiff had failed to genuinely consider the offers of compromise or rejected them out of hand. Although he was bound to give careful consideration to the offers, and to the deficiencies pointed out to him, there is no basis to find that he did not do so. In this context, of course, it was entirely reasonable that he should decide to proceed to trial in circumstances where the defendant had taken no step to prosecute her appeal other than by filing the appeal motion many weeks out of time. 44 In Leichhardt Municipal Council (pars 56, 57) it was pointed out that the question of reasonableness is not answered by a presumption, and depends upon the circumstances in each case, and that indemnity costs orders should be reserved for the most unreasonable action by unsuccessful plaintiffs. In this case, the element of compromise in the offer was as to costs; otherwise it was, in truth, a call to capitulate and give up. In my opinion, the plaintiff's ultimate lack of success does not establish that his failure to accept was unreasonable, or that he was, in any relevant sense, delinquent in proceeding to trial. 45 In my opinion the interests of justice require that the application for indemnity costs be dismissed, and that the ordinary rule as to costs should apply. Accordingly I propose to order that the plaintiff pay the defendant's costs of the proceedings on a party/party basis. 46 I now turn to the defendant's application to have her costs relating to the cross-claim against Mr Johns included in the costs recoverable from the plaintiff. The question is whether she has established that it is in the interests of justice in the particular circumstances of this case that, in the exercise of discretion, her application should succeed. 47 The cross-claim filed on 15 August 2006 was against Mr Johns as first cross-defendant and the plaintiff as second cross-defendant. As against Mr Johns the defendant claimed an indemnity for any amount awarded to the plaintiff, costs, and damages for any overpayment made to the plaintiff. In Mr Johns' defence to the cross-claim filed 14 December 2006 liability was denied and, in particular, it was pleaded that recovery was barred by reason of a personal insolvency agreement made with his creditors under Bankruptcy Act 1966 (Cth), Pt X on 13 October 2005. 48 On 12 June 2007 Mr Johns filed a notice of motion for orders that the cross-claim be summarily dismissed, and that the cross-claimant pay his costs. On 11 July 2007 he consented to discontinuance against him on the basis that the parties pay their own costs of the proceedings. On 22 August 2007 the proceedings against Mr Johns were discontinued, the parties paying their costs. 49 On 11 March 2008, by consent, the cross-claim as against the plaintiff was dismissed with costs. 50 In support of the application the defendant submitted (T p 18) that the cross-claim was made as "… a necessary precautionary measure against the possibility of success in the plaintiff's claim against the defendant …", and that it was reasonable to claim under indemnities allegedly provided on about 8 February 2005 and 14 February 2005. It was put that the defendant should have her costs of these proceedings, although Mr Johns' insolvency agreement caused them to be abandoned. 51 In my opinion, the application should be refused. The cross-claim against Mr Johns involved issues discrete from those under the plaintiff's claim against the defendant. The plaintiff's claim did not necessitate the institution of the cross-claim. Nothing was shown of the conduct of the unsuccessful plaintiff which made it proper and fair, in all the circumstances that he should bear the defendant's costs of proceedings which were ultimately abandoned. The authorities show that it is not enough simply to establish that it was reasonable to bring the proceedings against another party (e.g. Roads & Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140, pars 30, 31). The real contest in the proceedings was between the plaintiff and the defendant. The circumstances do not justify an order that he be liable for her costs in a claim which dealt with separate issues and was discontinued well before the trial. Furthermore, where the defendant consented to the dismissal of the cross-claim against the plaintiff with costs, a different order would be inappropriate. 52 As the defendant has failed on the applications for indemnity costs, and for costs in respect of the cross-claim, it is appropriate that she be ordered to pay the plaintiff's costs of the hearing of them. Conclusion 53 I make the following orders:

(1) The notice of motion filed 22 September 2006 be dismissed, and the defendant pay the plaintiff's costs. (2) The notice of motion filed 11 February 2008 be dismissed, and the defendant pay the plaintiff's costs.

(3) The defendant pay the plaintiff's costs of the costs applications heard on 11 March 2008.

(4) Subject to any existing costs orders including orders (1), (2) and (3), above, the plaintiff pay the defendant's costs of the proceedings. **********

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