Chan v Barter & Barter T/As The Pembroke Nursing Home

In this matter, notwithstanding that the plaintiff's action has failed, and judgment has been entered for the defendants, the plaintiff contends that there can be no order for costs against her.

The Court's power to order costs is found in s42 of the District Court Act which confers a wide discretion to award costs against any person "whether a party to or a witness in the proceedings or not". The evidence in this matter makes it clear that following the fall and the consequential brain haemorrhages the plaintiff was a "person under a disability" within the meaning of Rule 5 of the District Court Rules. In particular, she was "... a person who by reason of intellectual or mental impairment is unable to give sufficient instructions to take, defend or compromise proceeding ...". Accordingly, the plaintiff was required and did sue by a next friend (see Rule 35.01(1)).

In summary the contention for the plaintiff as to costs was as follows:

that the plaintiff Lai Hoo Chan by reason of her brain injury is a person under a disability and so cannot be liable for costs;

that the plaintiff's next friend, Hung Chook Leong - her daughter, cannot herself by liable for costs by virtue of the provisions of Rule 35.01(2); and

that Lai Hoo Chan is not the plaintiff or a party strictly so called but rather the plaintiff in the action is Lai Hoo Chan by her next friend Hung Chook Leong so that any order will have to be against that dual entity which would be impermissible.

I turn first of all to the plaintiff's second contention which can be disposed of quickly. Given the evidence in the case and the absence of any suggestion to the contrary by the defendants, I accept that the plaintiff's next friend, her daughter Hung Chook Leong, could not be personally liable for the defendants' costs by virtue of the provisions of Rule 35.01(3) because it could not be suggested that the proceedings were "instituted without reasonable cause" or the costs "incurred by reason of some impropriety in the conduct of the proceedings".

I now turn to the plaintiff's primary contention, namely that the intellectually impaired plaintiff could not be held liable for the costs of her failed action.

Counsel, Mr Pickhaver, referred me to a number of authorities which he contended supported that proposition. (eg Rhodes v Swithenbank (1889) 22 QBD 577; Spellson v George (1987) 11 NSWLR 300 and Stephenson v Geiss (1998) 1 QD R 542). Rather, what emerges from these authorities is the undeniable proposition that an infant or person suffering intellectual or mental impairments cannot bind himself or herself for costs (see Spellson (supra) per Powell J at 313). The cases referred to by Mr Pickhaver are not authority for the proposition that the inability of, for instance, an infant to bind himself or herself in costs translates to a total immunity from a costs order at the end of a failed action. Indeed the legal principles which surround this area belie that argument. The authorities referred to by Mr Pickhaver discuss the disabled parties legal incapacity to make binding contractual arrangements in the course of prosecuting and compromising litigation, and further discuss the consequent need for a person under a disability to sue by a next friend and defend by a guardian ad litem who can then make all the binding arrangements which inevitably occur in the course of litigation including as to costs. Such representatives have a right of indemnity against the property of the person under a disability for costs incurred by them in prosecuting or defending an action (see Sparham v SGIC (1992) 165 LSJS 354; Chapman v Freeman [1962] VicRp 38; [1962] VR 259 and Murray v Kirkpatrick (1940) 57 WN (NSW) 162). And further, prior to the advent of Rule 35 a next friend who properly conducted an action for a person under a disability but failed in the action and thus bore an adverse order for costs had a right of indemnity for those costs from the assets of the person under a disability (see Chapman v Freeman (supra) per Hudson J at 260; Pryor v Hennessy and Cham [1973] VicRp 20; [1973] VR 221 per Newton J at 222, 223). This right of indemnity of the next friend or guardian ad litem for costs incurred by them is inconsistent with the proposition that the disabled plaintiff is immune to a costs order or otherwise not obliged to pay costs.

So for those reasons I reject the plaintiff's submission that the plaintiff in this action can have no liability to meet the defendants' costs of the failed suit.

Finally, Mr Pickhaver contended that Lai Hoo Chan could not be regarded as "... a party" to the action but rather she only had standing as it were in combination with her next friend and that somehow it was impermissible to make a costs order against this dual entity. I am not sure that I have correctly articulated the argument but it is enough to say that I do not agree with the threshold contention that the person under a disability is not a party. He or she is a party and to facilitate the prosecution of the action does so by a next friend or guardian ad litem. Accordingly, it is not necessary to deal with what is said flows from it. It is clear for instance that the next friend is not regarded as a party to the action (see Taylor v Underwood (1988) 146 LSJS 137 per Legoe J at 139, per Von Doussa J at 148). The question then arises who is the party if it is not the plaintiff under a disability?

Accordingly, there being no other reason advanced for exercising the discretion to order costs other than on the normal basis, namely in favour of the successful party and against the unsuccessful party, the order of the Court is that the plaintiff pay the defendants' costs of the action, to be agreed or taxed.