Cohen v Double Bay Bowling Club

Supreme Court of NSW|2019-12-05|Before: Henry J

Solicitors: Crisp Law (Plaintiffs) Lazarus Legal Group (First Defendant) Curwoods Lawyers (Second Defendant) File Number(s): 2019/00170616 Publication restriction: Nil

Judgment

By judgment delivered on 22 November 2019, I determined the plaintiffs' notice of motion seeking orders that the first and second defendants be found guilty of criminal contempt of court (contempt motion) and the first defendant's notice of motion that the contempt motion be permanently stayed as an abuse of process (abuse of process motion): Cohen v Double Bay Bowling Club [2019] NSWSC 1625 (principal judgment).
The plaintiffs were unsuccessful with their contempt motion. I dismissed the contempt charges brought against the first defendant and found the second defendant not guilty of criminal contempt as charged. The first defendant was also unsuccessful with its abuse of process motion.
These reasons deal with the costs of those motions. The parties were content for me to deal with that issue on the papers having provided written submissions to the Court on 29 November 2019.

Legal principles

The contempt charges brought against the first and second defendants by the plaintiffs were for criminal, not civil contempt, alleging that the first and second defendants had committed contempt in connection with an undertaking given in these proceedings. The application for punishment for the contempt charges was made by notice of motion "in the proceedings": Supreme Court Rules 1970 (NSW) Part 55, r 6(1).
The applicable rules of procedure in relation to the contempt motion are those which apply to civil proceedings, which includes the principles in relation to costs: Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Limited (2015) 256 CLR 375; [2015] HCA 21 at [66]; Kostov v YPOL Pty Limited (2018) 98 NSWLR 1002; [2018] NSWCA 306 at [14] - [17].
The power to award costs is a matter within the discretion of the Court. That discretion is a broad one which must be exercised judicially having regard to the circumstances of the case: Civil Procedure Act 2005 (NSW), s 98(1)(a); Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (Oshlack), at [134].
The usual rule is that costs follow the event, unless it appears that some other order should be made: Uniform Civil Procedure Rules 2005 (NSW), r 42.1 (UCPR).
While an unsuccessful party typically bears the liability for costs, there is no absolute rule with respect to the exercise of the Court's discretion. A successful party has no right to an order for costs and there may be special circumstances, such as the conduct of the successful party, which justify not making a costs order in accordance with the usual rule: Oshlack, at [67], [69] and [134].
Generally, the Court will award costs to a successful party without seeking to differentiate and apportion costs between particular issues on which it has been successful and those on which it has failed, although it may be appropriate to do so if a particular issue or group of issues is "clearly dominant or separable": Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]; Elite Protective Service Pty Ltd v Salmon (No 2) [2007] NSWCA 373.
It follows that a successful defendant may have the costs of a reasonable (albeit unsuccessful and severable) defence paid by an unsuccessful plaintiff because those costs were incurred in defending a claim which was ultimately rejected. On the other hand, it may be appropriate for a successful plaintiff to pay the costs of unsuccessful severable claims or issues as it is the party that has chosen to bring the proceedings and thereby incur costs themselves and cause costs to be incurred by others which otherwise would not have been incurred: Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [19] - [20].
Where there is a mixed outcome in proceedings, the question of apportionment of costs is very much a matter of discretion, and mathematical precision is illusory. The exercise of the discretion depends on matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36], citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [22].

Costs of the plaintiffs and the first defendant: contempt and abuse of process motions

As noted above, the plaintiffs and the first defendant agree that the plaintiffs should be ordered to pay the first defendant's costs of the contempt motion. Their positions differ in respect of the costs of the abuse of process motion.
The plaintiffs submit that, as they successfully defended the abuse of process motion, there is no reason for the usual rule not to apply and they should have their costs of that motion paid by the first defendant.
While the first defendant was unsuccessful in establishing that the contempt motion was an abuse of process, it submits that this outcome should not lead to a bifurcated costs order. It relies on the principle (referred to above) that the Court should not seek to apportion costs based on success on some but not other issues, arguing that the abuse of process motion was a defensive application brought as an additional basis on which to resist a finding of contempt. It also argues that costs should not be apportioned because the abuse of process issue was not determinative (as the contempt motion was dismissed), it took up little additional time and was not a dominant issue.
Without expressly saying so, the first defendant's submissions suggest that it argues for the plaintiffs to pay its costs of the abuse of process motion as well as its costs of the contempt motion because of its success on the contempt motion.
I accept that costs should not be apportioned in respect of the defences raised by the first defendant on the contempt motion, some of which were successful and some of which were not (including one of the main arguments advanced at the hearing relating to the construction of the undertaking). But to my mind, the position in respect of the abuse process motion is different.
While it may be considered to be generally responsive, the abuse of process motion was not just a separate issue or defence raised to the contempt motion, akin to the different defences raised in Griffith v Australian Broadcasting Corporation [2011] NSWCA 145. Rather, it was a separate application which the first defendant chose to file in addition to advancing its various defences to the contempt motion.
Once the abuse of process motion was filed, the plaintiffs were at risk of an adverse decision if they did not attempt to meet it. In meeting the abuse of process motion, the plaintiffs incurred some additional costs, although as the bulk of the evidence, submissions and hearing time related to the contempt motion and the affidavits of Mr Cohen of 13 and 25 June 2019 relied on by the plaintiffs in defence to the abuse of process motion had been prepared as part of the main proceedings, presumably those additional costs are not significant.
The quantum of the additional costs incurred by the plaintiffs does not, in my view, justify deviating from the usual rule that costs follow the event to reflect the plaintiffs' successful defence to the abuse of process motion. Had the abuse of process motion not been brought, the plaintiffs would not have incurred the additional costs of defending it.
Some of the matters raised by the abuse of process motion were discrete, separately identifiable and different to those raised in defence to the contempt charges, such as facts going to the alleged improper purpose of the plaintiffs.
The abuse of process motion also involved different evidence and written submissions. For example, in response to the abuse of process motion the parties relied on evidence which was not relevant to or read on the contempt motion (see Mr Cohen's affidavits dated 13 and 25 June 2019, Mr Meskin's second affidavit dated 20 September 2019 and Mr Aguino's affidavit dated 20 September 2019). Most of the cross-examination of Mr Cohen related to matters raised by the abuse of process motion (T11:43). The submissions of the parties also separately dealt with the issues relating to the abuse of process motion.
Recognising that the first defendant may want to raise all possible arguments in response to serious allegations of contempt does not mean that it should expect its costs to be paid (and not pay the costs of others) when it brings a separate application which raised matters that were additional to those raised by the contempt motion and on which it failed. To require the plaintiffs to pay the first defendant's costs of the abuse of process motion would not produce a result that, in my view, is fair. Neither would it be fair to make no order in relation to the plaintiffs' costs: McLaughlin v Dunwogan Manly Pty Limited [2010] NSWSC 306, at [22].
I accept that the abuse of process motion was arguably one that did not need to be determined because the Court dismissed the contempt motion. But as noted in the principal judgment at [262], it was nevertheless determined by the Court because it had been the subject of submissions and it might be relevant to the issue of costs.
The general purpose of an order for costs in favour of a successful party is to provide compensation to the successful party for the costs incurred in successfully defending an application: Oshlack, at [67] and [134]. Here, the plaintiffs were respondents to a separate application which they defended at some additional cost and with success. In my view, it is appropriate that an order is made to compensate the plaintiffs for those additional costs in the usual way.
Neither party suggested that a costs assessor would have any difficulty differentiating between the costs incurred in relation to the contempt motion and the additional costs incurred by the plaintiffs in defending the abuse of process motion. Nor did the parties suggest, in the alternative, any figures by way of apportionment if the Court was to approach costs by way of an overall costs order.
In those circumstances, I consider the Court should adopt the usual rule that costs should follow the event in respect of both the contempt and abuse of motions and will make orders accordingly with the intent that the first defendant is to pay only those costs incurred by the plaintiffs in defending the abuse of process motion which are additional to those they incurred in respect of their contempt motion.

Costs of the plaintiffs and the second defendant: contempt motion

As between the plaintiffs and the second defendant, the plaintiffs submit that the Court should order the parties to pay their own costs of the contempt motion. They argue that such an order is appropriate because the Court made a finding that the second defendant, by its contractor CF Group, carried out excavation works in breach of the undertaking on each of the relevant days as charged.
I do not accept the plaintiffs' submission that the second defendant should bear its own costs of the contempt motion. The charges brought against it were not upheld as the plaintiffs failed to obtain a finding that the second defendant was guilty of criminal contempt. In my view, the Court should make an order that recognises the plaintiffs' unsuccessful outcome and compensates the second defendant for the costs it incurred in defending charges brought as criminal contempt.
The finding in the principal judgment relied on by the plaintiffs might raise the question of whether the second defendant should be awarded all of its costs or only a part. But I do not consider this to be a case where there should be some apportionment of the second defendant's costs. Nor did the parties advance any submission in support of some form of costs apportionment.
The second defendant raised some unsuccessful defences on the construction of the undertaking and whether works were carried out in breach of the undertaking. While arguably severable and leading to the finding of breach of the undertaking, those unsuccessful defences were, in my view, reasonably brought and could not be described as futile or of no merit.
In circumstances where they were part of an overall defence to criminal contempt charges that were ultimately not proven, I consider it appropriate that the second defendant should recover its costs of the unsuccessful defences as well as the other costs incurred in meeting the contempt motion. As Basten JA stated in Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145, at [39]: "…caution should be taken in allowing an unsuccessful plaintiff to resist payment of costs in respect of particular independent defences which are unsuccessful".
The second defendant raised a number of other factors which it submits are relevant to the Court's discretion to award costs - namely that the Court found that any breach was not contumacious or in deliberate defiance of the undertaking, the plaintiffs had elected to pursue a criminal contempt charge where there was no ongoing breach of the undertaking that needed to be remedied, it ought to have been apparent to the plaintiffs that they were always going to have difficulties proving that the breaches were contumacious and intentional, the breaches of the undertaking did not cause any damage, there was no suggestion that the works carried out were otherwise than in accordance with agreements reached between the parties' experts and the plaintiffs did not seek to speak to the second defendant in advance of making the application to give it an opportunity to explain what works were being done or to provide the required documentation.
To my mind, those matters are additional factors which support the exercise of my discretion to make an order that the plaintiffs pay the second defendant's costs of the contempt motion.

Should the costs of the contempt and abuse of process motions be assessed and payable forthwith?

The first defendant submits that any costs orders should enable an assessment of costs forthwith having regard to the Practice Note SC Eq 3, at [57], which provides: "Unless otherwise ordered, a party in whose favour an order for costs is made may proceed to assessment of such costs forthwith."
Rule 42.7(2) of the UCPR provides that costs of an application made in proceedings "do not become payable until the conclusion of the proceedings" unless the court "orders otherwise".
As Stevenson J identified in G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 2) [2019] NSWSC 463 at [7], paragraph 57 of Practice Note SC Eq 3 directs attention to when the costs of an interlocutory order may be assessed, as opposed to when those costs are paid (cf UCPR r 42.7(2)). His Honour also noted that there is little point in making an order in respect of an interlocutory application that costs be assessed forthwith unless they are also to be payable forthwith. I agree.
The contempt and abuse of process motions are interlocutory applications involving separately identifiable and discrete issues from the main proceedings which continue. I see no reason not to adopt the approach of Stevenson J and will order that the costs in respect of the contempt and abuse of process motions be assessed and payable forthwith.

Orders

I deferred making any orders in relation to the contempt and abuse of process motions until the parties had considered the principal judgment and made submissions on costs. Now that the issue of costs has been dealt with, I make orders reflecting the principal judgment and these reasons as follows: 1. In relation to the plaintiff's notice of motion dated 3 September 2019 (contempt motion): 1. dismiss the charges against the first defendant with the plaintiffs to pay the first defendant's costs on an ordinary basis to be assessed and payable forthwith; and 2. find the second defendant not guilty of committing criminal contempt as charged and otherwise dismiss the charges against the second defendant with the plaintiffs to pay the second defendant's costs on an ordinary basis to be assessed and payable forthwith. 1. Dismiss the first defendant's notice of motion dated 21 September 2019 with the first defendant to pay the plaintiff's costs in relation to the motion which are additional to those incurred by the plaintiffs in relation to their contempt motion on an ordinary basis to be assessed and payable forthwith.

Amendments 06 April 2020 - paragraph [32] - changed "could be described as futile" to "could not be described as futile". 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: 06 April 2020

(2018) 98 NSWLR 1002

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