Commonwealth Bank of Australia v Goater

The issues for determination

1. Two key issues emerged in argument. The first is whether a judge of the Common Law Division has power to vary an order made by the Court of Appeal. And the second is whether the discretion to order costs of an interlocutory application be paid forthwith under r 42.7 Uniform Civil Procedure Rules 2005 (NSW) has been engaged.
2. Mr Kaufmann of Counsel for the plaintiff argued that it is not within the power of this Division to vary the order for costs. Mr Kaufmann argues that the substituted orders, including order 3 (b), are orders of the Court of Appeal, not the Common Law Division. Mr Kaufmann advanced the argument that an application to vary a costs order should be made to the court originating that order and the proper forum for this application is the Court of Appeal, not this Division. In making this argument Mr Kaufmann referred to the decision of Stevenson J in Agricultural & Rural Finance Pty Ltd v Atkinson [2013] NSWSC 1066 at [2].
3. There is support for this position in the decision of the High Court Australia in Wishart v Frazer [1941] HCA 8; 64 CLR 470 at 478. In that case, the applicant who was convicted of an offence by the Court of Petty Sessions appealed the decision to the Court of Quarter Sessions, which affirmed the decision. The applicant then sought to challenge his conviction by way of an order for prohibition against the informant and magistrate in the Court of Petty Sessions. The High Court held that order nisi previously made be discharged, as the decision of the appellate court ' holds the field', such that the decision is a decision of the superior court, not the Court of Petty Sessions (Starke J at [478]). This principle has been frequently applied: see for example, Forge & Ors v Australian Security Investments Commission [No 2] [2007] NSWCA 42; 69 NSWLR 575.
4. Key to this decision of Wishart v Frazer was the inconsistent effect granting prohibition would involve. Dixon J, as he then was, said on this point that: " It is not denied that the order of the Court of Quarter Sessions was within its jurisdiction and was validly made. While it stands it is a judicial declaration by a competent court exercising Federal jurisdiction establishing the order of the magistrate and preventing its being called into question. If this court made an order setting aside the conviction, there would be two inconsistent judicial orders in operation at the same time, that of the Court of Quarter Sessions confirming the conviction and that of this court discharging it." (at 482)
5. Mr Hill eventually accepted that the order as to costs is an order of Court of Appeal. However he argues that this case is not of the type discussed above by Dixon J, as the order sought does not have the effect of creating inconsistency. The orders sought, in the words of Mr Hill, are not directed towards 'substantively altering the Court of Appeal decision, we are simply today dealing with your jurisdiction to make subsidiary orders following on from that.' (Transcript 25/02/16 12: 31-33). In support of his argument Mr Hill relies on the decision of Short v Crawley (No. 45) [2013] NSWSC 1541, where White J found at [33] that: "a gross sum costs order is a supplemental order that makes more specific provision for the implementation of the earlier costs order by providing an alternative mode of enforcing it, that does not alter the substantive relief given by the previous costs order, and falls within the narrow class of exceptions to the principle that when proceedings have been disposed of by a final order they are at an end."
6. Mr Hill argues that because the order sought by his application does not substantially alter the original order, similar reasoning should apply and that I have power, under s 98 of the Civil Procedure Act 2005 (NSW) to make the order. Mr Hill said this consideration distinguished this case from Agricultural & Rural Finance Pty Ltd v Atkinson.
7. Mr Kaufmann joins issue: the order sought is not simply a subsidiary or consequential order, but rather it constitutes a variance of that order and therefore should be a matter for the Court of Appeal.

Decision on the first issue

1. In light of Wishart v Frazer, I accept Mr Kaufmann's submission that order 3 (b) is an order of the Court of Appeal. However I am not convinced that it therefore follows that I am not, for this reason alone, without power to make the order sought. Section 98 of the Civil Procedure Act 2005 (NSW) makes clear that the Court's power as to costs is a broad power. This is not a situation where the order sought would lead to a situation of inconsistency which underpins the principle in Wishart v Frazer. Neither is it sufficiently analogous to Agricultural & Rural Finance Pty Ltd v Atkinson, where what was sought was a variation in the nature of the costs order, namely to provide a security for costs in lieu of the full amount: at [23]. What is sought by Mr and Mrs Goater is only that the order as to costs be payable forthwith. As such a payment is to be paid at some point in time by The Bank to Mr and Mrs Goater, to make an order that it is payable sooner rather than later is not a variation in the substance of the order.
2. In coming to this conclusion, I am bolstered by the consideration that, under r 42.7, the Court may 'order otherwise' without restriction as to when such an order is made, or by a condition that it may only be made by the judge who made the original order (Showtime Touring Group Pty Ltd v Mosley Touring Inc [2013] NSWCA 53; 296 ALR 597 at [29] Bathurst CJ, McColl JA at [33] and Bergin CJ in Eq at [34] agreeing). By necessary legal effect, the orders of the Court of Appeal remitted the whole proceedings which had previously merged in the default judgment, to the Common Law Division for determination. The costs order, which is the subject of the application is an order made in those proceedings. It may not be open to a judge of this division to vary the substance of it but by parity of reasoning with Short v Crowley at [45] and by application of the principle established by Showtime Touring Group, I am empowered by s 98 and r 42.7 to make a 'supplemental order that makes more specific provision for the implementation' of the costs order made by the Court of Appeal.

Decision on the second issue

1. The question then is whether I should make the order sought. Section 98 of the Civil Procedure Act 2005 empowers me to make orders as to costs at any stage of the proceedings. Ordinarily, as set out in r 42. 7 of the Uniform Procedure Rules 2005, costs in respect of interlocutory proceedings such as the one sought 'do not become payable until the conclusion of the proceedings' unless the court orders otherwise. I repeat, the court may order otherwise, without limitation as to when such an order is made, or by a condition that it may only be made by the judge who made the original order.
2. There are numerous grounds on which the court may order otherwise. Mr Hill made arguments on several grounds: first, the discrete nature of the interlocutory application which he submits does not bear upon the substantive issues which are the subject of the proceedings; secondly, the matter is not yet listed for hearing, and so will not be finalised for some time; thirdly, he relied on the financial disparity between the parties, specifically that the defendants were individuals and the plaintiff a major Australian bank; and fourthly, he submitted that the conduct of Mr and Mrs Goater in the proceedings was blameless. In contrast, he pointed to what he said was unreasonable conduct on the part of the Bank but he resiled from relying upon that last consideration as justifying the order.
3. While I am not persuaded of the correctness of the final argument, the first three have merit. On the question of discreteness, there is authority for the appropriateness of such an order in situations, such as a security for costs order, where the subject of the application is discrete and separate from the substantive issues: Jazabas Pty Ltd v Haddad [2006] NSWSC 880. On this point, Mr Kaufmann argued that on the argument of Mr Hill, every motion would be distinct, and further that the orders bear upon issues still in contention, namely whether the bank is entitled to judgment possession.
4. Further there is authority for the appropriateness of the order sought in the situation where there will be delay in the finalisation of proceedings, particularly in the situation where one of the parties is impecunious: Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; Royal Australian Naval Reserve Rifle Club Inc v NSW Rifle Association Inc [2010] NSWSC 351.
5. I have been informed by Counsel that this matter is currently in the list, and has not been assigned a date for hearing. There will likely therefore be the passage of some time before the substantive proceedings are concluded. Mr Hill made submissions as to the impecunious situation of Mr and Mrs Goater, which was not challenged by Mr Kaufmann. As the scenario of the Bank being unable to pay costs should the judgment be in the favour of Mr and Mrs Goater is so unlikely as to be considered fanciful, Mr Kaufman submits that this is not a danger that needs be protected against. He further argues that the delays in proceedings are largely due to the conduct of Mr and Mrs Goater, and could not be said to be due to the actions of the Bank.
6. This point flows onto the final argument of Mr Hill, namely the financial disparity between the parties. Here Mr Hill relies upon the decision of Traderight (NSW) Pty Ltd v Bank of Queensland Ltd (No 2) [2008] NSWSC 589 at [8], where the Court made the order because of the bank's superior financial position, which made it better able to bear the ongoing burden of litigation. Mr Kaufmann distinguished this case on the grounds that it concerned a claim against the bank, and hence there was no potential for a financial shortfall should the cost orders be payable prior to the completion of the substantive proceedings. He submitted that should the case be decided in favour of the Bank in this case, the value of the security is insufficient to cover the debt. And Mr and Mrs Goater have already had the benefit of a loan being advanced to them. To make the orders 'payable forthwith' would put the bank further out of pocket if it won.
7. Having consideration to the arguments of Counsel, I am convinced by the argument that the order sought should be granted. While I accept that the delay was in part due to the conduct of Mr and Mrs Goater, considerations of fairness balance heavily against the significance of this consideration. Despite their part in the delay, Mr and Mrs Goater are likely to suffer from the delay in the finalisation of the proceedings. I am further aware that their representation is on a 'speculative basis'. From this, I infer that they are unable to put their solicitor in funds to fight the litigation. There is significant financial inequality between the parties, with the Bank being well placed to financially support extended proceedings, which cannot be similarly said of Mr and Mrs Goater. I am satisfied that the application to set aside the default judgment is sufficiently discrete to justify an order that the costs be payable forthwith. The impecuniosity of Mr and Mrs Goater might stultify the proceedings if the order is not made.
8. I order that: 1. Under r 42.7 I order that the costs payable under order 3(b) made by the Court of Appeal on 7th November 2014 are payable forthwith. 2. The plaintiff pay the defendant costs of this application on the ordinary basis after they have been agreed or assessed.

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