Crown in the right of State of New South Wales v Gevaux

Judgment 1HER HONOUR: On 21 June 2011, I published my reasons for the dismissal of the plaintiff's application for summary judgment brought pursuant to Rule 13.1 of the Uniform Civil Procedure Rules 2005 (NSW). I indicated that I would hear submissions as to costs and referred the matter to the Expedition Judge. Written submissions on costs were, after some delay, served on 15 July 2011. Having considered those submissions, I am of the view that the appropriate order is that the costs of the plaintiff's summary judgment application should be costs in the cause. I publish my reasons on the issue of costs. 2For the Crown, it is submitted that there should be no order for costs on the application for summary judgment and that those costs should be costs in the cause. That result is urged on the basis of the submission that the plaintiff failed only narrowly on its summary judgment application (and that Mr Gevaux succeeded in resisting that application only on the basis of a defence not yet pleaded but that I had considered emerged on the facts then put before me). Reference was made to [110]-[111] of my principal judgment, in which I noted that my conclusion had been reached only after some hesitation and on the basis that, though a defence based on incapacity to consent to an attornment had not been pleaded, I could not be satisfied that there was no such arguable or triable defence disclosed on the evidence. 3Counsel for the plaintiff, Mr Hyde, further notes that the original defence pleaded a myriad of allegations, which have now been abandoned, and (as I accepted at [109]) that the defence as currently pleaded is not a recognised defence to a 'money had and received' claim in restitution. 4It is further noted that the Deed of Release (on which Mr Gevaux bases his defence on the current pleadings) was not a document that came to the attention of either party's legal representatives until after the application for summary judgment had been filed. 5For the defendant, it is submitted by Mr Benson of Counsel that the plaintiff should not have the benefit of a costs order in its favour (having failed on its summary judgment application and not having pressed the strike out aspect of its notice of motion); that costs should not simply be reserved (as that would have a "costs in the cause" effect); and that the appropriate order is either that the plaintiff pay 95% of the defendant's costs or that 95% percentage of the defendant's costs should be costs in the proceedings. 6Just as Mr Hyde points to the changes in the position adopted by the defendant throughout, Mr Benson points to the various amendments made to the plaintiff's pleading and its conduct of the summary judgment application (including the indication made when the hearing of the summary judgment application resumed before me in April this year that, if that application were not to succeed, the plaintiff would seek to file the Second Amended Statement of Claim and reinstate a claim based on the Deed of Undertaking that had previously been deleted following the arguments raised by the defence on the commencement of the hearing of the summary judgment application towards the end of last year). Reference was also made to the various adjournments of the plaintiff's motion to which I had referred in my principal judgment. 7Mr Benson submitted that the only issue on which the defendant 'lost' was its argument based upon the Deed of Release (the construction of which was in any event left for determination in due course by the trial judge [63]), this being the basis on which Mr Benson submits that a reduction of the costs order sought in favour of the defendant might be made in order to reflect the defendant's overall measure of success. (In this regard, I had noted at [94] that I was not satisfied that there was an obvious defence based on the Deed of Release to the Crown's claim and would not have acceded to the summary judgment application Mr Gevaux had filed had it then been pressed, which it was not.) 8The background to these proceedings is set out in my June reasons for judgment and I do not repeat that here. Suffice to say that I think there may fairly be some criticism levelled at both parties in relation to the events leading up to the hearing of the summary judgment application. The defendant, for example, had not raised (at least explicitly) until the first occasion on which the summary judgment application was before the Court, the issue as to the standing of the Crown to maintain the proceedings as it was not a party to the Award and said not to be the employer of Mr Gevaux (an issue that Mr Benson fairly conceded in argument gave rise to interesting questions of law). The Crown, for its part, had not expressly identified its claim in the various iterations of its pleading as a claim in restitution (though it had squarely raised in argument before me in late 2010 a restitutionary claim arising out of the fact that Mr Gevaux had received two payments when he was entitled only to one and had foreshadowed, in the response to particulars of 9 February 2011, an application to amend its pleading to include a claim for restitution based on the Deed of Undertaking should its motion for summary judgment be unsuccessful). 9With no disrespect to Counsel appearing for the respective parties, the imprecise articulation from time to time of the bases on which the parties maintained their positions in relation to the claim by the Crown and its defence by Mr Gevaux during the course of the summary judgment application (which was adjourned part-heard for some months while amendments to the pleadings were made to address, among other things, the fact that the Deed of Release had by then become known to the legal representatives) meant that the submissions made in relation to that application seemed to me quite frequently to be at cross-purposes and at times to involve a level of circularity (by way of illustration I note that the issue of standing, not pressed once the Crown's pleading was amended in late 2010, was again raised in argument in the course of the summary judgment application in April this year even though a claim based on the Deed of Undertaking was not then before me). 10However, insofar as criticism is made of the Crown's conduct in the present application by Mr Benson (it being said to be well-resourced and a model litigant), I simply note that the approach of the Crown in pressing for summary judgment seems to me to have been the product of concern to bring to a speedy conclusion proceedings in which (on the defence as pleaded) there was on a reasonable view of the matter no arguable defence to an attornment claim and in circumstances where (due in large part to the gambling of the defendant) the funds available to meet any judgment in its favour had largely been dissipated. Hence, it seems to me that it cannot be said that the summary judgment application was not maintained in accordance with the statutory objectives mandated in the Civil Procedure Act 2005 (NSW). 11It is recognised that there is a broad discretion in relation to the award of costs ( Oshlak v Richmond River Council (1998) 193 CLR 72), though the general rule (provided for in Rule 42.7 of the Uniform Civil Procedure Rules ) is that costs follow the event. 12In relation to the costs of interlocutory applications, it is commonplace for costs to be ordered to be "costs in the cause". In Coscom Pty Limited v Standing Enterprises Pty Limited [2006] NSWSC 114, Hamilton J noted the principles applicable to costs orders in interlocutory applications (though there referring to applications for injunctive relief or the like) and said (at [3]): In interlocutory applications for an injunction or extension of a caveat a successful plaintiff will usually obtain, not a straight out order for its costs, but an order that the costs of the application be its costs in the proceedings. This will mean that the plaintiff will recover the costs of the interlocutory application if it is successful in the proceedings. If it is not, it will not recover the costs of the interlocutory proceedings, but the defendant will not be entitled to recover under an order for costs in its favour the costs of the interlocutory application. 13The rationale for such an order was explained by Beazley, Giles and Hodgson JJA in Petar v Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142. Their Honours there said (at [18] and [21]): An order that the costs be 'costs in the cause' or 'costs in the proceedings' (the terms are interchangeable) means that the costs of the interlocutory proceedings correspond with the final order for costs in the action. Thus if, in the final proceedings, the plaintiff is successful and an order for costs of the final hearing is made in the plaintiff's favour, the plaintiff gets the costs of the interlocutory proceedings as part of the costs of the action against the defendant, regardless of who was successful on the interlocutory application: see J T Stratford Ltd v Lindley [1969] 1 WLR 1547 at 1553 per Lord Denning MR ... .... The rationale for making an order that costs be costs in the cause is that, at the stage of granting an interlocutory injunction, the court is not in a position to adjudicate on the ultimate outcome of the proceedings. Rather, provided there is a reasonable case to be tried, the Court's focus in deciding whether to grant the application for interlocutory relief is on other considerations and, in particular, on determining whether, on the balance of convenience, an injunction ought to be granted. Accordingly, if a plaintiff who applies for an interlocutory injunction is not ultimately successful in the proceedings, that plaintiff should not receive the costs of the application for an injunction which, when the matter is considered in overview cannot be sustained. However, as already explained, each case must depend upon its own facts. (my emphasis) 14At [27]-[28], their Honours went on to say: Applications for interlocutory injunctions are commonplace. If there is nothing to distinguish an application from the typical case that comes before the court, then the underlying jurisprudence relating to the exercise of the discretion may warrant the making of what is referred to in the legal vernacular as the "usual order", whether that be costs in the cause or the plaintiff's costs in the cause. The making of such an order does not displace the exercise of the court's discretion. Rather, it is a shorthand form of giving effect to the principles that govern the court's discretion in circumstances where there are no countervailing or different circumstances to warrant the exercise of the discretion in a different manner. We have already referred to r 42.7 of the UCPR, which is the rule that applies to costs on an interlocutory application unless some other order is made. We have also referred to the fact that if some other order is to be made, that order is made in the exercise of the court's discretion. That discretion cannot be fettered. For the reasons we have given, the making of an order in accordance with a "usual rule" does not, however, involve any fettering of discretion provided a court applies the rule in the exercise of its discretion, and not as a matter of course. It is not necessary, however, that a court explain its reasons for applying the usual rule in every case. The favourable exercise of the court's discretion in ordering the costs to be costs in the cause, or plaintiff's costs in the case, if otherwise unexplained, should be taken to reflect the fact that there is already an established jurisprudence as to the basis upon which the court's discretion should be exercised in a given circumstance. 15I accept that the application determined by me in June this year (for summary judgment) is different in substance from an application, say, for an injunction to restrain certain conduct or an application for an extension of a caveat, in which issues as to the balance of convenience will arise and where what is being considered is an interlocutory regime to preserve the status quo pending a final hearing at which the party seeking interlocutory relief may ultimately be unsuccessful. 16Here, however, it seems to me that there are some parallels that would make a costs in the cause order appropriate. First, it is entirely possible that the Crown will succeed in its application for restitutionary relief (or otherwise on its claim based on the Deed of Undertaking that has now been reinstated in the Second Amended Statement of Claim). There is no doubt that Mr Gevaux received two payments of disability benefits when, under the applicable award, he was entitled only to one, and the defences currently raised by him include defences that are conceded by Mr Benson to be novel. Secondly, the funds still retained by Mr Gevaux (and the subject of these proceedings), although held in his solicitors' trust account pending determination of the proceedings in accordance with the orders previously made, are being reduced by reference to costs incurred and living and medical expenses of Mr Gevaux, which leads to the prospect that the Crown may ultimately be unable to recover the fruits of any success in the overall proceedings. Therefore, maintenance of the status quo would suggest that the costs of the interlocutory application should be dealt with as part of the overall costs of the proceedings and not in advance. Thirdly, I note that in the course of this interlocutory application, the issues to be canvassed in the substantive proceedings have been distilled and refined, so as (one would hope) to permit the disposition of the ultimate issues in dispute to be achieved more expeditiously and cost-effectively. 17I also take into account that this was not a case in which the outcome of the application was so clearly foreseeable (notwithstanding the heavy burden on a party seeking summary judgment) so as to suggest that the maintenance of the summary judgment application was so unreasonable that, by reason of that fact alone, a costs order in advance of the disposition of the entire proceedings was warranted. 18I accept that on the ultimate issue before the Court (should there be summary judgment), the Crown was unsuccessful. However, having regard to the factors considered above, in the exercise of the broad discretion there is as to costs, I consider that the fairest outcome is to order that the costs of the summary judgment application be costs in the cause and I will so order. Orders 1.The costs of the plaintiff's application for summary judgment shall be costs in the cause.