Damien v Jackson

Judgment

1. WHITE JA: This is an application for leave to appeal from a costs order made in the District Court on 22 September 2017.
2. On 13 September 2017 the primary judge, Sorby DC-AJ, dealt with a notice of motion filed by the present respondent on 30 June 2017 in which the respondent, who is the first defendant in the proceedings, sought an order that the plaintiff's statement of claim, insofar as it brought a claim against her, be struck out pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005.
3. In his reasons of 13 September 2017 the primary judge noted that at the hearing of the notice of motion counsel for the respondent amended the orders sought in the notice of motion to one requiring that the statement of claim be repleaded to articulate clearly the risk of harm in respect of which it is alleged the defendant was obliged to take precautions and whether it was part of the plaintiff's case that the defendant had actual knowledge of the risk of harm and that the risk was thereby foreseeable, or whether the plaintiff only contended that the defendant ought to have known of the risk of harm, citing Garzo v Liverpool/Campbelltown Christian School Ltd [2011] NSWSC 292 at [60] per Garling J.
4. The primary judge said that to comply with Garling J's rulings as to the mandatory requirement that s 5B(1) of the Civil Liability Act 2002 (NSW) be specifically pleaded and justified, the statement of claim against both defendants was required to be amended, and the duty and breach of duty alleged against each defendant be clearly identified in the statement of claim. The notice of motion seeking the order that the statement of claim against the first defendant be struck out was dismissed, but the following orders were made: "2. In lieu thereof the Plaintiff's Statement of Claim as against each Defendant at paras 36 to 40 be amended to comply with the requirement of s 5B(1) of the Civil Liability Act as per the findings of Garling J in Garzo (supra). 3. The Application by the Applicant that the Statement of Claim be modified to differentiate more specifically the claims as against each Defendant is dismissed. 4. Costs of this Motion reserved, with leave to apply."
5. The applicant exercised liberty to apply in respect of the costs of the notice of motion. The applicant submitted that the respondent should pay his costs of the motion on the indemnity basis and that the costs should be payable forthwith. Before the primary judge the applicant argued that at the hearing of the notice of motion the respondent abandoned the application to strike out the statement of claim. Counsel then appearing for the applicant complained that instead of the notice of motion being simply dismissed the respondent was permitted to take a point that the requirements of s 5B of the Civil Liability Act had not been properly pleaded.
6. On 22 September 2017 the primary judge ordered that the parties pay their own costs of the motion. It is in respect of that order that this application for leave to appeal is brought. The primary judge acknowledged that on the hearing of the notice of motion counsel for the respondent had moved the goalposts, but his Honour said that it was open to the respondent to argue that the pleading did not address the requirements of s 5B of the Civil Liability Act. The applicant's counsel had not sought an adjournment.
7. The primary judge was of the view that a barrister of the experience of counsel who then appeared for the applicant would be expected to deal with the requirements of pleading and negligence claim to which s 5B of the Civil Liability Act applied. His Honour said that the applicants had succeeded on one point and the respondent on the other. Hence his Honour ordered that the parties bear their own costs of the motion.
8. Contrary to the submissions of the applicant in this Court, the application raises no issue of principle. Both parties were partly successful and partly unsuccessful on the matters dealt with on the hearing of the notice of motion.
9. Generally it is appropriate only to grant leave to appeal in cases that involve issues of principle, questions of public importance, or where it is reasonably clear that an error has been made going beyond what is merely arguable that occasions an injustice, see Be Financial Pty Ltd as trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[39] and The Age Company Ltd & Ors v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13].
10. One ground on which leave was sought raised in the applicant's written summary of argument was that the primary judge, when disposing of the respondent's notice of motion filed on 30 June 2017, appeared to have prejudged or predetermined the question of costs prior to hearing from the parties on that question.
11. The allegation was framed on the ground of either apprehended or actual bias by prejudgment. No evidence was referred to in the applicant's summary of argument to support that contention, and it was rightly abandoned by counsel appearing on the hearing of the application, who, it might be noted, was not responsible for the preparation of the written summary of argument.
12. The primary judge was called on to make a discretionary decision on the costs of the notice of motion. The principles in House v The King (1936) 55 CLR 499 apply in considering whether or not there would be grounds for overturning that decision if leave to appeal were granted. No House v The King error was demonstrated.
13. The observations of Jordan CJ in Re Will of Gilbert (1946) 46 SR (NSW) 318 at 323 apply to the present application. If a tight rein were not kept on interference with orders of judges at first instance that involve the exercise of discretion on a point of practice or procedure the result would be disastrous to the proper administration of justice. Disposal of cases could be delayed interminably and costs indefinitely if a litigant could, in effect, transfer all exercises of discretion in interlocutory applications to the Court of Appeal. Even if it were reasonably arguable that the primary judge's discretion miscarried, that would not be a sufficient basis for the grant of leave.
14. Leave is required to appeal from a judgment or order "as to costs only", because in many cases it is contrary to the public interest and creates injustice to the parties for costs to be incurred in arguments about costs (see Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69). In his written summary of argument the applicant contended that by her notice of motion the respondent visited significant expense upon the applicant in an attempt to bring about the summary disposition of his claim. He argued that summary dismissal was sought on the basis of a limitation point and a pleading point.
15. He said that at the hearing of the motion, and in breach of earlier orders as to the filing and service of submissions and a list of authorities, the respondent made an entirely new application without prior notice to the applicant that she would be relying upon a new authority that was not previously referred to. The applicant argued that the costs orders made at first instance did not take into consideration the events giving rise to the judgment, and in particular the actions and decisions of the respondent in the way she ran her case.
16. In effect, the applicant complained that the grounds upon which the application for striking out the statement of claim, which was the relief sought in the notice of motion, had been advanced, were abandoned before the hearing for the motion; but a different argument was raised on which different relief was sought and ultimately granted. The applicant contended that he ought in those circumstances to have had his costs of the motion.
17. These submissions overstated the position. The respondent's written submissions provided before the hearing of the notice of motion included a submission that the statement of claim did not articulate the duty alleged to be owed to the plaintiff by the respondent, who was an employee of the company whom it is said the applicant retained to provide insurance broking services.
18. The respondent had submitted before the hearing of the motion that if the respondent owed a duty to the applicant the content of that duty would be markedly different from the content of the duty owed by her employer and contended that these issues were not addressed in the pleading. Plainly enough, as counsel appearing on this application accepted, the respondent there asserted that the allegations of duty and breach were insufficiently pleaded. That was in essence the conclusion of the primary judge.
19. The applicant accepted that the limitation point that had been raised in correspondence before the filing of the notice of motion was not a relevant issue on the question of costs of the notice of motion. The notice of motion had not sought an order for summary dismissal of the proceeding, and no argument in relation to limitation periods was raised.
20. As noted above, costs were sought by the applicant on the indemnity basis. The reason for that is not readily apparent, but that application was not pressed, at least in oral argument, before this Court.
21. In my view the primary judge was entitled to view the outcome of the notice of motion differently from the way for which the applicant contends in this Court. His Honour was entitled to view the outcome as one that involved mixed success for both parties. The statement of claim was not struck out, but the applicant was ordered to replead. The applicant was not wholly successful on the notice of motion. On one view the respondent was a successful party.
22. Counsel for the applicant argued in this Court that the new point in reliance upon the pleading of matters required under s 5B of the Civil Liability Act was raised without notice and that this was relevant to the exercise of the costs discretion. That was a matter that was considered by the primary judge. His Honour was satisfied that counsel then appearing for the applicant should have been expected to be able to deal with the application as counsel evidently did.
23. The primary judge observed that counsel then appearing for the applicant did not seek an adjournment. The position may well have been different had the point, after being raised, been readily conceded by the applicant at the hearing of the notice of motion. But that did not happen. Instead there was a contested hearing before the primary judge on the question of whether or not the applicant needed to replead to deal with the suggested inadequacy of the pleading to meet the requirements of s 5B.
24. The applicant has not demonstrated that it is seriously arguable that the primary judge's discretion miscarried. Even if that were reasonably arguable, the proposed appeal involves no issue of principle, and, in my view, no question of any real injustice. Indeed, an alternative course that would have been open to the primary judge would have been to order that the applicant pay the costs thrown away by the amendment to the statement of claim and a proportion of the respondent's costs of the notice of motion by reason of the respondent's partial success.
25. The fact that the respondent did not obtain the relief claimed in the notice of motion was not determinative of the exercise of the costs discretion. The respondent had not sought summary dismissal of the applicant's claim. Even if the statement of claim had been struck out there would presumably have been liberty to replead as no order for summary dismissal was sought. The primary judge's order was a more limited form of the relief sought. Thus there is no injustice going beyond that which is merely arguable.
26. Indeed, the applicant might consider himself fortunate that the primary judge exercised the costs discretion in the way he did. In my view the application should be dismissed with costs.
27. EMMETT AJA: I agree with the orders proposed by White JA for the reasons that his Honour has propounded.
28. WHITE JA: Accordingly the orders of the Court will be: 1. Summons seeking leave to appeal be dismissed. 2. The applicant pay the respondent's costs. [Parties address on costs.]
29. WHITE JA: Two issues have been raised in respect of the costs order this Court has made. The respondent seeks an order that those costs be payable on the indemnity basis. That application is put on two grounds. First, it is said that the application for leave to appeal was hopeless and doomed to fail and should never have been brought. Secondly, some reliance is placed on what is said to be an offer of compromise dated 7 February 2018. The offer of compromise was that the defendant would consent to orders that the summons for leave to appeal be dismissed with each party to bear his and her own costs.
30. On the first ground I am not satisfied that there was a relevant delinquency that would justify the making of an order for indemnity costs. The matters that were raised by counsel for the applicant on the hearing of the application were sufficiently cogent that the ordinary costs outcome should follow the rejection of counsel's submission rather than an indemnity costs order.
31. As to the offer of compromise, there was no evidence as to the extent of any costs that had been incurred by the respondent at the time of the service of the offer of compromise. It is not possible to say that there was any real element of compromise in the offer to give up the costs which might have been incurred up to the date of the offer. Accordingly, for these reasons, I would not accept the respondent's submission that costs of this application should be payable on the indemnity basis.
32. Counsel for the respondent also sought an order for abundant caution under Uniform Civil Procedure Rules 2005 (NSW) r 42.7. That rule provides that: "42.7 Interlocutory applications and reserved costs (cf SCR Part 52A, rule 16; DCR Part 39A, rule 22; LCR Part 31A, rule 17) (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings."
33. Counsel submitted that there was some doubt as to whether or not the application for leave to appeal in this Court was a separate proceeding from the proceeding that is pending in the District Court. If it is a separate proceeding then no order under r 42.7 is required for the costs to be capable of being assessed forthwith and to be payable forthwith after agreement or assessment. On the other hand, if the application to this Court is regarded as being brought in the same proceeding then an order under r 42.7 would be required.
34. The Court was not assisted with any reference to applicable authority on the question. In my view, without deciding the question of construction of r 42.7, it is appropriate that the costs of this application should be payable forthwith after agreement or assessment. In substance, at least, the application to this Court was a separate proceeding. There is no obvious reason as to why the costs in this Court should await the outcome of the District Court proceedings. Nothing that would be decided in the District Court would affect the merits of the application for leave to appeal in this Court.
35. I propose that for abundant caution the Court make an order that to the extent necessary the costs payable pursuant to the order for costs be capable of being assessed forthwith and be payable forthwith after agreement or assessment.
36. EMMETT AJA: I agree with White JA that this is not an appropriate case for the grant of indemnity costs for the reasons his Honour has given. I also agree that whatever might be the effect of r 42.7, this is an appropriate case where costs should be assessed and paid forthwith for the reasons given by White JA. Accordingly, that will be the order of the Court.

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