The plaintiff brought an appeal against determinations made by the Costs Review Panel for costs payable by the plaintiff, a solicitor, to his clients. On 10 August 2022, in my judgment GB v EB [2022] NSWDC 322, I made the following orders:
1. Refuse leave to appeal pursuant to s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW) and dismiss the appeal.
2. Costs reserved with liberty to apply.
The plaintiff sought a judicial review from the Court of Appeal pursuant to s 69 of the Supreme Court Act 1970 (NSW). On 25 May 2023, the Court of Appeal dismissed the applicant's further amended summons seeking to review the orders: Amirbeaggi v EB [2023] NSWCA 108 (the discrepancy in the name of the judgment arises from an application Mr Amirbeaggi made to me for the suppression of his name, which he appears not to have made to the Court of Appeal).
In the interim, the successful defendants/respondents made an application for a gross sum costs order on an indemnity basis in relation to the orders I had made. On 27 September 2022, after hearing from the parties as to the course they considered appropriate for the determination of costs, I made orders pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 20.14 as follows:
1. Pursuant to UCPR r 20.14, I refer the determination of the reasonable legal costs (including disbursements) to a costs assessor, to be nominated by Mr B Bellach, the Manager, Costs Assessment, Supreme Court of NSW, for assessment on both a party/party and indemnity basis, inquiry and report by the costs assessor on the costs questions arising from these proceedings and from the issues adverted to in my judgment.
2. Each party is to provide the relevant documents to Mr Bellach for the purpose of the costs assessment 14 days from today.
3. Liberty to the parties, as well as to the costs assessor, to apply to Gibson DCJ in relation to costs and other issues arising from this appointment including provision of documents.
4. Stand matter over to Wednesday 30 November 2022 before Gibson DCJ at 10am for any further directions or orders.
5. Reserve the costs of today.
Mr Chris Wall was nominated by Mr Bellach, the Senior Deputy Registrar, Manager of Costs Assessments, to determine the costs. In a long and careful report, Mr Wall assessed those costs on both the ordinary and the indemnity basis.
After receipt of the referee's report, the defendants sought a gross sum costs order in the amount of $77,750.79, namely for the indemnity costs assessed by Mr Wall, the indemnity costs of this application and 50% of Mr Wall's fee, which are calculated as follows:
Indemnity costs of proceedings $ 45,273.67
Share of referee's report $1,567.50
Professional fees (application) $19,552.30
Disbursements (application) $11,357.32
[2]
The parties' submissions
The defendants seek payment of the sum set out above on a gross sum indemnity costs order basis.
The plaintiff raises the following issues relevant to the costs issues:
1. The court should not adopt the referee's report.
2. Costs should not follow the event by reason of the defendants' failure to comply with UCPR r 50.16A: see UCPR r 50.16A(2); in fact, the defendants should pay the plaintiff's costs on an indemnity basis, even though the plaintiff lost.
3. Indemnity costs should not be awarded as the appeal was not hopeless.
[3]
Adoption of the report
As to the first of these issues, the parties themselves decided the task referred to him by the court, as well as how that task was approached, as the commentary in Mr Wall's report makes clear. The referee has not taken an incorrect approach to the task, or made any errors of fact pointed to by either party. The plaintiff's request that the report be "evaluated in light of the task referred to him by the court and indeed how that task was approached" (submissions, paragraph 10) should be rejected for this reason. Both the orders I fashioned and the course of the referral were the result of the parties' requests and preferences. In those circumstances, the challenge to the adoption of the report should be rejected.
[4]
UCPR r 50.16A
This was the principal issue in the costs application.
The plaintiff seeks a costs order in his favour pursuant to r 50.16A of the Uniform Civil Procedure Rules 2005 (NSW), which provides:
"50.16A Objections to competency of appeal
(1) A defendant who objects to the competency of an appeal must, by notice of motion filed and served on all other parties to the appeal within 14 days after service on the defendant of the notice of appeal, apply to the court for an order dismissing the appeal as incompetent.
(2) If the defendant fails to comply with subrule (1) and the appeal is nevertheless dismissed as incompetent -
(a) the defendant is not entitled to costs of the appeal unless the court otherwise orders, and
(b) the court may order the defendant to pay the plaintiff any costs of the appeal proving useless or unnecessary."
UCPR r 50.16A became operational on 8 May 2015, but has been referred to in only a handful of cases since. Its purpose is to minimise costs and inconvenience in the appellate process (AB v State of New South Wales [2014] NSWCA 243) and it appears largely to operate as a warning to parties to consider such problems from the outset. This is probably why there are very few decisions on the costs penalties flowing from failure to comply with UCPR r 50.16A, and none at all where the kind of costs order that the plaintiff seeks in these proceedings has actually been made.
Of the few judgments where the rule is referred to, the most helpful is that written by Harrison AsJ. The approach taken by her Honour has been to note the discretion for costs orders to be varied where there is non-compliance and, where appropriate, to make costs orders which still follow the event in the usual way, at least in the absence of good reasons to the contrary. In Zadeh v The Hollard Insurance Company Pty Ltd [2022] NSWSC 345, where the notice was not served for six months, several warnings (as opposed to the filing of the motion) had been given in correspondence, as was the case in the proceedings the subject of this application. Harrison AsJ noted the discretion as to costs given by UCPR r 50.16A(2) and determined costs as follows:
"[73] The defendant was served with the sealed summons commencing an appeal on 16 July 2021. The motion as to competency was filed on 2 November 2021 and served on 3 November 2021, after several warnings were given to the plaintiff since at least 14 October 2021. There is a discretion for this Court to make an order for costs in favour of the Defendant in the event the appeal is dismissed as incompetent: see UCPR 50.16A(2).
[74] A purpose for the prompt filing of the motion within 14 days is to minimise the inconvenience and cost to the Court and to the putative appellant: see AB v State of New South Wales [2014] NSWCA 243. The plaintiff has not incurred unnecessary expense due the late filing and service of the motion. The court has not been put to additional inconvenience as the hearing and directions hearing of the motion and summons were listed concurrently.
[75] The Court ought to make an order for costs in favour of the defendant in order to do justice between the parties."
Having noted the existence of this discretion, and the basis for it, her Honour went on to hold:
"[76] Costs are discretionary. Costs generally follow the event. The plaintiff is to pay the defendants costs of the proceedings including the notice of motion filed 5 October 2021 and 2 November 2021."
A factor considered relevant to the exercise of the discretion by Bellew J in El-Hadi v Australian Timbers (NSW) Pty Limited [2020] NSWSC 1501 was that, although the defendant had not filed any such notice of motion, and instead simply raised it in correspondence (as occurred here), the plaintiff had not raised the issue of the costs consequences until a few days before the trial (at [3]). His Honour resolved the issue by deferring it:
"[6] The circumstances which have arisen do not reflect favourably on either party to the proceedings. There is no cogent explanation why, in circumstances where the raised this issue in correspondence as long ago as 10 September 2020, those acting for the defendant did not comply with the requirement mandated by r 50.16A and file the necessary notice of motion and affidavit. Equally, and bearing in mind the basis of this application today, there is no cogent explanation why such non-compliance was not raised by those acting for the plaintiff on receipt of the correspondence of 10 September 2020.
[7] In all of those circumstances, it seems to me that the dictates of justice are best served by granting an adjournment for a short period. In taking that course, I have had regard to the fact that, although not determinative, there is no suggestion that there will be any prejudice to the defendant if that course is taken.
The rule is certainly a harsh one. It may not always be clear whether the competency of the appeal is challengeable: Gabriel v Grech [2018] NSWSC 1652. It applies to appeals from the Local Court where the parties may be self-represented and thus unfamiliar with their obligations: Macdonald v Macdonald [2017] NSWSC 809. Curiously, it does not apply to criminal appeals. In Osman v Director of Public Prosecutions (No 2) [2016] NSWSC 1222 at [61], Campbell J commented:
"Appeals under Part 5 of the Crimes (Appeal and Review) Act are dealt with under part 51B Supreme Court Rules 1970 (NSW). Those rules contain no counterpart to r 50.16A Uniform Civil Procedure Rules 2005 (NSW) concerned with appeals to courts more generally. Part 51B of the Supreme Court Rules imposes no obligation on a defendant to raise the question of competency early, supported by costs sanctions. It does not seem appropriate to transpose r 50.16A to the Supreme Court Rules. Accordingly, I will decide the question of the reserved costs on general principles."
Taking the above into account, while I would not categorise UCPR r 50.16A as a lex imperfecta, it must be acknowledged that the sternness with which it was drafted does not seem to have been translated into punitive action of the kind the provision warns about.
This brings me to the question of the exercise of discretion, which I consider I should approach in the manner described by Harrison AsJ.
The general principles as to costs orders are set out in Oshlack v Richmond River Council (1998) 193 CLR 72 at [65] - [67], Commonwealth of Australia v Gretton [2008] NSWCA 117 at [21] and, in relation to conduct which falls short of misconduct but incurs unnecessary expense, in Lollis v Loulatzis (No 2) [2008] VSC 35 at [29].
In exercising the discretion as to any variation of the usual order of costs following the event, I should take into account the repeated statements by courts that only in compelling circumstances would a successful party be ordered to pay an opponent's costs. In Arian v Nguyen [2001] NSWCA 5, Ipp AJA stated:
"37 The making of an order that a successful party pay his or her opponent's costs requires strong justification (Ottway v Jones [1955] 1 WLR 706 at 708, 714, Scherer v Counting Instruments Limited [1986] 1 WLR 615 at 618) and exceptional circumstances must exist before a party will not only be deprived entirely of costs but also required to pay part of the opponent's costs (Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201; Robinson v Australian Association of Social Workers Limited [2000] SASC 239).
Where a party raises issues or makes allegations improperly or unreasonably, this may constitute misconduct such that the court may not only deprive it of its costs but order it to pay the whole or a part of the unsuccessful party's costs: Trade Practices Commission v Nicholas Enterprises Pty Ltd at 208 per Fisher J, Re Elgindata Limited (No 2) [1993] 1 All ER 232 at 237 per Nourse LJ; Ashby v Marshall , (unreported, SC(SA), 28 November 1991); Popovic v Murray (unreported SC(Tas), 15 March 1991).
38 It is rare for a successful party who is guilty of misconduct in the litigation to be ordered to pay the unsuccessful opponent's costs where the misconduct does not lengthen the proceedings unnecessarily, cause unnecessary issues to be canvassed or otherwise cause the costs of the litigation to be increased. Indeed, the court's entitlement to depart from the usual order that costs follow the event has sometimes been said, in effect, to be subject to the qualification that the misconduct in question occasioned unnecessary litigation and expense (see Huxley v West London Extension Railway Company (1899) 14 App Cas 26 at 32-33 per Lord Halsbury LC; Ritter v Godfrey [1920] 2 KB 47 per Atkin LJ at 60). In other cases, however, this qualification has not been mentioned: see for example Donald Campbell & Co v Pollak [1927] AC 732 at 811-812; Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433 at 500; Jamal v Secretary, Department of Health (1988) 14 NSWLR 252 at 271-272; Re Elgindata Limited (No 2) (supra). On balance, it seems to me that while delay and increased expense brought about by improper conduct in the course of the litigation are highly relevant factors in the discretion to depart from the usual order as to costs, they are not essential to the exercise of that discretion. It would, in any event, be very unusual for misconduct of that kind not to cause unnecessary delay and expense."
The correctness of this view, and the strictness of this test, have been repeatedly affirmed by courts in all jurisdictions and at all levels. In Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v PDWL (costs) [2021] FCAFC 75 at [15], the Court restated these propositions:
"The broad discretion encompasses the jurisdiction for the Court to make no order for costs to a successful party or even costs against a successful party: Austen v Ansett Transport Industries (Operations) Pty Ltd [1993] FCA 403 per Burchett J (at [58]); Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201; (1979) 42 FLR 213 per Fisher J (at 220). However, it is extremely rare for the successful party to be ordered to pay the unsuccessful party's costs. Such an order "can rarely, if ever, be justified": Scherer v Counting Instruments Ltd [1986] 1 WLR 615 per Buckley LJ (at 622); see also Ngarluma Aboriginal Corporation RNTBC v Ramirez (No 2) [2018] FCA 2042 per Banks-Smith J (at [6]). There must be "strong justification" for the order and "exceptional circumstances" must be shown: Arian v Nguyen [2001] NSWCA 5 per Ipp AJA (at [37], with Foster AJA agreeing at [1]) and Oshlack per McHugh J (at [70]). Furthermore, the onus lies on the unsuccessful party to demonstrate a basis for departing from the usual rule: Waterman v Gerling Australia Insurance Company Pty Ltd (No 2) [2005] NSWSC 1111 (at [10])."
The Court went on to set out paragraph [38] of Arian v Nguyen (see above) in full, referring to the expression of similar views in an earlier decision of the Full Court of the Federal Court in Grass v Minister for Immigration and Border Protection (No 2) [2015] FCAFC 61.
The fact situation in the present case is very similar to Zadeh v The Hollard Insurance Company Pty Ltd. As is set out in the affidavit of Rebecca Renshaw sworn on 26 July 2022, the defendants identified, in the submissions filed pursuant to the orders made on 25 March 2022, the lack of competence in the appeal by reason of the need to seek leave. This was a submission that should have been answered by the plaintiff in reply submissions by 24 May 2022 but instead of doing so, the plaintiff failed to file any reply submissions at all. It was in those circumstances, given the failure to reply, that the notice of motion required by UCPR r 50.16A was filed but the plaintiff continued to argue throughout most of the first day of the hearing before me that no leave was required, even after the notice of motion required by UCPR r 50.16A had been filed.
As Mr Rogers states in his written submissions (referring to Zadeh v The Hollard Insurance Company Pty Ltd at [73] - [75]), the plaintiff has not demonstrated that the costs associated with the appeal would have been any different had the motion been filed in time. It would have been ignored for just the same reasons. Indeed, in relation to the challenge to indemnity costs, the plaintiff was still trying to argue his case in this costs application before me, and the only reason that this argument did not proceed was because the Court of Appeal, the day before this hearing on costs, dismissed the application for judicial review. (I was not addressed as to whether the failure to comply with UCPR r 50.16A would have carried over into the costs of the judicial review and I note that the issue of costs implications of UCPR r 50.16A was not referred to in the Court's judgment).
In those circumstances, I propose to adopt the same reasoning and to make the same order as that made by Harrison AsJ, namely that costs should follow the event.
The remaining question is whether those costs should be paid on an indemnity basis.
[5]
Should an indemnity costs order be made?
The defendants submit that this was always a hopeless appeal and that the hopelessness was such as to warrant an indemnity costs order: Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801 at [24]; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401. The amounts in dispute were modest, there was no significant error made by the Costs Review Panel and the manner of conduct of the appeal was combative.
Nevertheless, for the reasons expressed by Bellew J in El-Hadi v Australian Timbers (NSW) Pty Limited set out above, there may be cases where unsatisfactory conduct on both sides may be relevant as to costs. It may seem like a counsel of perfection to say that the defendants should have filed their notice of motion, but it is still a compelling factor.
Ms Nolan submits, and I agree, that the appropriate manner in which to accommodate the failure to serve a notice of motion conformably with UCPR r 50.16A is to add it to the list of factors for which the defendants should be denied indemnity costs and that, if so, an order for costs on the indemnity basis should not be made. In agreeing with her submission, I take into account that I do not accept that the appeal was entirely hopeless (unlike, for example, Ferella v Stomo [2017] NSWCA 268), although the argument was weak and the sum involved trifling. The addition, to those defects, of the failure of the defendants to comply with UCPR r 50.16A must tip the balance in favour of ordered, rather than indemnity, costs.
I discussed the appropriate reductions with the parties in relation to each of the sum before reserving judgment in order to provide these reasons. If costs orders are made on the ordered costs basis, the revised sum of $67,681.92 is arrived at as follows:
Costs of proceedings on an ordered basis $ 39,554.42
Share of referee's report $1,567.50
Professional fees on an ordered basis (application) $16,560.00
Disbursements including a small reduction for these to be paid on an ordered basis (application) $10,000
[6]
Orders:
1. The plaintiff pay the defendants' costs pursuant to s 98 of the Civil Procedure Act 2005 (NSW) in the gross sum of $67,681.92.
2. Exhibits retained until further order.
[7]
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Decision last updated: 08 June 2023