Idoport Pty Limited v National Australia Bank Limited, Idoport Pty Limited v Donald Robert Argus, Idoport Pty Limited v National Bank Limited & Ors

Supreme Court of NSW|2006-09-08|Before: Einstein J, Kirby P, Mahoney JA, Priestley JA

CITATION : Idoport Pty Limited v National Australia Bank Limited, Idoport Pty Limited v Donald Robert Argus, Idoport Pty Limited v National Bank Limited & Ors [2006] NSWSC 895

HEARING DATE(S) : 21/7/99, 2/8/99, 18/5/00, 26/5/00, 13/6/01, 20/6/01, 22/8/01, 28/10/01, 1/11/01,

JURISDICTION : Equity Division Commercial List

DECISION : Plaintiff to pay defendants costs of nominate interlocutory motions

Civil Procedure Act (NSW) 2005 LEGISLATION CITED : Federal Court Rules Queensland Uniform Civil Procedure Rules 1999 Victorian Supreme Court (General Civil Procedure) Rules 2005

New South Wales Bar Association v Stevens [2005] NSWCA 351 New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 14 IPR 75 CASES CITED : O'Keeffe Nominees Pty Ltd v BP Australia Ltd (No 2) (1995) 55 FCR 591 Oshlack v Richmond River Council (1998) 193 CLR 72 Surf Road Nominees Pty Ltd v James [2004] NSWSC 223 Waters v P C Henderson (Australia) Pty Ltd [unreported, Supreme Court of New South Wales Court of Appeal, Kirby P, Mahoney JA, and Priestley JA, 6 July 1994]

Idoport Pty Limited (Plaintiff) PARTIES : National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)

FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00

COUNSEL : Mr L Foster SC (Plaintiff) Ms K Williams (Defendant)

SOLICITORS : Sarvaas Ciappara (Plaintiff) Freehills (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50113/98 Idoport Pty Limited v National Australia Bank Limited & Ors

3991/00 Idoport Pty Limited v National Australia Bank Ltd & Ors JUDGMENT Costs of nominate interlocutory hearings The background 1 The three relevant proceedings in point were:

(a) Idoport Pty Ltd v National Australia Bank Ltd & Ors, proceeding number 50113 of 1998;

(b) Idoport Pty Ltd v Donald Robert Argus, proceeding number 50026 of 1999; and

(c) Idoport Pty Ltd v National Australia Bank Ltd & Ors, proceeding number 3991 of 2000. 2 On 29 January 2002, the Court dismissed each set of proceedings with costs: see [2002] NSWSC 18. 3 In August 2003, the defendants to the main proceedings and the Argus proceedings filed notices of motion seeking, inter alia, gross sum cost orders. Some amendments were made by amended notices of motion filed on 17 June 2005 and again by amended notices of motion filed 20 June 2006. The present applications 4 Prior to the dismissal of the respective proceedings the Court reserved costs in eight of the interlocutory hearings and made no order as to costs in relation to the remaining hearing. The occasion for the delivery of this judgment concerns the necessity for the Court to determine costs in relation to each of the nine interlocutory hearings. The parties have had an opportunity to address written submissions with respect to the costs issues. The threshold issue 5 The parties are in issue as to the applicability of Rule 42.7 of the Uniform Civil Procedure Rules ["UCPR"]. The position in that regard is as follows:

i. In the absence of a specific order dispensing with the requirements of the UCPR, the UCPR applies to the Proceedings: Schedule 6, clause 5 of the Civil Procedure Act (NSW) 2005.

ii. Schedule 6, clause 5 of the Civil Procedure Act (NSW) 2005 provides as follows: 5(1) Subject to subclause (2), this Act and the uniform rules apply to proceedings commenced before the commencement of this Act [namely 15 August 2005] in the same way as they apply to proceedings commenced on or after that commencement.

5(2) A court before which proceedings have been commenced before the commencement of this Act may make such orders dispensing with the requirements of the uniform rules in relation to the proceedings, and such consequential orders (including orders as to costs), as are appropriate in the circumstances.

iii. The general costs discretion conferred on the Court by section 98 of the Civil Procedure Act 2005 (NSW) operates subject to the UCPR.

iv. The general rule, set out in r 42.1 of the UCPR is that costs follow the event.

v. The UCPR also specifically deals with the costs of interlocutory hearings. Where the costs of interlocutory hearings have been reserved and the principal proceedings have subsequently been dismissed with costs, the successful party in the principal proceedings is entitled to the costs of any interlocutory hearings in which the costs were reserved, unless the court orders otherwise: r 42.7 of the UCPR. In this way, r 42.7 of the UCPR provides the usual position that the successful party to the principal proceedings is entitled to the reserved costs of the interlocutory hearings. 6 The defendants contend that the usual position should apply in the present case for the following reasons:

i. R42.7 of the UCPR is consistent with the rule as to reserved costs in interlocutory matters in other jurisdictions, including the Federal Court Rules (Order 62, r 15), the Queensland Uniform Civil Procedure Rules 1999 (r 699), the Victorian Supreme Court (General Civil Procedure) Rules 2005 (r 63.22) and the Supreme Court (UK) (practice direction to rules 43 to 48, formerly Order 62, r 3(6) of the RSC).

ii. the rationale for the presumption is applicable in the present case. The rationale was stated by Spender J, namely in O'Keefe Nominees Pty Ltd v BP Australia Ltd (No 2) (1995) 55 FCR 591 (at 598 to 599): "it is not necessarily just that the costs of an interlocutory application should follow the result of that interlocutory application but rather should be determined by the result of the principal litigation of which the interlocutory application forms but a part ." (Emphasis added) iii. it would be artificial to isolate each of the interlocutory hearings and apply any different test from that which applies to the costs of the Proceedings generally.

iv. the interlocutory hearings the subject of these submissions concern confidentiality undertakings in relation to the plaintiff's witness statements, claims for legal professional privilege over documents produced on notices to produce and subpoenas, applications for leave to amend the pleadings, applications in relation to discovery and applications to set aside notices to produce and subpoenas. All of these applications are intimately concerned with and not collateral to the conduct of the principal litigation.

v. accordingly, there are no special circumstances in this case to disturb the operation of the usual rule that the defendants are entitled to the reserved costs of the interlocutory hearings. 7 The plaintiffs contradictor submissions are as follows:

i. there was no equivalent rule equivalent rule to rule 42.7(1) under the old Supreme Court Rules .

ii. the transitional provisions with respect to the Uniform Civil Procedure rules are set out in schedule 6 to the Civil Procedure Act (NSW) 2005 . The NAB Parties have quoted clause 5 in their submissions, however clause 10 is also relevant. Clauses 5 and 10 of schedule 6 are as follows: "5 Pending proceedings

(1) Subject to subclause (2), this Act and the uniform rules apply to proceedings commenced before the commencement of this Act in the same way as they apply to proceedings commenced on or after that commencement.

(2) A court before which proceedings have been commenced before the commencement of this Act may make such orders dispensing with the requirements of the uniform rules in relation to the proceedings, and such consequential orders (including orders as to costs), as are appropriate in the circumstances."

"10. General saving Subject to this Schedule and the regulations: (a) anything begun before the commencement of this Act under a provision of the old legislation for which there is a corresponding provision in this Act or the uniform rules may be continued and completed under the old legislation as if this Act had not been enacted, and (b) subject to paragraph (a), anything done under a provision of the old legislation for which there is a corresponding provision in this Act or the uniform rules (including anything arising under paragraph (a)) is taken to have been done under the corresponding provision of this Act or the uniform rules, as the case requires." iii. it is clear from the opening words of Rule 42.7(1) itself (" Unless the court orders … ") and from clause 10 of schedule 6 that in an appropriate case, the Court need not apply rule 42.7(1) in its terms.

iv. the Legislation Review Committee commented on Schedule 6 in paragraphs 15 to 18 of the Legislation Review Digest, No 5, 2 May 2005, a copy of which is Annexure A to these submissions. The committee noted the retrospective effect of clause 5 of Schedule 6, but stated that this was justified in the circumstances where the Court had a power to dispense with the new rules where appropriate.

v. retrospective legislation is always fraught with danger. In this case the NAB Parties are asking the Court to apply rules made in 2005 to events that happened in 1999, 2000 and 2001 at a time when no one would have seriously contemplated that they would be bound by a rule like rule 42.7 of the 2005 rules.

vi. had such a rule been in contemplation, it is submitted that there is a real possibility or a probability that the parties would have asked the Court to rule on the costs of each application when the application was determined. This is all the more so in this case as it will be seen from what is submitted below that the plaintiff had a strong case to be awarded costs in respect of most of the reserved costs orders. vii. by way of example, when costs were reserved on 1 November 2001 (this order is addressed in detail below), the following exchange occurred at transcript pages 14657.53-14658.04 (Annexure B to these submissions):

"DICKER: Two matters. Firstly, could any costs relating to the orders made in the main proceedings be reserved, just so that there is no argument that your Honour, just having made the orders, would prevent us from later raising the costs?

HIS HONOUR: I will have the transcript record that I note that the costs of the orders just made in the main proceedings are to be reserved." viii. table F to Ms Castle's report (on pages 186ff of the report) demonstrates the enormity of the costs the NAB Parties are claiming in respect of interlocutory applications. It is particularly relevant that Ms Castle assumes that each solicitor spent two days out of Court for every day in Court and that each Counsel spent one day out of Court for every day in Court. This demonstrates the importance of fairly determining each of the reserved costs orders and the prejudice that will be suffered if the UCP Rules are given retrospective force.

ix. further, section 58 of the Civil Procedure Act 2005 provides that when making orders the Court must act in accordance with the dictates of justice. It is submitted that the Court would not be acting in accordance with the dictates of justice if it applied rule 42.7 retrospectively.

x. in the circumstances it is submitted that the Court should determine each of the matters where costs have been reserved on their own merit. 8 In my view it is appropriate to make an order dispensing with the requirements of the UCPR in order that the parties may be placed, insofar as the relevant exercise of discretion is concerned, into the same position as they would have been had the reserved costs been determined at the time of the respective interlocutory hearings. The proceedings were unusual in a number of respects made apparent by the interlocutory judgments and occupied a huge bracket of hearing time. They do not represent the norm. Part 52A rule 16 of the Supreme Court Rules 9 Part 52A, r 16 of the NSW Supreme Court Rules provides as follows:

Subject to this Part the costs of any application or other step in any proceedings shall, unless the Court otherwise orders, be paid and otherwise dealt with in accordance with the provisions of this Part or the provisions of any order relating to the general costs of the proceedings. 10 The usual rule, that costs follow the event, is set out in Part 52A rule 11. 11 As the defendants have observed, New South Wales Bar Association v Stevens [2005] NSWCA 351 Spigelman CJ at [17] (with whom Mason P and Handley JA agreed) is authority for the proposition that an order reserving the costs of an interlocutory hearing is an 'otherwise order' for the purpose of Part 52A, r 16, and that therefore the award of costs in an interlocutory hearing where costs have been reserved is in the discretion of the Court. The further threshold issue 12 The parties are then at issue as to whether or not the proper exercise of the Court's discretion must follow a separate determination of the respective merits concerning the proper costs order in terms of each of the occasions where costs have been reserved. 13 In my view this approach is presently inappropriate. In that regard it is important to look to the principles relevant to the exercise of the Court's discretion. The principles relevant to the exercise of the Court's discretion under Part 52A 14 I accept as of substance the proposition put by the defendants that the following principles underpin the exercise of the Court's discretion:

i. subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. If the litigation had not been brought by the unsuccessful party, the successful party would not have incurred the expense which it did: Oshlack v Richmond River Council (1998) 193 CLR 72, per McHugh J at 97; see also Surf Road Nominees Pty Ltd v James [2004] NSWSC 223 per Einstein J at [48].

ii. "the event" which costs ordinarily follow can be considered as the commercial result, so that a successful party may recover all its costs where the objective sought by the litigation is achieved, even though the party does not succeed on every issue in the litigation: see for example New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 14 IPR 75 at 79; and

iii. an analogy may be drawn with matters involving multiple issues. In these cases it is generally not appropriate for the Court to attempt to determine which issues were won by particular parties, to what extent they were won, and what was the amount of time spent on each of the issues so as to apportion costs accordingly. Such an approach would be contrary to the trend of decisions in relation to the exercise of discretion as to costs: Waters v P C Henderson (Australia) Pty Ltd NSWCA 6 July 1994 unreported, per Mahoney JA at 5 (with whom Priestley JA and Kirby P agreed). In the same way the costs of these interlocutory hearings should be determined by the result of the principal litigation of which these interlocutory hearings form but a part. As such, it is not necessary for the Court to consider the issues that arose in each of the interlocutory hearings in an attempt to apportion the costs of each of the various interlocutory hearings. 15 Applying those principles [but noting that the defendants apparently no longer press for costs of the interlocutory hearing of 26 October 2001], the principled exercise of the Court's discretion is to order that the costs of each of the other interlocutory hearings in issue be awarded in favour of the defendants as the successful parties to the principal litigation. 16 That being the case it only remains to direct that the parties produce short minutes of order recording this result. Short minutes of order 17 The parties are to bring in short minutes of order.

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.

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