24 The Court's power to deal with costs has recently been the subject of extensive consideration in two Full Bench judgments (Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 at [8]-[9]; Toll Transport Pty Ltd v Transport Workers' Union of New South Wales (No 2) [2010] NSWIRComm 97 at [8]-[11]) and although those judgments were in relation to civil proceedings, the relevant principles are not materially affected by the fact that the present proceedings are criminal proceedings. We adopt what was said in Cretney and Toll Transport.
25 As it has been explained, the appellant's position regarding the proceedings at first instance was that there should be no order as to costs as a consequence of four errors on the part of the primary judge. As to the first alleged error that there was no effective challenge to the finding that the corporation had breached the OHS Act, yet the prosecutor was 'put to its proof', Marks J did not regard that as favouring any exercise of discretion against the respondent's application for costs.
26 In light of the respondent's concession that its admissions 'virtually proved the case that the prosecution had to prove that the company committed the offence' it seems to us that it was quite unnecessary for the appellant to occupy most of the first two days of the trial to traverse all the circumstances of the incident. It was only necessary to address 'some minor matters' that the respondent declined to admit, in order to rectify inadequacies perceived in the particulars of the charge in the application for order. We do not consider Marks J committed any error.
27 The second alleged error was that his Honour failed to take into account that the respondent 'materially contributed to the prosecution and its costs by exercising his right to remain silent as to his "defence" to a charge under s 26(1)'. We do not consider there is any substance in this contention. The respondent did not form a belief about his defence until about one month prior to the trial commencing. Furthermore, there was no evidence that the appellant incurred additional cost as a result of the timing of the respondent's disclosure of his defence.
28 The third alleged error concerned the finding by his Honour that the deed of indemnity made by the respondent and his employer, Alesco, would not indemnify the respondent. The indemnity against legal costs, etc, was only available if the respondent was a director of Dekorform. As the Full Bench confirmed on appeal, Mr Ryan was not a director of that corporation. It follows that the provisions of the indemnity could not, in any event, apply to him.
29 Moreover, and this concerns the fourth alleged error, as Marks J correctly observed at [43], the fact that an indemnity exists does not, of itself, provide any reason for denying a defendant in criminal proceedings a costs order against the prosecutor.
30 The appellant relied on Green to submit that this Court should look beyond the 'surface identity of the parties' and have regard to the financial ability of those persons or organisations that actually stand behind the parties for the purpose of liability for costs. Green concerned the question whether security for costs should be ordered in circumstances where proceedings had been commenced by a liquidator of a company, but those proceedings were financed by a litigation funder who stood to make a financial gain from the proceeds of the litigation.
31 After referring to the judgments in Green, Marks J stated:
[48] In my opinion, the part played by a consideration of a commercial gain to be made by a litigation funder in considering whether security for costs should be ordered is relevantly distinguishable from a consideration of whether a successful party in proceedings is entitled to a costs order in his or her favour assuming the existence of a third party indemnity. A litigation funder stands to make a commercial profit from the arrangement with the party. A third party provider of an indemnity for costs does not have, without more, any interest in the proceeds of the litigation. It is of the nature of an arrangement to finance costs incurred by a party to proceedings. Furthermore, there are significant differences in approach that are taken into account in considering whether an order for security for costs should appropriately be made when compared with a consideration of whether a successful party to proceedings should have the benefit of a costs order.
[49] In determining whether to exercise the discretion to make an order for the provision of security for costs, a court will have regard to the need to provide protection in appropriate circumstances against a successful party (usually a defendant) being denied a right to recover costs against another party who is impecunious. The discretion is a wide one and was the subject of general consideration in the New South Wales Court of Appeal in Green , previously referred to. However, in determining whether to exercise the discretion to make an order for costs in favour of a defendant who is successful in criminal proceedings, the court is concerned about compensation, as I have earlier discussed. Furthermore, the entitlement to costs has crystallised, whereas in considering matters involving security for costs a court is looking at matters in futuro .
[50] Of more relevant consideration is the recent decision of the High Court of Australia in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43. In those proceedings, the High Court of Australia considered whether or not the Supreme Court of New South Wales had power to order costs against a non-party who was a litigation funder. The High Court held that no such power existed because, fundamentally, the litigation funding arrangement did not constitute an abuse of process of the court. Although neither the High Court of Australia nor the New South Wales Court of Appeal, nor, indeed, the judge at first instance, had given specific consideration to whether or not a party might be deprived of the right to seek costs because of a litigation funding arrangement, the various judgments cast no doubt on the general proposition that the existence of a litigation funding agreement for the benefit of a successful party in proceedings would not in some way disentitle that party from recovering costs in circumstances where he or she would otherwise be entitled to the benefit of a costs order.
[51] I am of the opinion that the existence of any indemnity for costs to the benefit of the defendant would not disentitle him to a costs order to which he would otherwise be entitled.
32 We agree with Marks J's reasoning. In any event, as the respondent submitted:
By contrast [to the facts in Green ], the respondent did not initiate this litigation with the financial support of a third party who will share in the proceeds. He did not initiate it at all. He will not enjoy any proceeds from his acquittal. There is no litigation funder who ought to be required to share the risk of the litigation. The respondent had no choice but to resist the unwarranted prosecution of him.
33 The appellant has not established any proper basis to interfere with his Honour's first instance decision regarding costs.
34 As to the costs of the appeal, the appellant submitted the respondent should be deprived of the costs of the relevant disputed question of law upon which he had failed, and should be ordered to pay the appellant's costs of that dispute: O'Sullivan v Crown in Right of State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303; (2003) 128 IR 158 at [198], referred to with approval in WorkCover Authority of New South Wales (Inspector Keenan) v Leighton Contractors Pty Ltd [2005] NSWIRComm 454; (2005) 147 IR 329 at [13].
35 O'Sullivan concerned five separate charges brought against the defendant in those proceedings. Two of the charges were not made out. Having regard to Kimberley John Hughes v Western Australian Cricket Association (Inc) and Ors (1986) ATPR 48, subject to the qualifications in Cretazzo v Lombardi (1975) 13 SASR 4, and noting the decision in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272, Walton J, Vice-President decided to make an order for costs in favour of the prosecutor, with an apportionment of the costs recoverable by the prosecutor from the defendant (that portion of costs being 70 per cent).
36 In the present proceedings, the question of whether s 26 of the OHS Act extended to cover de facto and shadow directors arose in the context of the respondent's defence that he had not been validly appointed as a director of Dekorform. The appellant sought to counter that defence by contending, successfully, that s 26 covered de facto and shadow directors. However, ultimately it was found at first instance, and upheld on appeal, that the respondent was not a director in either capacity. The prosecution failed because an element of the offence was not made out.
37 As it was observed in Cretney at [8]:
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