Judd v Warwick

AMC Caterers Pty Ltd v Stavropoulos [2005] NSWCA 79 Anglo Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Berrico Estate Pty Ltd v Andersen [2003] NSWCA 23 Brittain v Commonwealth (No 2) [2006] NSWSC 528 Commonwealth of Australia v Lewis [2007] NSWCA 127 Commonwealth of Australia v Smith [2005] NSWCA 478 Fordham v Fordyce [2007] NSWCA 129 Heaps v Addison Wesley Longman Australia Pty Ltd [2000] NSWSC 542. CASES CITED: Holt v Wynter [2000] NSWCA 143 Knight v Clifton [1971] Ch 700 Ng v Chong [2005] NSWSC 385 Oshlack v Richmond River Council (1998) 193 CLR 72 Re: Nardell Coal Corporation (In liq) v Hunter Valley Coal Processing [2003] NSWSC 642 Smith v Grant [2006] NSWCA 244 Tolcher v Gordon [2005] NSWCA 135 Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 Williams v Lewer [1974] 2 NSWLR 91

PARTIES: Andrew Timothy Judd (Plaintiff) Stephen Mark Warwick and Alexander Meadows Rendel (Defendants)

COUNSEL: Mr R Quickenden (Plaintiff) Mr M Dicker (Defendant)

SOLICITORS: Brazel Moore Lawyers (Plaintiff) Middletons (Defendant)

1. On 7 September 2007 judgment was delivered in respect of two interlocutory motions in these proceedings. The remaining issue concerns the proper order as to costs of those motions.

2. The plaintiff brought one of the motions, seeking orders as to the service of the Statement of Claim, and the other motion was brought on behalf of the defendants seeking an order declaring that the Statement of Claim had not been duly served. The plaintiff's motion succeeded, and the defendants' motion was dismissed. I ordered that the time for service be extended and deemed service of the Statement of Claim to have been validly effected upon the defendants on 18 November 2006.

3. The plaintiff sought an order for costs in his favour, in accordance with the presumption that costs follow the event: r 42.1 of the UCPR. The defendants opposed that application and in turn sought an order that the plaintiff pay their costs, in accordance with the so-called "indulgence principle", which assumes displacement of the presumption in the case of a party seeking some sort of favour or dispensation from the court, irrespective of the outcome: Holt v Wynter [2000] NSWCA 143, Tolcher v Gordon [2005] NSWCA 135 at [131]. The defendants submitted, in particular, that the principle applicable is that stated by the Court of Appeal in Commonwealth of Australia v Lewis [2007] NSWCA 127 at [94] - [95].

4. The plaintiff conceded that there was no evidence that the defendants' opposition to the plaintiff's motion was 'wholly unreasonable' so that if the indulgence principle does apply, then there should be an order for costs in their favour.

The applicable principle 5. It was submitted for the defendants that the principle stated in Commonwealth of Australia v Lewis [2007] NSWCA 127 at [94] - [95] should extend to and apply in the present case. The plaintiff acknowledged the force of the indulgence principle in the context of an application for an extension of time under the Limitation Act 1969, but submitted that the principle does not extend to the remedying of a procedural irregularity.

6. In my view the superior courts have made it clear in a number of recent judgments that the indulgence principle is not one of inflexible general application: see, for example, Fordham v Fordyce [2007] NSWCA 129 at [50], Smith v Grant [2006] NSWCA 244 at [79]; Brittain v Commonwealth (No 2) [2006] NSWSC 528 at [12]; Commonwealth of Australia v Smith [2005] NSWCA 478 at [217]; Re: Nardell Coal Corporation (In liq) v Hunter Valley Coal Processing [2003] NSWSC 642 at [145].

7. I consider that I am not bound by the decision in Commonwealth of Australia v Lewis in the context of the present matter, which did not involve the invalidation of proceedings. Rather, the present matter involved failures to comply with the rules of court as to time and manner, and were thus to be treated as procedural irregularities: Tolcher v Gordon [2005] NSWCA 135 at [73], capable of cure: s 63 of the Civil Procedure Act 2005.

8. Consistent with the overriding purpose of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules introduced under that Act, the presumption now is that costs will follow the event, unless it appears to the court that some other order should be made: r 42.1. Under the old rules of court the presumption was in the reverse, such that a party that applied for an extension of time was required to pay the costs of the application, unless the court ordered otherwise: Part 39A Rule 32 of the District Court Rules 1973. That is no longer the position.

9. The plaintiff submits that the rationale for r 42.1, at least in part, is for the parties to make a realistic assessment of the merits of their position before opposing an application, such as the one made in the present case: Oshlack v Richmond River Council (1998) 193 CLR 72 at 97. For my part, one does not need to go beyond the overriding purpose and the objects of case management for the rationale: see s 56 and s 57 of the Civil Procedure Act 2005.

Application of the principle 10. In the present matter the plaintiff was successful, and the presumption is, therefore, that the plaintiff should be awarded costs. The presumption may be displaced, on discretionary grounds. It is for the losing party to establish a basis for any departure from the usual rule: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10].

11. The discretion to depart from the usual rule will usually only be exercised where there has been some sort of misconduct or other disentitling behaviour on the part of the successful party. The circumstances where that might occur are summarised as follows in the Civil Trials Bench Book (Judicial Commission of NSW, June 2007):

[8-0030] Displacing the presumption The court must not exercise its discretion to award costs against a successful party arbitrarily or capriciously, or on no grounds at all: Oshlack , above, at [22]. The discretion must be exercised judicially and "according to rules of reason and justice, not according to private opinion…or even benevolence…or sympathy": Williams v Lewer [1974] 2 NSWLR 91 at 95.

It is for the losing party to establish a basis for any departure from the usual rule: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10]. The usual rule is that the presumption will only be displaced where there has been some sort of misconduct on the part of the successful party: Anglo Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874. The court is to have regard to the particular circumstances of the case, including the evidence adduced, the conduct of the parties and the ultimate result: Knight v Clifton [1971] Ch 700. In general terms the event will be regarded as going against a party who recovers nominal damages only, unless some other right is vindicated by the judgment, such as the establishment of a legal right irrespective of whether any substantial remedy is obtained: Ng v Chong [2005] NSWSC 385; Berrico Estate Pty Ltd v Andersen [2003] NSWCA 23 at [35] and [39]. But the mere fact that a defendant strenuously defends a claim does not entitle the plaintiff to the costs of a trial where the plaintiff does not succeed, or does not succeed to any material extent: AMC Caterers Pty Ltd v Stavropoulos [2005] NSWCA 79 at [4]-[6]. The presumption may be displaced by contractual agreement: Heaps v Addison Wesley Longman Australia Pty Ltd [2000] NSWSC 542.

12. There was no relevant conduct on the part of the plaintiff in the present proceedings such as would justify displacement of the presumption that costs follow the event.

Disposition 13. For these reasons I consider that the defendants should pay the plaintiff's costs of the two motions, on the ordinary basis. I note that no application has been made under r 42.7(2), so that the costs do not become payable until the conclusion of the proceedings.

14. I therefore order the defendants to pay the plaintiff's costs of the motions, including any costs arising from the defendants' application for costs, on the ordinary basis.

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