Kennett and Anor v Mayrana Pty Ltd and Ors

CORAM: Boland J President; Walton J Vice-President; Haylen J

CATCHWORDS: APPEALS - costs orders - unfair contract proceedings - leave to appeal refused to first instance applicant - no grounds established why usual order for costs following the event should not apply - appeals brought by legal representatives against costs orders made in favour of first instance applicant - appeals succeed - costs of appeal to be born by respondents - application for certificate under Suitors' Fund Act 1951 - grounds for exercise of discretion to grant certificate not established - application for certificate refused

Acquilina v Dairy Farmers Co-Operative Milk Co Ltd (1965) 82 W.N (Pt 1) NSW 531 Builders Licensing Board v Pride Constructions Pty Ltd (1979) 1 NSWLR 607 Commissioner for Children and Young People v A (No 2) (2004) 132 IR 112 CASES CITED: Berwick and Ors v Kennett [2010] NSWIRComm 41 Gurnett v The Macquarie Stevedoring Co Pty Ltd [No 2] (1956) 95 CLR 106 Kennett and Anor v Mayrana Pty Ltd and Ors (No 11) [2009] NSWIRComm 99 Kennett and Anor v Mayrana Pty Ltd and Ors (No 13) [2010] NSWIRComm 29

HEARING DATES: Written submissions dated 15, 16 and 25 April 2010

Mr A J McQuillen of counsel for 1st and 2nd appellants in IRC2008/2189; IRC2009/1050; respondent in IRC2009/1200; 1st and 2nd respondents in IRC2009/1286 Mitchell Lawyers

Mr A J Bulley of counsel for 1st and 2nd respondents in IRC2008/2189 and IRC2009/1050 Gadens Lawyers LEGAL REPRESENTATIVES: Mr R J Darke SC for 5th and 6th respondents in IRC2009/1050; 1st and 2nd appellants in IRC2009/1286 Middletons Lawyers

Mr G P Craddock SC for 7th respondent in IRC2009/1050; appellant in IRC2009/1200; 3rd respondent in IRC2009/1286 McCabe Terrill Lawyers Pty Limited

CORAM: BOLAND J, President WALTON J, Vice-President HAYLEN J

KEITH FRANKLIN KENNETT AND ANOTHER v MAYRANA PTY LTD AND OTHERS

Application by Keith Franklin Kennett for leave to appeal and appeal against judgment of Justice Schmidt given on 27 May 2008 and judgment and orders given on 4 November 2008 in Matter No IRC 3679 of 2003

KEITH FRANKLIN KENNETT AND ANOTHER v MAYRANA PTY LTD AND OTHERS

Application by Keith Franklin Kennett for leave to appeal and appeal against judgment of Justice Schmidt given on 29 June 2009 and judgment and orders given on 4 November 2008 in Matter No IRC 3679 of 2003

Application by Dr John Berwick for leave to cross-appeal and cross-appeal from the judgments and orders of Justice Schmidt given on 29 June 2009 and 24 July 2009 in Matter No IRC 3679 of 2003

KATARINA MUC AND ANOTHER v KEITH FRANKLIN KENNETT AND OTHERS

Application by Katarina Muc and Anor for leave to appeal and appeal against a judgment and orders of Justice Schmidt given on 24 July 2009 in Matter No IRC 3679 of 2003 JUDGMENT OF THE COURT [2010] NSWIRComm 64

1 This judgment concerns outstanding questions of costs arising from unsuccessful appeals brought by Professor Kennett (see Kennett and Anor v Mayrana Pty Ltd and Ors (No 13) [2010] NSWIRComm 29) and successful appeals brought by Dr Berwick and also by Ms Muc and Mr Healey (see Dr John Berwick v Keith Franklin Kennett; Katerina Muc and Anor v Keith Franklin Kennett [2010] NSWIRComm 41). Briefly stated, in Professor Kennett's two appeals, leave to appeal was refused and in the appeals of Dr Berwick, Ms Muc and Mr Healy, leave to appeal was granted and the appeals were upheld. In the Dr Berwick, Ms Muc and Mr Healey appeals, costs orders made at first instance against the appellants in favour of Professor Kennett were quashed and in substitution thereof, costs orders were made against Professor Kennett in favour of Dr Berwick with Ms Muc and Mr Healey to bear their own costs. In those appeals the Full Bench noted at [36]: As a result of these findings there remain a few loose ends that need to be addressed by the parties. The outstanding issues appear to be:

(a) what orders, if any, should be made in relation to the costs of the three February days in 2008 (an issue primarily arising between Professor Kennett and the respondent purchasers)? (b) what costs orders should be made in relation to the appeals in this Court in which Professor Kennett has been unsuccessful and Dr Berwick, Ms Muc and Mr Healey have been successful?

This costs decision of the Full Court, therefore, needs to be read with the appeal judgments identified above. 2 By agreement with the parties the Full Court received written submissions in relation to these costs issues and no party sought to orally address these matters. The Full Court is therefore in a position to determine the outstanding costs issues. 3 In relation to the costs of three hearing days in February 2008, the respondent purchaser noted that in Kennett and Anor v Mayrana Pty Ltd and Ors (No 11) [2009] NSWIRComm 99, Schmidt J, in order 1, made an order that the first and second respondents (Professor Kennett) were to bear the applicants' costs of the hearing of the jurisdictional arguments and otherwise the applicants (Professor Kennett) were to bear the respondent purchaser's costs on an indemnity basis from 13 September 2007. The Full Bench had refused leave to appeal in respect of, inter alia, the costs order of Schmidt J. In those circumstances it was submitted that no further order needed to be made regarding the February dates and Her Honour's first costs order, referred to above, continued to stand. 4 It was argued on behalf of Professor Kennett that Dr Berwick had not given a reason to the Court for withdrawing from the case at the end of the February 2008 hearing dates and no application, in terms, was made for an adjournment because of illness. It was pointed out that the applicants in the s 106 proceedings were thereby left without counsel who had conducted the case from the outset and who was intimately acquainted with the evidence. It was also submitted that Dr Berwick, by his own evidence, accepted that he had been unwell and had developed symptoms as early as April 2007 with increased severity until October 2007 when "the case stumbled to a close". The applicants had not been told of Dr Berwick's illness until 2009. As a result, other counsel was briefed and was required to complete the case. It was submitted in these circumstances, Professor Kennett should not be required to bear the costs of the three days when Dr Berwick was unable to properly fulfil his duty to his client. Further, the error found by the Full Bench was an error of law and therefore each party should bear its own costs of the application for leave to appeal and the appeal. It was submitted, in the alternative, that Professor Kennett should be granted a certificate pursuant to the provisions of s 6(1A) of the Suitors' Fund Act 1951. 5 The successful respondents in Professor Kennett's appeals and the successful appellants (Dr Berwick, Ms Muc and Mr Healey) all sought costs orders in their favour in relation to each set of appeals. 6 In relation to the costs of the solicitors, Ms Muc and Mr Healey, it was submitted for Professor Kennett that the notices of motion that he had brought seeking costs against his legal representatives was listed for hearing before Schmidt J at the same time as similar applications brought by other parties. Those other matters, however, were resolved on the eve of the hearing. It was then submitted that, as the error found by the Full Bench was an error of law, each party should bear their own costs for the leave to appeal and the appeal and there should be no order for costs for the three hearing days in February 2008 as against the respondent purchaser. 7 Although the submissions for Professor Kennett on this matter are somewhat interwoven with other features of the case, and at times it was not entirely clear which case was being referred to, it does appear as if the overall thrust of the submission is that no party should bear the costs of the other parties for the three February 2008 hearing days. The difficulty for that submission is that, substantially for the first two days, the matter did proceed until finally, on the third day, Dr Berwick accepted that his illness would not allow him to complete the matter. While it is clear that full use was not made of the first two days although they were substantially used, Professor Kennett's counsel did cross-examine a witness and did commence his final address. In allowing an adjournment for the purposes of concluding the case, Schmidt J ruled that matters already covered by Dr Berwick in his address were not to be revisited and that only the remaining issues, not covered by Dr Berwick's address, were to be dealt with in further submissions to be made by new counsel to be briefed on behalf of Professor Kennett. That further hearing was completed in one day shortly thereafter, with all counsel addressing. Importantly, this was not a case where the full three days were lost because of the unavailability of counsel due to illness. As was accepted during the course of the argument before the Full Court, the invariable practice in such circumstances appeared to be that the parties would bear their own costs. 8 In the circumstances of this case, the most appropriate and just result concerning the liability as to costs for the February 2008 days is for Professor Kennett to bear the costs of two of the three days during which his counsel commenced final submissions but that the third day, effectively lost due to Dr Berwick's inability to continue because of illness, should be borne by each party and no costs order for that day should be made. Order 1 made by Schmidt J on 29 June 2009 should be varied to reflect this outcome. 9 In relation to the costs of his appeals, Professor Kennett has been wholly unsuccessful: he has failed to obtain leave to appeal in relation to those parts of Schmidt J's judgment that he sought to challenge. He has also been unsuccessful in the appeals brought by his legal representatives, Dr Berwick, Ms Muc and Mr Healey, in relation to the costs of the three hearing days in February 2008 said to be effectively "lost" and other orders made by Schmidt J. This Court has usually applied the rule that costs should follow the event although the particular nature of the jurisdiction exercised by the Court may, from time-to-time, require particular attention to be given to circumstances that may warrant an amelioration of that approach (see for example, Commissioner for Children and Young People v A (No 2) (2004) 132 IR 112 at [31] and [32]. Nothing that has been put on behalf of Professor Kennett persuades the Court that this is a case in which the usual rule should be departed from: in those circumstances he should be required to pay the appeal costs of the respondents in Matters 2189 of 2008 and 1050 of 2009 and should pay the costs of the appellants in Matters 1200 and 1286 of 2009. 10 Professor Kennett, as outlined above, relies on a number of matters in support of an application that he be granted a certificate pursuant to the provisions of s 6(1A) of the Suitors' Fund Act. Professor Kennett asserts that the error found by the Full Bench was an error of law thus suggesting a jurisdictional basis for the granting of a certificate under the Suitors' Fund Act. 11 Section 6 of the Suitors' Fund Act contains the following relevant provisions: (1) If an appeal against the decision of a court: (a) to the Supreme Court on a question of law or fact, or (b) to the High Court from a decision of the Supreme Court on a question of law, succeeds, the Supreme Court may, on application, grant to the respondent to the appeal or to any one or more of several respondents to the appeal an indemnity certificate in respect of the appeal. (1A) Where an appeal against the decision of a court to the Industrial Relations Commission of New South Wales or to the District Court of New South Wales on a question of law succeeds, that Commission or Court, as the case may be, may, upon application made in that behalf, grant to the respondent to the appeal or to any one or more of several respondents to the appeal an indemnity certificate in respect of the appeal. 12 Professor Kennett relies on the provisions of s 6(1A) and therefore directs the submission to the successful appeals pursued by Dr Berwick on the one hand and Ms Muc and Mr Healey on the other. Professor Kennett having failed in relation to his own appeal with leave to appeal refused, it follows that s 6(1A) of the Suitors' Fund Act has no application to those appeals. 13 The discretion to grant a certificate under the Suitors' Fund Act appears to be a discretion left at large. In Gurnett v The Macquarie Stevedoring Co Pty Ltd [No 2] (1956) 95 CLR 106 at 112 -113, Dixon CJ considered some of the matters relevant to the exercise of the discretion to grant a Suitors' Fund certificate: The power given by s 6 is new and in many ways anomalous but it appears to be a power given to State appellate courts because State law regards it as appropriate for the purposes of doing complete justice in the litigation. True it is that it does not operate inter partes and that it relates to a consequence upon one party of a decision given inter partes ... The question remains whether in substance it is a proper case for the grant of such an indemnity certificate. Sub-section (1) of s. 6 grants a power which, as s. 6 (5) shows, is to be exercised as a matter of discretion. It provides that the court determining the appeal may grant to the respondent thereto an indemnity certificate. The power arises only when an appeal against the decision of a court on a question of law succeeds. Very little light is to be obtained from the long title or the provisions of the Act as to the considerations which should govern the exercise of the discretion to grant a certificate. But since it does not arise except in the case of a successful appeal against a decision upon a question of law, it would seem that the purpose of the legislature was to relieve litigants of the burden of costs that might be imposed upon them by reason of erroneous decisions upon questions of law. In the present case no question was involved as to any principle of law or any application of principle or as to the meaning or effect of any statutory provision. It is true that in the legal dichotomy between questions of fact and questions of law we place under the latter head a question whether there is sufficient evidence to submit to a jury in support of a cause of action. That is because it is a question for the court to decide and not for a tribunal of fact. In the present case no considerations of law affected the matter at all. It was simply a question whether the evidence adduced was enough to enable the jury to draw an inference of fact. Further, the defendant is a limited company apparently not without assets. All that we know concerning the finances of the defendant company is that its paid up capital is 84,000 pounds. At the trial the defendant company's counsel advisedly sought to withdraw the case from the decision of the jury. To take such a course involved an obvious risk. I cannot see why, because in the result it turned out badly, the defendant should have a claim upon the discretion of the Court to certify for the recoupment of the costs out of a public fund. Indeed I can see no sound reason why the defendant company should be indemnified for costs out of the Suitors' Fund. In my opinion the discretion given by s. 6 should in this case be exercised by refusing a certificate. I would on that ground refuse the application of the defendant respondent. 14 In the Builders Licensing Board v Pride Constructions Pty Ltd (1979) 1 NSWLR 607, Cross J, in dealing with the operation of s 6 stated: So then, in my view, the unsuccessful respondent is entitled to a certificate, subject to the Court's overriding discretion. There is an analysis or reference to that discretion in Reeve v. Fowler by the Full Court and by the High Court in Gurnett v. Macquarie Stevedoring Co. Pty. Ltd. (No. 2). There is a somewhat detailed analysis of the scheme of the Act by Moffitt J., as he then was, in Chambers in Acquilina v. Dairy Farmers Co-operative Milk Co. Ltd. , and also by the learned President in Steele v. Mirror Newspapers Ltd.

What can be argued against the present application of the unsuccessful respondent in these proceedings? Did the company act reasonably? Reference was made in Steele's case to Victorian authority talking of the lower court being misled by "submissions which should not have been made". Those words are not to be equated to "unsuccessful submissions". An unsuccessful submission does not mean a submission which should not have been made. In the present case, the Court was asked to give an interpretation of the words, "building and construction" in the Building and Construction Industry Long Service Payments Act , 1974. The attitude of the company before the magistrate was perfectly proper. What the company argued was quite arguable and, indeed, convinced the magistrate. Nor was it a matter which this Court found capable of easy disposition. The Court reserved, and required a degree of reflection, in view of the exhaustive researches of counsel, before coming to a decision - a decision, which I may say in honesty was not come to in absolute confidence that it was correct. The attitude of the company was perfectly proper. The submissions were perfectly proper. There was nothing in the history of this litigation, and the decision of the magistrate which would require or suggest the Court's discretion be exercised against the company. I intend to grant a certificate under s. 6 of the Act, subject to this Court being satisfied that the unsuccessful respondent company is not disqualified by virtue of s. 6 (7) of the Act from obtaining such certificate, 15 As Cross J noted in the Builders Licensing Board case, Moffitt J (as he then was) in Acquilina v Dairy Farmers Co-Operative Milk Co Ltd (1965) 82 W.N. (Pt 1) NSW 531 considered the extent of the discretion to grant a certificate under the fund, stating that the Act did not define or limit the discretion and that, accordingly, it was undesirable to attempt judicially to limit that discretion. His Honour looked at the general purpose of the Act, inferring that it proceeded on the assumption that the law is known so that, if an error of law occurred in a court of first instance or an inferior appellant court, error may be ordinarily attributed to a fault of the administration of justice rather than of the parties so that the costs of having the error rectified ought not ordinarily lie on the unsuccessful respondent to the appeal but may be paid from a fund contributed by all litigants (at 533). At 534 his Honour thought that, in its present form, s 6 of the Act when looked at both as to its terms and historically, had as its purpose the relief of the party who incurred or became liable for costs, not through his own decision or conduct but because of some error of law of the Tribunal. His Honour then stated: In exercising the discretion conferred by s 6(1) it follows that it is relevant to consider to what extent costs provided by a certificate if granted were due merely to an error of the Tribunal, and to which extent if any they were due to the conduct of or decisions taken by the applicant. This leads to an enquiry as to the scope of the certificate in the particular case if granted.

At 536 his Honour noted that, in the case before him, the majority decision of the Full Court was that certain evidence was wrongly rejected and that a new trial should be ordered. His Honour accepted that the rejection of evidence raised questions of law. His Honour's determination was constrained by the consideration that if any certificate were granted, it could not be limited in any way and it must extend to all costs of all appeals. In the circumstances of this particular case, having regard to the numerous grounds of appeal and that many of them did not involve questions of law, his Honour determined that it would not be proper to grant a certificate under the Act. 16 Although there is a wide discretion available to grant a certificate under the Suitors' Fund Act, it is still necessary for the applicant for such a certificate to establish a reason why the discretion should be exercised in his or her favour. In the present matter, Professor Kennett puts forward general arguments about the nature of the case, but many of those matters do not appear to be relevant to this issue. It is relevant that the argument pursued as to the meaning of Rule 209 of the Commissions Rules was pursued on the basis of one construction of the rule, although there was another clearly more appropriate construction available and, further, that the argument was pursued without reference to the background found in the Supreme Court Rules referred to in the decision of the Full Court. It is also to be recalled that the costs motion pursued by Professor Kennett sought that all the costs of the proceedings be paid by his legal representatives, including those to be paid to the respondent purchasers together with indemnity costs. In that wide-ranging debate, Professor Kennett only succeeded against Dr Berwick in relation to the three February 2008 days. No particular or relevant issues have been identified in relation to the appeals of Ms Muc and Mr Healey. Essentially, while these matters tend against the granting of the certificate, Professor Kennett has not, in any event, established sufficient reason for the granting of such a certificate and doing complete justice to the litigation does not require that the certificate be granted.

ORDERS 17 As a result of these considerations the Full Court makes the following Orders:

1. In Matters 2189 of 2008 and 1050 of 2009: (a) the applicant, Professor Kennett, is to pay the costs of the respondents in a sum agreed or, in the absence of agreement, as assessed; (b) the costs order numbered (1) made by Schmidt J on 29 June 2009 in Kennett and Anor v Mayrana Pty Ltd and Ors (No 11) is modified to the extent that Professor Kennett is to pay the cost of only the first two days of the February 2008 hearing with all parties to pay their own costs of the third February 2008 hearing day.

2. In Matter 1200 of 2009: Professor Kennett is to pay the costs of Dr Berwick in relation to the application for leave to appeal and in relation to the appeal, such costs to be agreed or assessed.

3. In Matter 1286 of 2009: Professor Kennett is to pay the costs of Ms Muc and Mr Healey in relation to the application for leave to appeal and in relation to the appeal, such costs to be agreed or assessed.

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