Mackey v Hunter Valley Gardens Pty Ltd

Power to set aside earlier costs order

1. The earlier costs order was made on 9 November 2018. That order has been entered.
2. The Plaintiff brings this application solely by reference to r 36.16(3) of the Uniform Civil Procedure Rules. That rule relevantly provides that: "In addition to its powers under subrules (1) and (2), the Court may set aside or vary any … order except so far as it:
3. determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
4. dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief".
5. Four matters may be immediately noted. First, the power in r 36.16(3) is expressed as an additional power in the Court to set aside or vary orders that have already been entered to the power in rule 36.16(2). This other power set out certain prescribed circumstances that may enliven that discretion. None of those circumstances were relied upon here, which explains why the Plaintiff must fall back upon r 36.16(3).
6. The second aspect is that, plainly, the court's power is discretionary.
7. A third matter is the contextual significance given to the general desirability of litigants seeking to set aside or vary earlier orders before they are entered (rr 36.16(1) and 36.16(3A) - (3B)). Those rules plainly encourage prompt application to set aside or vary an earlier order, before the order is entered, or within the 14 day window provided for in the rules. The circumstance that no such time limit applies to an application under r 36.16(3) does not derogate from the general desirability that applications to set aside or vary earlier orders should be brought with reasonable promptitude. In this case, the Plaintiff's lawyers intimated to the Defendant's lawyers on 11 December 2018 that it was concerned about the vacation order and flagged that the consequential costs order might need to be 'revisited' by the trial judge, but not until after judgment that application was brought.
8. The fourth matter is that, by its terms, the power in r 36.16(3) is general, unless the exceptions (in (a) or (b)) arise. Plainly, the costs order made on 9 November 2018 does not fall within the exception in (b).
9. However, an issue in this application that does arise is whether the exception in r 36.16(3)(a) is made out in relation to the impugned costs order. This is a matter that has been the subject of controversy in the New South Wales Court of Appeal. There is appellate authority to the effect that a costs order may fall within the exception in (a), since it "determines any claim for relief" and, moreover, r 36.16(3) is intended to apply to all claims for substantive relief and ancillary orders.
10. This is the result of the decision of Giles JA in Roads and Traffic Authority of NSW v Palmer (No.2) [2005] NSWCA 1400 ("Palmer"). That decision was thereafter adopted by differently constituted appellate benches in Habib v Nationwide News Pty Ltd (No.2) [2010] NSWCA 291 at [34] - [39] ("Habib"); and Griffiths v Australian Broadcasting Commission [2011] NSWCA 145 ("Griffiths") at [10], [34], [41].
11. A difficulty with the status of Palmer, as the Court of Appeal explained in Habib, was that a different view was taken of the application of r 36.16(3) to costs orders by the Court of Appeal in the later decision of Hancock v Arnold (No.2) [2009] NSWCA 19 ("Hancock"). However, as Basten JA (who sat in the Hancock) noted in Griffiths, a difficulty with Hancock was that the decision in Palmer was not referred to the Court on that occasion. In Griffiths, Basten JA agreed (with Hodgson JA) that Palmer was binding.
12. In Habib, the Court of Appeal said (at [38]): "..there is much to be said for the view that UCPR 36.16 is intended to apply to all claims for substantive relief and orders ancillary thereto, and that the exception UCPR 36.16(3) carved out reflects the court's power to set aside, vary or discharge an interlocutory order" (emphasis supplied)
13. When the question of power was specifically brought to the parties' attention, in the course of this application, no submission was advanced that I should not follow the course taken in Habib.
14. Senior counsel for the Plaintiff submits that r 36.16(3) creates an exception to the general rule promoting the finality of orders. So much may be accepted. He then submits that on the basis of Habib, the order for costs that was made on 9 November 2018 was in the nature of an interlocutory order. I accept this submission. Unlike the cases decided by the Court of Appeal, referred to above, all of which concerned purportedly final costs orders of a trial or an appeal, the present application only concerns a costs order of an interlocutory application; not the claim for relief in the Plaintiff's pleading that seeks an order for the costs of the proceeding as a whole. In my view, following Habib, the costs order made on 9 November 2018 does not "determine any (substantive) claim for relief", within the meaning of r 36.16(3)(a).
15. Accordingly, as a matter of power, I do not consider that I am precluded from making the order sought by the Plaintiff.

Merits of the application

1. This involves some enquiry into the circumstances by which Letherbarrow DCJ made the earlier costs order. It is not an attractive proposition for a trial judge, after a hard-fought trial to be invited to, as it were, go behind the decision of the Court's Civil List Judge to order costs following an earlier interlocutory application. It is a very good demonstration of the reasoning, and justification for the prevailing interpretation of r 36.16, which seriously impedes attempts by litigants to expressly or collaterally challenge earlier orders of the Court, and costs orders in particular; especially where, as here, such orders have been made after procedural fairness has been given to the parties. In this case, Letherbarrow DCJ made the costs order consequent upon his disposition of the Plaintiff's application and after argument was entertained on the question of costs.
2. As was said by the High Court in De L v Director-General Department of Community Services (NSW) (No.2) (1997) 190 CLR 207 at 215, with reference to its power to reopen judgements or orders: "The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded 'on a misapprehension as to the facts or the law', where 'there is some matter calling for review' or where 'the interests of justice so require'. It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required 'without fault on his part' i.e. without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice…"

The Plaintiff's submissions

1. The Plaintiff submits events have borne out that the late service of the psychiatric report of Dr Kaplan (18 September 2018) provided no reason for why the trial that had been scheduled for 14 November 2018 should be vacated.
2. He says that there was no basis, on 9 November 2018, for the Defendant to consider that it would need more time to obtain its own report - the Plaintiff says that, by then, the Defendant already had obtained (but not served) a report from its psychiatric expert, Dr Lewin. Further, there was no further material, or investigations, that the Defendant needed for the Defendant to complete, or finalize any report it had obtained from Dr Lewin. The Defendant then says that no new material was likely to emerge which required the Defendant to cross-examine Dr Kaplan, in order to present its case to its best advantage. No vacation of the hearing date on 14 November was therefore necessary.
3. The Plaintiff thereafter referred to subsequent events to the making of the costs order on 9 November 2018. The matters put to the Plaintiff in cross-examination at the trial (concerning his suicidal ideation in June 2017) were known by the Plaintiff, as at 9 November 2018, so that, therefore, they did not need to be put to Dr Kaplan. The Plaintiff adds that it could not be said that the Defendant did not have enough information in November 2018 to assess its case: on 28 November, it had even served an offer of compromise.

The Defendant's submissions

1. The Defendant refuted the Plaintiff's central contention that it was ready to run its case as at the date (9 November 2018) the motion was heard by Letherbarrow DCJ. It says that, at this time, it was seeking documents on subpoena, from the New South Wales police relating to the episode of the Plaintiff's suicidal ideation in June 2017, which were not accessible until early in 2019. Mr Gordon, the Defendant's solicitor, said in his affidavit in response to the present application that, as at October 2018, although it had procured a report from Dr Lewin, that report had not addressed the Campbelltown Hospital notes and, thus, the Defendant had sought a supplementary report. I note, however, that this supplementary report had been obtained before the motion on 9 November. At any rate, Mr Gordon said that after receipt of the report, Counsel for the Defendant had advised, prior to the determination of the motion on 9 November, that Dr Lewin should be asked whether his views needed to be expanded. In short, Dr Lewin's views were not in a final state, as at the date of the motion and were not likely to be so at the time of the scheduled commencement of trial.
2. The Defendant also cited a range of other circumstances relating more to the exercise of the Court's discretion, such as the timeliness (or absence thereof) of the Plaintiff's application made to Letherbarrow DCJ. Reference was also made to the reasoning of Letherbarrow DCJ in making the costs order, which had, in effect, upheld points raised by the Defendant's counsel in opposition to the application.

Determination

1. In my view, the Plaintiff's submissions obscure the reasons underlying the Court's orders on 9 November 2018, relevantly including the order for vacation. The features of the reasoning of Letherbarrow DCJ in making the orders on the motion were that the cause of the vacation was entirely attributable to the Plaintiff, Dr Kaplan and to some extent, his legal representatives.
2. First, the Plaintiff had not himself disclosed to his lawyers until August 2018 (only 3 months before trial) information indicative of psychiatric injury. Secondly, his Honour found, the Plaintiff's lawyers could have, but did not, approach the Court to indicate the recent revelation from their client and their apprehension that amendments would be required to the Plaintiff's statement of particulars on the basis of a psychiatric report and that leave would be sought to rely upon that report. Thirdly, even after the revelation in August, the application for vacation was itself the product of some not insubstantial delay (in the context of a looming trial): there was a period of one month's delay between the production of Dr Kaplan's report and the filing of a notice of motion. Fourthly, Dr Kaplan was not apprised of the scheduled hearing date (14 November) and arrangements for his giving evidence (assuming a requirement for cross-examination) by audio visual link were not considered in sufficient time prior to the motion. In this respect, there was no indication as to whether the Plaintiff had undertaken inquiries to engage an alternative suitably qualified psychiatrist who could complete the report and be available at the scheduled trial when, on 16 October 2018, the Plaintiff's lawyers communicated to the Defendant's lawyers that Dr Kaplan would be unavailable for the scheduled hearing. Finally, an order for costs thrown away is the usual price paid for a vacation of the hearing.
3. I accept the Defendant's submission that, as at the date of the motion, there were matters in respect to which clarification might be sought from Dr Lewin even if an initial report had been prepared by him. That his views might, at that point, remain fluid was largely attributable to the Plaintiff's delay in serving the report of Dr Kaplan. Further, until his final views were known, the Defendant might then consider the utility of a joint conference between Dr Lewin and Dr Kaplan. The lateness of the service of Dr Kaplan's report and the making of the application to the Court had virtually precluded such conference prior to the scheduled trial date.
4. I also accept that, as at November 2018, and indeed, right up until the date of the trial, the Defendant was entitled to keep its options open as to whether it might seek to cross-examine Dr Kaplan. As I indicated in the Principal Judgment, although Dr Kaplan's report was found to be admissible, my consideration of his evidence (especially at [197]-[198] of the Principal Judgment) indicates that I did not regard the content of his report as being an exemplar of expert opinion evidence or, alternatively, so compelling as to preclude acceptance of any contrary view. Although it survived the challenge to its admissibility, it was not overtly fulsome in its reasoning. As at November 2018, it was reasonable for the Defendant to consider itself entitled to challenge the admissibility of the report which, if such attack succeeded, would undermine the claim and, failing that, to reserve to itself the option of cross-examining Dr Kaplan on its content. As the trial revealed, there was a real issue as to whether the Plaintiff's psychiatric injury was attributable to the slip and fall or whether it was attributable to other events (before and after that fall). Conceivably, the history or information supplied by the Plaintiff to Dr Kaplan may reasonably have appeared to offer fertile opportunities to trial counsel for the Defendant in any cross-examination. I do not accept that, as at 9 November 2018, the Defendant (or a reasonable Defendant in its position) would have come to a view that under no circumstances would it be necessary or desirable for Dr Kaplan to be cross-examined.
5. So much appears to have been understood by Letherbarrow DCJ when his Honour vacated the hearing date. That being so, fairness plainly dictated that if Dr Kaplan's report was to be admitted, the case would have to be adjourned to a date upon which Dr Kaplan could be cross-examined. The existing trial date of 14 November did not suit Dr Kaplan (through a lack of communication with the Plaintiff's solicitors). It was inevitable that, if the Plaintiff wanted to have the report admitted, that date would need to be vacated. That being so, it was hardly surprising, with respect, that Letherbarrow DCJ would form the view that the usual costs consequences of a vacation of a hearing, following the grant of an indulgence to the Plaintiff in order to permit the late service of an expert report, should apply.
6. The Plaintiff's submissions raise several questions as to the forensic decision-making of the Defendant in response to circumstances of difficulty that the Plaintiff, his expert and legal representatives had created; and all with the benefit of hindsight. It is not consistent with case management objects to subject lawyers' forensic decisions to scrutiny save in the most unusual circumstances, and certainly not where the costs order, in this case, will, at most, only very modestly affect the Plaintiff's financial resources. In this I am mindful of s 60 of the Civil Procedure Act.
7. I do not regard there being any circumstances of procedural injustice in the earlier costs order remaining and, as I have intimated, the principle of finality, with its narrowly defined exceptions, is intended to reduce disputation of the kind that this application has raised. The Plaintiff has not persuaded me that in the circumstances he relies upon, the exceptional course he invites me to take should be followed.
8. Accordingly, I reject the Plaintiff's application to set aside or vary the costs order made on 9 November 2018. This being the only application in dispute, consequent to the reasons in the Principal Judgment, and because the application was not insubstantial, in my view, the Plaintiff should pay the Defendant's costs of this application.

ORDERS

1. I make the following orders: 1. Judgment for the Plaintiff for the sum of $363,243.43. 2. Subject to order 3, the Defendant is to pay the Plaintiff's costs up to 24 December 2018 on the ordinary basis and thereafter, the Defendant is to pay the Plaintiff's costs on an indemnity basis. 3. Exceptions to order 2 are that: 1. The costs order made by Letherbarrow DCJ on 9 November 2018 is to remain unaltered; and 2. The Plaintiff is to pay the Defendant's costs of the application to set aside the costs order made by Letherbarrow DCJ on 9 November 2018.

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. Decision last updated: 14 May 2019