McGuirk v University of New South Wales

Supreme Court of NSW|2011-04-29|Before: Johnson J

Judgment (ON COSTS) 1JOHNSON J : On 17 December 2010, I gave judgment on an application by the Defendant, the University of New South Wales, to strike out parts of the First Amended Statement of Claim filed by the Plaintiff, Gerard Michael McGuirk: McGuirk v The University of New South Wales [2010] NSWSC 1471. 2I was satisfied that the Plaintiff's claims for conspiracy and misfeasance in public office disclosed no reasonable cause of action and that those parts of the First Amended Statement of Claim ought be struck out, without leave to replead being given. I was not satisfied that the Plaintiff's claims for common law deceit and under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987 ought be struck out in whole or in part, nor was I satisfied that the challenged parts of the breach of contract claim ought be struck out. 3At [51], I said: "As the Defendant has succeeded upon some significant matters argued at the hearing of the strike-out application, but has failed on others, I consider that the appropriate order is that the Plaintiff pay 50% of the Defendant's costs of the Notice of Motion." 4I made orders giving effect to these conclusions, including an order that the Plaintiff was to pay 50% of the costs of the Defendant with respect to the Defendant's Notice of Motion filed on 6 May 2010. 5By Notice of Motion filed 24 December 2010, the Plaintiff sought an order setting aside the costs order made on 17 December 2010 and, in its place, an order that the Defendant pay 50% of the Plaintiff's costs in defending the Notice of Motion. In the alternative, the Plaintiff sought an order that there be no order as to costs in respect to the Notice of Motion. 6Extensive written and oral submissions had been made by the Plaintiff and the Defendant with respect to the Defendant's strike-out application. However, the question of costs was not addressed prior to the making of the 50% costs order on 17 December 2010. I approach the resolution of the Plaintiff's present application upon the basis that the question of costs is open for consideration generally. It is not necessary for the Plaintiff to demonstrate any error on my part in the earlier costs order. Rather, the question is, what is the appropriate costs order having regard to the outcome of the Defendant's strike-out application determined on 17 December 2010.

Applicable Legal Principles 7As is apparent from my earlier judgment cited at [3] above, I approach the question of costs upon the basis that the Defendant succeeded upon some significant matters argued at the hearing of the strike-out application, but failed on others. This is not a case where the Defendant failed entirely or succeeded entirely on the strike-out application. 8Subject to Rules of Court and any relevant statutory provision, costs are in the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent costs are to be paid and upon what basis: s.98 Civil Procedure Act 2005 . The general rule is that costs follow the event: Rule 42.1 Uniform Civil Procedure Rules 2005 ("UCPR"). 9The overriding purpose of the Civil Procedure Act 2005 and the UCPR, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s.56(1) Civil Procedure Act 2005 . Parties to civil proceedings are under a duty to assist the Court to further this overriding purpose and to participate in the processes of the Court and to comply with directions and orders of the Court: s.56(3). The Court may take into account any failure to comply with s.56(3) or (4) in exercising a discretion with respect to costs. 10There is no fixed approach to be taken by the Court in determining the question of costs in a case such as this, where a party has been partially successful in a strike-out application. The discretion as to costs is to be exercised having regard to the circumstances of the particular case, with a view to reaching a just outcome on the question of costs. 11Assistance may be derived from a number of decisions of the Court of Appeal where the question of costs was addressed in cases where a party has had partial success only. 12In Bostik Australia Pty Limited v Liddiard (No. 2) [2009] NSWCA 304, Beazley, Ipp and Basten JJA said at [38]: "The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows:

Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).
In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.
If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].
Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).
A separable issue can relate to 'any disputed question of fact or law' before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].
Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2) , citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272. These principles were applied in City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 at [22] and most recently in Turkmani v Visvalingham (No 2) [2009] NSWCA 279." 13In Hawkesbury District Health Service Limited v Chaker (No. 2) [2011] NSWCA 30, Allsop P, Beazley JA and Hoeben J said at [10]-[11]: "10 The respondent's reliance upon UCPR 42.1 is misconceived. The rule does not envisage a trial or an appeal being divided into a series of discrete 'events' in respect of which one party may be successful as to some and another party successful as to others. What the rule envisages is the substance and reality of the outcome of a proceeding. 11 That proposition was explained by Ward J in Quest Rosehill Pty Ltd v White [2010] NSWSC 1190 at [67]: 'I have previously had occasion to refer to what was said in the English Court of Appeal in Roache v News Group Newspapers [1992] TLR 551 (as cited by the Queensland Court of Appeal in Timms v Clift [1998] 2 Qd R 100) where the question as to who was to be seen as the successful party 'in the event' was posed as being a question as to ' [w] ho, as a matter of substance and reality, had won? ...'." 14After reciting at [13] the principles summarised in Bostik Australia Pty Limited v Liddiard (No. 2) (at [12] above), their Honours said at [14]-[15]: "14 In the appeal the damages issues were addressed with brevity, both in written submissions and at the hearing. The consideration of the quantum issues did not increase the hearing time or otherwise take up "a significant part" of the appeal. The fact that one issue on which a party failed on the appeal is separable or discrete is not, without more, sufficient to warrant departure from the ordinary rule. 15 The overwhelming focus of both parties was on the issue of liability. This was clear from the written and oral submissions. In the particular circumstances of this case the Court is not persuaded that the costs order in favour of Dr Tompsett should be disturbed because she failed on the damages part of her appeal."

The Present Case 15In his lengthy written submissions on costs, the Plaintiff referred to the history of the litigation, the issues argued and determined on the strike-out application, and a range of other matters in support of his contention that a different costs order should be made to that included in the orders of 17 December 2010. The Plaintiff submitted, amongst other things, that the Defendant had made improper use of interlocutory processes. He sought to call in aid the observations of Heydon J in Edwards v Santos Limited [2011] HCA 8; 85 ALJR 464 at 477-478 [62] concerning the making of strike-out and other interlocutory applications by "wealthy litigants" . He submitted that what has happened here is an example of the scenario referred to by Heydon J. It is not necessary to recite in any further detail the submissions of the Plaintiff. Amongst other authorities, the Plaintiff referred to the decisions of the Court of Appeal in Bostik Australia Pty Limited v Liddiard (No. 2) and Hawkesbury District Health Service Limited v Chaker (No. 2) . 16The Plaintiff submitted that the Defendant ought be ordered to pay 50% of his costs having regard to the outcome of the strike-out application. Alternatively, he submitted that there ought be no order as to costs. 17Mr Izzo, counsel for the Defendant, submitted that although apportionment of costs is very much a matter of discretion and depends upon matters of impression and evaluation, rather than mathematical precision ( Bostik Australia Pty Limited v Liddiard (No. 2) at [38]), 50% represented a reasonable estimate of the time that was devoted to dealing with the causes of action for misfeasance in public office and conspiracy at the hearing of the strike-out application. He submitted further, that the effect of the Defendant's success on these issues was to substantially narrow the controversy between the parties and that the saving of time and expense that this narrowing will involve, represents a substantial success that should be recognised in a costs award. 18In response to the Plaintiff's submission that the Defendant had made improper use of interlocutory processes, Mr Izzo submitted that the bringing of the strike-out application was plainly justified by the saving of time and expense that success for the Defendant would entail. He submitted that the costs order made by the Court on 17 December 2010 was appropriate and should stand.

Decision 19The Court is to exercise its discretion with respect to costs by reference to the Defendant's strike-out application determined on 17 December 2010. As my judgment of that day makes clear, and as reflected in the written submissions made for the purpose of the strike-out application, there were various parts or components to the application. The claims for conspiracy and misfeasance in public office occupied a very substantial part of the oral hearing of the strike-out application on 23 June 2010. The Defendant succeeded in its application to strike out those parts of the First Amended Statement of Claim which pleaded these causes of action, and succeeded as well on an argument that the Plaintiff ought not be given leave to replead these claims. 20Accordingly, the Defendant had substantial success on its Notice of Motion, although other parts of the First Amended Statement of Claim were not struck out. 21I cannot see any proper basis upon which the Court should order that the Defendant pay 50% of the costs of the Plaintiff. The Defendant achieved substantial success, over the opposition of the Plaintiff, on its Notice of Motion. 22I accept the Defendant's submission that the Defendant's success in this respect operates to substantially narrow the controversy between the parties. The observations of Heydon J in Edwards v Santos Limited have no bearing upon this costs application. The proceedings now contained in the Second Amended Statement of Claim filed on 11 February 2011, are confined effectively to the causes of action based upon the Plaintiff's complaint that the alleged termination of his contract in early 2002 was wrongful. I am entirely unpersuaded that the proper costs outcome in these circumstances would see an order that the Defendant pay any part of the Plaintiff's costs, however those costs might be calculated in accordance with the principles in Cachia v Haines [1994] HCA 14; 179 CLR 403. 23I have given careful consideration to the Plaintiff's alternative submission that there should be no order as to costs of the strike-out application. This approach might be an available one given a measure of success on the part of both the Defendant and the Plaintiff in the issues which fell for determination. 24However, I am satisfied that the appropriate costs order which will do justice in the circumstances of the case is one where the Plaintiff should pay a proportion of the Defendant's costs of the strike-out application. I have formed this view, having taken into account the relevant provisions in the Civil Procedure Act 2005 and the UCPR, together with the principles referred to in the decisions cited earlier in this judgment. The Defendant's success on the strike-out application was substantial in removing two causes of action, with this approach serving to narrow the issues between the parties and to facilitate the resolution of the real issues in dispute. 25There is no precise mathematical formula which ought be applied in circumstances such as this. The question is one of a discretionary determination in the light of the issues argued and determined in the relevant proceedings, namely the Defendant's strike-out application. 26As I have considered the competing submissions as to costs, my view has firmed that the appropriate order as to costs, in the circumstances of the case, is the order made on 17 December 2010 that the Plaintiff should pay 50% of the Defendant's costs of the application. This accords with the substance and reality of the outcome of the strike-out application: Rule 42.1 UCPR; Hawkesbury District Health Service Limited v Chaker (No. 2) at [10]-[11] (cited at [13] above). 27I propose to order that the Plaintiff's Notice of Motion filed on 24 December 2010 be dismissed.

Costs of This Notice of Motion 28The parties have so far not made submissions with respect to the costs of the present Notice of Motion. 29I will reveal my provisional thoughts on that issue before providing an opportunity to the parties to make oral submissions on the question if they so wish. 30The Plaintiff has not succeeded in obtaining any relief sought in his Notice of Motion filed 24 December 2010. Ordinarily, costs should follow the event and an order should be made that he pay the Defendant's costs of that Notice of Motion. 31I am conscious, however, that the Plaintiff's Notice of Motion arose from the fact that the costs order was included in the orders made on 17 December 2010 before the parties had had an opportunity to make submissions on the question of costs. The Plaintiff's Notice of Motion has served as a vehicle for the issue of costs to be ventilated by the parties before me. 32It might be said for the Defendant that the Plaintiff was aware of the costs order made on 17 December 2010 and that he has not achieved a more favourable costs outcome after the question of costs has been fully ventilated. Nevertheless, the fact is that the present process has arisen because of the way in which the question of costs was dealt with in the principal judgment on 17 December 2010. 33I am minded to make no order as to costs of the Plaintiff's Notice of Motion of 24 December 2010. However, I will give the parties an opportunity to be heard on that aspect before making final orders.

Orders 34The Plaintiff's Notice of Motion filed 24 December 2010 is dismissed. I confirm the order made on 17 December 2010 that the Plaintiff is to pay 50% of the costs of the Defendant with respect to the Notice of Motion filed on 6 May 2010. 35I will hear the parties on the question of costs of the present Notice of Motion.

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: 05 May 2011

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