Morrison v Defence Maritime Services Pty Ltd, Coates and Mahon

Land and Environment Court (NSW)|2007-09-04|Before: Biscoe J, Mr J, Ms P

CITATION : Morrison v Defence Maritime Services Pty Ltd, Coates and Mahon [2007] NSWLEC 552

50049 of 2005 PROSECUTOR: Anthony Morrison DEFENDANT Defence Maritime Services Pty Ltd

50048 of 2005 PROSECUTOR: PARTIES : Anthony Morrison DEFENDANT: Allen Coates

FILE NUMBER(S) : 50048-49 of 2005; 50014 of 2006

KEY ISSUES: Costs :- Class 5 criminal proceedings - pleas of guilty - whether reasonable that prosecutor bear the expense of litigating an issue upon which he failed - whether prosecutor acted unreasonably in relation to an issue upon which he failed such that he should bear the expense of litigating it - whether Calderbank principles apply in criminal proceedings

Crimes (Sentencing Procedure) Act 1999 (NSW), s 10 LEGISLATION CITED: Criminal Procedure Act 1986, ss 253, 257B, 257C, 257D, 257E, 257F and Schedule 2 cl 50 Evidence Act 1995 s 131(1) and (5)(b) Land and Environment Court Act 1979, ss 41, 69(2)

Calderbank v Calderbank [1975] 3 WLR 586; Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1; Environment Protection Authority v Truegrain Pty Limited [2003] NSWLEC 277; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) [1998] NSWSC 616 ; GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174 ; Hughes v Western Australian Cricket Association Inc (1986) ATPR 40 - 748 ; James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296; CASES CITED: Jones v Bradley (No 2 ) [2003] NSWCA 258 ; Latoudis v Casey (1990) 170 CLR 34; Morrison v Defence Maritime Services Pty Ltd and Coates [2007] NSWLEC 421 ; Morrison v Mahon [2007] NSWLEC 416; Oshlack v Richmond River Council (1998) 193 CLR 72 ; Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453; Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141 ; Warringah Council v Koch and Severino [2006] NSWLEC 608

PROSECUTOR: Mr J Sheahan SC and Ms P Arcus, barristers SOLICITORS Dibbs Abbott Stillman

FIRST AND SECOND DEFENDANTS: LEGAL REPRESENTATIVES: Mr G Grogin, barrister SOLICITORS Ebsworth and Ebsworth

THIRD DEFENDANT: Mr D A McLure, barrister SOLICITORS Norton White

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

ANTHONY MORRISON v DEFENCE MARITIME SERVICES PTY LTD

JUDGMENT 1 HIS HONOUR: This is a costs application. The defendants, who were respectively the owner, master and chief engineer of the vessel "Seahorse Horizon", pleaded guilty to charges of oil pollution of Sydney Harbour waters.

2 The Court found the defendants guilty and convicted the defendants of the charges in the summonses. They were not afforded the benefit of s 10 of the Crimes (Sentencing Procedure) Act 1999 (NSW). They were sentenced to a penalty of a fine in the sum of $35,000 in the case of each of the owner and chief engineer and $30,000 in the case of the master. See Morrison v Defence Maritime Services Pty Ltd and Coates [2007] NSWLEC 421; Morrison v Mahon [2007] NSWLEC 416.

3 The prosecutor submits that costs should follow the event so that the defendants should be ordered to pay the prosecutor's costs. The defendants submit that there should be no order for costs, or alternatively that they should pay no more than a small proportion of the prosecutor's costs because the prosecutor lost on the (or a) major issue in the case and the prosecutor's conduct prior to and during the hearing caused unnecessary litigation and expense.

4 The sentencing hearings in the three matters were fixed for three days on 20, 21 and 22 February 2007. In fact, they took many more days in March, April and May 2007.

Power to award costs in Class 5 proceedings 5 These are proceedings in Class 5 of the Court's jurisdiction. The broad power of the Court to award costs under s 69(2) of the Land and Environment Court Act 1979 (NSW) (Court Act) is "subject to any other Act". Section 41 of the Court Act provides: 41 Part 5 of Chapter 4 of the Criminal Procedure Act 1986 applies to proceedings in Class 5 of the Court's jurisdiction. 6 Section 253 of the Criminal Procedure Act 1986 (NSW) was in Part 5 of Chapter 4. It amended circumstances in which a court may order an accused or a prosecutor to pay costs. It was repealed by item 7 of Schedule 2 of the Courts Legislation Amendment Act 2006 No 23 (NSW) (the Amendment Act), which commenced on 13 July 2006. The Amendment Act Schedule 2 introduced a new Division 4 (ss 257A - 257G) to Chapter 4 Part 5 of the Criminal Procedure Act that imposes restrictions on ordering costs in favour of an accused person in proceedings commenced on or after 13 July 2006. The following provisions of Division 4 may be noted: 257B When costs may be awarded to prosecutor

A court may, in and by a conviction or order, order an accused person to pay to the registrar of the court, for payment to the prosecutor, such costs as the court specifies or, if the conviction or order directs, as may be determined under section 257G, if: (a) the court convicts the accused person of an offence, or (b) the court makes an order under section 10 of the Crimes (Sentencing Procedure) Act 1999 in respect of an offence. 257C When professional costs may be awarded to accused person

(1) A court may at the end of proceedings under this Part order that the prosecutor pay professional costs to the registrar of the court, for payment to the accused person, if the matter is dismissed or withdrawn. (2) The amount of professional costs is to be such professional costs as the court specifies or, if the order directs, as may be determined under section 257G. (3) Without limiting the operation of subsection (1), a court may order that the prosecutor in proceedings under this Part pay professional costs if:

(a) the accused person is discharged as to the offence the subject of the proceedings, or (b) the matter is dismissed because the prosecutor fails to appear, or (c) the matter is withdrawn or the proceedings are for any reason invalid.

257D Limit on award of professional costs against a prosecutor acting in a public capacity

(1) Professional costs are not to be awarded in favour of an accused person in proceedings under this Part unless the court is satisfied as to one or more of the following: (a) that the investigation into the alleged offence was conducted in an unreasonable or improper manner, (b) that the proceedings were initiated without reasonable cause or in bad faith or were conducted by the prosecutor in an improper manner, (c) that the prosecutor unreasonably failed to investigate (or to investigate properly) any relevant matter of which it was aware or ought reasonably to have been aware and which suggested either that the accused person might not be guilty or that, for any other reason, the proceedings should not have been brought, (d) that, because of other exceptional circumstances relating to the conduct of the proceedings by the prosecutor, it is just and reasonable to award professional costs.

(2) This section: (a) does not apply to the awarding of costs against a prosecutor acting in a private capacity, and (b) does not apply in relation to proceedings for an offence against the Occupational Health and Safety Act 2000 , the regulations under that Act or the associated occupational health and safety legislation within the meaning of that Act.

(3) An officer of an approved charitable organisation under the Prevention of Cruelty to Animals Act 1979 is taken not to be acting in a private capacity if the officer acts as the prosecutor in any proceedings under that Act or section 9 (1) of the Veterinary Practice Act 2003 .

257E Public officers and police officers not personally liable for costs

(1) A public officer or a police officer is entitled to be indemnified by the State for any costs awarded against the officer personally as the prosecutor in any criminal proceedings in a court in which the officer is acting in his or her capacity as a public officer or a police officer. (2) In this section: public officer does not include a councillor or an employee of a council or any other person prescribed by the regulations for the purposes of this section. 257F Costs on adjournment

(1) A court may in any proceedings under this Part, at its discretion or on the application of a party, order that one party pay costs if the matter is adjourned. (2) An order may be made only if the court is satisfied that the other party has incurred additional costs because of the unreasonable conduct or delays of the party against whom the order is made. (3) The order must specify the amount of costs payable or may provide for the determination of the amount at the end of the proceedings. (4) An order may be made whatever the result of the proceedings. 7 However, by Schedule 2 cl 50 of the Criminal Procedure Act, an amendment made to that Act does not extend to proceedings instituted before the commencement of the amendment. The proceedings in this case were instituted before the commencement of Schedule 2 of the Amendment Act on 13 July 2006. Therefore s 253 of the Criminal Procedure Act applies to these proceedings notwithstanding that it no longer applies to Class 5 proceedings commenced on or after 13 July 2006. The effect of s 253 is that the Court may make orders for costs in defined situations: 253 Court may order payment of costs

(1) A court may, in and by a conviction or order, order an accused person to pay the prosecutor such costs as the court specifies or, if the conviction or order directs, as may be determined under subsection (2), if: (a) the court convicts the accused person of an offence, or (b) (Repealed) (c) the court makes an order under section 10 of the Crimes Sentencing Procedure Act 1999 in respect of an offence. (1A) A court may, if the court makes an order dismissing the charge for an offence, in and by that order, order the prosecutor to pay the accused person such costs as the court specifies or, if the order directs, as may be determined under subsection (2). … 8 The relevant provision is that in s 253(1)(a). Section 253(1A) does not apply. It follows that the Court may order the defendants to pay the prosecutor's costs but has no power to order the prosecutor to pay any of the defendants' costs: Environment Protection Authority v Truegrain Pty Limited [2003] NSWLEC 277 at [21]. Pre-hearing matters 9 The defendants place reliance on the prosecutor's pre-hearing particulars of the volume, duration and locations of oil discharged and on the defendants' three pre-hearing offers as to the volume and location of oil discharged. 10 Particulars of the charges provided by the prosecutor included that between 40 and 85 litres of oil were discharged on the day in question over a minimum distance of 4.85 kilometres of waterway within Sydney Harbour, and that the oil discharge would have a high likelihood of causing oil to coat intertidal habitats and associated flora and fauna.

11 The defendants made three pre-hearing offers of admissions, expressed to be Calderbank letters, as to the volume and location of oil spillage, none of which were accepted by the prosecutor: (a) on 11 August 2006 the owner and master offered to admit that 15 litres of oil were discharged at HMAS Waterhen; (b) on 4 December 2006 the owner and master offered to admit that 35.79 litres of oil were discharged at HMAS Waterhen in return for the prosecutor agreeing to confine any allegation of oil spillage to that location and not seek to advance a case of failure to notify an oil discharge on behalf of any member of the crew. This volume was Mr Booker's estimate of the maximum amount of oil that could be lost from the port side stern system in any circumstance. The letter stated that acceptance would significantly shorten the penalty hearing time to half a day rather than the three days currently allocated; and (c) on 13 February 2007 all the defendants offered to admit that 35.79 litres of oil discharged into State waters. 12 The prosecutor replied to the second offer stating that the Calderbank principles do not apply in criminal proceedings and that s 131 of the Evidence Act 1995 (NSW), which provides for the exclusion of evidence of settlement negotiations, does not apply in criminal proceedings. The letter also stated that the offerors had overlooked that the prosecutor has a duty to inform the Court of all salient matters and to provide the Court with the correct summary of events. Accordingly, for those reasons, the prosecutor did not accept the offer. Prosecutor's submissions 13 In summary, the prosecutor's submissions in support of an order that the defendants should pay the prosecutor's costs were as follows: (a) the normal principle is that costs follow the event in the absence of disentitling conduct: Warringah Council v Koch and Severino [2006] NSWLEC 608 at [4] citing Latoudis v Casey (1990) 170 CLR 34; (b) the prosecutor was successful. The issue of substance was whether the defendants should be given the benefit of s 10 of the Crimes (Sentencing Procedure) Act 1999 or, rather, be convicted and fined. The primary question in that regard was the respective defendant's culpability for the oil discharges. The issue was resolved against the defendants; (c) the prosecutor's case was that the defendants were imprudent in moving the vessel from Garden Island when they were aware that there had been an oil spill a few weeks earlier and indicia of a possible oil spill during sea trials early on the day in question. The critical question was not whether there was a discharge before the vessel reached Garden Island but whether that was a possibility; (d) the Court accepted the prosecutor's case that the prudent course of action would have been to take precautionary steps at Garden Island. That was the reason why the defendants were not afforded the benefit of s 10 of the Crimes (Sentencing Procedure) Act 1999 ; (e) there was no evidence of disentitling conduct by the prosecutor. It is by no means clear that the Calderbank principles apply in proceedings such as this: Latoudis at 543, 568; s 131 Evidence Act 1995 . Even if they do, they would not result in a departure from the usual order in this case. The fact that the prosecutor did not accept pre-trial offers of admission concerning the quantum or location of oil spills was no reason for departing from the usual order because it was inappropriate to accept them. The first offer on behalf of the owner and master was to admit that 15 litres of oil discharged at HMAS Waterhen. It was inappropriate to accept because the prosecutor had evidence of apparent reliability that the discharge exceeded 15 litres and occurred at other locations and the prosecutor proved a discharge at Garden Island. The second offer on behalf of the owner and master was to admit a discharge of 35.79 litres of oil at HMAS Waterhen and imposed a condition that the prosecutor not advance a case of failure to notify of an oil discharge on behalf of any crew member. It too was inappropriate to accept. The third offer on behalf of all three defendants was to admit to a discharge of 35.79 litres into State Waters on terms that the defendants were free to call evidence and make submissions. Acceptance would have made little difference to the conduct of the hearing. The place of discharge, its cause and the proper reaction of the defendants could not readily be disentangled from the amount of oil discharged; (f) no matter was needlessly contested. The prosecutor had a duty to present all the evidence to the Court. The prosecutor had strong evidentiary support for its case. The contemporaneous documentary material of the chief engineer and his affidavit evidence were such that the prosecutor was duty-bound to test it. The prosecutor also had supporting expert evidence of the experienced Mr Burge; (g) as for the three reports of Mr Burge, who was cross-examined for a long time, the first went to issues of culpability, the second was a response, and the third was a response to a later report of Mr Hunter in the chief engineer's case; (h) the issue of quantum of oil spilled, considered as a discrete question, did not in any event take up a large part of the case and was a subsidiary issue. If the issue was severable, then it would be within the proper scope of the Court's discretion to order that the prosecutor not have its costs of that issue or make some allowance for its costs in respect of that issue. In that event the only evidence that can be isolated to that issue are the reports of Dr Lincoln-Smith and Dr King; and (i) there should be taken into account that a costs order was made against the prosecutor at the hearing in relation to an unsuccessful application by the prosecutor. Defendant's submissions 14 In summary, the defendants' submissions in support of an order that there be no order as to costs, or alternatively, that the defendants pay no more than a small proportion of the prosecutor's costs, are as follows: (a) the prosecution failed in its case that oil was continuously discharged over a minimum distance of 4.85 kilometres of waterways; (b) the defendants' case was that the only discharge of which they were aware was about 15 litres at HMAS Waterhen and, in the case of the chief engineer, some droplets at Garden Island. The defendants' case was accepted; (c) the prosecutor's case that there was a continuous discharge of oil was based primarily on the expert reports of Mr Burge and Professor Coster. The Court found that their opinion was based on a misinterpretation of Mr Cosh's report; (d) the prosecutor's expert reports of Dr Lincoln-Smith and Dr King were based on the premise that there was a continuous discharge of oil; (e) the issue of the amount and location of oil discharge on which the prosecutor failed is severable and took up a considerable part of the hearing time. The estimate of the owner and master is more than two thirds of that time. The estimate of the chief engineer is 70 to 80 percent. In any event, the prosecutor ought not to have the cost of the various expert reports; (f) section 10 of the Crimes (Sentencing Procedure) Act 1999 was not the defendants' dominant goal or the only issue and, even in that context, the issue of continuing discharge was significant; (g) the prosecutor's conduct prior to and during the hearing occasioned unnecessary litigation and expense and the prosecutor obtained a result which was no better than that set out in the defendants' pre-trial statement of facts. In particular: (i) prior to the hearing the prosecutor failed to accept the defendants' offers to agree the quantum of discharge of oil at between 15 and 35.79 litres; (ii) the prosecutor took no steps to question the chief engineer before the hearing (as happened with the master) to test his contemporaneous records; and (ii) on 22 February 2007 it was clear from Mr Burge's cross-examination that he had misinterpreted Mr Cosh's report in forming an opinion that there was a continuous discharge. Between that date and when the proceedings against the chief engineer resumed on 7 May 2007 he realised that his opinion could no longer be sustained. That was not disclosed in his supplementary report. The prosecutor nevertheless read Professor Coster's report in May 2007 which was based on the same misinterpretation. Discussion 15 The focus of the submissions was the prosecutor's failure to establish that there was a continuous discharge of oil around Sydney Harbour, which the prosecutor had particularised at between 40 and 85 litres over a minimum of 4.85 kilometres. The Court found that there was a discharge of between 5 and 15 litres at HMAS Waterhen and a very small amount at Garden Island. 16 The broad issues are whether the prosecutor should bear his own costs in relation to that issue because: (a) the prosecutor lost that issue which was large and severable; or (b) the prosecutor's conduct in relation to that issue before and during the hearing was unreasonable. Apportionment where prosecutor succeeds only upon a portion of the case 17 In my opinion, where a prosecutor has succeeded only upon a portion of his case, the circumstances may make it reasonable that it bear the expense of litigating that portion upon which it has failed. That may be where the prosecutor has failed on a dominant or separable and substantial issue. I understand the parties to accept that principle, although they are in dispute as to its application in the present case. 18 The apportionment principles are conveniently stated by the Court of Appeal in James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 at [32] - [36] and were applied by the Court of Appeal in Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 at [17]. Although they were civil cases, the principles are, in my view, the same in criminal proceedings, consistently with the approach in Latoudis (save insofar as they may be modified by statute). In James the Court of Appeal held: 32. The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said: Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, 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.

Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748: 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them. In this sense, issue does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. (references omitted)

Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called discrete issues , for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it 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.

In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a rule that where there are discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated , an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of rules . However, the underlying approach to the rule stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances.

Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261: Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.

19 James at [33] quotes the three principles stated by Toohey J in Hughes v Western Australian Cricket Association Inc (1986) ATPR 40 - 748 at 48, 136. Immediately after stating those principles Toohey J added: There is no difficulty in stating the principles; their application to the facts of the particular case is not always easy. 20 When considering apportionment of costs in civil litigation, a balance has to be maintained between not discouraging litigants from canvassing all material issues and not rewarding them for unreasonable conduct in the pursuit of issues. That balance is even more important in a criminal case where a prosecutor has a public duty to put all material issues before the Court. In the civil case GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174 at 178 [9] I said: [9] The three principles enunciated by Toohey J in Hughes were cited by the Full Federal Court in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271: The propositions enunciated in that case are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues that might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. In Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213; 28 ALR 201, Fisher J regarded the discretion to apportion costs as one to be exercised only in the most exceptional circumstances. Nevertheless he accepted that where a considerable part of the trial is taken up in determining issues upon which a party fails, it is a proper exercise of the discretion to reduce the costs allowed to that party. Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs. 21 Similarly, in Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141 at [12] Tamberlin J commented that: "When apportioning costs, however, a Court should be mindful not to discourage litigants from canvassing all material issues for fear of an adverse costs order…Equally, litigants should not be rewarded for the injudicious pursuit of issues without substance".

22 In Latoudis v Casey it was held that ordinarily an order for costs should be made in favour of a defendant against whom a prosecution has failed. Although that position has been qualified in New South Wales by the legislation discussed above at [5] - [8], the underlying reasoning informs the approach when considering whether a prosecutor should be deprived of costs to the extent that the prosecutor fails on a dominant or severable and substantial issue. Mason CJ said at 543 (omitting citations): If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. Most of the arguments which seek to counter an award of costs against an informant fail to recognize this principle and treat an order for costs against an informant as if it amounted to the imposition of a penalty or punishment. But these arguments only have force if costs are awarded by reason of misconduct or default on the part of the prosecutor. Once the principle is established that costs are generally awarded by way of indemnity to a successful defendant, the making of an order for costs against a prosecutor is no more a mark of disapproval of the prosecution than the dismissal of the proceedings. 23 In this context, the reasonableness of the prosecutor's conduct is irrelevant. In Oshlack v Richmond River Council (1998) 193 CLR 72 at [79] McHugh J commented that in Latoudis "The reasonableness of the prosecutor's conduct was viewed as clearly irrelevant to the proper exercise of the costs discretion".

24 In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) [1998] NSWSC 616 Young J reviewed a number of cases in which successful plaintiffs had failed on issues and consequently were held to be entitled to recover only a percentage of their costs. In that case his Honour decided, in the circumstances of failure on issues, that the appropriate order was that the relevant defendants pay fifty percent of the plaintiff's costs. 25 In Newcastle City Council v Pace Farm Egg Products Pty Ltd [No 3] [2005] NSWLEC 423 at [39] - [42] Pain J ordered the defendant to pay only 30 percent of the prosecutor's costs where the contested evidence and the bulk of the hearing related to the prosecutor's unsuccessful argument that pollutants had entered a lagoon.

26 What divides the parties is not the relevance of the apportionment principle but its application to the issue of a continuing discharge of oil, on which the prosecutor failed. The prosecutor submits that that was not a dominant or severable issue or, alternatively, that an appropriate exercise of the discretion in relation to that issue would only exclude costs referable to the reports of Dr Lincoln-Smith and Dr King from the costs awarded to the prosecutor. The defendants, on the other hand, submit that that issue was both dominant and severable and accounted for over two thirds of the costs (according to the submission of the owner and master) or between 70 and 80 percent (according to the chief engineer's submission).

27 The prosecutor submits that the dominant issues, on which the defendants failed, were whether the defendants should have the benefit of s 10 of the Crimes (Sentencing Procedure) Act 1999 and the issue of their culpability upon which the s 10 decision substantially depended, and that the continuing discharge issue was neither large nor discrete. The prosecutor suggests that that was so because even if the prosecutor had established its case of continuing discharge of between 40 and 85 litres, the resultant increase in fines over those that were in fact imposed would not have been sufficient to justify the time and cost involved in contesting the proceedings for many days. The submission has some logical attraction in the abstract. Culpability was undoubtedly a very important issue and was relevant to s 10.

28 The reality, however, was that the issue of a continuous discharge of oil was a large, strongly contested and discrete issue. It vitally affected findings as to the quantum, duration and locations of oil discharge, environmental harm and culpability. A great deal of the evidence went to that issue. To give but one example, Mr Burge, an expert called by the prosecutor, was cross-examined for a long time mainly on that issue. I accept the defendants' submissions that s 10 was not their main goal and that, even in the context of s 10, the issue of continuing discharge was significant. In my opinion, justice requires an apportionment of the prosecutor's costs attributable to the continuous discharge issue.

29 Mathematical precision in apportionment is illusory in a case such as the present and the exercise of discretion depends upon matters of impression and evaluation: James at [36] (quoted above at [18]). In GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174 at 182 [25] I said: When considering apportionment of costs in a multi-issue case in which the applicant has failed on severable issues, mathematical precision may often be illusory, the discretion may depend upon matters of impression and evaluation, and a broad-brush approach may be appropriate: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1983) 26 IPR 261 at 271 per the Full Federal Court; Newcrest Mining (WA) Ltd v Commonwealth (FCA, 17 December 1993, unreported) at [10] per French J. A broad-brush approach to apportionment was taken in Booksan Pty Ltd v Wehbe [2006] NSWCA 103 at [21] - [23]; Lewis v Kation Pty Ltd [2006] NSWSC 480 at [16] (Hamilton J); Metropolitan Petar v Mitreski [2006] NSWSC 626 at [16] - [18] (Hamilton J); and Farah v Warringah Council [2006] NSWLEC 544 at [15] (Talbot J).

30 In the present case, I put aside the time taken on an unsuccessful application by the prosecutor during the hearing in respect of which a costs order was made against the prosecutor: that order will continue to stand and is unaffected by the order that I propose to make. The reports of Dr King and Dr Lincoln-Smith were based on the assumption of a continuing discharge: it is just to exclude the prosecutor's costs attributable to those reports. Otherwise, it is my impression that in the order of 50 percent of the hearing time and written evidence was attributable to the issue of a continuing discharge of oil. In my view, justice would be served by ordering the defendants to pay 50 percent of the prosecutor's costs other than costs attributable to the reports of Dr King and Dr Lincoln-Smith. Unreasonable conduct 31 That is sufficient to dispose of costs. However, for completeness, I will also address the defendants' submission that the prosecutor's conduct was unreasonable and occasioned unnecessary litigation and expense. The submission centres on three matters. 32 First, the prosecutor failed to achieve a better result than had been offered in the defendants' pre-hearing offers to agree on the amount and location of discharge of oil, which had also been set out in the defendants' proposed agreed statement of facts. They were expressed to be Calderbank offers. In civil litigation "Calderbank offers" are a well recognised means of making offers of settlement in circumstances where the offeror ultimately seeks a costs advantage if the offer is not accepted: Calderbank v Calderbank [1975] 3 WLR 586. The unreasonable or imprudent rejection of a Calderbank offer may warrant a costs order different from the usual order if the offeree does not achieve a better result, subject to consideration of all the circumstances: Jones v Bradley (No 2 ) [2003] NSWCA 258 at [5] - [9]; Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7] - [9]. However, one of the substantial differences between criminal and civil cases is that criminal cases cannot be compromised. In Latoudis v Casey (above) at 543 Mason CJ commented on the substantial differences between criminal and civil cases including "the defendant's inability in criminal proceedings to enter into a compromise". Similarly, McHugh J said at 568 "a criminal case cannot be settled". Evidence of settlement negotiations in civil litigation is generally excluded by statute but there is no such exclusion in the case of "an attempt to negotiate the settlement of a criminal proceeding or an anticipated criminal proceeding" : Evidence Act 1995 (NSW) s 131(1) and (5)(b). In my opinion, having regard to these considerations, Calderbank principles are inapplicable in criminal proceedings.

33 Nevertheless, it is in the interests of the efficient administration of justice if prosecutor and defendant agree facts for a sentencing hearing where it is reasonable to do so. Unreasonable failure to do so arguably may be a consideration that is relevant to costs. Assuming that to be so, in the present case, in my opinion, it was not unreasonable for the prosecutor not to accept any of the defendants' offers. The prosecutor had a public duty to put all material matters before the Court. There were statements in the chief engineer's contemporaneous documents and in his affidavit which, unless explained to the satisfaction of the Court, provided support for the prosecutor's case of continuing discharge. That material was apparently supported by the expert evidence of the experienced Mr Burge.

34 Second, the chief engineer submits that it was unreasonable for the prosecutor not to question the chief engineer, as was done with the master, before the hearing to test his evidence. I do not regard this as a significant point. 35 Third, the chief engineer submits that the prosecutor acted unreasonably in pressing the continuous discharge issue after 22 February 2007, particularly through reading the affidavit of Professor Coster when the hearing resumed in May 2007. This is said to be because it was clear from the cross-examination of Mr Burge on 22 February that the evidence of Mr Burge and Mr Coster was based on a misinterpretation of Mr Cosh's report. I consider that the following matters should be taken into account on this point. Mr Burge did not in cross-examination on 22 February concede the misinterpretation and did not effectively do so until his cross-examination continued at the hearing in May. The prosecutor in final submissions in effect conceded the misinterpretation. The prosecutor had sought to read Professor Coster's affidavit on day one of the hearing but the chief engineer successfully applied to have a ruling as to its admissibility deferred. It then appears to have slipped everyone's mind until the prosecutor sought to read it at the resumed hearing on 8 May 2007 and actually read it on the next hearing day, 16 May. On that date the chief engineer accepted that if I were to treat the relevant underlying factual matters stated in the report as assumptions, that would meet his objection that it was based upon a misinterpretation of Mr Cosh's report. In these circumstances I am not satisfied that the prosecutor acted unreasonably such as to affect costs nor, in any event, that the reading of the affidavit of Professor Coster, who was not cross-examined, added significantly to costs otherwise incurred. Order 36 For these reasons, the Court orders in each matter that the defendant pays 50 percent of the prosecutor's costs, other than the costs attributable to the reports of Dr Lincoln-Smith and Dr King, as agreed or assessed. The exhibits may be returned.

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.

Evidence Act 1995(NSW)s 131(1)

(2007) 156 LGERA 365

(2006) 151 LGERA 174

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