New South Wales Crime Commission v Police Integrity Commission; Giorgiutti v Police Integrity Commission

Supreme Court of NSW|2011-08-31|Before: Rothman J

2011/54085: R Beech-Jones SC / D H Mitchell (Plaintiff) A J Sullivan QC / G E S Ng (Defendant)

2011/61704: No appearance (Plaintiffs) A J Sullivan QC / G E S Ng (First Defendant) Submitting appearance (Second Defendant) Solicitors:

2011/54085: Crown Solicitor's Office (Plaintiff) Police Integrity Commission (Defendant)

2011/61704: TressCox Lawyers (Plaintiffs) Police Integrity Commission (First Defendant) Crown Solicitor's Office (Second Defendant) File Number(s): 2011/54085; 2011/61704

Judgment 1These reasons deal with applications for costs arising from earlier judgments. On 17 May 2011, the Court, as presently constituted, issued reasons for judgment and orders dealing with the substantive aspect of the proceedings: New South Wales Crime Commission v Police Integrity Commission; Giorgiutti v Police Integrity Commission [2011] NSWSC 443 (hereinafter "the first judgment") . On 24 May 2011, after further submissions relating to a particular aspect of the earlier reasons for judgment, an amendment was made to those orders: New South Wales Crime Commission v Police Integrity Commission; Giorgiutti v Police Integrity Commission (No 2) [2011] NSWSC 476 (hereinafter "the second judgment") . Both judgments together shall where appropriate be referred to as "the earlier judgments". 2The effect of the orders issued on 17 May 2011 and 24 May 2011 was to determine that the Police Integrity Commission (hereinafter the "PIC") had jurisdiction to conduct an inquiry in terms announced on 13 December 2010, but because the PIC, in reaching that decision, took into account two particular, although minor, aspects of alleged corruption that were outside the terms of the announced investigation, the determination to hear those proceedings in public took into account irrelevant considerations and was required to be reconsidered. 3Arising from the foregoing orders, the question now before the Court is whether and to what extent there should be an order for the payment of costs. 4As was made clear in the earlier judgments in these proceedings, the substantive challenge to the conduct of an investigation by the PIC announced on 13 December 2010 was a jurisdictional challenge to the capacity of the PIC to conduct an investigation, because the allegations did not involve misconduct and the investigation related only to prevention: see Ground 1 at [31] in the first judgment. There was a further ground relating to the invalidity of the decision to hold the hearings in public, because of the consideration of an irrelevant factor: see Ground 2 at [31] in the first judgment. Predominantly, that irrelevant factor was that the allegations, in total, could not amount to misconduct. 5The major thrust of the proposed investigation was the practices of the New South Wales Crime Commission (hereinafter "the Crime Commission") in dealing with proceedings under the Criminal Assets Recovery Act 1990 (hereinafter "CARA"). Two allegations, not caught by that description, were taken into account in dealing with whether or not to hold a public hearing. Those allegations related, firstly, to the terms of a letter in which, it was said, there was a misrepresentation as to whether this Court had approved certain settlements, or aspects of settlements. The second allegation related to a purported sham arrangement regarding superannuation payments, which, if performed knowingly, might amount to fraud. The Court held that these two allegations were not allegations described by the terms of the announced inquiry. 6The subsequent proceedings determined that the two aforementioned non-CARA matters, taken into account by the PIC in determining to hold the proceedings in public, were, given the terms of the announced inquiry, irrelevant considerations. The decision to hold the hearings in public was quashed and the PIC (or more accurately the Commissioner) was ordered to determine that issue in accordance with law. 7The foregoing is a short but necessary summary of the circumstances, a full account of which may be obtained by the reading of the earlier judgments. It is a summary necessary in order to deal with this costs question.

Principles on the determination of costs 8Section 98 of the Civil Procedure Act 2005 provides that costs are in the discretion of the Court and provides the Court with full power to determine by whom, to whom and to what extent costs should be paid, and the basis for the calculation of those costs. While the terms of s 98 are in broad terms, and seemingly unqualified, the principles that have been established in the exercise of that jurisdiction require that the Court's discretion be exercised judicially. 9The provisions of the Uniform Civil Procedure Rules 2005, and in particular UCPR 42.1, make clear that ordinarily costs must follow the event. A party that seeks an order different from that which reflects costs following the event, bears an onus to convince the Court that the usual order ought not issue: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97; Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 542-543, per Mason CJ and 564, 566, 567, per McHugh J; Morton v Sydney Ferries Corporation (No 2) [2010] NSWSC 40 at [2]; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [38], per Beazley JA; Ruddock v Vadarlis [2001] FCA 1865; (2001) 115 FCR 234 at [11], per Black CJ and French J (as he then was). 10The award of costs is not intended as a punishment. Nor is it intended as a reward. It arises from the necessity to compensate a party who has incurred expenses either in enforcing a right or defending against an allegation of right, and, in that sense, costs are awarded as part of the compensation and/or damages to a plaintiff, or compensation to a successful defendant who has resisted a claim: Ahmadi v Fairfax Media Publications Pty Ltd (No 2) [2010] NSWSC 1191 at [7]. As stated in Ahmadi , supra, at [8], a practical, rather than technical approach should be taken. I there said: "[8] One of the issues in these proceedings is the identification of the 'event' that costs should follow. The Court should take a practical rather than a highly technical approach to this issue. Recently the Court of Appeal (Sydney Ferries v Morton (No 2) [2010] NSWCA 238) cited, at [10], with approval, the statements of principle of the Court of Appeal in James & Ors v Surf Road Nominees Pty Limited & Ors [No 2] [2005] NSWCA 296 at [31]- [36]. The passage is in the following terms: '[31] Costs orders in the Supreme Court are governed by the provisions of s.76 of the Supreme Court Act 1997 and the Supreme Court Rules . Section 76 provides, relevantly that subject to the Act and the Rules, costs shall be in the discretion of the Court: s.76(1)(A). Part 52A r.11 acts as a limited proscription of the Court's discretion conferred by s.76. Part 52A r.11 provides that, subject to Part 52A, the Court shall order that costs follow the event "except where it appears to the Court that some other order should be made as to the whole or any part of the costs". [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." [33] Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association [1986] FCA 382; (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) [34] 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. [35] 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. [36] 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] FCA 259; (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." This case is a classical example of that sentiment.'" 11I apply the foregoing approach to the exercise that is before me.

Consideration 12The issue between the parties in these proceedings, which is necessary to resolve in determining an appropriate order for costs, if any, is what was the "event" and to what extent have the respective parties been successful. 13As stated at the outset, the overwhelming issue before the Court in the substantive proceedings was the jurisdiction of the PIC to embark upon an inquiry into the conduct of the Crime Commission, or its officers, insofar as they were engaged in CARA proceedings. The plaintiffs, the Crime Commission, Messrs Giorgiutti and Spark were unsuccessful in that respect. 14A subsidiary issue was the validity of the determination to hold the inquiry in public. The argument in relation to that aspect was successful on that which I have described as a technical basis, and not on the primary basis argued. Nevertheless, it was successful. 15The determination to hear the matter in public was quashed and the PIC was required to determine the matter again, in accordance with law, namely, without regard to the two allegations of misconduct that did not involve CARA proceedings. The second judgment involved determination of that ground. The second judgment involved a hearing for one day and the costs associated with the further preparation of that matter. Those costs were borne, from a plaintiff's perspective, only by the Crime Commission. 16The substantive proceedings concern the issues associated with the determination to hear the investigation in public to a very minor extent. However, if that were the only matter raised, the plaintiffs would have been entitled to have their costs compensated. Because the subsequent proceedings were taken successfully, the Crime Commission should be entitled to its costs in relation to those subsequent proceedings. The material that I have examined relating to the suggestions made by the Crime Commission to resolve the matter without further litigation confirm that approach. Nevertheless, as earlier stated, the substantive issue was determined in favour of the defendant, the PIC, and, to that extent, their costs should also be compensated. Because of the subsequent proceedings and the different proceedings, it is necessary to differentiate between the two sets of plaintiffs. 17There were two statements of claim and two proceedings, the second set of proceedings (2011/61704) were commenced by two of the most senior officers of the Crime Commission after the Crime Commission itself had initiated proceedings. Those individual plaintiffs raised additional grounds. None of those additional grounds were successful. 18The following factors should also be mentioned: the jurisdictional issue upon which the PIC were wholly successful represented no less than 80% of the proceedings; in the second judgment, while utilising submissions that were agitated earlier, the Crime Commission were wholly successful; and the only "success" achieved by Messrs Giorgiutti and Spark arose from the second judgment in the separate proceedings in which they did not participate. 19It seems, from what I have been told during the proceedings, that all costs will be borne by the State Government, albeit from different budgets. 20As a result of the foregoing, I need to allocate the costs of the PIC in both proceedings and I apportion those costs as 60% in the Crime Commission proceedings (2011/54085) and 40% in the other proceedings (2011/61704). The Crime Commission should pay one-third of the total costs allocated to its proceedings, namely, 20% of the costs of both proceedings, and the individual plaintiffs should pay 75% of the total costs allocated to their proceedings, namely 30% of the total costs. On that basis PIC will be compensated for 50% of its total costs. 21The Court makes the following orders: (i) The costs in and incidental to each proceeding, being 2011/54085 and 2011/61704 are to be treated as one set of costs; (ii) The New South Wales Crime Commission pay one-fifth of the Police Integrity Commission's costs in each proceeding, as agreed or assessed; (iii) The plaintiffs, Messrs Giorgiutti and Spark, pay 30% of the Police Integrity Commission's costs in each proceeding, as agreed or assessed; (iv) Otherwise the proceedings are dismissed.

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: 02 September 2011

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