Plaintiff v First Defendants

Supreme Court of Victoria|2007-11-09|Before: LASRY J

COSTS - usual orders for costs - absence of disentitling conduct - passive role by a party.

1 On 29 October 2007 this matter was before me as an application for an order in the nature of certiorari quashing the decision of a Medical Panel - the members of the Medical Panel were the first named defendants in the proceedings. Also joined in the action was the Peter MacCallum Cancer Centre, Dr Charles Leinkram and Dr Grant McArthur. In the hearing of the proceedings none of the defendants sought to advance argument, although Mr Moloney of counsel who appeared on behalf of the third defendant, Dr Grant McArthur, and Ms Dawes who appeared on behalf of the second and fourth defendants, reserved their entitlement to make submissions on the question of costs. They have both now done so.

2 On 7 November 2007 I delivered judgment in the matter, concluding that I should accede to the application for an order in the nature of certiorari quashing the decision of the Medical Panel dated 12 November 2006, and I ordered that the medical question determined by the Medical Panel on that date be remitted to a differently constituted Medical Panel for determination according to law.

3 Upon that result being announced, Ms Mortimer of senior counsel for the plaintiff applied for an order for costs against the second, third and fourth defendants. No order for costs was sought in relation to the Medical Panel. No doubt, that is because of the "very-well [sic] established line of authority" referred to by the Court of Appeal in Psychologists Registration Board of Victoria v The Herald and Weekly Times Ltd.[1] In that case, the Court of Appeal set aside an order for costs against the Psychologists Registration Board of Victoria on the basis that costs should only be awarded against a statutory tribunal which makes an order in excess of its powers where it can be demonstrated that the tribunal has been "guilty of serious misconduct or corruption or has acted perversely".[2] No such allegation was made in this case, nor have I found it to be so demonstrated.

4 The question then is whether or not costs should be awarded against the second, third and fourth defendants. On behalf of the defendants against whom costs are sought, it was submitted that there is no absolute rule in relation to costs, and that in this case the costs should not follow the event.

5 In making orders for costs, the Court exercises a discretion pursuant to s 24(1) of the Supreme Court Act 1986 (Vic) which provides:

Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

6 In the course of his submissions in support of the contention that no order for costs should be made in this case, Mr Moloney also referred to the judgment of the High Court in Latoudis v Casey.[3] That case, as is well-known, concerned the issue of costs orders in the Magistrates' Court in favour of the defendants where a police prosecution had failed. The Court held that in the ordinary circumstances an order for costs should be made in favour of a defendant against whom a prosecution has failed.

7 In the course of the judgment of the Court, their Honours referred to a substantial number of the cases concerning costs. Justice Dawson noted:

By rule it was provided in England that in civil jury trials costs followed the event unless the court should for good cause order otherwise. In non-jury cases the costs were left to the discretion of the court. Whilst the discretion was absolute and unfettered, it was to be exercised judicially, that is to say, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation. A successful party in a non-jury case had, in the absence of special circumstances, a reasonable expectation of obtaining an order for costs in his favour, but no right until he obtained an order; nevertheless, it was said that a court should not exercise the discretion against a successful party "except for some reason connected with the case"...[4]

8 In the course of his judgment in Latoudis, McHugh J stated:

An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connexion with the litigation ... The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party. In Cilli v Abbott_, Keely, Toohey and Fisher JJ pointed out that "the object of costs is not to penalize; it is to indemnify the successful party in regard to expense to which he has been put by reason of legal proceedings" ..._[5]

9 His Honour went on to conclude that once it is recognised that costs operate as an indemnity and that the rationale of making an order for costs is that it is just and reasonable that the successful party should be reimbursed for the costs incurred in bringing or defending the action, no ground exists for distinguishing between parties who are public officials and those who are private persons.

10 Later in his judgment, in dealing with civil proceedings, his Honour noted that the relevant statute or rule often provided that costs followed the event unless the Court considered there was some reason that a different order be made.[6] It is true that this is not the effect of s 24(1) of the Supreme Court Act 1986 (Vic). The discretion for costs in these circumstances might be described as a discretion which is uncontrolled. Nevertheless, as McHugh J stated:

But even when the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case.[7]

11 In his submissions, Mr Moloney accepts that the usual costs order is that costs follow the event. However, he relies on the fact that on the question of costs there is a discretion to be exercised and refers to the observation of Gaudron and Gummow JJ in Oshlack v Richmond River Council,[8] in which their Honours noted:

There is no absolute rule with respect to the exercise of [the costs discretionary] power ... that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party.

If regard be had to the myriad circumstances presenting themselves in the institution and conduct of litigation, and to the varied nature of litigation, particularly in the equity jurisdiction, it will be seen that there is nothing remarkable in the above propositions.[9]

12 There is no question that there is a discretion to be exercised. Nevertheless, in the judgment of McHugh J in that same case, his Honour said that the phrase "usual order as to costs" embodies the important principle that the successful party in litigation is entitled to an award of costs, subject to "certain limited exceptions".[10] Primarily the exceptions would relate to "misconduct" by the successful party such as: lax conduct inviting the litigation; protracting the proceedings; success on a point not argued before a lower court; prosecution of a matter solely for the purpose of increasing the costs recoverable; or obtaining relief which the unsuccessful party had already offered in settlement.[11] His Honour went on to say that there were very few, if any, exceptions to the usual order for costs outside the area of disentitling conduct.

13 A number of features of this case were relied on by Mr Moloney in support of his submission that the usual costs order should not be made. Foremost among those features is that the conduct which is impugned in these proceedings is purely the conduct of the Medical Panel and not the conduct of Mr Maloney's client, Dr Leinkram. I should note at this stage that Mr Moloney relies particularly on the fact that it was the fourth defendant, Dr McArthur, who is said to have caused the plaintiff's psychiatric injury, and not Dr Leinkram. However, as I read the statement of claim in the proceedings in the County Court, the claim against Dr Leinkram is based on the assertion that: (a) he failed to do that which would have then been medically appropriate and refer the plaintiff to an ear, nose and throat surgeon; and (b) he failed to perform an examination of the aero-digestive tract under a general anaesthetic. Rather, Dr Leinkram performed an excisional biopsy in June 2003, gave the plaintiff his diagnosis on 24 June 2003 and then referred the plaintiff to Dr McArthur. These allegations are part of the factual prelude to the alleged misdiagnosis and they are part of the plaintiff's cause of action against Dr Leinkram.

14 In his submissions, Mr Maloney also relied on the fact that the defendants had chosen to submit to any orders made by the Court, and had not "entered the fray" in relation to the application. This is, of course, correct. On 1 October 2007 an email was forwarded to this Court by Mr Mark O'Sullivan, the solicitor for the third defendant, informing the Court that his client did not consent to nor oppose the order sought by the plaintiff but reserved the right to be heard on the question of costs. He expressed his intention to brief junior counsel to appear on behalf of the third defendant for this limited purpose.

15 That is indeed what happened in relation to each of the second, third and fourth defendants. On 7 June 2007, Ms Dawes, who is the solicitor for the second and fourth defendants in the proceedings, informed the solicitor for the plaintiff that her clients would neither consent to nor oppose the application.[12] On 18 October 2007 Mr Herz, the solicitor for the plaintiff, wrote to Ms Dawes referring to her letter of 7 June 2007 in the following terms:

We suggest that there is no need for your client to be represented at the hearing, given your intention to neither consent to nor oppose our clients' [sic] application. Given the absence of substantive opposition from any defendant to the claims made in the plaintiff's judicial review application, the time and costs (both for the parties and the Court) seem unnecessary.

We enclose, for your consideration, draft Consent Orders. We ask that you consider consenting to the enclosed Orders. If you do not return the Consent Orders, duly signed within 7 days of the date of this letter, we reserve the right to produce this letter on the question of costs.[13]

16 On 23 October 2007, Mr Peter McGrath, on behalf of the solicitors for the second and fourth defendants, replied.[14] He expressed the view that it was a matter for the Court to "exercise its judgement to determine if the medical panel has erred in law and to grant the orders your client seeks, or otherwise". He suggested it was not a matter "for our client[s] to consent to the orders your client has sought". He again indicated his intention to appear at the hearing, but only to ensure his clients' position in respect of costs. He noted that "[i]t is our contention that no order for costs should be made against our clients". He asked that the plaintiff consider not seeking costs against his clients, in which case he would not attend the proceedings on 29 October 2007 or seek any costs orders against the plaintiff in relation to the appeal proceedings - presumably referring to the appeal in relation to the extension of time.

17 I agree that if consent orders had been presented to this Court as proposed, I would still have needed to have been satisfied that the plaintiff's case was made out before making such orders. The fact that the defendants have not participated in the hearing of this action other than for the purpose of reserving their position on costs has obviously had a beneficial impact on the time this matter has taken. I note that the estimate for the case was originally put at one day and in fact the hearing took less than an hour and a half.

18 Although the proceedings before me were separate proceedings from those brought by the plaintiff in the County Court, in my opinion there is an artificiality in isolating them totally. The proceedings before me became necessary because under Part VBA of the Wrongs Act 1958 (Vic) ("the Act"), in order to be able to proceed with litigation in the County Court the plaintiff was put through the Medical Panel procedure, if I can use that shorthand to describe the process. As I noted in the course of my judgment on the relief sought by the plaintiff, in the event that a Medical Panel determines that a plaintiff's injury does not satisfy the threshold requirements imposed by the Act (as was the case here), there can be no appeal against that process other than by way of judicial review. In order to continue the litigation in the County Court, therefore, the proceedings before me were necessary unless the plaintiff were to accept the Panel's determination that his injury had not reached the threshold required by the Act. If judicial review had not been sought, the Panel's determination would have represented the end of the plaintiff's action in the County Court.

19 Further, there is nothing about the plaintiff's conduct in these proceedings which could be said to disentitle him according to ordinary principles. It is not argued that there is any disentitling conduct. Indeed, it is accepted that the plaintiff was required to conduct his case before me in exactly the manner he has done so, even if the errors on the part of the Medical Panel were accepted by the defendants to have occurred. Other than to highlight that point, the history of the matter does not otherwise inform the issue. I am certainly not persuaded that where a defendant adopts a passive role in litigation this will, of itself, be a reason not to make the usual order for costs. Whilst it is clear that the ordering of costs is discretionary, no cases supporting the proposition that passive defendants can, for that reason alone, avoid orders for costs following the result were cited to me. Further, I consider the remarks made by McHugh J in Latoudis need to be read realistically and I consider that his Honour's use of the word "caused" is broader than the proposition that Mr Moloney contends for.

20 The manner in which the High Court dealt with the issue confronting it in Latoudis suggests that orders for costs would be made in favour of a defendant against whom the prosecution had failed with the possible exception of circumstances where "the defendant, by his or her conduct after the events constituting the commission of the alleged offence, brought the prosecution upon himself or herself".[15] In those circumstances it would not be just and reasonable to avoid costs against the prosecutor.

21 There is nothing about the plaintiff's conduct in this case which should disentitle him to what might be described as the usual procedure or the successful party's "reasonable expectation". The steps the plaintiff has taken in this proceeding have all been necessary for him to take and have been conducted efficiently.

22 In all the circumstances I propose to make an order for costs against the second, third and fourth defendants. I will hear from the parties as to the form those orders should take.

[1] [2000] VSCA 118 at [11] (per Winneke P, Phillips and Charles JJA).

[4] Ibid at 557, quoting Donald Campbell and Co v Pollak [1927] AC 732 at 811-12 (per Viscount Cave LC).

[5] [1990] HCA 59; (1990) 170 CLR 534 at 566-7 (citations omitted).

[11] Ibid (per McHugh J). See also the cases to which his Honour refers.

[12] See the affidavit of Emma Kate Dawes, dated 29 October 2007, and Exhibit EKD-4 thereto.

[15] [1990] HCA 59; (1990) 170 CLR 534 at 544 (per Mason CJ).

At a glance

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Judgment (40 paragraphs)

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