Reeves v State of New South Wales

The State's submissions

1. Whilst acknowledging the starting point represented by the ordinary rule (r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that costs follow the event, the State referred the Court to a number of cases which demonstrate the flexibility for the Court in framing costs orders to meet the circumstances where the parties enjoy mixed success.
2. The State argues that the Court may be entitled to view the overall result as an entry of a judgment (albeit for a modest amount) in favour of Mr Reeves; but, if the Court took that view, this would be an appropriate instance of the Court applying an 'issue by issue' approach to the question of costs. This was fairer than allowing Mr Reeves all of his costs given the significance of his failure on issues.
3. This was so because: (a) the time spent by the issues upon which Mr Reeves failed, manifested in the evidence adduced and the submissions, was preponderant in comparison to the issue upon which he succeeded; (b) Mr Reeves only succeeded on the 'secondary' false imprisonment claim as a consequence of the Court rejecting his claim that the entirety of the period he spent in custody amounted to false imprisonment; and (c) he failed on the malicious prosecution claim.
4. The State argued that Mr Reeves' costs should be capped as being the greater of the amount of 20% of the judgment, or 10% of $100,000; in this case, being $10,000.
5. This result was derived by application of the decision Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378. The State argued that the injured feelings I described in the Damages Judgment at J[31] accorded with the definition of 'personal injury damages' in s 11 of the Civil Liability Act 2002 (NSW), including "impairment of a person's mental condition". Findings made that the plaintiff was 'scared' and 'very anxious' related to impairment of his mental condition for the 16 minute period that he was falsely imprisoned. Without such impairment, the award for general damages would have been reduced below the sum of $5,000 awarded.
6. It was argued that Schedule 1 of the LPULA Act operated by reference to the definition of 'personal injury damages'; not by reference to only the damages that are not excluded by s 11A(1) of the CL Act.

Mr Reeves' submissions

1. Mr Reeves made the following points in favour of his position that the State pay 90% of his costs: 1. the evidence called by each party was confined; 2. the evidence to support the action upon which he succeeded was inextricably tied to the evidence on all his other actions; 3. the defendant caused costs to be incurred on issues that it failed; 4. viewed in the context of settlement offers made by the State, his offer of settlement was not unreasonable, but was rejected by the State; 5. two decisions, one of this Court and another of the Supreme Court, were 'comparable' or pointed the way to how the discretion on costs should be exercised in this case.
2. In relation to point (d) above, Mr Reeves attached to his submissions the settlement offers. In chronological sequence, these were: 1. An offer of compromise ('rules offer') by the State, dated 17 May 2022 offering that judgment be given for the Defendant with no order as to costs; 2. Another rules offer [3] by the State, dated 12 September 2022, also offering that judgment be given for the Defendant with no order as to costs; and 3. A rules offer by Mr Reeves, in which he offered that judgment be given in his favour for the sum of $10,000. This was exclusive of costs, about which no provision was made.

Consideration

1. Two issues are raised on these submissions: 1. Whether an 'issue by issue' approach should be adopted; and 2. Whether a statutory cap upon the plaintiff's recovery of costs should apply.

Whether an 'issue by issue' approach is warranted?

1. Costs are awarded in accordance with a broad discretion (Civil Procedure Act 2005 (NSW) s 98(1)(a)) The ordinary rule is that costs follow the event. Ordinarily, the 'event' is determined by the party who obtains a judgment in its favour. But that depends on all of the circumstances. In a context where multiple causes of actions are raised, especially which involve some different factual circumstances arising in relation to those actions, there is some doubt as to what the 'event' actually is. Here, the State enjoyed success on most issues and Mr Reeves enjoyed only limited success in relation to an alternative action for false imprisonment utilised as a fallback if his primary action for false imprisonment failed. He received a modest amount for damages. The single cause of action upon which he succeeded, 'secondary false imprisonment', was not derivative of any of the other causes of action upon which he lost, but was discrete and, indeed was premised upon, and a true alternative to, the failure of that might be described as his 'primary' action for false imprisonment, predicated as that was upon the unlawfulness of his arrest.
2. Mr Reeves' general position on costs does not reflect the reality of the outcome of the litigation. It would be more in keeping if he succeeded overall but some minor discount should be awarded in the State's favour. That was manifestly not the case. Addressing his points: 1. The efficient or economical conduct of the proceeding is beside the point. That parties should conduct themselves efficiently or economically is not only an expectation of the Court but a statutory obligation upon the parties (Civil Procedure Act 2005 (NSW), s 56(3)); 2. The evidence to support the actions upon which he failed was not substantially coextensive with the evidence to support the action upon which he succeeded. This submission overlooks the reality, as was pointed out in the Liability Judgment at J[105], that virtually the entirety of his claims, including malicious prosecution, was premised upon the Court's accepting his submission that his arrest was unlawful. Once that submission was rejected, as it was, he fell back upon the single action upon which he succeeded, being 'secondary' false imprisonment (which was necessarily premised upon the arrest being lawful). 3. The circumstances that the State did not succeed on certain issues (ss 3B and 43A of the Civil Liability Act 2002) did not derogate from the circumstance that save for the action of 'secondary false imprisonment', the State successfully defended all of Mr Reeves' other actions. 4. The settlement offers are irrelevant. The State did not rely upon the rules offers it made and Mr Reeves did not obtain a more favourable outcome than what he offered. 5. Costs judgments in other cases rarely provide meaningful instruction when assessing costs in a particular case. The result in Raad [4] (which I infer induced the plaintiff to propound a claim for 90% of his costs) does not assist Mr Reeves. The reasons of his Honour (Dicker SC DCJ) on the costs judgment make it plain that the plaintiff in that case was regarded as being more successful than the State. In the primary reasons for judgment in Raad [5] , it was clear that the plaintiff in that case, unlike Mr Reeves in this case, succeeded with his claim that he was wrongfully arrested, which had flow on effects for the other actions that were run. Murphy [6] was another case where the plaintiff succeeded on actions of false arrest and wrongful imprisonment for a much more significant period of time (for 24 hours).
3. In the circumstances, the relevant principles are set out in Bostik Australia Pty Ltd v Liddiard (No.2) [2009] NSWCA 304 at [38]. I agree with the State that the order for costs which a Court frames should be moulded to meet the circumstances of each case.
4. I further agree with the State that the preponderance of evidence and argument at the hearing was significantly weighted to the causes of action upon which Mr Reeves lost. In particular, the State's success in establishing the legality of the arrest, which had dispositive consequences for all the action other than Mr Reeves' fallback action for secondary false imprisonment, is separable and dominant and justifies an 'issue by issue' approach to the making of the costs order.
5. As was explained by White JA (Basten JA and Macfarlan JA agreeing) in Oikos Constructions Pty Ltd t/as Lars Fischer Construction v Ostin & Anor (No.2) [2021] NSWCA 98 at [29], where a Court favours an 'issue by issue' approach in determining costs orders, there are a variety of forms for such orders. The State has urged upon the Court the form which sees orders being made by both parties of a proportion of the others' costs. That approach appears to be based upon the special restriction which the State submits should apply to the costs recovered by Mr Reeves; to which I will now turn.

The statutory provisions and principles

1. Section 61 of the LPULA Act provides that Schedule 1 contains provisions relating to maximum costs in 'personal injury damages' matters.
2. By sub-clause 2(1)(a) to Schedule 1 of the LPULA Act, "If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows-- (a) in the case of legal services provided to a plaintiff--maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater"
3. "Personal injury damages" bears the same meaning as Part 2 of the Civil Liability Act 2002 (NSW) ('CL Act').
4. By s 11 of the CL Act, "personal injury damages" means: "damages that relate to the death of or injury to a person."
5. Section 11 of the CL Act also defines "injury" as meaning: "personal injury and includes the following: (a) pre-natal injury; (b) impairment of a person's physical or mental condition; (c) disease."
6. In the two decisions of the High Court of Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 and New South Wales v Williamson (2012) 248 CLR 417 it was emphasised that the statutory cap could be engaged where the claim for personal injury damages arose from an injury resulting from an intentional tort. It concerns any and every form of a claim for damages relating to personal injury, whether it results from a defendant's failure to take reasonable care or the commission of an intentional tort.
7. On the facts in Williamson the State was unable to invoke the statutory cap on recovery of costs. The plaintiff alleged that he had suffered personal injury from several batteries, causing him personal injury. The plaintiff sued in actions for trespass to the person and false imprisonment. In that context, French CJ and Hayne J observed (Kiefel J agreeing) that: "34. Even assuming, however, that the respondent did allege that the act of wrongful imprisonment (as distinct from the batteries he alleged he had suffered) had caused him some personal injury, the claim for false imprisonment was necessarily a claim for damages on account of the deprivation of liberty with any accompanying loss of dignity and harm to reputation. The deprivation of liberty (loss of dignity and harm to reputation) is not an "impairment of a person's physical or mental condition" or otherwise a form of "injury" within s 11 of the Liability Act. The claim for false imprisonment, at least to the extent to which it sought damages for deprivation of liberty, is not a "claim for personal injury damages". (emphasis supplied)
8. At [35], French CJ and Hayne J (Kiefel J agreeing) referred to the circumstance that the judgment entered at first instance was consistent with only the deprivation of liberty with no allowance made for any impairment of the plaintiff's physical or mental impairment. That being so, the State could not demonstrate the sum for which the plaintiff recovered on a claim for personal injury damages.
9. The State seeks to distinguish this case from Williamson on the basis that in that decision the statements of principle pertained to circumstances where the award of damages (which judgment was ordered by consent) was made solely on the basis of a deprivation of liberty (including harm to reputation and loss of dignity) whereas in the Damages Judgment I expressly indicated that the award for general damages partly reflected a need to compensate Mr Reeves for his being scared and anxious (in addition to the need to provide vindication for him).
10. However, in my view, those feelings to not amount to an "impairment" of Mr Reeves' mind or a "deterioration" or "injurious lessening or weakening" of his mind [7] , but represented the perfectly normal, rational reaction of an unimpaired mind to the position Mr Reeves found himself in, especially the police officers' defiance of his expressed desire not to participate in the interview which he had been led to expect (by legal advice) would be respected. They were not consequential upon physical or psychiatric injury caused by the wrongful imprisonment [8] .
11. The damages did not "relate to" an impairment of Mr Reeves physical or mental condition. They were therefore not 'personal injury damages' under s 11 of the CL Act. Necessarily, they were not 'personal injury damages' under s 61 and sub-clause 2(1)(a) of Schedule 1 to the LPULA Act.
12. The statutory cap on costs does not apply to the amount for costs recovered on Mr Reeves' claim of false imprisonment.
13. In the absence of any restriction upon Mr Reeves' recovering his costs, the net effect of these reasons is that, conceptually, there is no limitation upon either party to recover costs upon the issues, or more accurately, actions upon which they succeeded. Fairness indicates that the overall outcome reflect the parties' respective successes and for this purpose, I adopt the State's position that the costs award should proportionately reflect the State's success on the preponderance of issues (75%) and also Mr Reeves' success (25%). Recognising certain assumptions embedded in the approach but in the interest of clarity and finality, this is achieved by substantially offsetting the proportion of the costs to which the State should be entitled against the costs to which Mr Reeves would be entitled to.

Orders

1. For the above reasons, it is ordered that the plaintiff pay the defendant 50% of its costs of the proceeding, as agreed or assessed.

Endnotes

1. Reeves v State of NSW [2023] NSWDC 196
2. Reeves v State of NSW (No.2) [2023] NSWDC 232.
3. Both offers purported to be made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). Mr Reeves did not submit that the offers did not comply with r 20.26.
4. Raad v State of New South Wales (No.2) [2017] NSWDC 94
5. Raad v State of New South Wales [2017] NSWDC 63
6. Murphy v State of New South Wales [2023] NSWSC 407
7. New South Wales v Corby (2010) 76 NSWLR 439 at [24], applied in Moore v Scenic Tours (2020) 268 CLR 326 ("Moore") at [41]
8. Williamson at [33]-[34] & [45]; Moore at [55]-[56] & [62] (approving New South Wales v Ibbett (2005) 65 NSWLR 168 per Spigelman CJ at [21]-[22]); see also H Luntz & S Karder, Assessment of Damages for Personal Injury and Death (5th ed, 2021, LexisNexis) at [1.3.20].

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