ROBINSON v AUSTRALIAN ASSN OF SOCIAL WORKERS LTD No. SCGRG-00-86 [2000] SASC 239

Supreme Court of SA|2000-08-04|Before: Debelle J, Mullighan J, Millhouse J, Martin JJ, Prior J, Williams J

Judgment No. [2000] SASC 239

On Appeal from DISTRICT COURT (HIS HONOUR JUDGE HERRIMAN)

ROBINSON v AUSTRALIAN ASSOCIATION OF SOCIAL WORKERS LTD

1 PRIOR J. I agree with the reasons given by Martin J.

2 The appeal should be allowed and in lieu of the order for costs made in the court below an order made that the defendant pay 50 per cent of the plaintiff's costs to be taxed if not agreed.

4 MARTIN J. The appellant is a family counsellor who is a member of the respondent Association. A complaint was made to the Association about the conduct of the appellant and the Association commenced an investigation. By summons dated 22 April 1999 the appellant sought the following relief:

1.1 In the conduct of the investigation and determination of a complaint against a member, the defendant must comply with its by-laws;

1.2 In the course of its conduct of the investigation of a complaint against the plaintiff the defendant has breached its by-laws;

1.3 The defendant is obliged to provide proper particulars of the complaint to the plaintiff.

2. An injunction to restrain the defendant from proceeding with any further investigation and determination of any complaint against the plaintiff."

5 A Judge of the District Court made the following orders:

1. That the defendant has not complied with its by-laws in the steps taken by it after 19 March 1998 and to that extent those steps have been ultra vires the defendant and denying the plaintiff procedural fairness.

2. That the plaintiff pay 50% of the defendant's costs, to be taxed if not agreed."

6 The learned trial Judge declined to grant an injunction restraining the Association from proceeding with further investigation and determination of the complaint against the appellant. The appeal to this Court was originally brought against that decision and his Honour's order that the appellant pay 50 per cent of the Association's costs. The appeal has proceeded only in respect of the order that the appellant pay those costs. In essence the appellant argued that he succeeded with respect to his complaints concerning the procedure adopted by the Association and the defences in that regard were rejected by the learned trial Judge. In those circumstances, the appellant having succeeded on the substantive issues, it was submitted that the cost order is unreasonable or plainly unjust and this Court should find that the learned trial Judge failed to exercise his discretion properly.

7 The formal order to which I have referred does not adequately reflect the positions taken by the parties with respect to legal and factual issues or the findings of the learned trial Judge with respect to those issues. It is necessary, therefore, to examine those matters in order to determine whether the appellant's complaint is made out.

8 The By-Laws of the Association prescribed a procedure to be followed with respect to the investigation and determination of complaints about members of the Association. The issues argued may be summarised as follows:

(i) The appellant submitted that the documents giving him notice of the complaint did not comply with the By-Laws and did not sufficiently particularise the complaint against him. The learned trial Judge found that the documentation did not strictly comply with the prescribed forms, but that strict compliance would not have provided any additional information to the appellant concerning the allegations against him. His Honour found against the proposition that the complaint was not sufficiently particularised. He reached the view that the appellant had been accorded "substantial fairness" and that "to insist upon literal compliance with those provisions of By-Law 5.3(c) would amount to excessive formalism." He found against the appellant's proposition that a failure to comply literally with the By-Law rendered the process invalid.

(ii) At an early stage in the process, the Association convened a meeting to consider whether to proceed with an investigation of the complaint. That meeting was held on 19 June, 1997. The appellant contended that the convening of the meeting was in breach of the relevant By-Law because the meeting was not convened within 21 days after the receipt of the appellant's reply to the complaint. The meeting was no more than two days outside the 21 day period. The appellant's submission was rejected by the learned trial Judge. His Honour was satisfied that it was not intended that such a delay would invalidate the holding of the meeting. He also found that no procedural unfairness resulted from the delay.

(iii) In addition to submitting that the initial meeting was in contravention of the By-Laws, the appellant submitted that once it was found that the meeting did not comply, the subsequent meetings could not cure the defect and the entire process thereafter was invalidated. That submission was also rejected by the learned trial Judge.

(iv) After the initial meeting of 19 June 1997, a number of meetings were held over a period of many months. The Association did not decide to proceed with an investigation until a meeting held on 19 March, 1998. Although the appellant did not seek to assert that specific prejudice was suffered between June 1997 and March 1998, the learned trial Judge reached the view that "unwarranted, unreasonable or unfair delay in finalising" the meeting convened under the By-Laws could lead to procedural unfairness. The appellant argued that the sequence of events demonstrated unreasonable delay on the part of the Association that was procedurally unfair to him. His Honour found that the Association was attempting to be fair to the appellant and that, of the delay of approximately nine months, there was "no doubt that six of them were directly attributable to the appellant's own conduct in that he sought time for and led the [Association] to believe that he would be making a response." His Honour found that it was not unreasonable for the Association to afford the appellant such an opportunity, but that the Association could be criticised for the delay caused by the Association not acting on the appellant's failure to respond to the Association between the end of November 1997 and March 1998. He was of the view that the Association should have made its determination in December 1997 or February 1998. His Honour was not persuaded, however, that any delay was so substantial as to invalidate the decision made on 19 March 1998 or to deny the appellant procedural fairness. He found that the criticisms made by the appellant of the conduct of the Association in this regard were "ill-founded and opportunistic".

(v) Notwithstanding the various attacks made by the appellant, the learned trial Judge found that the steps taken by the Association leading to the decision of 19 March 1998 to proceed with an investigation were not ultra vires and did not deny the appellant procedural fairness. His Honour found, however, that there was non-compliance with the By-Laws after 19 March 1998 and that the steps taken by the Association in the disciplinary process after the meeting of 19 March 1998 did not afford procedural fairness to the appellant. In particular, he found that a series of telephone conversations treated by the Association as a meeting for the purposes of the By-Laws did not amount to a meeting properly convened pursuant to the By-Laws. As a consequence he found that acts flowing from decisions made in that manner were tainted. In addition, as to the process of appointing investigators pursuant to the By-Laws, his Honour found as follows:

"I am further not satisfied that the rights of objection to the appointment of investigators provided for in By-Law 5.4 are particularly clear, nor were they adequately explained to the plaintiff.

The investigator appointments were made some ten weeks late in time and their first report was some nine months late. The explanations for those delays can easily be discerned from the spirited correspondence between solicitors over that time. It had become clear that the plaintiff was challenging the propriety of all that had happened before and he was not prepared to speak to the investigators.

Having noted that, I should say I am not minded to be overly critical of that delay. I am satisfied that correspondence amounted to "other relevant investigation or legal process under way" and that the [Association] and the investigators were entitled to have "due regard" to it (5.3(i)). Although the [Association] did not record a resolution in those precise terms, it is evident from the relevant minutes that it was, in view of the solicitors' correspondence, permitting the investigators a much longer time than the 28 days ordinarily allowed for the submission of their report (5.4(h)).

Whilst I have thus found myself satisfied that procedural fairness was accorded to the plaintiff up to and including the resolution of 19 March 1998, subsequent events are very much clouded by the events which then occurred. Those later steps, taken by the defendant and/or the investigators, did not, in my view, substantially comply with the wording or purpose of the By-Laws. They proceeded, at least in part, upon the premise that there was a valid meeting on 24 March 1998, when I have found there was not. They did not adhere, or even substantially adhere, to the relevant time limits and there was a clear misunderstanding over the appellant's rights of objection to investigators and as to what those persons should have done in the face of the appellant's refusal to speak to them.

In making those findings, I do not consider that the actions of the defendant disclose intentional non-compliance, but rather misunderstanding and oversight on its part, substantially clouded, indeed distracted, by its perception it had met on 24 March 1998 and by the content of the solicitors' correspondence.

For these reasons, I am satisfied that the steps taken by the defendant in the disciplinary process after the meeting of 19 March 1998, did not afford the appellant procedural fairness."

(vi) The appellant also claimed that the members of the Association had shown bias against him. He relied on a number of matters in support of that contention. The learned trial Judge found against the appellant.

(vii) Contrary to the position taken by the appellant, his Honour concluded that the Association was at liberty to proceed to deal with the complaint, but only on the basis that the progress of the process prescribed by the By-Laws be taken back to the meeting of 19 March 1998. In his Honour's view the appellant would not suffer procedural fairness if the progress of the complaint was taken back to that date. As a consequence, while his Honour was prepared to make a formal order that there had been failure to comply with the By-Laws and a denial of procedural fairness after 19 March 1998, he was not prepared to grant an injunction restraining the Association from proceeding further with the investigation.

9 Against that background, the learned trial Judge heard full submissions concerning costs and made the following ruling:

"As to costs, I am mindful of the fact that both parties have expended monies on costs, I am mindful of the matters that have been put to me by counsel, I am mindful of the nature of the dispute, the fact that the plaintiff has in part succeeded. I have also had regard to all the matters that were put before me in the course of argument previously and today. The order for costs will be that the plaintiff is to pay to the defendant 50% of the defendant's costs, to be taxed or otherwise agreed."

10 After his Honour delivered that ruling, further submissions were made by counsel for the appellant who had not been given the opportunity to reply to submissions by counsel for the Association. During the course of those submissions, his Honour adverted to the possibility of awarding costs to each of the parties in respect of the matters upon which they had been successful, but expressed the view that "the more appropriate course is to order one set of costs to reflect the varying successes of both parties." When counsel for the appellant expressed surprise that the appellant had been ordered to pay 50 per cent of the Association's costs, his Honour said:

"That was my intention, but it reflects what I regard as an appropriate determination of the merits of the issues tried between the parties, and the respective rights they might otherwise have had if I had been minded to award costs on an issue basis."

11 Section 42(1) of the District Court Act 1991 provides that costs are in the discretion of the Court. Rule 101.02 of the Supreme Court Rules applies in the District Court and provides that, subject to the rules, the costs of and incidental to a proceeding shall follow the event unless the Court orders otherwise. That rule does not fetter the discretion of the judge with respect to costs. In Copping v ANZ McCaughan and Ors [1995] SASC 4917; (1994) 63 SASR 523 at 527-528, King CJ with whom Mohr and Nyland JJ agreed made the following observations about the wording in r 101.02(1):

"The reference to costs following the event is an expression of the general expectation that the successful party will get the costs. The phrase "unless the court otherwise orders" reflects the unfettered discretion of the judge to fashion the order for costs as he sees fit in the interests of justice."

12 The discretion must be exercised judicially. It cannot be exercised on grounds unconnected with the litigation. The existence of jurisdiction to order a successful party to pay the opponent's costs was settled in Cretazzo v Lombardi (1975) 13 SASR 4 per Bray CJ at 11-12. The Chief Justice gave some guidance in this regard (p 12):

"It follows, therefore, that there is now jurisdiction to order a successful party, even a wholly successful party and whether plaintiff or defendant, to pay his opponent's costs in part or in whole. Of course, it by no means follows that it would be a judicial exercise of the discretion to do so and it may well be that in many cases it would not, since there must be some reason for departing from the settled practice whereby the successful party receives his costs from his opponent; see Donald Campbell & Co. v Pollak [[1927] A.C. 732.], per Viscount Cave L.C., at p. 812.

The next matter is this. A successful party who has failed on certain issues may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent's costs of them, and in this context "issue" does not mean a precise issue in the technical pleading sense, but any disputed question of fact or, in my view, of law: Foster v. Farquhar [[1893] 1 Q.B. 564.], per Bowen L.J., as he then was, at p. 570. In fact in that case the plaintiff, who succeeded to a substantial extent, was deprived of his costs and ordered to pay the defendant's costs in relation to certain specific disputed items of special damage on which he failed. Moreover it has been held by the House of Lords that the support of an extravagant claim by fraudulent acts or evidence may be good cause for depriving a successful plaintiff of his costs: Huxley v. West London Extension Railway Company [(1889) 14 App.Cas. 26.]"

13 Two other references from the judgments in Cretazzo are of assistance. First, having acknowledged that costs may be awarded against a successful plaintiff, Jacobs J sounded a note of "cautious disapproval" of applications to apportion costs "according only to the success or failure or one party or the other on the various issues of fact and law, which arise in the course of a trial." His Honour observed (p 16):

"But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."

14 The note of "cautious disapproval" sounded by Jacobs J has been cited with approval on a number of occasions (see Considine v Basheer & Ors -unreported, Debelle J delivered 15 June, 1994 - No. 4632; Duke Group Ltd (In Liq.) v Pilmer & Ors - unreported, Mullighan J delivered 1 June, 1998 - No. 6699; Lucas v Hillier and Carney - unreported, Millhouse J [1999] SASC 128.)

15 The second passage of assistance in Cretazzo is found in the judgment of Zelling J. Commenting on the approach to be taken by the Court of Appeal with respect to an appeal against a discretionary order, his Honour said (p 15):

"...[T]he overriding principle in cases of this sort appears to me to be well set out in the judgment of the Court of Appeal in Griggs v. Petts [[1939] 4 All E.R. 39, at p.42.], where Slesser L.J. says, after referring to the speech of Lord Atkin in the case of Evans v. Bartlam [[1937] A.C. 473, at p.480.]:

"Lord Atkin points out that while the Court of Appeal normally will not interfere with the exercise of the Judge's discretion except on grounds of law, yet, if it sees that on other grounds the decision will result in injustice being done, it has both the power and the duty to remedy it.""

16 The authorities provide numerous examples of circumstances in which it is reasonable not only to deprive a successful plaintiff of all or part of costs of the action, but to award costs against a successful plaintiff in favour of the defendant. It is not helpful to attempt to define with precision the circumstances in which such orders can properly be made. The Court of Appeal in England had occasion to consider this question in Re Elgindata Ltd (No. 2) [1993] 1 All ER 232. The plaintiff had been successful in obtaining an order that the respondent purchase certain shares held by the plaintiff. Notwithstanding that success, the trial judge found that the majority of the plaintiffs' case had failed, but there was some conduct on the part of the respondent that constituted unfairly prejudicial conduct. He ordered that the plaintiffs pay three quarters of the respondent's costs and that the respondent pay one quarter of the plaintiffs' costs. The end result was that the plaintiffs would have been required to bear costs in the order of 240 000 pounds. In setting aside the orders and directing that the respondent pay approximately half of the plaintiffs' costs, Nourse LJ with whom Stocker LJ agreed, addressed the principles to be applied (p 237):

"In order to show that the judge erred I must state the principles which ought to have been applied. They are mainly recognised or provided for (it matters not which) by s 51 of the Supreme Court Act 1981 and the relevant provisions of RSC Ord 62, in this case rr 2(4), 3(3) and 10. They do not in their entirety depend on the express recognition or provision of the rules. In part they depend upon established practice or implication from the rules. The principles are these. (1) Costs are in the discretion of the court. (2) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (3) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (4) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but order him to pay the whole or a part of the unsuccessful party's costs. Of these principles the first, second and fourth are expressly recognised or provided for by rr 2(4), 3(3) and 10 respectively. The third depends on well-established practice. Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party's costs. It was because of his disregard of that principle that the judge erred in this case."

17 In Duke Group v Pilmer, Mullighan J applied the principles enunciated by Nourse LJ. The plaintiff had succeeded in obtaining judgment against a number of defendants, but did not succeed on all issues raised by it in the proceedings. His Honour concluded that the issues upon which the plaintiff had not succeeded were not raised improperly or unreasonably and found there was no reason to deprive the plaintiff of its costs or to order that it pay the costs of any of the defendants on those issues. His Honour applied the principles enunciated in the judgment of Nourse LJ and adopted the approach reflected by Jacobs J in Cretazzo v Lombardi.

(i) In order to protect his rights and to obtain relief, it was necessary for the appellant to institute the proceedings and to incur the ensuing expense.

(ii) The appellant successfully established that the Association had acted in breach of its by-laws and had denied the appellant procedural fairness.

(iii) As a consequence of the findings referred to in par (ii), the appellant was successful in requiring the Association to cease the existing process of investigation.

(iv) The Association opposed all forms of relief on the basis that it was not amenable to review on grounds of procedural fairness. That fundamental position was rejected by the learned trial Judge.

(v) A number of complaints by the appellant concerning the procedures followed prior to March 1998 and in respect of the meeting of 19 March, 1998 were rejected. In respect of the complaints based upon the delay from June 1997 to March 1998, the learned trial Judge regarded the criticisms as "ill-founded and opportunistic". However, the factual matters upon which those complaints were founded formed a necessary part of the background circumstances to the conduct that occurred after 19 March, 1998 in respect of which the learned trial Judge found the Association was in breach of the By-Laws and had denied the appellant procedural fairness.

19 It is a reasonable inference from the findings of the learned trial Judge that those issues which gave rise to "ill-founded and opportunistic" criticisms were raised unreasonably. In those circumstances, good reason existed for not only depriving the plaintiff of his costs with respect to those issues, but for ordering that he pay the Association's costs on those issues. However, as I have already indicated, the factual matters that form the basis of those ill-founded criticisms had to be put before the learned trial Judge in order to provide the background to the events occurring after 19 March, 1998. In addition, while those issues were of some significance, they did not form a large proportion of the matters to be considered by his Honour. Significantly, those issues did not affect the fundamental questions which were centred upon whether the processes of the Association were amenable to review on grounds of procedural fairness and whether the appellant had been denied procedural fairness to the extent that the existing process of investigation should be halted. In those circumstances, the unreasonable conduct of the appellant with respect to those issues could have been reflected fairly by either reducing an award of costs in favour of the appellant or by both reducing the award in favour of the appellant and ordering the appellant to pay a small percentage of costs to the Association.

20 In the circumstances to which I have referred, it was a particularly significant step for his Honour not only to deprive the appellant entirely of an award of costs in his favour, but also to order that the appellant pay 50 per cent of the Association's costs. In my opinion, good reason must exist in the context of the litigation before a successful party such as the appellant should be deprived entirely of an award of costs. Further, it is not setting the bar too high to say that special or exceptional circumstances must exist before the appellant should not only be deprived entirely of costs, but should also be required to pay part of the Association's costs.

21 It is obvious that the learned trial Judge was not impressed with the conduct of the appellant in some respects. However, as I have already indicated the appellant was required to take the proceedings and succeeded upon critical issues. The Association's fundamental proposition that it was not amenable to review on grounds of procedural fairness was unsuccessful. Although the appellant failed on some issues other than those where the criticisms were described as ill-founded and opportunistic, there is no basis in the judgment for a finding that those other issues upon which the appellant failed were raised improperly or unreasonably. In those circumstances, with respect to those issues, the note of cautious disapproval sounded by Jacobs J in Cretazzo v Lombardi and the remarks of Nourse LJ in Elgindata are applicable. In respect of such issues the appellant should not be required to pay any part of the Association's costs.

22 The learned trial Judge arrived at an order that he apparently considered reflected "the varying successes of both parties". Expressed by his Honour in another way, it reflected what his Honour regarded "as an appropriate determination of the merits of the issues tried between the parties."

23 Appellate courts are slow to interfere with discretionary orders made with respect to costs. In order to succeed an appellant must show that the exercise of the discretion as to costs was brought about by an identifiable error or that order was so unreasonable or unjust as to require the appellate court to substitute its own discretion (Southern Resources Ltd v Residues Treatment and Trading Co. Ltd [1990] 56 SASR 455 at 480).

24 In my view, if the order is permitted to stand an injustice will be done to the appellant. Interference on this ground alone is justified . In addition, in my opinion, although the precise error is not readily identifiable, his Honour erred in principle. In some respects his Honour gained an adverse impression of the appellant, but that view does not justify the order. I am satisfied that in making the order his Honour gave insufficient weight to the principle that the general rule that costs should follow the event does not cease to apply merely because the successful party raises issues or makes allegations on which that party is not successful. In addition, he appears to have overlooked the note of "cautious disapproval" and the implication of the fourth principle discussed by Nourse LJ that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which that party fails should not be required to pay any part of the unsuccessful party's costs.

25 Making full allowance for all the matters to which I have referred, and without attempting to dissect in detail each of the issues argued and determined, in my opinion a fair result would be achieved if the Association was ordered to pay 50 per cent of the appellant's costs of the action before the learned trial Judge.

26 I would allow the appeal and set aside the order that the appellant pay 50 per cent of the respondent's costs. I would order that the respondent pay 50 per cent of the appellant's costs to be taxed or agreed.

District Court Act 1991s 42(1)

Supreme Court Act 1981

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