Rural & General Insurance Broking Pty Ltd v Barrie Goldsmith t/as Goldsmiths Lawyers

Judgment 1HIS HONOUR: The defendant moved the Court for an order that the plaintiff provide security for costs. However, upon the hearing of the application I found that he had insufficient evidence to establish that there was reason to believe that the plaintiff would be unable to pay the costs of the defendant if ordered to do so. Even if he had been able to establish that threshold matter, I was of the view that I would not have been minded to make the order in any event: see Rural & General insurance Broking Pty Ltd v Barrie Goldsmith t/as Goldsmiths Lawyers [2011] NSWSC 175 ("the principal judgment"). 2The plaintiff sought costs in respect of the motion. Such costs would be payable at the conclusion of the proceedings, "unless the court orders otherwise": r 42.7 Uniform Civil Procedure Rules 2005 ("UCPR"). The plaintiff seeks an order that its costs of the motion be payable forthwith. 3The defendant, on the other hand, seeks an order that the plaintiff pay his costs of the motion up to 24 February 2011 upon an indemnity basis, and that there be no order as to costs incurred subsequent to that date. Alternatively, it was submitted that there should be no order for costs in favour of either party. 4I have received written submissions from counsel for the plaintiff and from the defendant, who represented himself on the hearing of the motion. The parties are content for me to determine the issue of costs on the papers. 5Ms Castle, for the plaintiff, reminded me that an order for costs is discretionary: s 98 Civil Procedure Act 2005. Further, she reminded me that the general rule is that costs follow the event: r 42.1 UCPR . 6Ms Castle submitted that where a court declines to order security for costs, the most usual order is that the applicant pay the respondent's costs, citing as examples, Funds First Pty Ltd & 2 ors v Owners Corporation Strata Plan 66609 & 10 ors (No 2) [2008] NSWSC 428 at [16] and Bevwizz Group Pty Ltd v Transport Solutions Pty Ltd [2008] NSWSC 1399 at [35]. 7As to the application that the plaintiff's costs be payable forthwith, it was submitted that such an order is appropriate because the costs relate to a discrete and distinct aspect of the proceedings: Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1. 8Mr Goldsmith acknowledged the general rule in r 42.1 UCPR but submitted that it was qualified by the proviso, "unless it appears to the court that some other order should be made". Moreover, he submitted that the general rule applies only to the extent that such costs have been reasonably incurred in the conduct of the litigation: Latoudis v Casey (1990) 170 CLR 534 at 566-7; Oshlack v Richmond River Council (1998) 193 CLR 72 at 97. 9A concession was made by the defendant that it is rare for a successful party to pay the unsuccessful opponent's costs and that such an order would require particular justification: Ottway v Jones [1955] 1 WLR 706 at 708, 714; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201. It was submitted, however, that an exception would be if the successful party's conduct lengthened the proceedings unnecessarily; caused unnecessary issues to be canvassed; or otherwise increased the cost of the litigation. 10Mr Goldsmith submitted that "the plaintiff's conduct was such that it caused unnecessary issues to be canvassed, specifically the unnecessary filing of the motion in question, and unnecessarily increased the cost of the litigation, at least up until 24 February 2011". In support of this submission, he referred to certain matters which preceded the filing of his notice of motion. 11On 23 December 2010 he wrote to the plaintiff's solicitors. He referred in that letter to the three matters upon which he was later to argue provided reason to believe that the plaintiff would be unable to pay an adverse costs order. He required, in the letter, that the plaintiff provide security for costs in the sum of $30,000. He required a response by 4 January 2011. 12On 13 January 2011, the plaintiff's solicitors replied to the effect that they had forwarded Mr Goldsmith's letter to their client and they would reply when they had instructions. Mr Goldsmith then sent an email on 14 January 2011 referring to a lack of any further response to his request and warning that unless he received the response he desired by close of business on 17 January 2011, he would file a notice of motion. The plaintiff did not respond. The defendant's notice of motion was filed on 19 January 2011. 13On 4 February 2011, the Registrar made directions as to the filing and service of affidavits and listed the motion for hearing on 8 March 2011. 14On 24 February 2011, the plaintiff served affidavit evidence which provided its answer to the three matters to which the defendant had referred in his letter of 23 December 2010. The defendant then served a notice to produce requiring the production of documents for the purpose of testing the claims made in the affidavit. Nothing was produced in response. I rejected a submission that an adverse inference should be drawn against the plaintiff because of this, principally because the notice to produce had only been served at a time that allowed a mere two business days for compliance: see the principal judgment at [18]. 15Mr Goldsmith submits, in essence, that the plaintiff could have provided to him the material that was contained in the affidavit served on 24 February 2011 at a much earlier time. He had raised his concerns in his letter of 23 December 2010 but the plaintiff did not respond. It was this failure of the plaintiff, he submitted, that caused the unnecessary filing of his notice of motion and the unnecessary increase in the cost of the litigation, at least up until 24 February 2011. 16The strongest of the three matters relied upon by the defendant on the hearing of his motion was that an application had been made by the Deputy Commissioner of Taxation for the winding up of the plaintiff. The plaintiff's response was to provide evidence that it had entered into an arrangement for the repayment by instalments of a debt owed, and that the winding up proceedings had been held in abeyance whilst that arrangement was in place. The defendant was unaware of this arrangement until the service of affidavit material on 24 February 2011. He argues that he was justified in seeking security for costs in light of the fact that, on the face of it, he was being sued by a company that was in jeopardy of liquidation. If the plaintiff had responded to his concerns raised in the letter of 23 December 2010, then " it may well be that the motion would never have been filed" (defendant's submissions at [21] - emphasis added). 17The problem with this argument is twofold. The defendant's letter of 23 December 2010 was not a request for information. It was a demand for the provision of security for costs. If it had been the former, one might be more sympathetic to the defendant's submission and more critical of the plaintiff's lack of response. The second problem is that, in the light of the history of the matter, there is no certainty that the defendant would not have filed his notice of motion even if the material provided by the plaintiff on 24 February 2011 had been provided earlier. It is significant that the defendant put his submission in terms of, "It may well be" . That is not an assertion that he would not have. 18There is then the submission that there should be no order in respect of costs incurred after 24 February 2011. Mr Goldsmith concedes that upon receipt of the affidavit material, he had the opportunity to discontinue the proceedings in respect of his notice of motion. However, he chose to attempt to test the evidence by service of the notice to produce which, he submitted, was not unreasonable in the circumstances. In my view, the fact that he chose not to discontinue at that point tends to indicate that if he had been provided with the material that was provided on 24 February 2011 before he filed his notice of motion he would likely have filed in any event. 19Finally, it was submitted that whilst the plaintiff was not obliged to file any evidence in answer to the motion, if it had not done so the Court would more likely have granted the defendant's application. The point is hypothetical. 20In responding to the plaintiff's application for costs, Mr Goldsmith submitted that the plaintiff "encouraged the defendant to file, and pursue, the motion" and thus "by its conduct, invited or contributed to the filing and pursuit of the motion". This, it was submitted, "militates against the plaintiff being granted any costs order in its favour". As to whether any such costs should be payable forthwith, it was submitted that such an order should not be made as there was no proper basis to do so. The defendant at all times acted reasonably. At the time of filing the motion there were unexplained circumstances, at least on a prime facie basis, warranting such action. 21As I have indicated, there was insufficient evidence to warrant the making of the order sought by the defendant's motion. To put the onus upon the plaintiff to have provided him with a satisfactory explanation for his asserted concerns, and to attribute blame to, and seek costs against, the plaintiff for his failed motion is, in my view, completely unrealistic. 22I accept the submissions for the plaintiff. I am satisfied that costs should follow according to the general rule. I am also satisfied that they should be payable forthwith.