Searle v Commonwealth of Australia

Supreme Court of NSW|2020-05-08|Before: Garling J, Fagan J

Judgment

In 2016 the plaintiff, Clayton William Searle, brought representative proceedings pursuant to Pt 10 of the Civil Procedure Act 2005 ("the CPA"). These proceedings were brought on his own behalf and on behalf of a group of people who had enlisted in the Royal Australian Navy, entered into a training contract to achieve a Certificate IV in Engineering and who did not achieve that qualification.
The Commonwealth of Australia denied any liability to the plaintiff and group members.
On 3 July 2018, Fagan J, having heard the proceedings over a six day period in February and March 2018, dismissed the plaintiff's claim: see Searle v Commonwealth of Australia [2018] NSWSC 1017.
An appeal against the judgment of Fagan J was heard by the Court of Appeal over a three day period in April and May 2019. On 31 May 2019, the Court allowed the appeal and set aside the order of Fagan J dismissing the plaintiff's claim: Searle v Commonwealth of Australia [2019] NSWCA 127.
It then made the following orders relevant to the present judgment: "6. Judgment for Mr Searle in the amount of $60,000 with effect from 3 July 2018, plus interest from that date pursuant to s 100 of the Civil Procedure Act 2005. 7. Order that the Commonwealth pay Mr Searle's costs of the proceedings at first instance. 8. Order that the Commonwealth pay 70% of Mr Searle's costs of the appeal. 9. Remit the matter to the Common Law Division for the determination of the claims of other group members and the resolution of common questions between claims of all group members."
Since this decision of the Court of Appeal, the matter has returned to the Common Law list for further judicial management.
On 9 April 2020, the plaintiff filed a Notice of Motion dealing with a range of interlocutory matters, generally addressed to the question of how the Court should go about assessing damages for the remaining members of the representative group. That Motion included a proposed order dealing with those orders that had been made in the Court of Appeal. This proposed order, with which this judgment now deals, is: "To the extent required, an order pursuant to UCPR 42.7(2) that the costs of the proceedings at first instance that are the subject of paragraph 7 of the orders of the Court of Appeal made on 31 May 2019, be payable forthwith."

Legislation

Rule 42.7 of the Uniform Civil Procedure Rules 2005 ("UCPR") is in the following form: "42.7 Interlocutory applications and reserved costs (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including - (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in sub-rule (1) do not become payable until the conclusion of the proceedings."

Plaintiffs Submissions

The plaintiff submitted that, upon the assumption that UCPR 42.7 applies to the costs of the proceedings, there are good reasons for the Court to exercise its discretion to make the order sought.
First, the plaintiff submitted that what has occurred up until this point in the proceedings is a discrete part of the proceedings. He submitted that the effect of the judgment of the Court of Appeal, and specifically the orders it made replacing those made by Fagan J at first instance, was to finally determine a series of separately identifiable matters. These matters included both the whole of Mr Searle's claims and the identified common questions. Thus, the plaintiff submitted that it is appropriate for the Court to order costs to be payable forthwith for the discrete part of the proceedings which has been finally determined by the Court of Appeal.
Secondly, it was submitted that the costs incurred by the plaintiff in prosecuting the proceedings before Fagan J, and during the interlocutory phases preceding that, were incurred over a long period of time and were not insubstantial.
Thirdly, the plaintiff submitted that, as there were substantial issues yet to be determined in the proceedings which may take a substantial period of time to be finalised, it would be unjust and unfair to keep the plaintiff out of his entitlement to the costs of the first instance proceedings. Particularly, it was argued, in circumstances where the plaintiff had no ongoing part in the litigation except as the named party.
Finally, the plaintiff pointed to the fact that the defence raised by the Commonwealth before Fagan J, and upon which it succeeded, constituted unreasonable conduct on its part, particularly in light of the description given by the Court of Appeal to that defence as "unattractive" and as "acutely embarrassing".

Submissions of the Commonwealth

The Commonwealth opposed the order for costs being sought on the basis that: "… These are ongoing proceedings and, until there is greater clarity on the way in which these proceedings are to progress, and the ability of any co‑plaintiffs (or sample group members) to honour any costs order awarded against them, any such order is premature."
The Commonwealth added, as is obvious, that this was not a case in which the defendant (i.e. the Commonwealth) would lose the capacity to pay the costs.

Discernment

The judgment of the Court of Appeal resolved all issues between the plaintiff and the Commonwealth insofar as his personal claim was concerned. The orders made by the Court of Appeal were that he was to have a money judgment in his favour and that the Commonwealth was to pay the costs of the claim. Nothing more remains to be determined in Mr Searle's individual case.
Because Mr Searle commenced the proceedings under Pt 10 of the CPA, there was (in accordance with an often used practice in this Court) a determination not just of Mr Searle's individual claim, but also of any common questions amongst the group members that were likely to arise in the course of the determination of Mr Searle's claim.
The trial Judge, Fagan J, and then the Court of Appeal, have settled the answers to those common question.
It was because the proceedings were representative proceedings under Pt 10 that the appeal to the Court of Appeal was properly regarded as an interlocutory one. That is because, at least arguably, the judgment of Fagan J did not determine all issues for all members. Nevertheless, the Court of Appeal granted leave and determined the proceedings.
Any further proceedings are correctly described in the plaintiff's submissions as addressing different issues from those already addressed. The primary outstanding issue is in what sum of money should each member of the group be compensated by way of damages for the breach of the training contract by the Commonwealth of Australia. This outstanding issue is discrete from those already addressed by Fagan J and the Court of Appeal.
Whether this assessment of damages takes place in groups, or as a whole, or ultimately individually, is not to the point. What the Court has to deal with in the future is the quantification of the damages for members of the group.
The Commonwealth's submissions do not advance any reason of substance as to why it is necessary for there to be "greater clarity" on the future progress of the management of the remaining claims. It is also not at all clear from the Commonwealth's submissions how that subject could relate to the costs accumulated in the past for the determination of issues which have now been finalised. It is not at all clear from the submissions when it might be that "greater clarity" will be achieved. The Commonwealth's argument is unpersuasive.
The second argument of the Commonwealth seems to suggest a possibility that at some point in the future, the Commonwealth may be at risk as to its costs if a group member is unsuccessful. The suggestion seems to be that in such an event the Commonwealth may not be able to recover those costs. It seeks, in effect, to hold back the sums which it owes the plaintiff here for legal costs because there may be an ability to set these costs off against orders for costs in the future against another group member.
At the moment there is only one plaintiff. At a point in time in the future, it may become appropriate to appoint other plaintiffs, or representatives of subgroups. If there is a reason to question their capacity to pay any adverse costs order, then the UCPR provide that there are a range of measures open to any litigant, including the Commonwealth, to secure its position in the event of an unrecoverable costs order.
The notion of preserving all of the costs of the past against the possibility that there may be some adverse costs order in the future, so as to enable a set-off to occur, is without merit. The Commonwealth does not advance any argument as to why it could not if such circumstances arose in the future, make an application of the kind contemplated by the UCPR if and when those circumstances manifested.
I note that at an earlier time in these proceedings, the Commonwealth sought and was granted security for costs during the first instance proceedings.
Neither party suggested that this Court could not exercise the power to order that the costs be payable forthwith. The Court of Appeal has determined that this Court does have that power: see Showtime at [29].
The question of whether to make an order that the costs be payable forthwith is a matter of discretion.
I am persuaded that the elapse of time during which the costs at first instance were incurred, namely prior to and during the whole of the interlocutory proceedings leading up to the hearing by Fagan J, and the size of the costs incurred (as shown by the affidavit of Joseph Mazzeo sworn for 9 April 2020), make it in the interests of justice that the costs be payable forthwith. This is particularly so in the circumstances described above, where any future proceedings are quite separate and discrete from those that occurred in the past.
As well, I am satisfied that such an order best serves the overriding purpose to be found in s 56 of the CPA, namely that there be a just and quick resolution of issues in proceedings.
As Bathurst CJ said in Showtime at [31]: "… a lengthy delay in an entitlement to enforce an unchallenged costs order does nothing to facilitate the just, quick and cheap resolution of proceedings."
The plaintiff has an order for costs in his favour. It has been incurred over a considerable period of time. There is no reason of substance for him not to be paid those costs. It is manifestly in the interests of justice that the costs order is enforced, and the order should be made.

Conclusion

The plaintiff is entitled to an order that the costs of the proceedings at first instance, as ordered to be paid by the Court of Appeal, be payable forthwith.
In light of the fact the Commonwealth opposed the Motion, to the extent that any costs were incurred dealing with this question, the Commonwealth should also pay these costs.

Orders

I make the following orders: 1. Order that the costs of the proceedings before Fagan J, as ordered by Order 7 of the Court of Appeal dated 31 May 2019, be payable by the Commonwealth of Australia forthwith. 2. The Commonwealth of Australia is to pay the costs of the Notice of Motion filed 9 April 2020, insofar as, and to the extent that, the Motion concerned the matters the subject of this judgment.

Amendments 15 June 2023 - Sequential numbering on cover sheet added. 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: 15 June 2023

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Judgment (8 paragraphs)

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Cases Cited (3)