State of New South Wales v Rizzo

Catchwords: COSTS — costs orders in interlocutory proceedings — general rule that costs follow the event — application of the rule and discretion
CIVIL PROCEDURE — alternative dispute resolution — referral to mediation

Legislation Cited: Civil Procedure Act 2005 (NSW), ss 26, 29, 58 – 58
Uniform Civil Procedure Rules 2005 (NSW), rr 36.16, 42.1, 42.7

Cases Cited: Glanville v NSW Police [2025] NSWSC 1584
Sethi v The Owners – Strata Plan No 93392 (No 6) [2023] NSWSC 1368
State of New South Wales v Christopher Rizzo [2025] NSWSC 1340

Texts Cited: New South Wales Premier’s Department, Model Litigant Policy for Civil Litigation (July 2016)

Category: Costs

Parties: State of New South Wales (Plaintiff) (Respondent)
Christopher Rizzo (Defendant) (Applicant)

Representation: Counsel:
M Green SC, M Castle (Plaintiff) (Respondent)
E Chrysostomou (Defendant) (Applicant)
Solicitors:
Norton Rose Fulbright (Plaintiff) (Respondent)
Aussie Lawyers (Defendant) (Applicant)

File Number(s): 2024/00190108

Publication restriction: Nil

JUDGMENT

1. By way of Notice of Motion filed on 21 November 2025, the defendant seeks an order for costs in relation to my earlier ruling in State of New South Wales v Rizzo [2025] NSWSC 1340 (the subpoena judgment). The defendant also seeks an order that the substantive matter, set down for hearing on 18 and 19 March 2026, be referred for mediation. The defendant relies upon the affidavit of Adam Canceri dated 21 November 2025. Each party has filed written submissions and I am dealing with the matter on the papers.

2. The subpoena judgment set out my reasons for setting aside two subpoenas (subject to some limited exceptions) issued at the request of the State of New South Wales in relation to the substantive matter, an appeal against a costs assessment brought by the State. This judgment assumes familiarity with the subpoena judgment. I note that no order for costs was sought in the Notice of Motion filed on 20 May 2025, with which the subpoena judgment dealt.

3. The orders now sought are:

4. Pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 36.16(3A), the orders made by McNaughton J on 14 November 2025 be varied by inserting the following further order:

“The Plaintiff is to pay the Defendant’s costs of the notice of motion filed 20 May 2025 in respect of the subpoenas to produce addressed to Aussie Lawyers Pty Ltd and The Legal Costs Consultants Pty Ltd both, such costs to be:

(a) on the ordinary basis up to and including 6 August 2025; and

(b) on an indemnity basis from 7 August 2025 thereafter.”

2. The costs referred to in Order 1 be assessed and paid forthwith.

3. Such further or other orders as the Court considers appropriate.

4. As noted, the defendant also seeks an order that the parties in the substantive matter should be directed to participate in a mediation under s 29 of the Civil Procedure Act 2005 (NSW) (CPA).

5. In response, the State contends that there should be no order for indemnity costs, and no “forthwith” order. Further, the State opposes any order for mediation.

Legal Principles

6. The general rule is that if the Court makes any order as to costs, costs should follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: UCPR r 42.1.

7. As to indemnity costs, as Chen J stated in Sethi v The Owners – Strata Plan No 93392 (No 6) [2023] NSWSC 1368 at [85]-[86]:

“The Court has power to order indemnity costs: s 98(1)(c) of the CPA.

The starting point is an acknowledgment of the ordinary rule and the exception to it: namely, that the costs that are payable are on the ordinary basis and that the circumstances of a particular case must be such “as to warrant the Court in departing from the usual course”: Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, 233; [1993] FCA 801 ('Colgate Palmolive'). In this latter respect, what is needed is that “there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice”: Colgate Palmolive at 233. That feature is not confined to, although it may include, an “ethically or morally delinquent party” (Botany Municipal Council v Secretary, Department of the Arts (1992) 34 FCR 412, 415; [1992] FCA 194) That is, the Court "requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation" Rosniak v Government Insurance Office (1997) 41 NSWLR 608, 616. The “unreasonable conduct” must be “conduct in the proceedings of the party against whom the order is sought”: Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6].”

8. The State is also bound by the Model Litigant Policy, although as discussed in my recent judgment of Glanville v NSW Police [2025] NSWSC 1584 at [20], the policy is not at large, and there are some parameters. For instance, the State is not prevented from acting firmly and properly to protect its interests and can test or defend claims made.

9. In exercising its discretion, including whether to order interlocutory costs to be paid “forthwith”, the Court must take into account the overriding purpose of the CPA set out in ss 56–58.

Submissions by the parties

Defendant’s submissions

10. The defendant points to a number of reasons why indemnity costs should be payable from 7 August 2025 (in addition to costs payable on the ordinary basis up to and including 6 August 2025). I summarise them as follows:

11. The defendant wrote to the State on 6 August 2025 setting out in detail why the subpoenas were invalid, oppressive and lacking any legitimate forensic purpose and inviting the State to withdraw them. On 9 September 2025, the defendant served a detailed privilege log, explained why production would be oppressive and why key categories were privileged. The Court ultimately accepted the substance of these objections. The defendant incurred substantial additional costs resisting subpoenas that ought not have been pressed.

12. The subpoenas amounted to a misuse of process, resulting in unjustified burdens on the recipients, more reprehensible where a government litigant, subject to the Model Litigant Policy, is responsible. They were “futile” in the sense that no additional relevant documents would have been produced. The issues in dispute were accepted by the Court to be able to be determined on material already available. Court resources were wasted.

13. The State sought privileged material for an impermissible collateral purpose, due to its concern about the expense of intentional tort claims.

14. By the time the defendant’s affidavits were filed in April 2025, the 6 August 2025 letter was received, and the Privilege Log was provided on 9 September 2025, the subpoena’s lack of legitimate forensic purpose was plainly apparent. A reasonable litigant, and certainly a model litigant, would have withdrawn, or even considered narrowing it.

15. The involvement of non-parties makes ordinary costs inadequate.

16. As to the seeking of an order that costs payable should be assessed and paid forthwith, the defendant contends that this is “plainly” a case warranting the exercise of the discretion to “otherwise order” under UCPR r 42.7(2), the general rule being that interlocutory costs should be deferred until the conclusion of the proceedings.

17. The defendant contends that the interlocutory dispute in question was discrete and self-contained. The costs are significant and delay in payment would cause prejudice. The costs were “driven entirely” by the State’s conduct which contravened the overriding purpose of the CPA. The burden on non-parties takes it “out of the ordinary”. A forthwith order is necessary to ensure the defendant and the subpoenaed parties are not left to absorb substantial costs for an extended period. The overriding purpose of the CPA strongly supports a forthwith order and would discourage similar conduct. Delaying payment until the end of proceedings would be unjust and there is no countervailing prejudice to the State if a forthwith order was to be made.

18. As to mediation, the defendant highlighted that the matter had not yet been subject to mediation or ADR. Section 26 of the CPA and Practice Note SC Gen 6 empowers the Court to order mediation with or without consent. A mediation in this matter offers a genuine opportunity to resolve or significantly narrow the issues and accords with the overriding purpose in s56 of the CPA. Certain orders were proposed pursuant to the Practice Note.

State’s submissions

14. The State highlighted that the defendant’s submissions failed to recognise that up until 9 September 2025, when it filed and served a late affidavit without leave,

“presumably after reading the plaintiff’s criticisms in its submission of 21 August 2025 at [41]-[43], the application to set aside the subpoenas was bound to fail because there had been no attempt whatsoever to properly establish privilege. Furthermore, there was no evidence of oppression, which the State’s submissions of 21 August 2025 also addressed at [34]-[37]”.

15. The State submits that it was only in the affidavit of 9 September 2025 that these basic defects were sought to be remedied by including evidence of oppression and attaching an 85-page privilege log. Without that evidence, the Court could not have determined the matter. Even with this additional material the question of waiver was left open. The question of waiver was a live one at the hearing and there was no suggestion that the point was taken inappropriately.

16. The State submits that there is no basis upon which costs should be payable forthwith for the following reasons:

17. The defendant has conceded some costs were claimed erroneously. This means that the Certificates of Determination issued by the review panel will be inevitably set aside – the very result contended for by the State.

18. The remaining question at the substantive hearing will therefore be what will follow as a consequence of setting aside the Certificates. That is, judgment would either be entered for the amount claimed by the defendant, or the Court may find the concessions made by Mr Canceri insufficiently reliable such that a report by a referee would be required. The State contends for the latter.

19. In any event, the State submits that it is likely to be awarded some costs. Accordingly, the better exercise of discretion would be to allow any costs orders to be set off against each other.

20. Lastly, there is no evidence of the arrangement under which Aussie Lawyers (the defendant’s solicitors) have been retained, or even whether the defendant has a liability to pay his lawyer’s costs. Accordingly, the Court ought to be reluctant to make an order that costs be paid “forthwith”.

21. In conclusion, the State submits that given the late raising of matters which came to be material to the disposition of the matter in response to the 20 May 2025 Motion, the defendant’s motion of 21 November 2025 should be refused with costs.

22. As to mediation, the State opposes mediation because the amount of costs sought by the defendant remains “entirely uncertain”, having regard to the concessions made by Mr Canceri that the “so-called bill of costs” prepared by Ms Morson, contains errors.

Consideration

19. In my view, as pointed out by the State, the defendant has failed to acknowledge adequately the very late service of critical evidence in support of the application brought by way of Notice of Motion filed on 20 May 2025. Mr Canceri’s final affidavit was served on 9 September 2025. It was clearly filed and served late, and without leave. The hearing took place a week later, before me, on 16 September 2025. Without the material in that affidavit, the application would have failed. It is therefore inappropriate to contend that indemnity costs should be payable from 7 August 2025, even taking into account the State’s model litigant obligations.

20. Further, as noted, whilst the subpoenas were largely set aside, some documents were produced by the defendant as a result of the issuance of the subpoenas. As a result, several errors in the bill of costs were identified, and on any view the Certificates of Determination are infected by error.

21. In my view, these reasons alone are sufficient to render an indemnity costs order inappropriate. I decline to make such an order.

22. Further, given the short time before the substantive hearing is to be heard, together with the likely award of some costs to the State, I am not persuaded that a “forthwith” order is appropriate.

23. In addition, given the mixed outcome resulting from the Notice of Motion dated 21 November 2025, the subject of this judgment, it is appropriate that each party bear their own costs as to the preparation of the written submissions.

24. As to the question of mediation, whilst I have some reservations about making such an order, there is still scope for resolution, or at least the narrowing of issues. Accordingly, I am of the view that it is appropriate to make an order referring the parties to mediation.

25. Accordingly, I make the following orders:

26. The State is to pay the defendant’s costs of the Notice of Motion filed 20 May 2025 on the ordinary basis.

27. Each party is to bear their own costs of the Notice of Motion filed 21 November 2025.

28. Pursuant to s 26 of the CPA, the substantive proceedings (currently set down for hearing on 18 and 19 March 2026) are referred to mediation.

29. Subject to order (5) below, the parties are to agree upon a mediator by COB 9 February 2026 and the mediation is to be conducted by that agreed mediator by COB 27 February 2026.

30. If the parties are unable to agree upon a mediator by 9 February 2026, the mediator is to be appointed in accordance with the Joint Protocol referred to in Practice Note SC Gen 6.

31. Each party is to attend the mediation by a representative with authority to settle (including as to costs).

32. The mediator’s costs are to be borne equally by the parties.

33. Liberty to apply on 48 hours’ notice.

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