State of New South Wales v Zreika

Judgment 1HIS HONOUR: On 1 July 2011, his Honour Judge Walmsley SC of the District Court entered judgment in favour of the respondent/plaintiff in the sum of $304,556. The respondent had sued the applicant, the State of New South Wales, for wrongful arrest, assault and malicious prosecution. Before the primary judge he succeeded on all counts. His Honour awarded a total of $60,500 damages in respect of the wrongful arrest, $10,000 in respect of the assault and battery, and $234,356 in respect of the malicious prosecution. With respect to this latter sum, his Honour awarded $75,000 as compensatory damages, $25,000 as aggravated damages, $100,000 as exemplary damages, $29,356 with respect to defence costs and an interest component, and $5,000 for economic loss. 2The proceedings before his Honour proceeded over a period of approximately twelve days and was obviously hard fought. The applicant has filed a notice of appeal and an amended notice of appeal in which it challenges the primary judge's findings with respect to the alleged wrongful arrest and assault. So far as the malicious prosecution findings are concerned, there is no challenge to the primary judge's finding that there was a malicious prosecution, but the amount of damages which his Honour awarded is in issue. In this respect it is to be noted that in a letter dated 12 September 2011 from the Crown Solicitor to the respondent's solicitors, it was stated that the applicant intended to file a notice of appeal with respect to his Honour's finding of wrongful arrest/ false imprisonment, assault, and the exemplary damages component of the damages awarded for malicious prosecution and costs. It was not then suggested that there would be a challenge to the other components of the damages awarded with respect to the malicious prosecution. 3However, in its amended notice of appeal, which appears to only have been proposed in response to submissions that were made on behalf of the respondent in opposition to the applicant's intention to seek a stay of the whole of his Honour's orders, there is now a challenge not only to the award of exemplary damages but also to the amounts awarded for aggravated damages and compensatory damages. There is no challenge, as I understand it, to that part of his Honour's assessment of damages that related to defence costs and economic loss. However, in the written submissions of the applicant in which it seeks to set out reasons why it has an arguable case to succeed on the appeal, the submissions in relation to the issue of damages are with respect, not particularly convincing or, for that matter informative. They contain a number of bare assertions which ultimately may or may not succeed. 4On 28 September 2011, the applicant filed a notice of motion seeking an order staying the orders and judgment of the primary judge. It did not seek the costs of that motion. Written submissions were filed on both sides in support of their respective positions, but I do not find it necessary to deal with their contents in any detail. Although in the respondent's submissions it was asserted that the applicant's challenge to his Honour's findings in relation to all three counts was hopeless and, therefore, that it had not established an arguable case, given what I said in Trad v Harbour Radio Pty Limited [2010] NSWCA 41 at [48], I do not consider that this appeal has been filed merely for the purpose of keeping the successful respondent out of the fruits of his victory by seeking a stay. In these circumstances I do not find it necessary to determine the extent to which it is likely that the applicant will succeed in relation to its appeal, particularly with respect to his Honour's findings relating to the allegations of false arrest and assault and battery. 5The issue really comes down to the following. The respondent ultimately does not contest that the applicant is entitled to a stay but submits that it should be a condition of that stay that the applicant should pay the respondent one-half of the judgment sum rounded down to the sum of $150,000, together with $150,000 in respect of the respondent's costs of the trial. In this respect the respondent filed an affidavit of Anthony Porthouse sworn 27 October 2001 which purports to set out the costs incurred by the respondent at trial and which amounts to some $646,507.06 of which non-disbursement costs amount to $275,000. The respondent submits that he should receive at least $150,000 in costs given that there has been no appeal against his Honour's finding of liability with respect to the malicious prosecution and, therefore, so the argument runs, it is highly likely that even if the appeal otherwise succeeds in whole or in part, nevertheless there will still be a substantial order for costs in favour of the respondent with respect to the time at trial taken up with that issue. 6At one point the respondent made an offer to consent to a stay upon the basis that it receive one-half of the judgment on damages and one-half of its costs, which offer was rejected. The matter came before Young JA a week ago, when an offer was made by the applicant to pay $150,000 on account of the damages awarded by the primary judge but upon the condition that that sum was held by the respondent's solicitor in his trust account pending the hearing and determination of the appeal. There was no offer to pay any costs. 7On the other hand, no offer until this morning was made by the respondent to provide an undertaking by his solicitor to personally repay any costs which might be paid as a condition of the grant of a stay in the event that it was determined on the appeal that the respondent was not entitled to those costs or any part thereof. In that respect, the giving of such an undertaking for the payment of costs of a trial when there is an appeal pending was the subject of observations by Lord Herschell LC in Hood Barrs v Crossman [1987] AC 172 at 175. When asked this morning whether the respondent's solicitor would give such an undertaking if it was made a condition of the stay that the applicant should pay the respondent $150,000 on account of costs, an affirmative response was forthcoming. 8In these circumstances, upon the giving of that undertaking to the Court, it should be a condition of the stay that the applicant pay the respondent's solicitor $150,000 on account of his costs of trial. 9So far as the question of damages is concerned, I have already commented upon what I regard as the prima facie strength of the applicant's submissions on the issue of the damages awarded in respect of the malicious prosecution. I can see a possible basis for asserting that the award of exemplary damages was at least excessive, but as at present advised I am more sanguine about the other components of the damages in respect of the malicious prosecution case. In my view, it would be reasonable to require the applicant as a condition of the granting of a stay to pay all of the damages awarded in respect of the malicious prosecution claim other than the $100,000 awarded in respect of exemplary damages. The amount which I would therefore require the applicant to pay to the respondent as a condition of granting the stay is the sum of $134,356. 10The applicant asserts that it is entitled to a condition that that amount should be held by the respondent's solicitor in his trust account pending the determination of the appeal. The appeal has in fact been fixed for hearing on 8 February 2012, just over three months away. It was submitted that as the hearing date is so close, it would be appropriate for there to be no payment of any amount in respect of damages as a condition of the grant of the stay. I do not agree. The appeal is not to be heard for just over three months time and then there will be a hopefully short time for the giving of judgment but which could amount to one or two months. I see no reason why the respondent should be kept out of his money for that period of time. Nor do I consider that it is necessary that the amount of $134,356 should be retained by the respondent's solicitor in his trust account. 11At one point during the course of the trial, the respondent was ordered to pay certain costs to the applicant which amounted to some $22,000. The evidence would appear to indicate that that amount was paid by the respondent's solicitor personally. The applicant therefore contended that one can infer from that fact that the respondent himself did not have the necessary money to pay those costs. That may be so in the sense that the respondent did not have ready cash available to pay those costs without, for instance, borrowing the amount. Alternatively, he may just have had a very generous solicitor. But in my view, as the applicant concedes, no real attempt has been made to suggest that in the event that any part of the $134,356 is required to be repaid upon the basis of the outcome of the appeal, that it will not be possible for the respondent to comply with such a requirement. For instance, he may own property in the sense that he may be asset rich and cash poor. But as there is no evidence one way or the other, I am not prepared to infer that he will be unable to repay the amount to which I have referred or any part thereof which is required to be repaid as a consequence of the outcome of the appeal. 12For the foregoing reasons I therefore propose that the parties bring in short minutes of order to give effect to this judgment in relation to the grant of a stay upon condition that the applicant pay to the respondent on account of damages the sum of $134,356 and, on account of costs, the sum of $150,000 subject to an undertaking by the respondent's solicitor to the Court that he will personally repay that amount or such part thereof as may be required to be repaid as a consequence of the outcome of the appeal. 13That leaves two matters. The first is the question of the costs of the present application. The respondent submits that it should be entitled to the costs of the application. The applicant did not seek costs in the event that it was successful on the application, but it has until a week ago before Young JA maintained the position that it should be entitled to a stay without paying anything as a condition of that stay. 14The essential issue that has arisen for determination is whether or not any amount, whether on account of damages or costs, should be paid by the applicant to the respondent as a condition of the stay and, subject to one matter, the respondent has been successful in achieving a result in that respect, although the amount that I have ordered to be paid on account of damages is slightly less than the amount of $150,000 which the parties had otherwise negotiated upon. That one matter is that it was only today that the respondent's solicitor was prepared to offer an undertaking to repay the costs. Nevertheless, in my view, on balance, I consider that the applicant should pay the respondent's costs of the notice of motion for the stay. 15The only other matter relates to directions for the filing of submissions and so forth which the parties have agreed to. What I suggest is that in preparing the short minutes they include these directions in that document and that they agree on the orders that should be made, and I will make those orders when those short minutes can be brought back to Court.