White ACT (in liquidation) v G B White & Ors

Introduction 1 In my reasons for judgment given on 25 February 2004, [2004] NSWSC 71, I concluded, at para [554], that the plaintiff's claims against the defendants failed. At para [555], I ordered that the summons be dismissed and that the plaintiff pay the defendants' costs. I reserved liberty to any party to move to vary the costs order. The defendants, by their notice of motion filed on 19 March 2004, move pursuant to order 3. 2 The notice of motion sought by prayer 1, an order that the defendants' costs be assessed on the indemnity basis. That prayer was heard by me today. By consent the hearing of prayers 2 and 3 has been adjourned. The evidence 3 The defendants relied upon two affidavits sworn by Mr Nicholas Pember Reeves, a solicitor in the employ of Mallesons Stephen Jaques. Those affidavits were read, subject to an objection as to their relevance. In my view, the first affidavit is in substance relevant. The second is not. 4 In any event, much of the relevant material is, at least for the purposes of this application, uncontested in the sense that it forms part of the commonly known and understood background to the litigation or in the sense that it has been, at least for today, resolved by my earlier judgment. The principles 5 The basic rule is that a successful party is entitled to its costs on a party and party basis: see for example Pt 52A r 32. See also the judgment of Mason P in Rosniak v Government Insurance Office (1997) 41 NSWLR 608, 616. 6 It is clear, of course, that there is a discretion to award costs on the indemnity basis. That follows from, among other sources, s 76(1) of the Supreme Court Act and Pt 52A r 32. 7 The basis upon which the discretion to award indemnity costs should be exercised has been examined in a very great number of cases. But, as those cases make clear, the discretion is not confined or limited except to the extent that it is required to be exercised judicially: see for example Harrison v Schipp [2001] NSWCA 13 at [139] (Giles JA, with whom Handley and Fitzgerald JJA concurred); see also Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, 256-257. 8 What is required, in any case, is that the Court examine the facts of that case in the light of such statements of principle as may be relevant. In the ordinary way, the Court will take into account, as offering guidance, statements of principle made by those to whom the particular judicial officer should have regard. 9 At the most basic level, the statements of principle indicate - not unsurprisingly - that there must be some sufficient special or unusual feature to justify departure from the ordinary rule. 10 I take the basic principle to be as stated by Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72, 9. Their Honours said at [44] (I omit citations): "It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs, but for costs on a 'solicitor and client' basis, or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what would otherwise have been the position of the unsuccessful party in the absence of such delinquency on its part." 11 I read what their Honours said on the basis that "some relevant delinquency" does not mean moral delinquency or some ethical shortcoming, but delinquency bearing a relevant relation to the conduct of the case: see for example Council of the Municipality of Botany v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412, 415; NMFM Property Pty Limited v Citibank Limited (No 2) (2000) 109 FCR 77. The special or unusual features relied upon 12 I turn now to the circumstances upon which the defendants relied in support of their application.