Wood v State of New South Wales

JUDGMENT OF : Handley JA at 1; Beazley JA at 2; Tobias JA at 3 DECISION : (a) That Order (b) referred to in [47] of this Court's judgment of 23 April 2004 be rescinded and in lieu thereof it be ordered that the orders of Gamble ADCJ made on 4 July 2003 be set aside; (b) Order that the costs of the claimant's Notice of Motion filed on 6 February 2002 be reserved for determination by the trial judge at the conclusion of the proceedings in the District Court; (c) Order that the claimant pay the opponents' costs of the Notice of Motion filed in this Court on 24 May 2004

CATCHWORDS : COSTS - Matter out of time - Application for extension - Reasons for delay provided - Limitation Defence - Not withdrawn upon request - Reliance upon Calderbank letter - Opponent not agree for application and substantial hearing to be heard together - COSTS - Belated motion - Application not argued on appeal Supreme Court Rules 1970 (NSW); LEGISLATION CITED : District Court Rules 1973 (NSW); Limitation Act 1969 (NSW) Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116; L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 151 CLR 590; CASES CITED : Gould v Vaggelas (1985) 157 CLR 215; Production Spray Painting & Panel Beating Pty Ltd v Newnham (No. 2) (1991) 27 NSWLR 381; TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 PARTIES : Brendan Wood State of New South Wales FILE NUMBER(S) : CA 40639/03 COUNSEL : C: Ms Anna Katzmann SC / E Romaniuk O: D Ronzani SOLICITORS : C: Oates & Smith, Sydney O: I V Knight, Crown Solicitor

LOWER COURT District Court JURISDICTION : LOWER COURT DC 7404/01 FILE NUMBER(S) : LOWER COURT Gamble A-DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40639/03

HANDLEY JA BEAZLEY JA TOBIAS JA

Thursday 22 July 2004 BRENDAN WOOD v STATE OF NEW SOUTH WALES Judgment on Notice of Motion dated 18 May 2004 1 HANDLEY JA: I agree with Tobias JA. 2 BEAZLEY JA: I agree with Tobias JA. 3 TOBIAS JA: The substantive judgment in this matter was published on 23 April 2004 ([2004] NSWCA 122) on which date the appeal was allowed with certain consequential orders of which the relevant one for present purposes, Order (b), was that the order of Gamble ADCJ made on 4 July 2003 be set aside "except as to costs". 4 On 4 July 2003 the primary judge dismissed the claimant's application for an extension of time to commence proceedings against the opponent and ordered the claimant to pay the opponent's costs of the application. It was this cost orders that was excluded from this Court's order setting aside her Honour's order dismissing the application. 5 By Notice of Motion filed on 18 May 2004, the claimant seeks a variation of Order (b) by the deletion of the words "except as to costs" and the making of the following additional order: "That the costs of the hearing in the District Court be reserved for determination by the trial judge at the conclusion of the substantive hearing." 6 The parties have filed written submissions and have consented to the Court determining the application without oral argument. The Court has power to vary its orders where a notice of motion for their variation is filed before entry of judgment: Pt 40 r 9 of the Supreme Court Rules 1970. Neither party has suggested that the orders of this Court made on 23 April 2004 have been entered. 7 It is important to observe at the outset that the claimant did not, either in his written submissions or in oral argument on the appeal, make any submissions relating to the costs of the hearing before the primary judge. On the other hand, in the draft notice of appeal in the White Book the claimant impliedly sought the setting aside of all orders made by the primary judge on 4 July 2003 and sought in lieu orders that the opponent pay his costs of the application for an extension of time as well as his costs of the appeal. Although the claimant was seeking a reversal of the primary judge's order for costs, regrettably that fact was not brought to our attention and it was therefore overlooked. 8 The foundation for the claimant's application to vary Order (b) and make an order reserving the costs at first instance to the substantive trial is essentially two-fold. Firstly, the claimant refers to two letters to the opponent's solicitor dated 2 October 2001 in the first of which a Calderbank offer was made and an offer of compromise purportedly pursuant to Pt 19A r 1 of the District Court Rules was enclosed. The letter added that in the event that the opponent pleaded a limitation defence to the statement of claim filed on 20 July 2001, the claimant would file a notice of motion for an extension of time and would rely upon the Calderbank offer and the accompanying offer of compromise in seeking an order for indemnity costs of that motion, if successful. 9 The second letter of 2 October 2001, which enclosed a number of medical reports and other documents, requested the opponent's solicitor to seek instructions as to whether his client really wished to proceed with a limitation defence. It continued in these terms: "We also request you seek instructions whether you are prepared to acquiesce to our view that the limitation application should be heard with a substantive hearing should you decide to continue with the particular of defence that we are statute barred. The cost and time involved in an extension of time application heard separately from the substantive hearing is of little utility and a much better use of resources is to have both the substantive hearing and the limitation application heard together as the same issues will arise in both matters."

The letter went on to state that if those instructions were not obtained, the claimant would rely on the letter for the purposes of costs should additional costs be incurred in the limitation application over and above those incurred in the substantive hearing. It is apparent that the claimant's suggestion was rejected. 10 On 1 March 2002, the opponent filed Notice of Grounds of Defence in which it pleaded s 18A of the Limitation Act 1969 (the Act). In the meantime, according to the primary judge the claimant had filed a notice of motion for extension of time on 26 October 2001. However, I note that the only notice of motion on the District Court file seeking leave to commence proceedings is one filed on 6 February 2002. It would appear that at some point that notice of motion was listed for hearing on 6 February 2003. 11 By letter dated 3 February 2003, the claimant's solicitor wrote to the opponent's solicitor repeating the request recorded in [9] above. Reference was made to three decisions of judges of the District Court to which the opponent was a party and had consented to a notice of motion for extension of time being heard at the same time as the substantive hearing. This request was also rejected. The claimant's notice of motion was then heard by the primary judge on 2 and 3 June 2003 and adjourned to 4 July 2003 when she delivered her judgment dismissing the application. 12 After publication of this Court's judgment on 23 April 2004, the claimant's solicitor wrote to the opponent's solicitor on 7 May 2004. Reference was made to a letter written in March 2001 inviting the opponent to concede that the claimant should be granted an extension of time or alternatively, inviting it to consent to a motion for extension of time being heard simultaneously with the substantive hearing. Reference was also made to the letter of 3 February 2003 and to the offer of compromise of 2 October 2001. Finally, reference was made to [46] of my judgment in the appeal in which I had recorded the concession of counsel for the opponent that if the primary judge's decision was set aside, he could not resist an exercise of this Court's discretion in favour of the claimant. The opponent was therefore requested to consent to orders in terms of those now sought. 13 By letter dated 13 May 2004, the opponent's solicitor rejected the claimant's request in these terms: "I note that the issue of costs as set out in your letter was not addressed in the Claimant's Summary of Argument. He chose not to seek to put submissions in reply. Your client was also represented by Counsel when judgment was handed down and any costs issues could have been raised at that time, particularly as the Orders were read onto the record. Please note that my client will be seeking costs on an indemnity basis should you be unsuccessful in your application." 14 In support of the orders now sought, the claimant submits that:

(a) he was entitled to rely on the Calderbank letter and/or the offer of compromise with respect to the costs of the notice of motion for extension of time;

(b) pursuant to Pt 39A r 2 of the District Court Rules the costs of an interlocutory motion can be reserved to a later time such as the substantive hearing;

(c) although an application for an extension of time is sometimes referred to as an " indulgence ", that was only so in a limited way and there was no reason in principle why, in an appropriate case, an unsuccessful respondent should not pay the costs of a successful applicant;

(d) in the present case, due to the opponent's concession in this Court that it could no longer oppose an extension of time, it was not appropriate that the claimant should be ordered to pay the opponent's costs at first instance;

(e) it was unreasonable for the opponent to reject the request of the claimant's solicitor to have the motion for extension of time heard at the same time as the substantive hearing to avoid duplication of costs;

(f) accordingly the opponent should be ordered to pay the costs at first instance or those costs should be reserved to the substantive trial when the costs consequences, if any, of the Calderbank letter and/or the offer of compromise can be determined in the light of the proceedings as a whole.

(a) the Calderbank letter and offer of compromise were irrelevant to any determination of the costs of the motion for extension of time at first instance;

(b) the opponent was within its rights to plead the statute of limitations with the consequence that the claimant was required to seek the District Court's indulgence in extending the time for the commencement of proceedings;

(c) the opponent was not acting unreasonably in rejecting the request of the claimant of 2 October 2001 to combine the hearing of the notice of motion with the substantive hearing given that the claimant had not provided any evidence, formally or informally, to explain his delay in instituting proceedings;

(d) the claimant failed to take the opportunity in its written submissions on the appeal or at the oral hearing to contend for a different order as to the costs of the motion at first instance so that this Court, in its discretion, should refuse to entertain the current notice of motion to vary Order (b). 16 Nowlan v Marson Transport Pty Limited (2001) 53 NSWLR 116 involved an application for leave to commence proceedings out of time pursuant to s 52(4) of the Motor Accidents Act 1988. The accident took place on 5 July 1995 so that proceedings had to be instituted before 5 July 1998. The application for extension of time was not filed until 29 July 1999. 17 The major issue in the case centred on the alleged prejudice to the defendant if the application succeeded. It succeeded before the primary judge but lost that issue on the appeal. On the question of costs at first instance, Heydon JA, with whom Mason P and Young CJ in Eq agreed, said this (at 130 [37]): "Since the respondent's opposition to the application before the primary judge rested on one primary point on which it has failed, the costs of the hearing before the primary judge should be the appellant's costs in the proceedings. That is, if the appellant wins the trial, he will have his costs of the s 52(4) application; if not, there will be no order as to costs. It may be that that type of order is not typical of those made in relation to s 52(4) applications which succeed. In argument before this Court expressions were used to the effect that the appellant had been seeking an 'indulgence'. In a limited sense that is true. There are some types of opposition which ought to result in adverse costs orders even if the opposition fails. In other cases it can be seen, if opposition fails, that there ought not to have been opposition, and different types of costs may be appropriate. The failure of the respondent here is in the latter category."

The claimant relies on the last two sentences of this passage. 18 It is difficult to see the relevance of the Calderbank letter and/or the offer of compromise to the determination of the costs of the application for extension of time at first instance. Of greater relevance was the rejection of the claimant's request that the application for extension of time should be heard with the substantive hearing to minimise costs. 19 The claimant did not institute proceedings within the limitation period. It was therefore required to approach the court for an extension of time and to attend to the matters set out in s 60E(1) of the Act as were relevant in the circumstances. 20 In my opinion, the opponent was not acting unreasonably in maintaining its limitation defence at least until it had seen evidence which dealt with all relevant matters to which regard was required to be had pursuant to s 60E(1). As the opponent points out, one of those was the explanation for the delay in the institution of proceedings. The opponent was entitled to be satisfied that there were reasons for the delay of some substance. It was also entitled to be satisfied that the claimant had an arguable case on liability, that he had sustained loss as a consequence of any alleged negligence and, importantly, that the delay in the institution of proceedings would not prejudice the opponent in obtaining a fair trial. 21 In the present case, given the opponent's knowledge of the decision in State of New South Wales v Seedsman [2000] NSWCA 119 and the fact that prejudice was not asserted, the major issue which the opponent had to consider before it acceded to the claimant's request was the claimant had an explanation of substance for his delay in instituting the proceedings. 22 As at 2 October 2001, the claimant had not provided any evidence to explain his delay. However, this was supplied by affidavits of the claimant sworn 17 July 2002 (filed in the District Court on 2 September 2002); 9 October 2002, 13 May 2003 (filed 15 May 2003) and an affidavit of Ms Kim Smith, the claimant's solicitor, sworn and filed on 19 September 2002. The first and last of those affidavits dealt in detail with the question of delay. Accordingly, by September 2002, the opponent had sworn evidence of the reasons for the delay for its consideration. 23 In his letter of 3 February 2003 the claimant's solicitor repeated his request for the opponent's solicitor to seek instructions as to whether it wished to proceed with its limitation defence and, if it did, whether it was prepared to have the extension of time application heard in conjunction with the substantive hearing. By this time the claimant's evidence relating to the delay had been filed for some months. The notice of motion for an extension of time came before Knight DCJ on 6 February 2003 but did not proceed; it was heard on 2 and 3 June 2003. The opponent was not prepared to withdraw its limitation defence, consent to an extension of time or agree to the extension of time hearing being combined with the substantive hearing to minimise costs. In my opinion, its refusal to agree to the interlocutory and substantive hearings being combined was, in the circumstances, unreasonable. This conclusion is confirmed by the fact that the opponent has not sought to justify its refusal to accede to the claimant's request. 24 The concession of Counsel for the opponent in this Court that he could not resist a re-exercise of the discretion in favour of the claimant was (as I said in [46] of the substantive judgment), properly made and inevitable. Nonetheless the opponent was not obliged to accept the affidavit evidence at face value and was entitled to test it as it did. I say this with some diffidence because only some of the cross-examination related to questions of delay, its major thrust being directed to the merits of the case that the claimant would be required to make at trial. In other words, the opponent was taking the opportunity to obtain a "free kick". 25 Quite clearly the primary judge made her costs order upon the basis that the claimant had failed to make out a case for an extension of time. As that decision was wrong, the foundation for the making of that costs order by her Honour falls away. It is therefore necessary for the matter to be considered afresh. 26 The claimant's primary submission, consistent with the orders sought in the notice of motion, is that the costs of the notice of motion for an extension of time should be reserved for determination by the trial judge. There were precedents for the joint hearing suggested by the claimant in October 2001 and February 2003 and the opponent had, in the cases referred to in the letter of 3 February 2003, agreed to that course. The opponent advanced no submission as to why that course would not be appropriate in the present case; nor did it suggest that in the cases identified by the claimant to which the opponent was a party, the combined hearing was in some way unsatisfactory or unfair. 27 In all the circumstances, I consider that the orders sought by the claimant should be made. 28 Finally, there is the question of the costs of the current notice of motion. It has been brought about by the failure of the claimant to deal with the issue of the costs of the notice of motion for an extension of time either in his written submissions on the appeal or in oral argument. As a consequence, the matter was overlooked. Although the claimant requested the opponent to consent to the orders now sought, that request was rejected upon the basis that the matter should have been dealt with at the hearing of the appeal and it was now too late. 29 I see nothing unreasonable in the opponent having declined to consent to the orders sought although not for the reason it gave. It was clearly entitled to make submissions with respect to the appropriate costs order to be made with respect to the proceedings at first instance. It has done so albeit unsuccessfully. On the other hand, the claimant is at fault for not having raised this matter at the appropriate time. 30 The general practice of this Court and the High Court has been to make the claimant pay the costs of a belated motion such as this where the matter in issue could, and should, have been disposed of in the principal hearing and only became necessary because the claimant omitted to ask at that time for the relief now sought: L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 151 CLR 590 at 595; Gould v Vaggelas (1985) 157 CLR 215 at 276; Production Spray Painting & Panel Beating Pty Ltd v Newnham (No. 2) (1991) 27 NSWLR 695 at 663G; TCN Channel 9 Pty Ltd v Antoniadis (No. 2) (1999) 48 NSWLR 381 at 386 [20]. I see no reason why we should depart from that general rule in this case. 31 Accordingly, I would propose the following orders:

(a) That Order (b) referred to in [47] of this Court's judgment of 23 April 2004 be rescinded and in lieu thereof it be ordered that the orders of Gamble ADCJ made on 4 July 2003 be set aside;

(b) Order that the costs of the claimant's Notice of Motion filed on 6 February 2002 be reserved for determination by the trial judge at the conclusion of the proceedings in the District Court;

(c) Order that the claimant pay the opponents' costs of the Notice of Motion filed in this Court on 24 May 2004. **********

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