Solicitors:
Hunt & Hunt (Plaintiff)
W A Baxter & Co. (Defendant)
File Number(s): 2016/269154
Decision under appeal Court or tribunal: Local Court of NSW
Date of Decision: 11 August 2016
Before: Greenwood LCM
File Number(s): 2012/349400
[2]
Judgment
The Plaintiff sued the Defendant in the Local Court at Gunnedah for damages for the use by the Defendant of a 32 tonne excavator, a flat top Isuzu truck and a Bobcat belonging to the Plaintiff. The Defendant had been allowed to use these vehicles but the Plaintiff asserted that he had not paid the full amount for the hire of them. It appears that the amount claimed by the Plaintiff allowed an offset for monies that the Plaintiff ought to have paid to the Defendant for work that the Defendant did for the Plaintiff.
On the last day of the hearing the Magistrate reserved her decision. The transcript relevantly reads:
HER HONOUR: Is there anything either of you need to say any further than that other than how long will I think I'm going to take to do it. I don't know. I'm not sure when I'll be able to do it, but it's got to be before 12 September.
ANDERSON: I assume your Honour doesn't require counsel to appear on the next occasion, if it's just a matter of judgment your Honour.
HER HONOUR: No I think I'm quite happy to hand down my decision - there may be some matters you want to address after that, but that's not a question which we can anticipate and I wouldn't require you to come just to get that, any submissions further if they are required can be made in writing.
…
HER HONOUR: Well I'm reserving my decision and the matter will be mentioned within the next two months.
Judgment was delivered on 15 August 2014 but the parties were not notified prior to judgment being delivered. It seems that the Defendant was largely successful because the Plaintiff was given judgment for $8,250 in circumstances where the Defendant agreed that some money was owing to the Plaintiff. Further, the figure of $8,250 was referable only to the Bobcat with the Magistrate finding that the arrangement in relation to the excavator had been satisfied and the evidence put forward by the Plaintiff in relation to the tray truck was unreliable. The Magistrate found that $2,056 was owing to the Defendant on his cross-claim and that was said to be offset against the amount due by the Defendant.
In a document from the Local Court of New South Wales headed "Notice of Orders Made" dated 4 September 2014 the following appeared:
On 11 July 2014 the following orders (and/or directions) were made:
15/8/14
Verdict for the plaintiff $8250
Reason published in writing
Verdict for the cross claimant $2056.
It is not clear what the reference to 11 July 2014 is in that document but I note that that was the last of four hearing days before the Magistrate.
Her Honour made no costs order. The Defendant's solicitor said in an affidavit that he received, after a request to the Local Court at Gunnedah, a copy of the orders made on 4 September 2014. Magistrate Kok retired on 12 September 2014 but the Defendant's solicitor was not aware of her Honour's retirement until after the event. The elliptical statement that "it's got to be before 12 September" was not understood at the time it was made.
On 15 September 2014 the Plaintiff filed a summons in this Court seeking leave to appeal against Magistrate Kok's decision. The summons was heard by Beech-Jones J on 6 May 2015, and on that day his Honour dismissed the summons and ordered the Plaintiff to pay the costs of the proceedings: Yarraford Pastoral Co Pty Ltd v Lewington [2015] NSWSC 522.
On 4 November 2015 the Defendant's solicitor filed a Notice of Motion in the Local Court at Gunnedah seeking the following orders:
1. An Order that the Judgment on the Cross Claim be amended by substituting the figure "$3,376" for the figure "$2,056" [the Slip Rule Application].
2. An Order that the Judgment for the Cross Claimant be set off against the Judgment for the Plaintiff.
3. An Order that the Plaintiff pay the costs of the Motion.
4. An order that the Plaintiff pay the costs of the correspondence between the parties concerning the Slip Rule Application.
5. An order that the Plaintiff pay the costs of the correspondence between the parties concerning the Costs Application.
6. An Order that the Plaintiff pay the Defendant's costs thrown away by reason of the amendment and further amendment of the Statement of Claim and his costs of the claims that were abandoned by those amendments.
7. An Order that the Plaintiff pay the Defendant's costs incurred up to 24 September 2014 of all claims in the proceedings other than the claim in respect of the Bobcat, less the maximum amount which could have been recoverable under Local Court Rule 2.09 had the claim in respect of the Bobcat been commenced and tried in the Small Claims Division of the Court.
8. An Order that the Plaintiff pay the Defendant's costs incurred after 24 September 2014 in the proceedings on the Plaintiff's claim and on the Cross Claim.
The Motion was subsequently transferred by consent of the parties to the Local Court at Sydney. The Motion was heard on 1 August 2016 by Magistrate Greenwood. Her Honour gave judgment on 11 August 2016 and the orders she made were relevantly these:
1. The Plaintiff is to pay the Defendant's costs on the statement of claim, including any amendments (the "Proceedings Costs Order");
2. Each party to bear their own costs of the cross-claim; and
3. I order the Plaintiff to pay the Defendant's costs of the Motion (the "Motion Costs Order").
By Summons filed 7 September 2016 the Plaintiff seeks leave pursuant to s 40(2)(c) of the Local Court Act 2007 (NSW) to appeal against the first and third of the orders made by Magistrate Greenwood. Although the Summons contained three grounds of appeal the Plaintiff abandoned the third ground (which concerned the Motion Costs Order) in its submissions. The two remaining grounds are these:
Her Honour erred in finding that the Local Court had power, under s 98 of the Civil Procedure Act 2005, to make the Proceedings Costs Order.
Her Honour erred in failing to find that the Local Court had neither jurisdiction nor power to make the Proceedings Costs Order.
Although the judgment in favour of the Plaintiff was only $8,250 with an offset for the cross-claim the Defendant asserts that the costs of defending the proceedings before Magistrate Kok were $48,068.59.
Section 39 of the Local Court Act provides that a party to proceedings before the Local Court in its General Division may appeal to the Supreme Court but only on a question of law. Section 40 then provides:
40 Appeals requiring leave
(cf LCA 1982, section 74)
(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court:
(a) an interlocutory judgment or order,
(b) a judgment or order made with the consent of the parties,
(c) an order as to costs.
Leave is, therefore, necessary as a preliminary consideration.
[3]
The judgments of the Magistrate
The matter proceeded before Magistrate Greenwood in two parts on two separate days. On 1 August 2016 the question of whether she had any jurisdiction to make an order for costs was argued. Part of that argument concerned the issues argued on the present appeal but the arguments ranged more widely to include an argument that the costs application could not any longer be brought by reason of the appeal that had been determined by Beech- Jones J. That argument is no longer pursued.
Magistrate Greenwood gave reasons in relation to the jurisdictional issue. It is not necessary to set them out in their entirety. The following passage encompasses those reasons relevant to the present appeal:
What is my power to deal with the matters today, because logic might suggest that I am functus; today, what am I doing, I am standing in the shoes of Magistrate Kok, because she is no longer on the bench so that leads me to the issue of what are my powers today, and coming back to 36.16, this is not a case of setting aside or varying a judgment or order, and I understand the issue that is raised about it can go on for forever. There is no judgment or order as to costs but what I do have is s 98 of the Civil Procedure Act, and that says that, subject to rules of Court, costs are in the discretion of the Court. It then goes on to say costs are in the discretion of the Court, full power to determine by whom, to what extent, and a rule saying that they can be ordered on an ordinary or indemnity basis but subs (3) says, "An order as to costs may be made by the Court at any stage of the proceedings or after the conclusion of the proceedings".
The second aspect of the matter before Magistrate Greenwood was the merits of the costs application. Her Honour gave judgment on that matter on 11 August 2016. During the course of that judgment her Honour said this in relation to the application for costs thrown away by reason of amendments to the Statement of Claim (prayer 6 in the Motion):
The suggestion is I have no power to do so now [i.e., make a costs order] but my reading of the legislation, to my mind it is clear. I made the same decision about this concerning the final decision by Magistrate Kok as to costs in the proceedings, but I have already said, and it is my view still today, there is power under s 98.
It would be different, I think, if Magistrate Kok had said the words, "I make no order as to costs", but she has been silent.
[4]
Submissions
The Plaintiff accepts that ordinarily an appeal court should not grant leave to appeal from costs orders unless there is some clear error of principle or manifest injustice. The error of principle must be of the kind described in House v The King (1936) 55 CLR 499 at 505.
The Plaintiff submits that a question of general public importance is raised, namely, whether in circumstances where final orders have been entered but no order as to costs has been applied for or made, the power of the Court to order costs under s 98 of the Civil Procedure Act is subject to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). The Plaintiff submits further that the costs are not insubstantial.
On the question of leave, the Defendant submitted that if an error of principle was established leave ought to be given. If it was not, leave should be refused.
In relation to the grounds of appeal the Plaintiff points to what was said by Barwick CJ in Bailey v Marinoff (1971) 125 CLR 529 and 530 concerning when orders made affecting proceedings are beyond recall.
The Plaintiff accepted that s 98(3) is a "specific and relevant statutory provision" (as Barwick CJ refers) but submitted that the provision is expressly subject to the rules of the Court. The Plaintiff submitted that s 98(3) does not mean that a court never becomes functus officio with respect to the making of costs orders. The Plaintiff submitted that where the power to make a costs order that varies an entered judgment is concerned it can only be varied in accordance with Pt 36 UCPR which includes r 36.16(3A) that limits a period of 14 days from the entry of judgment. The Plaintiff submitted that this approach is consistent with ss 56-60 of the Civil Procedure Act.
The Plaintiff submitted that this approach is consistent with a number of authorities including some in the Court of Appeal dealing with applications that were analogous to, but not the same as, the present application decided by the learned Magistrate.
The Defendant submitted that s 98(3) governs the position and that that provision enables the Court to make a costs order after the conclusion of the proceedings. The Defendant said that r 36.16 has no application or relevance since the Defendant was not seeking the amendment of any entered order. No costs order of any sort had been made by Magistrate Kok. The Defendant relied on what was said by the Court of Appeal in Roads and Traffic Authority of New South Wales, Council of the Shire of Evans & Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140.
Counsel made clear that the issue on the present appeal concerns only the power or jurisdiction of the Local Court to make a costs order in the circumstances of this case and not any exercise of discretion in making such an order.
[5]
Legislation
Section 98 of the Civil Procedure Act 2005 (NSW) relevantly provides:
98. Courts powers as to costs
(1) Subject to rules of court and to this or any other Act:
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:
(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.
(5) ….
(6) In this section, costs include:
(a) the costs of the administration of any estate or trust, and
(b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and
(c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed.
Part 36 Uniform Civil Procedure Rules 2005 (NSW) relevantly provides:
36.16 Further power to set aside or vary judgment or order
(cf SCR Part 40, rule 9)
(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.
(2) The court may set aside or vary a judgment or order after it has been entered if:
(a) it is a default judgment (other than a default judgment given in open court), or
(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or
(c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.
(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.
(3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.
(3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.
(3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).
(4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.
36.17 Correction of judgment or order ("slip rule")
(cf SCR Part 20, rule 10; DCR Part 17, rule 10; LCR Part 16, rule 10)
If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error.
As far as counsel's research and mine can ascertain none of the cases which have considered s 98(3) and r 36.16 has been concerned with the precise situation that obtains in the present case. That position is that orders were made in relation to the substantive relief sought but no order for costs was made at the time those orders were pronounced. It is not clear from the evidence I have whether judgment was ever entered to perfect the orders made, but I have assumed on the basis of what appears on the Notice of Orders Made of 4 September 2014 that it was entered.
In Bailey v Marinoff Barwick CJ said at 530:
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.
In Palmer (No 2) Giles JA (with whom Spigelman CJ and Handley JA agreed) said of Pt 52A r 5 (the predecessor to s 98(3)):
[17] Part 52A r 5 provides that the Court may, in any proceedings, exercise its powers and discretions as to costs at any stage in the proceedings or after the conclusion of the proceedings. The rule is relevantly concerned with costs orders after the substantive decision has been given, and must be subject to finality from entry of costs orders already made. New South Wales Insurance Ministerial Corporation v Edkins relevantly held that a judge was not functus officio after making costs orders if, although unknown to the judge, a costs argument remained to be heard. There was no question of entry of judgment.
In New South Wales Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8 the District Court judge handed down two reserved judgments in favour of the plaintiff in respect of two claims. In one case he ordered the first defendant to pay the plaintiff's costs and in the second he ordered the plaintiff to pay some costs to the second defendant because that defendant had made an Offer of Compromise that exceeded the judgment. Subsequently the plaintiff applied for an order that the first defendant pay the costs he was obliged to pay to the second defendant. The trial judge so ordered. The first defendant challenged that order in the Court of Appeal. Relevantly, the third ground of challenge was that once the verdicts and costs orders in the cases were announced the trial judge was functus officio and he could not add to or vary his costs orders.
In respect of that argument, Priestley JA (with whom Spigelman CJ and Shepherd A-AJ agreed) said:
Also in my opinion there is no merit in the argument concerning the judge being functus officio at the point where he announced his verdicts and costs orders in the two actions. Although he did not know it at that moment, he had not then completed his duties in the cases, there was a costs argument still to be heard. He heard it immediately and acted quite properly and with proper authority in doing so.
In Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (1988) 77 ALR 190 the respondents successfully obtained an order dismissing the applicants' summons but neglected to ask for an order for costs. They sought by way of further summons an order amending the earlier order so as to provide that the applicants pay the respondents' costs of the earlier proceedings.
Justice Toohey said that although he might have expected some explanation for the failure to ask for costs on the earlier occasion, the inference he drew was that the failure was a matter of oversight on the part of counsel. His Honour was satisfied that the application fell within order 29 rule 11 of the High Court Rules which is the equivalent of r 36.17 UCPR, the slip rule. His Honour said:
In many cases the slip rule or its equivalent is invoked when, through error or oversight, a judgment or order fails to express correctly the intention of the court at the time when the judgment or order was announced. But it is clear that this power of correction extends to cases where a matter, through inadvertence, was not dealt with at the hearing. …
I am satisfied then that the Court is empowered to grant the relief which the respondents seek. I am also satisfied that it is appropriate to make an order amending the order made on 6 November 1987 by including provision that the applicants pay the respondents' costs of that summons.
Justice Giles in Palmer (No. 2) at [24]-[25] cited Raybos v Tectran as authority for the power to make an order for costs when one was not earlier sought notwithstanding that the original judgment or order had been entered.
The Plaintiff relied on Raybos v Tectran and its adoption in Palmer (No. 2) as indicating that in seeking an order for costs not earlier dealt with, a party was in fact seeking to vary the judgment earlier given. From there it was argued that r 36.16 necessarily operates because that rule only enables the variation of a judgment if the notice of motion to do so is filed before entry of the judgment or within 14 days of its entry.
The significant distinction in Palmer (No. 2) from the present case was that the court had previously made costs orders and the plaintiff sought to vary those orders by obtaining a Bullock order from the unsuccessful defendant. Although Giles JA noted the provisions of Pt 52A r 5 (now s 98(3)) he said that the rule was concerned with costs orders after the substantive decision has been given and the rule must be subject to finality from entry of costs orders already made. For that reason the plaintiff could not apply under that rule since costs orders had already been made. Accordingly, it was necessary to resort to the slip rule to find a basis for the power to vary the costs order already made.
In Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2013] NSWCA 227 McColl JA was dealing with a notice of motion seeking an order pursuant to s 101(4) of the Civil Procedure Act 2005 (NSW) that the plaintiff pay interest on costs and disbursements. Previously, Tobias JA had dismissed the applicant's summons seeking leave to appeal and ordered the applicants to pay the costs of the summons for leave to appeal and the respondent's notice of motion. The notice of motion being dealt with by McColl JA was filed a little over three years after the orders made by Tobias JA.
Justice McColl followed Handley AJA's view in Drummond & Rosen Pty Ltd v Easey [No 2] [2009] NSWCA 331 that an application for interest on costs pursuant to s 101(4) of the Civil Procedure Act must be made within the time limited in r 36.16(3A). Her Honour held that an order for interest on costs is made in respect of "an order for the payment for costs".
Her Honour said:
[82] However the interest order is made in respect of "an order for the payment for costs": s 101(4). Just as a costs order must be sought at the time of judgment, or within any time limited by UCPR 36.16, so, too, in my view must an interest on costs order. That conclusion which accords Handley AJA's view in Drummond (No 2) and, subject to what I have said, Beazley JA's view in Timms, is consistent with the principle of finality of judgments: see D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 (at [34]) per Gleeson CJ, Gummow, Hayne and Heydon JJ.
…
[85] Mr Ilkovski's submission that the interest order is an additional order, rather than one within the meaning of UCPR 36.16, is simply semantic. An application for an order not made in the Court's original orders is an application for a variation of a judgment or orders of the Court, albeit that it would add an order, rather than amend an existing order. Although it is not determinative, that was how the Court described the orders made in Drummond (No 2); see also Spedding v Nobles (No 2) [2007] NSWCA 87 (at [18]). The fact that the order was described as "additional [sic] in Leda Pty Ltd v Weerden (No 2) emphasises the semantic nature of the argument.
In Short v Crawley (No 45) [2013] NSWSC 1541 White J (as his Honour then was) reached a different conclusion from that of McColl JA in Zepinic in relation to an application for interest on costs and also for an order for a gross sum costs order where an earlier costs order had been made. In relation to the latter decision his Honour was influenced by what appears in s 98(3) and (4) and his Honour's construction of r 36.16(3) where he held that the words "except so far as" were not equivalent to "unless". His Honour held at [27] that the variation to order a gross sum costs order would not be in respect of a claim for relief or of any question arising on a claim for relief that had been determined but would only be as to the mode of quantifying what sum of money was payable pursuant to the costs orders.
His Honour went on to say:
[29] … Whilst the original costs order is thereby varied, it is not varied in respect of the matter that was the subject of determination when the order was made. Rule 36.16(3) confers power to vary the previous costs orders by substituting an order for payment of a gross sum instead of a sum determined by an assessment.
[30] In any event, the making of a gross sum costs order does not infringe the principles of finality of judgments. Those principles are subject to contrary statutory provision. In Beach Petroleum NL v Johnson (No. 2), von Doussa J said of the Federal Court Rules (at 120):
"Order 62, r 4(2) relevantly provides:
Where the Court orders that costs be paid to any person, the Court may further order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that person shall be entitled to:
...
(c) a gross sum specified in the order instead of the taxed costs; or
(d) a sum in respect of costs to be ascertained in such manner as the Court may direct [emphasis added].
Pursuant to O 62, r 3(1) the Court may exercise its powers and discretions as to costs at any stage of the proceedings, or after the conclusion of the proceedings. In my opinion the Court has power to make a gross sum order at this stage notwithstanding that costs orders were earlier made which envisaged taxation in the ordinary way."
[31] There is no material difference between those rules and s 98 of the Civil Procedure Act. The decision in Roads and Traffic Authority of NSW v Palmer (No. 2) does not address the impact of s 98(3) (formerly Pt 52A, r 5) on the court's ability to entertain an application for a gross sum costs order. Pursuant to s 98(3) and (4) the Court can exercise its powers and discretion as to costs after the conclusion of the proceedings and this includes the making of a gross sum costs order provided that the order is made before costs are referred for assessment.
In relation to McColl JA's conclusion in Zepinic, White J said this:
[77] In Zepinic McColl JA did not, with respect, analyse why the claim for interest on costs was barred because the costs order of Tobias JA was a final order, except to say that like an order for costs such an order must be sought at the time of judgment or within any time limited by UCPR, r 36.16 (at [82]). But why? Her Honour may have read UCPR, r 36.16(3) as if it provided that there is power to vary an order unless the order has determined a claim for relief, rather than that there is such a power except to the extent that a claim for relief is determined.
[78] At para [85] of Zepinic McColl JA said that the application was for a variation of the orders of the court, albeit by way of making an additional order. If that were so, r 36.16(3) would provide the requisite power to vary the costs order of Tobias JA unless the claim for interest on costs had been determined. As a matter of fact, the claim had not been determined. It had not been raised when Tobias JA made the costs order. It could only be said to have been determined if, as Beazley JA said in Timms, the claim for interest on costs had merged in the judgment for costs. For the reasons above, that was not the position.
[79] Nonetheless, I respectfully do not agree that if an order for interest on costs was made, such an order would vary the previous costs order. An order for interest on costs would vary the previous outcome, but not any previous order. Therefore the power to make such an additional order is not found in r 36.16.
[80] The orders of Tobias JA in Zepinic finally determined the proceedings. Likewise in this case the orders of the Court of Appeal finally determined the proceedings and left the 2008 costs orders undisturbed. In my view r 36.16(3) does not provide a power to make an order for interest on costs because such an order would not vary the costs orders made. No other power in r 36.16 is apposite. Prima facie, as the litigation is finally disposed of, it is at an end and no further application can be brought. But that is subject to contrary statutory provision.
[81] Section 98(3) of the Civil Procedure Act confers a power to make an order "as to costs" after the conclusion of the proceedings. If that power extends to the making of an order for interest on costs then the principles of finality of litigation are not offended because those principles are subject to contrary statutory provision.
…
[84] This construction of UCPR, r 36.16 and s 98(3) of the Civil Procedure Act is in accordance with the dictates of ss 56 and 57(2) of that Act. ….
…
[86] In Zepinic McColl JA did not address the question whether the construction of the Rules her Honour adopted was consistent with ss 56 and 57(2) of the Civil Procedure Act. Her Honour did not consider s 98(3) of that Act.
[87] For these reasons I respectfully consider that I should follow neither Timms nor Zepinic. I consider that s 98(3) confers power to make an order for interest on costs.
His Honour also concluded that he was not bound to follow McColl JA's decision in Zepinic because the decision was not given by her Honour sitting as a member of the Court of Appeal in the framework of the appellate structure for appeals from judgments from the Supreme Court or lower courts - see at [66].
In Grace v Grace (No 9) [2014] NSWSC 1239 Brereton J was also dealing with an application for interest on the costs order made some 12 months prior to the application. His Honour also declined to follow McColl JA's reasoning in Zepinic although not altogether for the same reasons given by White J in Short v Crawley.
Justice Brereton said:
[33] At the core of those reasons, and of the view that the critical date is that of the relevant costs order, is the finality principle, which finds expression in several ways: that the final judgment brings the proceedings to an end, so that there remains on foot no proceeding in which an interest on costs order could thereafter be made; that the court is functus officio, having completed its functions; or that the claim for interest has merged in the judgment on the claim for costs. What I have called "the finality principle" was stated by Barwick CJ in Bailey v Marinoff (1970) 125 CLR 529, in the following terms (at 530):
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.
[34] Thus in any event, the rule is conditioned on "final disposal" of the proceedings, and is subject to statutory provision to the contrary. Moreover, Bailey v Marinoff admits that a court can, even after final judgment and absent statutory authority, vary its orders in a manner that does not amount to getting rid of "the operative and substantive part of its judgment" [at 532 (Menzies J); 535 (Walsh J); see also Thynne v Thynne [1955] P 272, 296, 301, 314, 315].
[35] One element of McColl JA's reasoning is that a relevant costs order must itself be made not later than the final judgment disposing of the proceedings. Generally speaking, unless the question of costs has been dealt with, explicitly or implicitly, in the final judgment, a costs order does not involve any variation of or attack on the final substantive judgment. Accordingly, the finality principle is not offended by subsequently entertaining and dealing with an application for costs because it does not involve impugning "the operative and substantive part" of the judgment. In NSW Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8, the Court of Appeal held that a judge was not functus officio after giving judgment and making costs orders if the duties in the case were not otherwise completed (even though the judge was not then aware of it), and that in circumstances where there was a costs argument still to be heard - although it had not until that point been made - he was not functus officio and was entitled to entertain and deal with an application for a special costs order made immediate following the delivery of judgment. While that result could be supported as a variation to the order made on application before it was entered, under the then equivalent of UCPR r 36.16, that is not how the Court of Appeal put it (at 12E):
Also in my opinion there is no merit in the argument concerning the judge being functus officio at the point where he announced his verdicts and costs orders in the two actions. Although he did not know it at that moment, he had not then completed his duties in the cases, there was a costs argument still to be heard. He heard it immediately and acted quite properly and with proper authority in doing so.
[36] When that case was decided, the relevant predecessor of CPA, s 98 did not contain any provision equivalent to CPA, s 98(3), which was introduced in 2005, and expressly authorises the Court to make an order as to costs after the conclusion of proceedings:
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
[37] However, provision to similar effect was made in the Rules [(NSW) Supreme Court Rules 1970, Pt 52, r 5; Pt 52A, r 5]. It may be allowed that s 98(3) is concerned with costs orders after the substantive decision has been given, and must be subject to finality from entry of costs orders already made, so that it would not not authorise re-opening a final costs order that has already been made [Roads and Traffic Authority of New South Wales, Council of the Shire of Evans and Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140, [17] (considering (former) SCR, Pt 52A r 5)]. But subject to that qualification it is, in the words used by Barwick CJ, a "specific and relevant statutory provision" to the contrary.
[38] Accordingly, an order for costs can be made after the conclusion of proceedings, so long as it does not impugn or alter a final costs order already made [see also Cotie v Cox [2006] NSWSC 859, [22]-[27] (Latham J)]. And if an order as to costs can be made after the conclusion of proceedings, it must follow that an order for interest on costs can be made after the conclusion of proceedings. …
In Rodi v Gelonesi [2016] NSWCA 348 Mr Rodi and a company of which he was a director brought proceedings against Mr Gelonesi and another company over the sale of a business. The proceedings were heard in the District Court and were dismissed.
On 22 November 2012 consent gross sum costs orders were made in the District Court against Mr Rodi and his company in favour of Mr Gelonesi and Northside Deli Pty Ltd. By consent enforcement of those orders was stayed until determination of a summons for leave to appeal by Mr Rodi and his company to the Court of Appeal. On 5 December 2012 that summons for leave to appeal was refused with costs by Beazley and Ward JJA.
In March 2016 Mr Gelonesi filed motions in both the District Court and the Court of Appeal with a view to obtaining orders for costs against the solicitor for the Rodi parties.
As Payne JA noted at [33], the first issue to be determined was whether the 14 day time limit provided by r 36.16(3A) precluded the application.
Justice Payne (with whom Meagher and Gleeson JJA agreed) said this:
[34] In Bartlett the Court said at [21]-[23]:
[21] The different views earlier expressed by members of this Court in relation to UCPR r 36.16(3) are referred to in Habib v Nationwide News Pty Ltd (No 2) [2010] NSWCA 291 at [34]-[39]. In Road and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140, the Court (Giles JA, Spigelman CJ and Handley JA agreeing) found that a costs order determines a claim "for relief, the relief claim being orders disposing of the costs of the trial and of the appeals": [21]. However, in Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, the Court (Ipp, McColl and Basten JJA), observed of UCPR, r 36.16(3) at [10]:
The precise scope of this provision is unclear. Read literally, it might be thought to operate only in respect of orders which were not sought by any party. That reading seems implausible. Given its context, it is more likely that the distinction intended to be drawn is between substantive relief, to which the power does not extend, and ancillary or consequential relief, to which it does extend. On that understanding, a costs order would clearly fall within the latter category. Such a distinction would make practical sense because appropriate orders as to costs frequently depend upon the existence of offers of compromise which are properly not known to the Court until after substantive relief has been determined. On that basis, a party seeking to vary a costs order would not need to rely upon sub-r (3A).
[22] Notwithstanding the statement in Hancock, the weight of authority appears to support the position taken by Giles JA in Palmer: see AT v Commissioner of Police (NSW) (No 2) [2010] NSWCA 337 at [7]-[13] (per Basten JA, Beazley and Macfarlan JJA agreeing); Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133; 75 NSWLR 462; Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336 at [8], [10] (per Campbell JA, McColl JA and Sackville AJA agreeing); Short v Crawley (No 45) [2013] NSWSC 1541 at [21] (per White J). The effect of this line of authority is that the Court does not have power under r 36.16(3) to vary a costs order which determined a claim for relief where no issue as to that variation was raised within 14 days of the judgment having been entered.
[23] It is unnecessary for this Court to express a final view as to the meaning of r 36.16(3) because no reason has been established to support a variation of the order in question.
[35] In my view it is arguable that the application for an order pursuant to ss 98(1)(b) or 99 of the Civil Procedure Act that Mr Muriniti pay or indemnify Mr Gelonesi for legal costs which he incurred in the appeal proceedings CA 2012/176970 involves a variation of the orders made by Beazley and Ward JJA, and is subject to the time limit of 14 days in UCPR r 36.16(3A).
[36] This is because the order for costs was a final order, entered as soon as it was made in the Court's computer system in 2012: UCPR r 36.11(2). The effect of that order was that Mr Rodi and Forest Way Fruit Stall Pty Ltd were liable to pay the costs incurred by Mr Gelonesi and Northside Deli Pty Ltd as agreed or assessed. Mr Gelonesi was entitled to rely on that final order to pursue Mr Rodi and Forest Way Fruit Stall Pty Ltd for payment, as apparently he did in the bankruptcy and liquidation proceedings described above. What Mr Gelonesi now seeks is an order that a third party, Mr Muriniti also be liable for his costs either directly or by way of indemnity. That is an order which could have been sought within 14 days of the delivery of judgment in the application for leave to appeal. The order now sought is not akin to an order exercising a liberty to apply in the case of the working out of the details of the implementation of an order which is otherwise final, such as an order for specific performance: Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104. This view of the order sought in the present case accords with the view expressed in Palmer (No 2), that a costs order of the kind made by Beazley and Ward JJA in December 2012 determines a claim "for relief, the relief claim being orders disposing of the costs of the trial and of the appeals". This view reflects the preponderance of authority in this Court.
[37] Whilst I acknowledge that in Caboolture v Flower & Hart the Full Federal Court described the third party costs order there in issue as "supplemental" and rejected the suggestion that it varied or altered the order for costs which had already been made, the authorities relied upon were principally those involved in aid of enforcement and working out of original orders which had been made [at 265]. I also accept that in Xabregas White J held personal costs orders made under s 99 of the Civil Procedure Act against legal representatives were properly to be characterised as "supplemental" and thus not constrained by the time limit in UCPR r 36.16(3A). It seems to me that the order sought here, that a different person pay the costs ordered to be paid by Beazley and Ward JJA by way of indemnity, is more accurately to be described as a variation of the order already made that those costs be paid by Mr Rodi and Forest Way Fruit Stall Pty Ltd.
[38] As in Bartlett, however, it is unnecessary to express a final view about this question because no reason has been established to support the making of a personal costs order against Mr Muriniti. …
In all of the cases mentioned, except Raybos v Tectran about which more will be said, an order of some sort had been made in relation to the costs of the proceedings with the applicant seeking either a modification of the costs order or an order which might be regarded as supplementary or ancillary to the costs order already made. In the present case no order in relation to costs has been made of any sort.
Moreover, the finality principle is not offended in the present case by making a costs order both because costs have not been dealt with and because the magistrate who gave judgment on the principal claims anticipated that further orders might be needed. If the principle was not offended in Edkins where the judge was unaware that his duties were done, a fortiori in the present case where the magistrate anticipated that further orders may be necessary. For the same reason it cannot be said that Magistrate Kok, and hence Magistrate Greenwood, was functus officio.
In any event, even if the judgment given by Magistrate Kok can be said to be an order disposing of the proceeding, the finality principle is subject to any specific and statutory provision which modifies that principle. It is difficult to see why s 98(3), particularly when read with sub-s (4) is not a specific statutory provision that modifies the finality principle. If the words "at any time before costs are referred for assessment" are to have any work to do I do not see how an application for an order specified in s 98(4) can be said to be a variation with the result that r 36.16(3A) means that such an application must be made within 14 days. Since the matters in subs (4) are particular examples of orders as to costs that s 98(3) deals with, that tends to suggest that "after the conclusion of the proceedings" in subs (3) is, as a matter of jurisdiction, only limited by the restriction in subs (4) for those particular matters.
To similar effect, Brereton J said in Moustach Pty Ltd v Eddie Takchi [2015] NSWSC 2080:
[12] When subsection (3) is read in the light of the particular, but not exclusive, list of its applications set out in subsection (4), it seems clear that the section was intended to have the consequence that an order as to costs may be made up to the time that "costs are referred for assessment", which in the absence of an order referring costs for assessment, presumably means when an application is made for assessment.
…
[17] … In the light of s 98(4), the better view of s 98(3) is that it was intended to empower the Court to make or reconsider questions of costs at any time before the matter is referred for assessment. That means that an application can be made in respect of indemnity costs up to the time that the reference to assessment takes place, even if an order has been made on the ordinary basis previously.
Although the Court of Appeal's decisions in Zoef v Nationwide News Pty Ltd (No. 2) [2017] NSWCA 2 and Rodi may impose a limitation on s 98(3) for the sorts of orders sought in those cases, that would appear to be because costs orders of some sort had already been made. In that way the Court of Appeal considered that what was being sought was a variation to a costs order already made. The result was that r 36.16 was engaged with the limitation in subs (3A).
That is not the present case. No costs order has been made. I respectfully agree with Brereton J in Grace where he said at [38] that an order for costs can be made after the conclusion of proceedings so long as it does not impugn or alter a final costs order already made.
It is still necessary to deal with what was said in Raybos v Tectran. It should first be said that I am not bound by a single judge of the High Court although I would not lightly differ from his or her decision. Secondly, the High Court Rules 1952 (the relevant Rules at the time of this decision) with regard to costs were not as expansive as s 98. They did not contain any provision similar to s 98(3). The only path for the application in Raybos was by invoking the slip rule. The wording of the rule (O 29 r 11) meant necessarily that any order made would involve a "correction" to the judgment or order. Hence, the order made by Toohey J was an order "varying" the order earlier made although that order simply dismissed the summons and did not involve a costs order. Thirdly, the case stands as authority for the principle that the slip rule can be invoked to obtain an order for costs where they were not sought at the time judgment was given (Palmer (No 2) at [25]). It ought not be seen as authority for the proper construction of r 36.16 concerning the varying of a "judgment or order" with which it was not concerned.
In my opinion the learned Magistrate was correct to conclude that s 98(3) provided the basis of the power to make the costs order which she made.
Further, in the light of what was determined in Raybos and L Shaddock & Associates Pty Limited v The Council of the City of Parramatta (No 2) (1983) 151 CLR 590 at 594-595 to similar effect, and what has been said in Palmer (No 2), I do not see why the same result could not have been achieved by an application under the slip rule. It provides a source of power in any event.
[6]
Conclusion
Although the Plaintiff is ultimately unsuccessful, the appeal raised a legal question of some importance. In those circumstances leave should be granted to appeal but the appeal should be dismissed.
Accordingly, I make the following orders:
(1) Leave to appeal granted.
(2) Appeal dismissed.
(3) The Plaintiff is to pay the Defendant's costs.
[7]
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Decision last updated: 28 August 2019