Ralston and Collins v Chaffey (No. 2)

1. [1]

   On 21 December 2018 I gave judgment on an amended notice of motion filed by the plaintiff on 26 September 2018: Ralston and Collins v Chaffey [2018] NSWSC 1994. One of the orders I made was as follows:

2. [2]

   The second defendant now applies by notice of motion filed 3 January 2019 to vary that order as follows:

3. [3]

   It was agreed between the parties that the notice of motion should be dealt with by me on the papers after receipt of written submissions from each of the parties concerned. The second defendant filed its written submissions on 14 March 2019 and the plaintiff filed her submissions on 5 April 2019.

4. [4]

   The background to this judgment is set out in my earlier judgment.

5. [5]

   The second defendant’s application was made on the grounds that the conduct of the proceedings in the particular respects found by the Court was 'unreasonable' and contrary to the obligations of parties and their lawyers under ss 56-59 of the Civil Procedure Act 2005 (NSW) (the CPA). The second defendant submitted that, in the result, the Court has not been assisted in furthering the 'overriding purpose' of the CPA, the disposition of the substantive proceedings has been unnecessarily delayed, and the second defendant has incurred a costs liability beyond what it could reasonably have expected to incur in the litigation.

6. [6]

   The second defendant submitted that an order for indemnity basis will achieve the appropriate measure of justice for the second defendant. In that regard, the second defendant relied upon what was said by the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; [2013] HCA 46 at [51]-[57].

7. [7]

   The second defendant drew attention to what was said in such cases as Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [35] and [44] and Sydney City Council v Geftlick [2006] NSWCA 280 at [90]. These cases concerned the conduct by a party of proceedings that involved "some relevant delinquency" or where the party’s behaviour was "plainly unreasonable". The second defendant pointed out that the Court’s power to make the order sought may be exercised where the conduct of proceedings has caused "unreasonable delay and expense" and/or has involved "departures from the procedures devised to ensure the efficient disposition of proceedings" or where a party pursues a "hopeless" or "unmeritorious" application.

8. [8]

   The second defendant submitted that the following special or unusual features warrant the exercise of the discretion to order indemnity costs in the present case:

9. [9]

   The plaintiff submitted that the discretion to award indemnity costs remains exceptional. The plaintiff pointed to the statement of Brennan CJ in Oshlack where his Honour said that costs were awarded to indemnify a successful party in litigation and not by way of punishment of an unsuccessful party.

10. [10]

    The plaintiff submitted that, properly understood, the second defendant’s submission that indemnity costs were justified arose only because of the combination of the plaintiff's earlier conduct of the proceedings and the notice of motion seeking leave to rely upon the further reports. In that regard, the plaintiff submitted that the earlier conduct of the proceedings was not relevant to the exercise of the discretion to award the costs of the plaintiff's notice of motion on an indemnity basis. To do so would have the effect of punishing the plaintiff for that earlier conduct. Such an award would go beyond providing the second defendant with a reasonable indemnity for its costs of the plaintiff's notice of motion.

11. [11]

    The plaintiff submitted that the failure of the second defendant to give any notice or warning of the foreshadowed application for indemnity costs is a significant factor weighing against such an order being made. The plaintiff said that authorities such as Huntsman Chemical Co Australia Pty Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 249 make clear that a formal warning of an intention to claim indemnity costs make the awarding of such costs more likely.

Determination

1. [12]

   In Oshlack Gaudron and Gummow JJ said at [44]:

2. [13]

   Similarly, McHugh J, although dissenting in the outcome, said at [69]:

3. [14]

   In Sydney City Council v Geftlick Tobias JA (with whom Mason P and Hodgson JA agreed) said at [90]:

4. [15]

   In my opinion, the plaintiff’s conduct which led to the filing of her motion on 3 August 2018 and her subsequent conduct through her legal advisors in the conduct of that notice of motion exhibited the “relevant delinquency” or “misconduct” (as described in Oshlack) and was “plainly unreasonable” (as described in Nobrega v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133 and followed in Geftlick. I accept that the matters identified by the second defendant, set out at [8] above, constitute relevant delinquency and misconduct.

5. [16]

   In addition, a number of matters discussed in my earlier judgment support the conclusion that there has been relevant delinquency on the part of the plaintiff and that she and her legal advisors have behaved in a plainly unreasonable fashion. Those matters include, first, the failure of the plaintiff to comply with the guillotine order, made as it was by the Registrar after repeated failures by the plaintiff to comply with directions of the Court. Secondly, the report of Dr Chow was put forward as having been obtained in answer to the report of Dr Sinosich, but that proposition was subsequently denied by the plaintiff’s solicitor when he gave his oral evidence, evidence that was quite inconsistent with what his affidavit had sworn.

6. [17]

   Thirdly, the report of Dr Chow did not comply with the requirements of the Expert Witness Code and authorities on expert reports. That was subsequently accepted by those acting for the plaintiff. That in itself led to an adjournment, further delay and a modification of the application being made. It ought to have been apparent at the outset to those acting for the plaintiff that the report in its original form did not so comply.

7. [18]

   Fourthly, the solicitor for the plaintiff who swore the affidavit to justify the application did not make himself available on two successive occasions when the matter was fixed for hearing. That led to two unnecessary adjournments of the motion. As it transpired, cross-examination of the solicitor was a crucial matter because he clarified that Dr Chow’s report was never obtained as a response to that of Dr Sinosich, in the face of what had earlier been said in his affidavit and despite that being the basis of the application for leave in the first place. An associated matter was the failure of the plaintiff’s solicitor to instruct Dr Chow properly, resulting in the need for an extended cross-examination about the instructions provided to Dr Chow.

8. [19]

   I am satisfied that this delinquency and plainly unreasonable behaviour in relation to the motion caused unnecessary delay to the proceedings and expense to the second defendant.

9. [20]

   I reject the submission of the plaintiff that her earlier conduct of the proceedings is not relevant to the exercise of the discretion to award costs of the notice of motion on an indemnity basis for a number of reasons. First, as I noted in my earlier judgment at [82], s 58 of the CPA provides that when the court makes any order for the management of the proceedings (and the order sought by the plaintiff on her motion was such an order), it must act in accordance with the dictates of justice. Relevant considerations include the degree to which a party has fulfilled its duties under s 56(3) and the degree of expedition with which that party has approached the proceedings, including the degree to which the party has been timely in its interlocutory activities. Those matters must be relevant to any costs order which results from the determination of any application for the management of the proceedings or any procedural order.

10. [21]

    Secondly, s 56(5) enables the court to take account of any failure to comply with sub-s (3) when exercising a discretion with respect to costs.

11. [22]

    Thirdly, s 98(1) of the CPA provides that costs are in the discretion of the Court and that the Court has full power to determine by whom and to what extent costs are to be paid. In the exercise of that discretion the matters listed in s 58(2)(b) must be relevant if they go to make up the dictates of justice in any given situation.

12. [23]

    I do not consider that anything said by Kirby P in Huntsman Chemical stands in the way of indemnity costs being awarded in the present case. Justice Kirby said nothing more than “it would be preferable” if a warning was given that an application for indemnity costs would be made. I am entirely satisfied that if such a warning had been given in the present case it would not have made any difference to the approach of the plaintiff and her legal advisors in pursuing the application. If the plaintiff is to suggest that it would have made a difference, there ought to have been evidence put on to resist the making of an indemnity costs order for that reason. No such evidence has been filed.

13. [24]

    It seems highly unlikely, of course, that the delinquency and plainly unreasonable conduct which I have found was that of the plaintiff personally. The proceedings are being conducted by lawyers who are likely to have taken procedural and interlocutory steps at their own initiative, albeit with the plaintiff’s instructions. Section 99 of the CPA enables the Court to make costs orders against legal practitioners in the situations set out in sub-s (1) of that section. I do not consider it appropriate to make such an order, particularly because the lawyers concerned have not been given a reasonable opportunity to be heard as sub-s(2) requires. The amended costs order that I make will only refer to the parties. Who should ultimately be liable is a matter for determination between the plaintiff and her legal advisors.

Conclusion

1. [25]

   Accordingly, I make the following order: