Young v Cooke (No 2)

1. [1]

   HIS HONOUR: By a further amended notice of motion, Mr Bill Cooke and Mrs Helena Cooke (“the defendants”) sought security for costs pursuant to r 50.8 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) (“the application”). The application was sought with respect to an appeal brought by Mr Gary Young (“the plaintiff”), pursuant to s 39(1) of the Local Court Act 2007 (NSW), from a decision of Bradd LCM in the Local Court of New South Wales on 18 June 2015 (“the decision”).

2. [2]

   The Local Court proceedings concerned a claim by the plaintiff against the defendants for damages for conversion or detinue of a dog named “Apache Jack”.

3. [3]

   On 3 May 2018, the Court gave judgment in relation to the application: Young v Cooke [2018] NSWSC 588 (“Young v Cooke No 1”).

4. [4]

   In Young v Cooke No 1, the Court reached the following overall conclusion as to “security for costs” at [93]-[97]:

5. [5]

   The Court reached the following conclusions as to “quantum” at [93]-[97]:

6. [6]

   The Court made the following directions (at [101]-[102]):

7. [7]

   On 10 May 2018, the legal representatives for the defendants provided short minutes of order, reflecting the judgment, as well as a proposed timetable as to the issues of costs. The proposed short minutes of order were as follows:

8. [8]

   The short minutes of order were dealt with administratively in Chambers, with orders being made on 15 May 2018.

9. [9]

   As to the issue of costs, the legal representatives for the defendants sought that the issue of costs be decided on the papers. The proposed timetable was provided with the consent of the plaintiff and was as follows:

10. [10]

    On 15 May 2018, the proposed orders were made, save for an amendment to the dates, as follows:

11. [11]

    The defendants provided a short submission as to costs on 25 May 2018. They are short and are extracted below:

12. [12]

    On 4 June 2018, following the absence of receipt of a submission in reply, a communication was sent to the plaintiff requesting an indication as to whether any submission was to be produced and provided to the Court.

13. [13]

    That same day, the plaintiff sent a communication to the Court that contended the provision of submissions “would be an exercise in futility”. (The plaintiff, without legal representation by this stage, also utilised the communication to ventilate further frustrations as to his appeal that were for the most part inappropriate or otherwise not relevant to the issue of costs).

14. [14]

    On 5 May 2018, the following message was sent to the plaintiff from Chambers:

15. [15]

    On 15 June 2018, written submissions were provided by the plaintiff. Those submissions, for the most part, did not engage with the issues raised by the defendant’s application for costs. The submissions, in that respect, appear to primarily advance contentions with respect to “a right of appeal”. Notwithstanding the fact that the submissions provided by the plaintiff exceeded the scope of the direction of the Court, it may be accepted that the plaintiff opposed the application brought by the defendants, with respect to costs, and contends that is all the circumstances it is unfair.

16. [16]

    Two issues arise from the application brought by the defendant:

    1. (1)

       Whether it is appropriate to order costs follow the event in a successful security for costs application?

    2. (2)

       If there is a basis to order that costs follow, what is the authority to order it forthwith?

THE LEGISLATION

1. [17]

   The powers of the Court as to costs are set out in s 98 of the Civil Procedure Act 2005 (NSW) in the following terms:

2. [18]

   Part 42 of the UCPR sets out the rules with respect to costs. Rule 42.1 is extracted below:

3. [19]

   Specifically as to interlocutory proceedings, r 42.7 provides:

GENERAL PRINCIPLES

1. [20]

   Before turning to the question of costs in the context of the issues raised on the present application, I will address the general principles associated with costs orders.

2. [21]

   The general principles, with respect to costs orders, were set out in Moseley v AB (No 2) [2017] NSWSC 1812 at [65]-[79], extracted below:

Security for Costs

1. [22]

   The question of whether it is appropriate to order costs follow the event in a successful security for costs application was considered in G E Dal Pont, Law of Costs (Butterworths, 3rd ed, 2013) (at [28.61]) as follows:

2. [23]

   In Plyable Pty Ltd v Go Gecko (Franchise) Pty Ltd (No 2) [2016] QSC 256 (“Go Gecko”), Bond J observed (at [12]):

3. [24]

   In Lex Fitness Pty Ltd ATF Lex Family Trust v Australian Fitness Management Pty Ltd [2017] NSWSC 157 (“Lex Fitness”), Slattery J observed the following with respect to the successful defendant’s application for costs following an order for security for costs (at [70]-[73]):

4. [25]

   His Honour ultimately ordered the costs of the defendants’ motion for security will be the defendants’ costs in the cause (Lex Fitness at [74]).

5. [26]

   In MHG Plastic Industries Pty Ltd v Quality Assurance Services Pty Ltd [2002] FCA 821, Sackville J’s commentary on the question of the costs, in this respect, was limited to observing that as “the respondents have largely succeeded on their respective motions. I see no reason why costs should not follow the event” (at [38]). His Honour ordered that the applicant pay the first respondent’s costs of the motion for security.

6. [27]

   In Jazabas Pty Ltd v Haddad [2006] NSWSC 88, Simpson J made an order that the unsuccessful plaintiff pay the costs of successful defendants’ security for costs applications and that the costs and that such costs be paid forthwith (contrary to the default position in that jurisdiction that costs usually did not become payable until the conclusion of the proceedings, discussed under the next heading). Her Honour held (at [13]-[15]):

Costs payable forthwith

1. [28]

   Costs orders in relation to interlocutory applications are generally not to be paid until the conclusion of the proceedings “unless the court orders otherwise”: r 42.7 of the UCPR. However, the court may order that interlocutory costs be payable forthwith: Solarus Products v Vero Insurance (No 4) [2013] NSWSC 1012; Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564 (“Fiduciary No 1”) at [171]–[173]; Australian Securities and Investments Commission v Rich [2003] NSWSC 297. The question is one of time of enforcement of the costs order. The court must take into account whether the costs in question should be determined prior to the conclusion of litigation, or whether one occasion of enforcement of costs orders at the end of a case, with costs orders going different ways being set off, is preferable: Richards v Kadian (No 2) [2005] NSWCA 373 at [7].

2. [29]

   There are a number of circumstances in which the jurisdiction has been exercised in favour of defendants (Ritchie's New South Wales Civil Practice and Procedure under rule 42.7 at [42.7.40] sets out a list of circumstances in which the discretion has been exercised in favour of defendants. None of those appears to concern an order for security for costs), including where the decision relates to the determination of a discrete or self-contained question: Richards v Kadian (No 2) at [6]-[7].

3. [30]

   It should also be noted, circumstances where an order has been refused include that the party is legally aided (Richards v Kadian (No 2), above, at [5]), or that the final outcome is sufficiently uncertain to warrant deferring costs to the trial judge, or that the costs of the interlocutory application should be costs in the cause: Megna v Marshall [2005] NSWSC 1326 at [27];. Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 (“Fiduciary No 2”).

4. [31]

   The decision in Fiduciary No 2 also concerned the jurisdiction of the Court to order that costs be payable forthwith and the relevant factors to be considered. Barrett J identified three relevant factors, which may be summarised as:

   1. (1)

      the subject matter of the interlocutory application is discrete and self-contained making it a suitable vehicle for a separate order for costs;

   2. (2)

      whether some of the conduct of the unsuccessful party to the motion may be seen as being unreasonable; and

   3. (3)

      that there is still some considerable distance to go in the litigation so that it may be appropriate that the successful party obtain the fruits of its costs order now.

5. [32]

   In Fiduciary No 2, Barrett J concluded “that the interlocutory hearing may be regarded as a separate and completed phase of the proceedings… – [which] represents a sufficient reason, in the interests of justice, for departing from the general rule reflected by Part 52A rule 9(1)” (at [18]). In doing so, his Honour placed weight upon, inter alia, the timing between the interlocutory proceedings at the final hearing as a basis for making costs payable forthwith.

6. [33]

   The principles derived from Fiduciary No 2 (noting that s 52A has been repealed), were considered relevant to the Court’s determination under r 42.7(2) and applied as such in Solarus Products v Vero Insurance (No 4) at [4]-[7].

7. [34]

   As to interlocutory applications for security for costs, in Jazabas Pty Ltd v Haddad, Simpson J observed: “the very circumstances that give rise to the order for security for costs also support an order that the costs incurred in pursuing that applicant should be paid before further costs are incurred” (at [14]). Her Honour also noted “[t]he very purpose of an order for security for costs is to protect defendants against the prospect of incurring significant costs which, if the defendants are successful, the plaintiffs are likely to be unable to meet” (at [13]).

CONSIDERATION

1. [35]

   With those general principles in mind, I now turn to the defendants’ application for an order for costs against the plaintiff.

2. [36]

   The plaintiff was represented in the hearing of the security for costs application but not on the application for costs. I consider that the plaintiff has received ample opportunity to be heard on the defendant’s application for costs. It is appropriate, in the circumstances, however, that consideration be given to the plaintiff’s opposition to an order for costs; not only as an outright opposition but in terms of an order for costs in the cause which, as discussed above, is an order often (but no invariably) made where a defendant is successful in seeking an order for security for costs. I have also considered whether costs should be reserved.

3. [37]

   The following circumstances, particular to the motion, should be noted:

   1. (1)

      the application for security for costs occurred prior to the determination of the appeal proceedings;

   2. (2)

      the appeal proceedings were commenced by the plaintiff on 15 May 2013;

   3. (3)

      the defendants’ were successful in obtaining for security for costs on 15 May 2018 but not, as I will discuss below, the full quantum of security sought;

   4. (4)

      the appeal proceedings are stayed until the security is provided;

   5. (5)

      the security, at the time of the defendants submissions on costs, is still to be provided;

   6. (6)

      having regard to the plaintiff’s submissions as to the present application it seems most likely the substantive appeal will remain stayed at least for the foreseeable future.

4. [38]

   I shall elaborate on the circumstances described at [37(3)] and [37(6)], below.

Quantum of Security for Costs

1. [39]

   A specific quantum sought by the defendants was not set out in the amended notice of motion filed 23 June 2016.

2. [40]

   In written submissions filed on 21 June 2016, the defendants sought “security for costs from the Plaintiff in the sum of $35,000.00 to be paid into the Court, or in such sum and on such terms as the Court thinks fit”.

3. [41]

   The defendants’ solicitor, Mr David Eric Thackeray, by his affidavit affirmed 16 June 2016, deposed the following:

   1. (1)

      On 13 April 2016, Garling J ordered, inter alia, that the plaintiff pay the defendants’ costs of the proceedings with respect to:

   2. (2)

      As to further costs, in light of the costs incurred on the motions and using the Court of Appeal proceedings as a guide, “I estimate that the further costs to be incurred up to and including a hearing in these proceedings is likely to be in the range of $15,000.00 to $22,500.00 plus GST. This estimated range is in addition to the costs incurred on the Motions to which the Plaintiff is liable following the order of Garling J on 13 April 2016”.

4. [42]

   On 3 October 2017, during the hearing, counsel for the defendants made the following submission as to quantum:

5. [43]

   The amount ordered for security for costs, for projected costs, was $8,000 (less than that sought by the defendants for future costs, even aside of any amount for past costs). It follows that the defendants were not successful in obtaining the quantum sought although the defendants did accept that the assessment of the same was “impressionistic”.

Prejudice to the defendants

1. [44]

   In circumstances where the Court may be concerned that making the costs of the security application costs in the cause will prejudice the defendants if the action does not proceed, the Court may find it appropriate to utilise its discretion to order the plaintiff pay the defendants’ costs (see Law of Costs at [28.61], and Adult Guardian v B (2002) 29 Fam LR 384; [2002] FamCA 874 at [93]-[94]).

2. [45]

   The judgment of the Family Court of Australia in Adult Guardian v B concerned an application brought by, inter alia, the Adult Guardian for an order that B provide security of costs of an appeal lodged by B. The observations of that Court, as to costs in the appeal (at [93]-[94]), are analogous to the present consideration as to whether or not an order for costs in the cause should be made, and are extracted below:

3. [46]

   Here, as I have observed, it is unlikely that the appeal will proceed because security for costs will not be paid by the plaintiff.

Conclusion: Costs of the Security for Costs Application

1. [47]

   The Court is required to exercise its discretion as to costs in the context of the operation of the presumption and in the particular circumstances of this case (see Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256 at [97]-[98] (per Campbell JA); EKO Investments Pty Limited v Austruc Constructions Ltd [2009] NSWSC 371 at [18]-[23]; Knight v Clifton [1971] Ch 700 at 725 (see also, Oshlack v Richmond River Council at [69] (McHugh J); and Ritter v Godfrey [1920] 2 KB 47). The purpose of an order for costs is to compensate the person in whose favour it is made, not to punish the person against whom the order is made: Allplastics Engineering Pty Ltd v Dornoch Ltd [2006] NSWCA 33 at [34].

2. [48]

   Here, there is a substantial likelihood that the security for costs ordered will not be paid and the appeal will, therefore, remain stayed. In the result the defendants will be prejudiced in circumstance where the Court has found the plaintiff’s appeal not reasonably arguable.

3. [49]

   In my view, this is a very substantial factor weighing in favour of the award of costs to the defendants.

4. [50]

   On balance I consider that, notwithstanding the defendants were not wholly successful in the quantum of costs sought, the appropriate order in the interest of justice is that the plaintiff pay the defendants costs of the amended motion.

Costs payable forthwith

1. [51]

   The motion concerned a discrete interlocutory application, namely, security for costs, to be determined separately and prior to any final proceeding or any final order as to costs.

2. [52]

   The defendants in the present proceedings contended that the proceedings would not be finalised for some time in circumstances where the security is still to be provided. The above findings suggest that security for costs may not be paid or certainly not paid in the near future. Further, as to the appeal proceedings, the plaintiff had only finalised his grounds of appeal by fifth iteration. In this respect, the defendants noted that the plaintiff commenced the proceedings against the defendants on 15 May 2013. Further, the appeal has been found not to be reasonably arguable.

3. [53]

   It is appropriate that costs be ordered to be paid forthwith.

CONCLUSION

1. [54]

   The central and overriding principle in determining an application for costs is that of doing justice to the parties in the particular circumstances of the case.

2. [55]

   The general rule expressed in r 42.1 does not fetter the discretion of the Court in that respect, provided it is recognised that the general rule is that costs will follow the event unless it appears to the Court that other orders should be made. Rule 42.7 does not fetter the discretion of the Court to make costs payable, with respect to an interlocutory application, before the conclusion of the proceedings.

3. [56]

   For the aforementioned reasons, I consider this is an appropriate matter for costs of the amended motion to be ordered in favour of the defendants, payable forthwith.

ORDER

1. [57]

   I make the following order:

   1. (1)

      The plaintiff shall pay the defendants’ ordinary costs of the further amended notice of motion filed on 3 October 2017, as agreed or assessed, payable forthwith.