SUPREME COURT OF NORFOLK ISLAND Smith v Edward (No 2) [2006] NFSC 5 COSTS – Whether costs orders should be refused because of lack of compulsory motor accident compensation scheme on Norfolk Island – Whether costs orders should be limited because of successful defendant's failure on issues of non-justiciability and absence of duty of care which were raised by it. Held: Reduced costs orders are appropriate. PATRICK THOMAS SMITH v JOHN GEORGE EDWARD and ADMINISTRATION OF NORFOLK ISLAND SC7 of 2004 LORRAINE RUTH SMITH v JOHN GEORGE EDWARD and ADMINISTRATION OF NORFOLK ISLAND SC8 of 2004 ANDREA LEANNE SMITH v JOHN GEORGE EDWARD and ADMINISTRATION OF NORFOLK ISLAND SC9 of 2004 WILCOX J 16 JUNE 2006 SYDNEY IN THE SUPREME COURT OF NORFOLK ISLAND SC7 of 2004 BETWEEN: PATRICK THOMAS SMITH PLAINTIFF AND: JOHN GEORGE EDWARD FIRST DEFENDANT ADMINISTRATION OF NORFOLK ISLAND SECOND DEFENDANT JUDGE: WILCOX J DATE OF ORDER: 16 JUNE 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. There be judgment for the plaintiff, Patrick Thomas Smith, against the first defendant, John George Edward, in the sum of $69,764.98. 2. The first defendant pay the costs of the plaintiff, such costs being taxed on the basis that matters SC7 of 2004, SC8 of 2004 and SC9 of 2004 were conducted throughout as a single proceeding. 3. There be judgment for the second defendant, The Administration of Norfolk Island, against the plaintiff. 4. The plaintiff pay two-thirds of the costs of the second defendant, such costs being taxed on the basis that matters SC7 of 2004, SC8 of 2004 and SC9 of 2004 were conducted throughout as a single proceeding. IN THE SUPREME COURT OF NORFOLK ISLAND SC8 of 2004 BETWEEN: LORRAINE RUTH SMITH PLAINTIFF AND: JOHN GEORGE EDWARD FIRST DEFENDANT ADMINISTRATION OF NORFOLK ISLAND SECOND DEFENDANT JUDGE: WILCOX J DATE OF ORDER: 16 JUNE 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. There be judgment for the plaintiff, Lorraine Ruth Smith, against the first defendant, John George Edward, in the sum of $254,325.78. 2. The first defendant pay the costs of the plaintiff, such costs being taxed on the basis that matters SC7 of 2004, SC8 of 2004 and SC9 of 2004 were conducted throughout as a single proceeding. 3. There be judgment for the second defendant, The Administration of Norfolk Island, against the plaintiff. 4. The plaintiff pay two-thirds of the costs of the second defendant, such costs being taxed on the basis that matters SC7 of 2004, SC8 of 2004 and SC9 of 2004 were conducted throughout as a single proceeding. IN THE SUPREME COURT OF NORFOLK ISLAND SC9 of 2004 BETWEEN: ANDREA LEANNE SMITH PLAINTIFF AND: JOHN GEORGE EDWARD FIRST DEFENDANT ADMINISTRATION OF NORFOLK ISLAND SECOND DEFENDANT JUDGE: WILCOX J DATE OF ORDER: 16 JUNE 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. There be judgment for the plaintiff, Andrea Leanne Smith, against the first defendant, John George Edward, in the sum of $17,747.22. 2. The first defendant pay the costs of the plaintiff, such costs being taxed on the basis that matters SC7 of 2004, SC8 of 2004 and SC9 of 2004 were conducted throughout as a single proceeding. 3. There be judgment for the second defendant, The Administration of Norfolk Island, against the plaintiff. 4. The plaintiff pay two-thirds of the costs of the second defendant, such costs being taxed on the basis that matters SC7 of 2004, SC8 of 2004 and SC9 of 2004 were conducted throughout as a single proceeding. IN THE SUPREME COURT OF NORFOLK ISLAND SC7 of 2004 BETWEEN: PATRICK THOMAS SMITH PLAINTIFF AND: JOHN GEORGE EDWARD FIRST DEFENDANT ADMINISTRATION OF NORFOLK ISLAND SECOND DEFENDANT IN THE SUPREME COURT NORFOLK ISLAND SC8 of 2004 BETWEEN: LORRAINE RUTH SMITH PLAINTIFF AND: JOHN GEORGE EDWARD FIRST DEFENDANT ADMINISTRATION OF NORFOLK ISLAND SECOND DEFENDANT IN THE SUPREME COURT OF NORFOLK ISLAND SC9 of 2004 BETWEEN: ANDREA LEANNE SMITH PLAINTIFF AND: JOHN GEORGE EDWARD FIRST DEFENDANT ADMINISTRATION OF NORFOLK ISLAND SECOND DEFENDANT JUDGE: WILCOX J DATE: 16 JUNE 2006 PLACE: SYDNEY REASONS FOR JUDGMENT ON COSTS WILCOX J: 1 I handed down Reasons for Judgment in this matter on 22 March 2006. I did not make any orders at that time, leaving it to the parties to consult and file draft orders. 2 The parties have agreed on the quantum of damages to be awarded in favour of each plaintiff against the first defendant, Mr Edward. They have also agreed that there should be an order that Mr Edward pay the costs incurred by each plaintiff. I propose to make orders that will give effect to that agreement. 3 At para 54 of my earlier Reasons, I said: 'There seems to be no reason why costs should not follow the event in relation to each claim. However, I express the hope that the Administration will give consideration to the possibility, in the special circumstances of this case, of not enforcing its costs orders against the plaintiffs.' 4 It appears my hope will be disappointed. In a written submission, the solicitors for the Administration press for costs orders in their client's favour, on the basis that their client has successfully resisted the claims of each of the plaintiffs. Counsel for the plaintiffs provided a written submission in which he argues there ought to be no costs order in favour of the second defendant or, alternatively, that any orders should be of limited extent. 5 The first reason advanced by counsel for the plaintiffs is that his clients 'were effectively forced to sue the second defendant because of the unsatisfactory legal regime prevailing on Norfolk Island'. Counsel cited my comment about the absence of a compulsory motor accident compensation scheme. The second defendant's solicitors responded to this statement by saying 'The legal regime existing on Norfolk Island is not a matter resting within the province of the Administration.' That statement is technically correct, in the sense that introduction of a compulsory motor accident compensation scheme would presumably require legislation to be enacted by the Norfolk Island Legislative Assembly. However, the Island's Executive Members constitute four of the nine members of the Assembly. It may be assumed that legislation for such a scheme, that was sponsored by the Executive Members, would have a reasonable prospect of passing the Assembly. The solicitors' 'buck-passing' response is unattractive. I adhere to the view, expressed in para 53 of my earlier Reasons, that this case 'vividly illustrates the desirability of the Administration and Legislative Assembly giving attention to the establishment' of a suitable scheme. 6 Having said that, I am clear that the absence of a compulsory motor accident compensation scheme does not constitute a proper ground for depriving the successful second defendant of its costs in these proceedings. I would be justified in taking that course only if I were satisfied there was something about the Administration's conduct of these cases that disqualified it from the usual order. 7 Counsel for the plaintiffs argued I should be so satisfied. He said: 'the principal argument advanced by the second defendant, from the outset, was that the claims against it were "non-justiciable" (see the original defence in each action). Through to the conclusion of the trial, the second defendant maintained that it did not owe a duty of care to the plaintiffs. The second defendant even attempted, during the course of the trial to withdraw a concession previously made that it had power to undertake roadworks and install footpaths and lighting on Taylors Road. It was found that a duty of care was owed, and that the critical question was whether the second defendant had breached that duty … The second defendant was therefore unsuccessful on its principal argument, that no duty of care was owed. In those circumstances, to reflect the partial success of the plaintiffs, a reduction in the costs otherwise to be awarded to the second defendant is appropriate. A reduction of one third would, it is submitted, be just.' 8 Counsel went on to refer to the matters discussed at two directions hearings, those of 13 December 2005 and 20 January 2006. He submits these hearings were substantially concerned with the second defendant's denial of the existence of a duty of care and its defence of non-justiciability. Counsel also referred to the second defendant's delivery of an amended defence, in December 2005, when it claimed, for the first time, that it did not have power to undertake roadworks on Taylors Road; a claim that was withdrawn two weeks before the trial. 9 The second defendant's response to this submission is as follows: 'The Administration's denial that it owed a duty of care does not justify a reduction of one third of the usual party/party costs order. The argument as to duty of care was, as is usually the case, one of law. The existence of a duty of care was always in issue.' 10 The Administration's denial of the existence of a duty of care was pressed at trial but unsuccessfully: see paras 32-38 of my earlier Reasons. Although the issue was handled in a sensible and expeditious way by Mr Garling SC at the trial, it is undoubtedly the fact that the Administration's denial of the existence of a duty of care, and its ludicrous claim that it had no power to effect roadworks in Taylors Road, put the plaintiffs to extra expense in preparing for trial. The Administration's position on these matters complicated and extended the directions hearings on 13 December 2005 and 20 January 2006. But for the dispute between the parties concerning the pleading of these claims and the failure of the Administration to produce requested documents germane to them, it might have been possible for one or both of those directions hearing to be avoided; the other debated matters might well have been resolved by agreement. 11 Having regard to the whole of the circumstances, I think it is appropriate to reflect in costs the Administration's failure on the issues of existence of duty of care and justiciability of the claims. The raising of these issues by the Administration put the plaintiffs to expense they would not otherwise have needed to incur. 12 It would not be appropriate to make an order totally excluding recovery by the second defendant of its costs of attending the directions hearings of 13 December 2005 and 20 January 2006; other issues were dealt with on those occasions and I cannot be certain the directions hearings could have been avoided. However, I think the trouble and expense to which the second defendant put the plaintiff in relation to issues unsuccessfully raised by it justify the alternative course suggested by counsel for the plaintiff. Although I will make a general costs order in favour of the second defendant, this should be qualified by restricting recovery to two-thirds of the taxed costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate: Dated: 16 June 2006 Counsel for the Plaintiffs: Mr K Wilson SC Solicitor for the Plaintiffs: O'Reilly Lillicrap Solicitor for the First Defendant: Mr W Richards Counsel for the Second Defendant: Mr P Garling SC Solicitor for the Second Defendant: Phillips Fox Date of Judgment: 16 June 2006