EVERINGHAM v GOVERNMENT INSURANCE OFFICE OF NSW SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, HANDLEY and SHELLER JJA 13 April 1995, 13 April 1995 [1995] NSWCA 143 Motor vehicle accident — Damages — Pt39, r1A of District Court Rules — Costs Sheller JA Ex tempore The claimant, Dale Bradley Everingham, was the plaintiff and the opponent, Government Insurance Office, the defendant in two proceedings in the District Court to recover damages allegedly suffered by the claimant in two separate motor vehicle accidents. In the first of those proceedings, which was commenced in 1986, the claimant was granted legal aid to date from 18 November 1986. In the second, which was commenced in 1990, the claimant was refused legal aid. By consent both matters were heard together before Judge Madgwick QC in December 1993. The claimant succeeded in the second matter. In the first matter Judge Madgwick entered a verdict for the opponent without making specific reference to costs so that Pt39, rlA of the District Court Rules operated and costs followed the event of the action. In the second matter in which the claimant was successful, his Honour gave judgment for the claimant and allowed him costs on the highest scale. The effect of what his Honour said was that the claimant was to have his costs of those proceedings. On 4 November 1994, the claimant's cost were taxed in the matter in which he was successful. The opponent's costs in the other matter had not been taxed up to the end of 1994. On 9 November 1994 the opponent filed a notice of motion in the District Court seeking orders: 1. that the claimant be restrained from enforcing judgment for payment and costs ordered to be paid in the amount taxed; 2. that interest not run on the order; and 3. that the costs to which the claimant was entitled pursuant to such taxation be offset against costs to which the opponent was entitled on taxation in the 1986 proceedings and that one certificate of taxation issue for the excess in favour of the party entitled thereto. This application was supported by an affidavit of 17 November 1994 which voiced some apprehension that the opponent had about recovering costs from the claimant. On 19 November 1994 the notice of motion was heard by his Honour Judge Pain QC. There was some debate as to what part of the Act or District Court Rules his Honour was proceeding upon when hearing that application. Reference has been made in argument to Pt39, 134 but a reading of that rule would suggest that it was self executing. 2 UNREPORTED JUDGMENTS Reference has also been made to Pt31, r23 of the District Court Rules which enables application to be made by a judgment debtor to the court for an order that the judgment against him be set off against a judgment in his favour in the circumstances there described. His Honour may have proceeded under that rule to make the orders that he did. His reasons are brief and do not reveal the basis upon which he made his orders. We have been furnished with a copy of the transcript but that does not explain his Honour's orders. His Honour merely said that on the basis of the material before him and having heard the submissions made on behalf of the parties, he made orders 1, 2 and 3 as sought in the notice of motion and ordered the claimant to pay the costs of the opponent assessed in the sum of $750. By summons of 30 November 1994 the claimant seeks leave to appeal from Judge Pain's orders. That application is supported by a statement under Pt51, 137. The principal ground upon which the application for leave to appeal is made is the operation of s47(1) of the Legal Aid Commission Act 1979. The sub-section provides that where the court makes an order as to costs against a legally assisted person, subject to exceptions which are not here material, the legally assisted person shall not be liable for the payment of the whole or any part of those costs. It is said that the effect of Judge Madgwick's orders in December 1993 was to make an order as to costs against the claimant in the 1986 proceedings and in consequence, that the claimant is not liable for the payment of any part of those costs. Accordingly in the absence of liability by the claimant to pay any part of the costs in those proceedings Judge Pain could not make an order offsetting the amount of those costs against the amount of costs due to the claimant by the opponent in respect of the 1990 proceedings. In answer to that submission, the opponent argued that the form of the order made, namely that there be a verdict for the opponent, was not within the meaning of s47(1), an order as to costs against a legally assisted person, and s47(1) did not apply. The opponent relied upon what was said in this Court in Maher v Network Finance Ltd (1986) 4 NMR 694. In that case the Court held that a mortgagee could recover from the mortgagor the costs of proceedings under a contractual provision in the mortgage even though the mortgagor was legally aided in the proceedings. In my opinion it has no application to the present case. I observe, however, that in the course of his judgment McHugh JA said at 697 that s47 by its very terms made it plain that it was concerned only with costs which are the result of the making of an order by a court. (emphasis added) The claimant's argument should be accepted. In December 1993 Judge Madgwick made an order against the claimant as to the costs of the 1986 proceedings within the meaning of s47(1). Accordingly the claimant was not liable for the payment of any part of those costs. Judge Pain had no power to make an order which effectively interfered with the intended operation of s47(1). I think that this is a case in which leave to appeal should be granted. When the matter was before the Court on the previous occasion, the parties agreed that if the Court was prepared to grant leave in the matter it should proceed to hear and dispose of the appeal. The arguments that have been put for and against the grant of leave to appeal were also put in respect of the appeal. For reasons which I have given, in my opinion, the appeal should be allowed. Accordingly, I would propose the following orders that leave to appeal should be granted; that the appeal should be allowed; the orders made by Judge Pain should be set aside and in lieu thereof the application to the District Court should URJ EVERINGHAM v GOVERNMENT INSURANCE OFFICE OF NSW (Clarke JA) 3 be dismissed with costs; and the opponent should pay the claimant's costs of the application for leave to appeal and of the appeal. Clarke JA I agree. 5 Handley JA I agree. Clarke JA The orders of the Court will be as Sheller JA has announced. Leave to appeal is granted. 19 The appeal is allowed. The orders made by Judge Pain are set aside and in lieu thereof the application to the District Court is dismissed with costs. The opponent is to pay the claimant's costs of the application for leave to appeal and of the appeal. 15 Counsel for the appellant: D M Flaherty Solicitors for the appellant: Michael Murphy & Co Counsel for the respondent: C W Robinson 20 Solicitors for the respondent: R J Walters - Solicitor for GIO3040