Reported Decision : 6 DCLR (NSW) 277 New South Wales District Court CITATION: WIELAND v NEWCASTLE CITY COUNCIL & ANOR [2008] NSWDC 4 HEARING DATE(S): 31 January 2008 EX TEMPORE JUDGMENT DATE : 5 February 2008 JURISDICTION: Civil JUDGMENT OF: Sidis DCJ 1.The consent orders entered against the first defendant Newcastle City Council on 12 February 2007 are amended to vary paragraph 2 to read The first defendant to pay one half of the plaintiffs' costs of the proceedings, including the costs of the mediation conducted before Acting Judge McGrowdie in January 2007 as agreed or assessed. DECISION: 2.The consent orders entered against the second defendant H P Planning Service Pty Ltd on 12 February 2007 are varied to amend paragraph 2 as follows The second defendant to pay one half of the plaintiffs' costs of the proceedings, including the costs of the mediation before Acting Judge McGrowdie in January 2007 up to and including 8 February 2007 and thereafter all of the plaintiff's costs as agreed or assessed. 3.The defendants are to pay the plaintiffs' costs of the motion. 4.The exhibits will be retained for 28 days. CATCHWORDS: Jurisdiction-power of court to interpret consent orders - costs of mediation - public policy Civil Procedure Act 2005 LEGISLATION CITED: Federal Court of Australia Act 1976 Supreme Court Act 1973 Darling Downs Investments Pty Ltd v Ellwood (1988) 80 ALR 203 CASES CITED: Innovative Agricultural Products P/L v Richard Crawshaw [1996] 758 FCA Mead v Allianz Australia Insurance Ltd [2007] NSWSC 500 Roberts v Gippsland Agriculture and Earthmoving Contracting Company P/L (1956) VLR 555 TEXTS CITED: Ritchie's Uniform Civil Procedure Paul McKenny WIELAND and Janine WIELAND PARTIES: NEWCASTLE CITY COUNCIL H P PLANNING SERVICE PTY LTD FILE NUMBER(S): 1510/06 COUNSEL: Plaintiffs - T Alexis SC Defendants - P R Cummings Plaintiffs - Rockliffs SOLICITORS: 1st Defendant - Moray & Agnew Newcastle 2nd Defendant - Colin Biggers & Paisley JUDGMENT 1 The plaintiffs, by motion filed on 18 December 2007, ask for relief in the nature of a declaration that the order for costs made against each of the defendants in the proceedings on 12 February 2007 extends to the costs of the mediation conducted before Acting Judge McGrowdie in January 2007. 2 The defendants were jointly represented on the argument and raised the following issues: 1. Whether the Court had jurisdiction to make a declaration. 2. Whether the Court had jurisdiction to take any step in the proceedings, having regard to the terms of the consent orders. 3. If it is considered that there is jurisdiction, the defendants challenged the plaintiffs' contention that the costs orders extended to the costs of the mediation on the basis that it was inappropriate that this Court deal with the issue on public policy grounds and on the basis that the facts and circumstances in which the disputes were resolved did not support the plaintiffs' arguments. Issue 1 - Jurisdiction 3 The plaintiffs did not press for declaratory relief but noted that paragraph 2 of the motion sought: Such other orders as the Court thinks fit. It is unnecessary therefore, in my view, to decide whether, in the current circumstances, the new regime provided by the Civil Procedure Act 2005 allows this Court to give relief in the nature of a declaration. Issue 2 – Effect of the consent orders 4 The plaintiffs relied upon s 73 of the Act to seek clarification of the costs orders entered against the defendant. 5 S 73.1 provides In any proceedings the Court: (a) Has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether and on what terms the proceedings have been compromised or settled between them, and (b) May make such orders as it considers appropriate to give effect to any such determination. 6 The defendants' response to this section was firstly that the Court has no jurisdiction to entertain the applications, the proceedings having been finalised one year ago. I was referred to the footnotes in Ritchie's Uniform Civil Procedure which were said to indicate that the section does not apply to the current situation. It was argued that it was more appropriate that the costs assessor be allowed to make a determination of what was covered by the costs order and for the plaintiffs, if necessary, to proceed in the Equity Division of the Supreme Court, or for the parties, if necessary, to dispute the cost assessor's determination. 7 I disagree with these arguments for the following reasons: 1. The section specifically confers upon the Court, jurisdiction to determine whether and on what terms proceedings have been compromised or settled and the power to make orders to give effect to its determination. 2. On the defendants' arguments, the section would have no work to do in any proceedings in which settlement arrangements had been entered into between the parties. Such an interpretation would entirely defeat the clear purpose and terms of the section. 3. The notes refer to the decision of the Full Court of the Federal Court of Australia in Darling Downs Investments Pty Limited v Ellwood (1988) 80 ALR 203 in relation to s 22 of the Federal Court of Australia Act 1976. This provision is similar in its terms to s 63 of the Supreme Court Act 1973. It is a provision which is much more general in its terminology than that of s 73 of the Civil Procedure Act . Nevertheless, it was decided in that case that it was within the jurisdiction and power of the trial Judge, who did not hear the action on its merits, to enforce the terms of settlement agreed between the parties. Pinkus and Einfeld JJ referred to a number of authorities, including a decision of the Victorian Court of Appeal in Roberts v Gippsland Agriculture and Earthmoving Contracting Company Pty Limited (1956) VLR 555, where Smith J said that the Victorian provision, which was similar in terms to s 22 of the Federal Court of Australia Act : …should be liberally construed with a view to effectuating the purpose to which it is directed of avoiding multiplicity of legal proceedings. In my view, s 73 of the Civil Procedure Act specifically addresses the situation that arose in Darling Downs and that which arises in the current case. It is no longer necessary that parties in that situation seek declarations in Equity. 4. If reinforcement of this view is required I refer the parties to s 56 of the Civil Procedure Act , which reads: 1.The overriding purpose of this Act and of rules of Court in their application in Court proceedings is to facilitate for the just quick and cheap resolution of the real issues in the proceedings. 2. The Court must seek to give effect to the overriding purpose when it exercises any power given to it under this Act and or by rules of Court and when it interprets any provision of this Act or any such rule. 5. The only basis, in my view, upon which the defendants' arguments could potentially have merit, would depend upon a finding that there are no longer proceedings before the Court, they having been finalised by the making of consent orders on 12 February 2007. In each case the proceedings were ordered to be discontinued. In each case I ordered by consent, notwithstanding that the proceedings had been discontinued, that they be transferred to the Sydney Registry of the District Court for the purpose of assessment of costs. Further, and most importantly, in each case the plaintiffs were given liberty to apply for interest on costs and disbursements paid in connection with the proceedings. Thus, it appears to me to be clear that the parties not only intended, but they understood that there remained work to be done to finalise the actions and that there remained proceedings before the Court. 8 I find therefore that the Court has both the jurisdiction and the power to deal with the issue now raised. Issue 3 – (1) Public policy 9 The defendants questioned whether it would be appropriate for the Court to intervene. I have already referred to ss 56 and 73 of the Civil Procedure Act which contained not only powers but also impose obligations upon the Court. The defendants' argument was that there was no dispute concerning the wording of the terms and there was no dispute concerning compliance with the terms. The dispute arose as to the way in which the terms were to be construed. It was said it was a matter for the assessor to determine whether the term costs of the proceedings included costs of the failed Court ordered and conducted mediation. Thus, it was said it was inappropriate for the Court to intervene. 10 The decision of Bergin J in Mead v Allianz Australia Insurance Limited [2007] NSWSC 500 involved a similar argument, namely whether the term costs of these proceedings in an offer of compromise made by the plaintiff included the costs of mediation. Bergin J was asked to indicate what was included in the costs so the assessor could assess the costs with greater precision. Bergin J proceeded to do so. In my view it is similarly appropriate in this case, having regard to my obligation to deliver a just, quick and cheap resolution of the issue. Issue 3 – (2) The merits of the application 11 The defendants pointed to s 28 of the Civil Procedure Act which deals with the costs of mediations. The defendants argued that s 28 contained an indication that an express order or an agreement between the parties concerning the costs of a mediation was required. This is a somewhat circular argument because the plaintiffs' position is that such an agreement was indeed reached. 12 Reference was also made by Bergin J in Mead to the statement of Lee J in Innovative Agricultural Products Pty Limited v Richard Crawshaw (1996) 758 FCA to the effect that, It is in the public interest that parties be encouraged to undertake mediation proceedings without being concerned what additional party and party costs will be involved. This of course was an opinion of Lee J and not a matter of public policy as contended by the defendant. To the contrary, had the current parties entered into the agreement normally put forward by the Law Society and by this Court in Court conducted mediations, they would have found a provision to the effect that, if the mediation did not result in settlement of their dispute, costs of the mediation would be costs in the cause. 13 Bergin J, at paragraph 11 did not, as contended by the defendants, endorse Lee's J views. Rather, she agreed that: 1. Courts should not place impediments in the path to mediation; 2. Courts should be careful not to create significant disincentives to mediation; and 3. it was important that parties themselves make clear what costs are to be paid when they agree on the settlement of their disputes. 14 I unreservedly agree with and adopt these points. Unfortunately the parties in this case have not addressed the issue of costs with the required degree of clarity. It is therefore necessary, as did Bergin J, to consider what took place between the parties to decide whether they regarded the mediation as part of the litigation process and whether they saw it as necessary to make a separate application for the costs of the mediation. 15 I am influenced in this case by two factors. 1. The second defendant's offer to meet the plaintiffs' costs of the mediation was accepted. An attempt to vary the agreement so reached was made by seeking payment of 25% of a private mediator's fees. This was rejected by the plaintiffs when it was pointed out that they were unable to contribute in the manner sought. I have seen no evidence to suggest that the agreement thus concluded was terminated when the mediation was conducted by a judicial officer, rather than a private mediator. At best, it could be said that the agreement was varied to provide for the payment of one half of those costs by the second defendant. 2. The mediation was a matter that was discussed in the course of the proceedings before the court on several occasions before the mediation took place in January 2007. The mediation was conducted by a judicial officer pursuant to an order of the Registrar and it was conducted on the Court's premises in Sydney. In my view it was clearly undertaken as part of the litigation process. Findings 16 I therefore determine the dispute between the parties as follows: 1. The Court has jurisdiction to deal with this matter. 2. The Court has power to deal with the matter. 3. It is appropriate to intervene to assist the costs assessor. 4. In so far as the second defendant is concerned, the express agreement reached leads to the conclusion that the term costs of the proceedings included the costs of the mediation. 5. Since the same wording was used in the orders involving the first defendant I have no reason to conclude that they conveyed any other meaning. 6. In so far as both defendants were concerned, the manner in which the mediation was conducted indicated that it was undertaken as part of the litigation process. Orders 1.The consent orders entered against the first defendant Newcastle City Council on 12 February 2007 are amended to vary paragraph 2 to read The first defendant to pay one half of the plaintiffs' costs of the proceedings, including the costs of the mediation conducted before Acting Judge McGrowdie in January 2007 as agreed or assessed. 2.The consent orders entered against the second defendant H P Planning Service Pty Ltd on 12 February 2007 are varied to amend paragraph 2 as follows The second defendant to pay one half of the plaintiffs' costs of the proceedings, including the costs of the mediation before Acting Judge McGrowdie in January 2007 up to and including 8 February 2007 and thereafter all of the plaintiff's costs as agreed or assessed. 3.The defendants are to pay the plaintiffs' costs of the motion. 4.The exhibits will be retained for 28 days. 17 At the suggestion of the defendants, I accept that it would be appropriate that Mr Peter D Scammell, costs assessor, when determining the costs of the proceedings payable by the defendants, make a separate determination as to the amount that is attributable to the costs of the plaintiffs at the mediation conference before Acting Judge McGrowdie in the event that there is further argument to be raised concerning the payment of those costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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