Industrial Relations Commission of New South Wales in Court Session CITATION : Dr Payne v The University of Sydney & Anor [2000] NSWIRComm 158 APPLICANT: Dr John Ernest Payne PARTIES : FIRST RESPONDENT: The University of Sydney SECOND RESPONDENT: Central Sydney Area Health Service FILE NUMBER: 4798 of 1997 CORAM: Schmidt J CATCHWORDS : Unfair Contract - further judgment re costs - costs order opposed - claim for indemnity costs order - claim for set off - costs on a party/party basis except as to one day of hearing - questions of set off should not be dealt with by order of the Court in these proceedings CASES CITED : AMP & Anor v Avis & Anor, Avis & Anor v AMP & Anor (unreported, Bauer, Peterson and Marks JJ, 18 December 1997) Anderson v Boner (1993) 52 IR 114 HEARING DATES: 05/25/2000 DATE OF JUDGMENT: 08/22/2000 APPLICANT: Mr Robert Wynn Jones, Solicitor SOLICITORS: Bradfield & Scott Solictors LEGAL REPRESENTATIVES: RESPONDENTS: Mr Andrew Cunningham, Solicitor SOLICITORS: Minter Ellison Lawyers JUDGMENT: - 7 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J DATE: 22 August 2000 MATTER NUMBER 4798 OF 1997 DR JOHN ERNEST PAYNE v THE UNIVERSITY OF SYDNEY & ANOR Application under s106 of the Industrial Relations Act 1996 JUDGMENT RE COSTS 1 Judgment in this matter was given on 5 July 2000. On p31, I observed: The final question is costs. The usual order would be that Dr Payne be required to bear the respondents' costs, as agreed or assessed. In the event that the parties are unable to agree on the question of costs, they have liberty to file any submissions which they wish to put as to costs, within 14 days of the date of this judgment. If that liberty is not exercised, the proceedings will conclude, without further order. 2 On 19 July the respondents filed submissions as to the costs orders sought, which were to this effect: '(a) the applicant pay their costs of and incidental to the motions that your Honour determined by the judgment of 5 July 2000, (b) those costs be paid on an indemnity basis, and (c) the respondents' obligations to make payments of money to the applicant pursuant to the agreement that your Honour declared to have been made be set off against the applicant's liability to pay the respondents' costs.' 3 In submissions filed for the applicant by Messrs Bradfield and Scott, Solicitors, who had been instructed to represent the applicant after the judgment had been given, all three orders were opposed. It was the applicant's primary position that there should be no order as to costs, that in the alternative, any costs order should be on a party-party basis and that there should be no order as to set off. 4 The Court undoubtedly has the power to make an indemnity costs order. In Anderson v Boner (1993) 52 IR 114 at 118 and AMP & Anor v Avis & Anor, Avis & Anor v AMP & Anor (Unreported, Bauer, Peterson and Marks JJ, 18 December 1997) reference was made by the Full Court to what Hill J had observed at first instance in Boner: 'There is little doubt that orders for costs on an indemnity basis still constitute exceptions to the general rule. While costs are, under the Act and the rules, within the absolute discretion of the Court, nevertheless the Court must exercise its discretion judicially. Many of the criteria upon which such discretion is exercised in cases involving indemnity costs are to be found in the cases to which Mr Shaw referred and in a number of other cases dealing with the matter. It is fair to say that generally speaking an order for costs on an indemnity basis is justified in a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings. It is unnecessary to traverse the cases in any detail; they demonstrate in one form or another special or usual circumstances which manifest themselves in improper or unmeritorious conduct by the unsuccessful party, as for example, in cases involving the maintenance of a vexatious claim or defence, the institution and/or maintenance of an action or defence which while not vexatious or involving an ulterior or collateral purpose, may, on a rational basis, be described as untenable or doomed to failure and cases where a party has conducted its case in wilful disregard of known facts or clearly established law. However, even where there are special or unusual circumstances attaching to a particular case it does not follow as of course that indemnity costs will be awarded. But it may be observed, and the authorities demonstrate, that the categories of special or unusual circumstances justifying indemnity costs are not closed; a too rigid or narrow approach can lead to error in the exercise of the discretion. (See generally on indemnity costs Singleton v Macquarie Broadcasting Holdings Ltd and Qantas Airways Ltd v Dillington (unreported, Supreme Court, 14 May 1987) and Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 33-35, per Kirby P, Gleeson CJ concurring).' 5 In AMP the Full Court went on to observe at pp71-72: 'In the course of determining an application for the awarding of indemnity costs Morling J in the Federal Court of Australia in Australian Federation of Consumer Organisations Inc. v Tobacco Institute of Australia Ltd (1991) 100 ALR 568 said (at 570): "I was referred to a number of cases in which orders for costs have been made on a solicitor and client or indemnity basis. Those orders have usually been made in circumstances where the conduct of the parties against whom the orders have been made has been deserving of criticism: see, for example, Degman Pty Ltd (in liq) v Wright No 2) (1983) NSWLR 354 (sic); Packer v Meagher (1984) 3 NSWLR 486; and Australian Guarantee Corporation Ltd v De Jager (1984) VR 483. The respondent fought these proceedings fiercely and left no stone unturned in resisting the application. But I do not think the conduct of its case is deserving of criticism of the kind referred to in the authorities relied upon by the applicant. Accordingly, the cases in which orders for costs have been made on a solicitor and client or indemnity basis by reason of the undeserving conduct of a litigant are distinguishable from the present case." The New South Wales Court of Appeal considered the appropriateness of making an order for the payment of indemnity costs on appeal in Huntsman Chemical Co (Australia) Ltd v International Pools (Australia) Ltd (1995) 36 NSWLR 242. The judgments of Kirby P and Mahoney JA (as they then were) suggest that a cautious approach should be adopted to the awarding of indemnity costs, especially on appeal. This is consistent with the approach taken by Kirby P in Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 (at 32-4). Despite certain decisions (referred to by Hill J in Boner v Anderson (No. 2) to the effect that there should be an increase tendency towards the awarding of indemnity costs, we consider that there is still in existence and operation a general approach to the effect that costs will be normally awarded on a party-party basis with the indemnity costs to be awarded in the more exceptional case where conduct of a party justifies it. Hill J referred to those matters this way: ". . . . a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings." The view of Morling J in the Tobacco Industry Case , consistently with our thinking, was that fierce opposition to the claim was insufficient to ground indemnity costs; something more is needed.' 6 This is the approach which must guide the exercise of the discretion to award indemnity costs. Here the claim for indemnity costs was advanced on the basis that: · The applicant prosecuted his case in wilful disregard of the facts known to him. · In his conduct of the proceedings he opportunistically multiplied allegation upon allegation, all of them ultimately found to be groundless, in a deliberate attempt to deny the agreement that he had made. · As a result, he grossly prolonged the hearing. · He made allegations of fraud that were not sustained, and which he must have known to be false. His allegations of serious misconduct against his former legal representatives have the same character. 7 Additionally there was, it was submitted, a strong public interest in litigation being brought to an end. It was submitted that indemnity costs would be properly awarded where litigation was pursued unreasonably in the light of settlement negotiations. 8 This approach was opposed for the applicant because it was submitted that the respondents were not entitled to appropriate and reprobate. The agreement which they had relied upon had included a payment of $20,000 to the applicant in respect of his costs. It followed that it had been agreed that there was to be no other order made as to costs and that the applicant was to be released in relation to the claim he had advanced. The costs order sought, so understood, was contrary to the deed upon which the respondents relied. 9 It was submitted for the respondents that the principle relied on was misstated, that it was the applicant who had denied the agreement and could not later seek to take advantage of one aspect of it, in circumstances which could not possibly have been in the parties' contemplation when the agreement was made. 10 I reject the applicant's arguments as to whether or not a costs order should be made in the proceedings, having in mind the terms of the deed. 11 As the earlier judgment noted, the proceedings before me were concerned with a notice of motion filed by the applicant seeking to proceed to have his application heard. The respondents were brought to the Court to defend that application, which they did by filing their own motion. While it was submitted that the respondents could have accepted the applicant's breach of the agreement and recovered damages, I cannot agree that they are not entitled to a costs order in these circumstances, having been brought to this Court by the applicant who sought to proceed with his claim, despite the agreement reached. While questions of whether litigation has been settled may in the usual case be resolved in a different jurisdiction, it was the applicant's course which brought the parties to this Court, in circumstances where it had to be concluded on the evidence that the litigation had been settled and the proceedings should therefore be stayed. I reject the argument that the motions so brought led to the parties incurring 'costs of and incidental to' the proceedings, as envisaged by the agreement between them. The applicant's course was plainly not contemplated by their agreement. 12 I do not, however, completely reject the submissions advanced by the applicant as to the basis of the order to be made. As I observed in the judgment, the applicant represented himself and as an unrepresented litigant was given various latitude by the Court. Accommodations were also made for him by the respondents. Both matters undoubtedly added to the costs incurred by the successful respondents. I accept entirely the submissions for the applicant that as an unrepresented litigant, he could not be expected to run his case as efficiently as an experienced counsel might have run the matter. Indeed, the respondents also accepted this. Nor do I take the view that the proceedings were simply vexatious. 13 Nevertheless, there were aspects of the applicant's approach which, on any view, were opportunistic, untenable and unnecessarily prolonged the hearing, as the respondents submitted, thereby unfairly adding to the costs then incurred in the proceedings. This was especially so in relation to the allegations advanced in relation to fraud and misrepresentation. They cannot simply be regarded as the applicant pursing the proceedings fiercely. Those circumstances are described in detail in the judgment of 5 July and I do not repeat them. They can be fairly characterised as demonstrating the special or unusual feature of the case, which make it unreasonable and unfair that the successful respondents be out of pocket as to the part at the least of the case. While an indemnity costs order is not designed to punish an unsuccessful litigant and is not to be made lightly, in appropriate circumstances as a matter of justice to the successful party, it must be made. I am satisfied that this is such a case. 14 In that context, I take the view that the proper course is to make an order that costs be borne on a party-party basis, other than the costs of one day of the hearing, which should be borne by the applicant on an indemnity basis. This is perhaps a conservative view as to the unnecessary prolongation of the hearing and the work associated with the difficulties in question, but one I regard as appropriate in all of the circumstances and consistent with the cautious approach which the authorities indicate should be adopted to such cases. In making that order, I do not nominate a particular day, but I should be understood as not intending that those indemnity costs reflect the costs of the last day of the hearing, which concluded prior to the luncheon adjournment. 15 As to the claim for set off, in my view even if it were within power it must be rejected, having in mind the conclusion reached in the judgment of 5 July and the orders there made. Undoubtedly, there will be questions which the parties need to discuss as to how the matters now outstanding between them should be attended to. Set off of the respective amounts which they owe each other, will no doubt be one of them. These proceedings were, however, not concerned with the enforcement of the agreement reached between the parties, but rather with questions of whether an agreement had been reached and if so, whether Dr Payne should be held to it, thereby precluding him from pressing the claim which the agreement had settled. I take the view that in these proceedings questions of set off should not be dealt with by order of the Court. Order 16 For all of these reasons, I order the applicant to pay the respondents' costs, as agreed or assessed, other than in respect of the respondents' costs for one day of the hearing, which costs the applicant should bear on an indemnity basis. ------------------------ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.