New South Wales Court of Appeal CITATION : KIAMA CITY COUNCIL v McMILLAN [2003] NSWCA 33 HEARING DATE(S) : 13 February 2003 JUDGMENT DATE : 28 February 2003 JUDGMENT OF : Mason P at 1; Giles JA at 68; Cripps AJA at 69 DECISION : Appeal upheld. See further par 67 CATCHWORDS : District Court - District Court Rules Pt 26 r6A - dismissal on plaintiff's application on terms - costs normally to be borne by plaintiff in accorance with Pt 39 r1A - trial judge's discretion as to costs miscarried. (ND) PARTIES : KIAMA CITY COUNCIL v Alison McMILLAN FILE NUMBER(S) : CA 40927/01 COUNSEL : Appellant: M McCulloch Respondent: J Glissan QC/ M Cleary SOLICITORS : Appellant: Phillips Fox Respondent: Keddies Solicitors LOWER COURT District Court JURISDICTION : LOWER COURT DC 4915/99 FILE NUMBER(S) : LOWER COURT Gamble ADCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40927 of 2001 DC 4915 of 1999 MASON P GILES JA CRIPPS AJA Friday 28 February 2003 KIAMA CITY COUNCIL v Alison McMILLAN JUDGMENT 1 MASON P: A claim and a cross-claim for leave to appeal were heard concurrently and in circumstances where the Court heard full argument as on an appeal. (The cross claim was withdrawn during the course of argument.) I shall refer to the parties as the plaintiff and the Council. 2 Three sets of proceedings were instituted by the plaintiff against the Council on 30 June 1999. Each related to a different accident said to have occurred when she fell in the Black Head Reserve at Gerroa. 3 The claims based upon accidents occurring in July 1996 and September 1996 were resolved in May 2000 by consent, with the entry of judgment for the defendant. These accidents remain relevant because of the Council's assertion in the continued proceedings that the plaintiff's injuries stemmed from these earlier (non-tortious) incidents. 4 These appellate proceedings arise out of the third action, which involves an accident originally pleaded to have occurred "on and/or about January 1998". The plaintiff claimed that the Council was negligent in failing to maintain the Reserve, more particularly in creating or permitting a hole to be dug into which she fell, injuring her hand. The plaintiff's case, in essence, was that the hole was created during the reconstruction of the car park giving access to the Reserve. 5 Following arbitration proceedings in 2000 that failed to resolve the dispute, the trial opened on 28 June 2001 before Gamble ADCJ. The trial proceeded on June 28 and 29, August 15, 16 and 17 and September 17. 6 On August 17 the plaintiff made an unsuccessful application to vacate the trial. The refusal of such application was the subject matter of her foreshadowed cross appeal. 7 The proceedings were dismissed on the plaintiff's application on 12 October 2001 in circumstances set out below. In this Court the Council complains about the costs order made at that time. 8 At the trial, issues as to liability and damages were strongly contested. In short, the Council disputed that any accident occurred, disputed that it occurred on or about the date alleged, and contended that the main (if not sole) causes of the plaintiff's injuries were the earlier accidents where liability was no longer alleged against the Council. The plaintiff's credibility was strongly challenged, partly by confronting her with histories given to medical practitioners that were quite inconsistent with the case she was advancing at trial. 9 The plaintiff had walked around the Reserve many times since the mid-1980s. 10 In her evidence in chief the plaintiff recounted her earlier falls on Council controlled land in July 1996 and September 1996. Her evidence tended to suggest that these caused no significant injury to her hand. She then gave her account of the incident giving rise to her third action. She said that she fell down a fence post hole and that to the best of her memory the accident occurred "around January 1998" (Tr 28.8.2001, p32). The plaintiff described the hole into which she fell as "distinctively a fence post hole... It was a perfectly round, rounded hole with a small elongation where a fence post had been removed" (p 42). Her leg went about two feet into the hole. She said that she promptly complained to the Council and was told by an unidentified employee that the matter would be fixed up straightaway. Questioned about "the first external medical treatment" sought after the fall, she said that it was a visit to a physiotherapist named Karen Wunch on 11 February 1998 (p47). She also gave evidence relevant to economic loss occurring in the first part of 1998. 11 At the start of the second day of the trial, the plaintiff gave evidence that she had "last night" dug out an old diary. She referred to markings made by her on 23 July 1998. Her counsel foreshadowed an application to amend the statement of claim to change the date of the accident to July 1998. Counsel for the Council initially indicated that the application would be opposed. However, following an adjournment of apparently some hours he withdrew his opposition to the amendment on the basis that the trial was not going to be completed that day and would be going over part-heard to a convenient date in August. The amendment was accordingly allowed (p 69). 12 The plaintiff then completed her evidence in chief and her cross-examination began. She gave some specific evidence about the location of the hole and she said it was "most definitely" her case that her foot went into a hole that was "caused or left after the removal of a fence post" (p 88). 13 Cross-examination of the plaintiff continued when the trial resumed on 15 August. She agreed that it was "crystal clear" that her evidence on oath was that the accident had occurred in July 1998 (Tr 15.8.2001, pp3-4). 14 The cross-examination then proceeded to confront the plaintiff with an inconsistent medical history she had given to her hand surgeon, Associate Professor Connolly. This included statements suggesting that the two earlier accidents were of much greater significance than suggested by the case she was propounding at trial. 15 Matters took another twist when the cross-examiner put to the plaintiff that in January 1998 she had actually told another doctor (Dr Endrey-Walker) that she had had another accident when she fell into a metre deep hole in January 1998. It was put to her - and she agreed - that this was indeed the truth (p46). The existence of this further (apparently non-tortious) accident obviously created additional difficulties for the plaintiff's case, which was now more or less pinned to an accident in July 1998. 16 Professor Connolly was interposed. He was called by the plaintiff and gave evidence of her treatment. In cross-examination he agreed that he had been given a history that included a fall in January 1998 which was (in the plaintiff's words) "the major one" (pp53, 60). He expressed views about the relative importance of such injury, in light of the earlier injuries reported to him. 17 The cross-examination of the plaintiff resumed and continued on 16 August 2001. It culminated in the plaintiff agreeing that her case was most definitely one based upon falling into a fence post hole deliberately created by someone. It was put to her that she had not fallen into a hole of that shape at any time in 1998, a proposition with which she disagreed. It was also put to her that the Council had done no work in the area in 1998, something which she also denied. She also confirmed that her case was based on an accident occurring later than January 1998, in fact in July 1998 (pp39-41). 18 A couple of further witnesses were called, dealing mainly with damages issues. The plaintiff then closed her case (p58). 19 The Council called as its first witness Mr Whitaker, who had been the manager of works in the late 1990s and was previously the Council works engineer. He gave evidence about work on a pine log barrier fence in the car park area pursuant to plans prepared in July 1998 (Ex 2). A coloured version of this plan was later tendered as Exhibit 6. 20 Mr Whitaker said that the work was done in November 1998 and that it would have included the drilling of fence holes to receive treated pine logs. To his knowledge and based on his inspection, fence holes from relocated fence posts were backfilled and compacted manually. This evidence was incomplete at the close of proceedings on Thursday 16 August. 21 At the commencement of proceedings the following day (17 August 2001) counsel for the plaintiff sought to have the hearing "vacated", with the Council paying the plaintiff's costs. This was in effect an application to discontinue the trial so that it could commence afresh, presumably before a different judge. In this Court, the parties were agreed that the application invoked s126(2) of the District Court Act 1973, which provides that: The Court may, before judgment in an action and if no verdict in the action has been entered, order, on sufficient cause being shown, that the hearing of the action be discontinued and that a new trial be had. 22 The application was based upon the production that day of 22 pages of Council timesheets that recorded work done by Council employees at the Reserve in November 1998. These documents fell within the scope of a subpoena for production that had been served by the plaintiff upon the Council 12 months earlier. Counsel for the plaintiff submitted that the plaintiff had been deprived of a fair trial in consequence of the failure to produce these documents at the time. She had, it was contended, been denied the opportunity of investigations which would have been likely to have flowed from these documents. It was submitted that "the whole presentation of the plaintiff's case may well have been quite different had these documents been produced". 23 It was not suggested that there was any default in the Council's response to the subpoena other than in this particular respect. Nor was it suggested that the omission of the timesheets had been deliberate. 24 Later that day an affidavit of the plaintiff's solicitor was read. It conceded that prior to the commencement of the hearing the defendant had produced on subpoena the single page plan of "proposed alterations to car park" dated 10 July 1998 that later became Exx 2 and 6. 25 The affidavit endeavoured to explain the steps the plaintiff would have undertaken had she been given earlier access to the timesheets. The information was necessarily speculative and did not really grapple with the point that the timesheets were congruent with the information previously conveyed in Exx 2 and 6. Nor did it explain how the timesheets engaged with the plaintiff's case as it had closed, namely that the relevant fall occurred in July 1998. 26 The solicitor said in oral evidence that when she saw the plan (Ex 2) and its colour photocopy (Ex 6) she appreciated that they tended to prove that the fence moved in its position at some time after July 1998 (Tr 17.08.01 p13). The plan had been shown to the plaintiff and discussed with her during the arbitration hearing in November 2000 (p14). 27 Acting Judge Gamble dismissed the plaintiff's application. She held in effect that the late production of the timesheets had not deprived the plaintiff of the capacity to have a fair trial. Referring to the solicitor's evidence about what steps might have been taken had the timesheets been produced before the trial, her Honour said: That material relates to dates after the accident in July 1998; to October to November 1998. It also gives the identity of the people employed by the Council who worked at the site during those dates. Mrs Griffiths [the plaintiff's solicitor] says that these people would have been interviewed, and I only use that as an example and perhaps the most specific example in the affidavit, of prejudice. My view in relation to that is that those people could have been identified and interviewed without the timesheets, so could many other people with better memories or records of dates than for instance Mr Stephen [a witness called by the plaintiff at the trial]. I do not regard the impact of the late receipt of the time sheets as so severe as to justify vacating or indeed adjourning the proceedings so I dismiss the application. 28 This order was challenged by the plaintiff in her cross-claim for leave to appeal, but that cross-claim was withdrawn during the hearing in this Court. Accordingly the plaintiff's summons for leave to cross appeal will be dismissed with costs. 29 Notwithstanding the abandonment in this Court of her challenge to the order made on 17 August 2001, the plaintiff seeks to maintain the position that significant and lasting prejudice was caused by the late production of the timesheets. Like Gamble ADCJ, I am entirely unpersuaded about this. I also observe that any adverse impact would have diminished as the trial progressed, especially since it was adjourned part heard to 17 September 2001. As will appear, there was never any impediment to the plaintiff reopening her case to address issues stemming from the late-produced timesheets. 30 In her judgment of 12 October 2001 referred to below, Acting Judge Gamble reiterated her view that the plaintiff had suffered little or no prejudice in not having the timesheets available earlier in the proceedings. 31 After the plaintiff's application to "vacate" the hearing was dismissed on 17 August Mr Whitaker completed his evidence. The proceedings were then adjourned to 17 September 2001. 32 When the hearing resumed that day the plaintiff was represented by senior counsel leading the barrister who had conducted the trial thus far. Mr Hennessy SC made three successive applications. The submissions he advanced in their support covered much the same ground as those advanced a month earlier in support of the unsuccessful application to "vacate" the hearing. 33 First, there was an application by notice of motion seeking the discontinuance of the hearing and a new trial pursuant to s126(2) of the District Court Act. (As such it repeated the earlier application to "vacate" the hearing, although it expressly cited s126(2) apparently for the first time.) This application was supported by a further affidavit and oral evidence of the plaintiff's solicitor. It traversed old ground based on the late production of the timesheets. It also referred to a recently located witness, Mr Johnson, who was said to be able to give evidence of direct relevance to the issue of liability. The linkage between the timesheets and the discovery of Mr Johnson was not explained. 34 Acting Judge Gamble dismissed this further application, observing that there was no evidence as to the nature of the evidence that Mr Johnson might give. 35 Mr Hennessy's second application was for leave to reopen the plaintiff's case (p12ff). The plaintiff wished to be able to call Mr Johnson and have the opportunity to administer interrogatories as to the work allegedly done in the area "in the winter of 1998". Mr Hennessy made it plain that a further adjournment would be required. The Council's barrister recognised that this was inevitable having regard to the limited time left that day. There was debate about whether or not Mr Johnson should be interposed at that stage, but nothing turns on this detail. 36 Acting Judge Gamble gave leave to the plaintiff to reopen by calling Mr Johnson and indicated that the plaintiff would be given leave to administer interrogatories (p16). 37 This generosity evoked from the plaintiff's senior counsel a further complaint about the judge's refusal to order a new trial, a submission which may have overstepped the line in canvassing her Honour's earlier rulings. 38 When the judge confirmed that the trial was going to proceed, senior counsel sought and obtained a short adjournment. On resumption, he applied for a "dismissal of the action with a view to the plaintiff instituting fresh proceedings" (p18). This application was made pursuant to Pt 26 r6A of the District Court Rules which provides: The Court, on the application of any party making a claim for relief in any proceedings, may, at any time but, in the case of trial with a jury, before verdict, make an order, on terms, for the dismissal of the proceedings so far as concerns any cause of action or the whole or any part of any claim for relief made by him. 39 The application was opposed and argument ensued. 40 The plaintiff correctly maintained that r6A has a different genesis from s126(2) and that it is the modified successor to the common law non-suit. The application was adjourned to 12 October 2001 for judgment, the parties being given leave to file written submissions in the meantime. Those submissions reveal common ground that r6A (like its counterparts in the Supreme Court and the Federal Court of Australia) is to be applied having regard to the principles discussed in SCI Operations Pty Ltd v Trade Practices Commission (1984) 53 ALR 283 and The Ritz Hotel Ltd v Charles of the Ritz Ltd (No 8) (1987) 12 IPR 75. 41 Gamble ADCJ gave judgment on 12 October 2001. She granted the plaintiff's application to dismiss the proceedings, on terms. She held that the relevant considerations were the length of the proceedings, the failure of the defendant to produce the timesheets (observing that this failure had not been deliberate and that it had been explained as an error or misjudgment on the defendant's part), prejudice suffered by the plaintiff and the defendant respectively, the plaintiff's intention to commence further proceedings, and the decision to permit reopening of the plaintiff's case. Her Honour observed that: It is not desirable for the Plaintiff to be compelled to litigate against her will. Therefore, the court would normally allow the Plaintiff to discontinue if she wants to, provided there is no injustice to the Defendant. The court must be careful to see that the Defendant is not deprived of some advantage already gained in the proceedings and should be ready to offer adequate protection to preserve such advantage. This does not mean that an application for dismissal must always be refused if the Defendant's rights cannot be protected completely. The decision to grant an application is always a matter for the discretion of the Court having regard to all relevant circumstances, including any injustice to any party involved in granting or refusing the application. 42 In her reasons for judgment Gamble ADCJ said this as to costs and orders: I note that when an order is made dismissing proceedings on the Plaintiff's application under the equivalent provision in the Supreme Court Rules (Part 34 Rule 6A) guidance as to an appropriate order for costs is provided by part 52A Rule 23(2). That Rule requires that the Plaintiff who is successful in an application for dismissal will pay the costs of the other party incurred in defendant the dismissed claim. I am unable to find an equivalent costs provision in the District Court Rules , however there is case law which indicates that a similar result may occur under the general law (see Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194, J T Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122 and Acacia Resources Ltd v Delta Gold NL (No 2) [(1999) 33 ACSR 144 at 158ff ) ] . These matters have influenced me in making the following orders. ORDERS The application to dismiss is granted and the proceedings are dismissed on the following terms: • The Plaintiff is not to recommence proceedings in the same or a related cause of action, including an application to extend the time in which to commence proceedings, without leave of the Court; • In the event of such an application, the Defendant has leave to re-open the question of costs of these proceedings; • the Plaintiff is to pay the Defendant's costs of this application. Judgment accordingly. 43 Shortly after reasons for judgment were handed down her Honour was asked to confirm that she had intended to make no order as to the costs of the hearing in general. She said (Tr 12.10.01 p1): No, not the hearing, no, my intention is that the parties bear their own costs – in fact I make no order as to costs in relation to the proceedings to date but my second term grants leave to the defendant to raise that issue should there be an application to recommence proceedings. That's my intention in that matter. 44 In this Court neither party challenges the order for dismissal or terms 1 and 3 upon which it was made. 45 The Council challenges her Honour's refusal to order the plaintiff to pay its costs of the substantive proceedings. Submissions in this Court analysed 46 As indicated by Gamble ADCJ, the District Court Rules make no specific provision in relation to the costs of proceedings dismissed pursuant to Pt 26 r6A (contrast Supreme Court Rules Pt 52A r23). 47 The claimant Council submits that the three cases cited by her Honour in her reasons dealing with costs were not in point. They deal with the quite different situation where, following interlocutory proceedings in which costs are ordered to be costs in the cause, neither party wishes to have a trial on the merits. This submission was not disputed before us and it should be accepted. Unlike the situation addressed in the three cases cited, the trial on the merits was well under way, and it was the plaintiff who was unilaterally seeking leave to abandon its prosecution, albeit with the stated intention of launching fresh proceedings. 48 Part 26 r6A was only available to the plaintiff, because it was she alone who was making a claim for relief in the proceedings in the District Court. Under r6A she was required to make application to the court and to submit to such terms as the court imposed. The Council was content not to oppose the application if appropriate terms, as to costs and otherwise, were imposed. But the Council never consented to the application. Nor did it abandon its position that it was entitled to see the proceedings brought to verdict, subject only to any order properly made on the plaintiff's application under the rule. 49 The Council further submits, correctly, that the District Court Act and Rules offered some guidance as to costs in the present situation. 50 Section 148B of the District Court Act relevantly provides that, subject to the rules, costs are within the discretion of the court. There is a large body of well known case law about the scope of this disretion. 51 Part 39 r1A of the Rules provides: Subject to the rules, the costs of any action, including the costs of any proceedings ancillary to the action, shall, except where otherwise ordered by the Court follow the event of the action. 52 It was common ground before us that a dismissal of proceedings pursuant to Pt 26 r6A meant that "the event of the action" was its resolution in favour of the defendant, thereby triggering the application of Pt 39 r1A, subject to any contrary order of the court (see definition of "dismiss" in Pt 1 r4). 53 Before us, senior counsel for the plaintiff submitted that the trial judge's decision to make no order as to the costs of the action constituted a generous but sustainable exercise of the discretion to otherwise order conferred by Pt 39 r1A. Counsel pointed to the judge's recognition (muted though it was) that the plaintiff had suffered some disadvantage by reason of the late production of the subpoenaed timesheets. Alternatively, if error were found and this Court came to exercise the discretion afresh, it was submitted that the Court would come to the same conclusion as the primary judge or perhaps even award the plaintiff the costs of the action. 54 The Council submitted to the contrary, arguing that her Honour erred in a number of respects and that in the event of the discretion being exercised afresh the only proper order as to the costs of the action should be in favour of the defendant. I agree and shall state in my own words why the claimant should succeed in this application. 55 There is a threshold issue as to leave to appeal in light of s127(2)(b) of the District Court Act (requiring leave for an appeal from a judgment or order as to costs only). I would grant such leave because the costs are considerable and the errors clear and significant. 56 I observe, firstly that the suggestion that Acting Judge Gamble intended to displace the application of Pt 39 r1A because of significant prejudice suffered by the plaintiff cannot be accepted. Nothing in her Honour's reasons supports such a reconstruction of events. 57 The Council's main submission is that her Honour's discretion miscarried, because of the impossibility of giving full effect to the apparent intent of the second condition or term. That intent was that the cost consequences stemming from the dismissal of the action on the plaintiff's application would be re-visited if and when the plaintiff instituted a further action, as she had foreshadowed. 58 Such intent did an injustice to the Council's position. In any event, her Honour's discretion miscarried for several reasons. 59 First, commencement of fresh proceedings lies wholly within the plaintiff's discretion, with the consequence that by doing nothing the plaintiff could ensure that there will be no order dealing with the costs of the discontinued action before Acting Judge Gamble. It is possible that her Honour intended this, but I think it unlikely. She seems to have thought that the plaintiff was committed in some way to commence fresh proceedings; or alternatively overlooked the fact that the plaintiff was not bound to bring fresh proceedings, with the consequence I have already indicated. 60 Secondly, the plaintiff's capacity to commence a fresh action would depend upon obtaining leave to overcome the time bar that had fallen by the date of the discontinuance. Absent such leave, the court in the second action would not get an opportunity to deal with the costs of the first action. In that situation too, the plaintiff would reap an unjustified benefit. 61 Thirdly, the court hearing a fresh action instituted by the plaintiff would have no jurisdiction or power to make an order for costs in relation to the earlier proceedings. The situation is quite different from a second hearing taking place within the same proceedings. 62 The action was dismissed on the plaintiff's application, in circumstances where any antecedent default on the defendant's part had little if any continuing adverse impact. Moreover, the application was made notwithstanding the trial judge's earlier ruling that she would permit the re-opening of the plaintiff's case (at least to the extent of calling Mr Johnson) and authorise the plaintiff to administer late interrogatories. The plaintiff was not shut out of seeking further indulgences in the original proceedings if they were a genuine response to the late production of the timesheets or even if they were not. 63 To me it is quite clear that the plaintiff's case had reached a very parlous state. What is more, the plaintiff was well aware of this. She had pinned her colours to the mast of an accident occurring in particular circumstances at a particular time. That case was looking distinctly troubled by gaps that had opened up in the plaintiff's credibility in consequence of inconsistent medical histories and the evidence that the only relevant construction work done on the Council's behalf was done in November 1998. 64 There can be cases where a plaintiff is certain but demonstrably wrong as to some aspect of his or her case and yet be able to be accepted as a credible witness in the substance of the claim. This plaintiff chose not to proceed down this path. And she did so at a time when she had the benefit of the advice of senior counsel. I am not inferring that she was wrong to seek discontinuance on the best terms available. It was a matter for her. But this was certainly not a matter that should have enured to the disadvantage of the defendant. 65 One infers that the plaintiff was anxious to have the opportunity to start afresh, with a reconstituted case and before a new judge. She was entitled to make the application under Pt 39 r1A which would give her that opportunity. But the application she ultimately succeeded in was one involving the "event of the pending action" being determined in favour of the defendant. Part 39 r1A was engaged in the Council's favour and nothing arose to displace it. By this I mean that it was not displaced in the reasoning of the primary judge and it is not displaced in the fresh determination to be made by this Court consequent upon finding error below. 66 The proceedings having been dismissed, "the event of the action" indicated that costs of the action were to be awarded to the defendant in accordance with Part 39 r1A unless some exceptional circumstance prevailed. There was no such circumstance. 67 Accordingly I propose the following orders: 1. On the Council's Summons grant leave to appeal. 2. Subject to the filing of a notice of appeal, appeal upheld. 3. Set aside terms 2 and 3 upon which Gamble ADCJ dismissed the proceedings in the District Court and in lieu thereof insert a term that the plaintiff pay the defendant's costs of the proceedings in the District Court, including the costs of any proceedings ancillary to the action. Confirm that there is to be judgment accordingly. 4. Respondent to pay the appellant's costs of the appeal and if qualified to have certificate under the Suitors' Fund Act 1951. 5. Plaintiff's summons seeking leave to cross-appeal dismissed with costs. 68 GILES JA: I agree with Mason P. 69 CRIPPS AJA: I agree with Mason P. ********** Last Modified: 03/25/2003 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.