New South Wales Court of Appeal CITATION : Brereton v Higgins [2004] NSWCA 48 HEARING DATE(S) : 1 March 2004 JUDGMENT DATE : 1 March 2004 JUDGMENT OF : Giles JA at 1; Stein AJA at 31; Campbell J at 33 DECISION : Leave to appeal refused. No order as to costs. CATCHWORDS : Costs - discontinuance on basis that each party paid his or her own costs - whether error of principle in the exercise of discretion - no question of principle. ND Brimaud v Honeysett Instant Print Pty Ltd, McLelland J, 19 September 1988, unreported; Covell Matthews & Partners v French Wools Ltd (1977) 2 All ER 591; CASES CITED : House v the King (1936) 55 CLR 499; McNamara v Shepherd, Bryson J, 15 March 1991, unreported; National Parks and Wildlife Service v Pierson (2002) 55 NSWLR 315; Nominal Defendant v Manning (2000) 55 NSWLR 139; PARTIES : Christine Brereton - Claimant Gordon Clement Higgins - Opponent FILE NUMBER(S) : CA 40433/03 COUNSEL : A Fernon - Claimant Opponent in person SOLICITORS : Sutherland & Tiirikainen, Camberra - Claimant LOWER COURT District Court JURISDICTION : LOWER COURT DC 129/01 FILE NUMBER(S) : LOWER COURT Gibson DCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40433/03 DC 129/01 GILES JA STEIN AJA CAMPBELL J Monday 1 March 2004 BRERETON v HIGGINS Judgment 1 GILES JA: We have come to the conclusion that leave to appeal should be refused. Normally on leave applications the reasons given when an application is refused are quite brief. In the circumstances of this case my own reasons, which I will now give, are perhaps longer than normal. It is I think appropriate in the rather unusual circumstances of this case. 2 The opponent was the plaintiff/cross-defendant and the claimant was the defendant/cross-claimant in proceedings in the District Court. On 6 May 2003 Gibson DCJ gave leave to discontinue the claim and the cross-claim and ordered that the parties each pay his or her own costs. This is an application for leave to appeal so far as her Honour declined to order that the opponent pay the claimant's costs of the claim. It has been heard as an appeal so that, if leave to appeal be granted, a further hearing will not be necessary. 3 The background can be briefly stated. 4 The opponent and the claimant lived in a de facto relationship from mid-1996 to mid 1999. Their parting was not amicable, and there was hostility which was manifested amongst other ways in litigation. 5 On 8 May 2001 the opponent brought proceedings against the claimant for an adjustment of property in his favour under the Property (Relationships) Act 1984 and for the return of some tools and equipment. In the amended statement of claim filed on 23 August 2001 the claim to return of the tools and equipment was deleted. The adjustment sought payment of $250,000, which may have been the jurisdictional limit or may have represented someone's genuine assessment. The opponent relied principally upon his contribution to the development, manufacture and marketing of an agricultural implement called the Echidna, as to which the claimant was said to have the intellectual property, but he also relied on financial contributions to the benefit of the claimant and his performance of maintenance and improvement activities on the claimant's properties. 6 On 21 September 2001 the claimant filed a cross-claim for an adjustment of property in her favour by payment of $50,000, relying on financial contributions to the benefit of the opponent and her performance of homemaker duties. 7 Both parties were legally represented in this litigation. They filed extensive affidavit evidence, and the judge described the litigation as combative. 8 On 30 October 2002 the opponent filed a notice of motion seeking leave to discontinue his claim on the basis that each party pay his or her own costs. The basis of his application was, put loosely, that the Echidna was not worth fighting over because it had been ascertained that the claimant did not have any intellectual property rights to it, and that the opponent had regained possession of his tools and equipment. The application was heard by O'Connor DCJ on 4 November 2002. It was dismissed, and directions were given for the filing of further evidence by both parties. 9 Gibson DCJ said in her reasons that she was not provided with a copy of O'Connor DCJ's judgment, and did not know what was put to his Honour and what his Honour considered to be relevant or irrelevant in making the order. It was common ground, however, that O'Connor DCJ had not been prepared to give leave to discontinue otherwise than on the basis that the opponent pay the claimant's costs of his claim. This apparently was not acceptable to the opponent, hence the proceedings continued. 10 The proceedings were set down for hearing before Gibson DCJ for three days commencing on 6 May 2003. By this time the opponent was unrepresented. The judge said that she had read the file. She was plainly, and rightly, concerned that the parties could be litigating disproportionately to what was at stake, particularly given the opponent's earlier application for leave to discontinue. Her inquiries of the parties and considerable debate brought the position that the opponent again applied for leave to discontinue on the basis that each party pay his or her own costs, and the claimant applied for leave to discontinue the cross-claim (whether or not on the basis that the opponent pay her costs of the cross-claim being something to which I will return). 11 It then became apparent that each party was prepared to discontinue in any event, with costs to be as determined by the judge. The essential question for the judge was costs. The judge referred to evidence that the claimant's costs to that time, apparently her solicitor/client costs, were approximately $90,000. The judge gave lengthy reasons, at the conclusion of which she made the order that each party pay his or her own costs. 12 It was accepted that the claimant had to show error of principle of the kind spoken of in House v The King (1936) 55 CLR 499 at 504-5. It is not easy to distil from the judge's reasons the grounds on which she made the order. In the concluding paragraph of her reasons she said that she did so "having regard to smallness of the claim, the history of the litigation and indeed all of the factors I have referred to". It is best, I think, to concentrate on the four respects in which the claimant submitted there was error of principle. 13 The claimant first submitted that the judge erred in exercising her discretion in a manner different from the exercise of discretion by O'Connor DCJ. She submitted that there had not been a material change in circumstances from the time of the application dismissed by O'Connor DCJ, and that the only exercise of discretion open to her Honour was to require that the opponent pay the claimant's costs. 14 In her reasons the judge noted that O'Connor DCJ's order was interlocutory, and described it as capable of variation. She said - "It is often said that when an application is brought afresh there should be significant additional material before the Court. This is sometimes referred to as the principle in Brimand v Honeysett [ Brimaud v Honeysett Instant Print Pty Ltd , McLelland J, 19 September 1988, unreported] an unreported decision of McClelland J which can be found at the back of the Supreme Court Practice. Clearly that is the case here, in the matter was listed before me for hearing and additional material, including the status of the cross-claim, which was not an order that was sought by the plaintiff, and which was not the subject of any formal notice of motion by the defendant, is also before me. In any event, the proceedings were vacated by agreement and stood over for hearing in this sittings, and I note that it was set down indeed for three days. By this stage the plaintiff was representing himself." 15 The claimant held back from submitting that the judge should have held that it was an abuse of process for the opponent to renew his application to discontinue on the basis that each party pay his or her own costs. The submissions were essentially directed to the absence of any change in circumstances of the kind described by her Honour. In the view that I take, it is not necessary to go into those submissions. 16 In the debate to which I have referred the judge put to counsel for the claimant that she "would have additional information that his Honour wouldn't have", and that she might not share the view taken by O'Connor DCJ and could vary his Honour's order. The response was, "Your Honour is certainly open to do that". Much later in the debate her Honour asked counsel for the claimant whether he submitted that she was bound by O'Connor DCJ's decision and could not look behind it, and the response was that "great credence has to be given to the views of his Honour Judge O'Connor". 17 There was an immediate difficulty in that counsel was unable to provide her Honour with a copy of the judgment of O'Connor DCJ, which made it difficult to give credence to his views or to identify the material circumstances which lead his Honour to the order he made and thus any change in circumstances. The point is, however, that from these exchanges in the course of submissions it was acknowledged that her Honour was not obliged to follow the view taken by O'Connor DCJ. Indeed, it seems to me that it was acknowledged that there had been at least sufficient change in circumstances that the principles found in cases such as Nominal Defendant v Manning (2000) 15 NSWLR 139 and National Parks and Wildlife Service v Pierson (2002) 55 NSWLR 315 did not require more than the giving of credence to the views of O'Connor DCJ, those views not being fleshed out by availability of his Honour's reasons. 18 In those circumstances it seems to me that as a matter of discretion it would not be appropriate to grant leave to appeal from the judge's costs decision so far as complaint is sought to be made that her Honour departed from the earlier exercise of discretion. 19 The claimant secondly submitted that the judge took into account an irrelevant consideration in the reliance she placed on Pt 39A r 12 of the District Court Rules as a matter relevant to the exercise of her discretion. 20 The judge came to Pt 39A r 12 as one of what she called "three areas of the law that are relevant". Under rule 12 as it then stood a plaintiff in an action which could have been brought in the Local Court, but was brought in the District Court, who recovered less than $10,000 was not entitled to costs unless the Court certified that there was a sufficient reason for bringing the action in the District Court. 21 The judge said that when the opponent brought the proceedings he had no idea what the Echidna was worth, and that in her view the proceedings were properly brought by the plaintiff in the District Court because his claim so far as it was concerned with the Echidna could well have been worth more than $10,000. She observed that it remained the fact that the proceedings were still alive when, as it had come to be appreciated, the opponent's claim was worth nothing. She referred to a number of cases in which costs in favour of one party or the other had not been ordered because the litigation was concerned with small amounts, in particular a decision of Bryson J in McNamara v Shepherd (15 March 1991, unreported) involving Pt 52 r 24 of the Supreme Court Rules. Her Honour said - "[I]t is a provision which is on all fours, so to speak, with Pt 39A r 12, and given the much lower threshold in Pt 39A r 12, it is my view that I ought to have regard to that as being an important factor when I am exercising my judicial discretion." 22 It is apparent from this that in some manner the judge did pay regard to Pt 39A r 12. The question is, in what way? 23 Her Honour had excluded any direct application of the rule to the opponent's claim when she had said that the claim was properly brought in the District Court. The context was cases in which the litigation was over a small amount. It seems to me that what her Honour was saying was that in cases of that kind the message to be found in Pt 39A r 12 and also in Pt 52 r 24 was that litigation over a small amount would commonly not bring a significant costs order and may well result in the parties each bearing their own costs. Further, in the context in which these remarks were made it seems to me that her Honour was classifying the litigation before her as of that nature. The opponent's claim had come down to a claim about nothing, and her Honour was of the view from perusal of the cross-claim and reading the affidavits that the cross-claim was "one of very small compass indeed". What she was doing was not applying Pt 39A r 12 as a rule governing the situation before her in any way, but using it as an illustration of a more general principle that, in exercising the discretion as to costs, litigation over a small amount could proper result in orders whereby each party was to pay its own costs, a principle she thought applicable because the litigation was over a small amount. 24 It was not submitted that if the reasons were to be understood in that way her Honour paid regard to an irrelevant consideration, and plainly enough the amount at stake is a relevant consideration when considering how to exercise the discretion as to costs. In the result, therefore, I am of the opinion that when the reasons are properly understood there is no substance in this second complaint, and that as to it also leave to appeal would not be appropriate. 25 The claimant then submitted that the judge took into account an irrelevant matter, because the issue before her was whether the claimant should have the costs of the opponent's claim, not how the costs of the cross-claim should fall, but she took into account her view earlier mentioned that the cross-claim was in small compass. This, it was said, was an irrelevant consideration because whatever its relevance might have been to an order for the costs of the cross-claim it had no relevance to the costs of the claim. The submission related back and could be regarded as a facet of the complaint which I have last dealt with, and what I say applies also to it when so regarded. 26 We were taken to the transcript of the debate before her Honour. It was somewhat confusing on this amongst other aspects, but certainly at one point counsel for the claimant said fairly specifically that the claimant was not seeking an order in her favour for the costs of the cross-claim. That may not have been so clear elsewhere, and it appears not to have been made clear to the judge because her Honour's reasons show that she thought that the claimant sought an order for all the claimant's costs, apparently meaning the costs of the cross-claim as well as the costs of the opponent's claim. 27 Given what her Honour thought she was deciding, she did not take into account an irrelevant matter. If the question was the costs of the whole of the proceedings including the cross-claim, it would be relevant to take into account the substance and magnitude of the cross-claim, as perceived on a prima facie basis in the way the debate proceeded before her Honour. 28 What is the result if her Honour misperceived what she was deciding? The claimant cannot complain so far as her Honour did not order the opponent to pay her costs of the cross-claim, and the claimant does not complain of that. When considering whether leave should be given it is I think appropriate to ask whether it would have made any difference had the judge focussed on the costs of the claim, to the exclusion of the costs of the cross-claim. It seems to me that it would not. It was common ground, indeed it was something of which the claimant made a point, that the costs attributable to the cross-claim as distinct from the claim were minimal. It seems to me that her Honour's reasoning equally applied if the only matter in issue was the costs of the claim. There was a misunderstanding, it seems, between the claimant's position as outlined in the debate before her Honour and her Honour's perception of that position. But I do not think that, had her Honour concentrated solely on the costs of the claim, the result would have been any different on the reasoning which her Honour employed. That it seems to me is a reason why on this matter again leave to appeal should not be granted. 29 Finally, the claimant submitted that her Honour erred in failing to pay regard to the principles found in cases such as Covell Matthews & Partners v French Wools Limited (1977) 2 All ER 591. That case was cited as the most relevant to the claimant's submission, and includes the statement that leave to discontinue will normally be granted if that can be done without injustice to the defendant, but that in doing so care should be taken to see that the defendant is not deprived of some advantage which the defendant has already gained in the litigation. 30 Covell Matthews & Partners v French Wools Limited was not a case at all like the present case, and while its general principle can be acknowledged there are many cases in which discontinuance has been permitted on terms as to costs other than that the discontinuing party pay the costs of the other party. It all depends on the facts, and there can be no doubt from reading the transcript and from what her Honour said that her Honour had in mind that she was exercising a discretion, that the discretion had to be exercised judicially, and that in doing so it was necessary to consider how best to do justice between the parties. I can see no indication that her Honour failed to recognise that fundamental principle. I do not regard this fourth submission as having any substance and for that reason leave would not be appropriate in relation to that matter. 31 Those were the four submissions helpfully put by counsel for the claimant. For the reasons I have given, none of them in my view warrants the grant of leave to appeal. I propose that leave be refused. The opponent has appeared unrepresented, and in those circumstances there should be no order as to costs. 32 STEIN AJA: I agree with the reasons of Giles JA and with the orders which he proposed. Of the four issues distilled by Mr Fernon, counsel for the claimant, as errors of principle made by her Honour, I agree that numbers 1 and 4 have not been established. Issue No. 2 (Pt 39A r 12) and issue No. 3 may be arguable, but it is tolerably clear that her Honour meant no more than that if the claim and the cross-claim were heard and determined, bearing in mind the Rule and the precedents referred to, it was likely that the result would be that each party would be ordered to pay his and her own costs. 33 Whether her Honour understood that the claimant was not seeking costs on the Discontinuance of her cross-claim or erroneously believed that she was, it is plain that she was well aware that only a small amount of costs were involved. Any confusion regarding the cross-claim did not in my opinion affect the ultimate orders which were made in the exercise of discretion. 34 CAMPBELL J: I agree with the reasons and orders proposed by Giles JA and with the supplementary reasons of Stein AJA. I have nothing to add. 35 GILES JA: The orders will be as I proposed. ********** Last Modified: 03/08/2004 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.