New South Wales Supreme Court CITATION : DPP (CTH) v. DIEZ [2005] NSWSC 306 HEARING DATE(S) : 31/03/05 JUDGMENT DATE : 15 April 2005 JURISDICTION : COMMON LAW JUDGMENT OF : Greg James J at 1 DECISION : The plaintiff is to pay the defendants costs on a party, party basis. CATCHWORDS : Costs - Proceeds of Crime - Defendant successful in having property excluded from forfeiture in discretion - consideration of matters to be taken into account on costs and on indemnity costs. LEGISLATION CITED : Proceeds of Crime Act 1987 (Cth) Bissett v Commonwealth DPP SC (Vic), 24 February 1993 (unreported) Oshlack v Richmond River Council (1998) 193 CLR 72 CASES CITED : The Queen v Dietrich (1992) 177 CLR 292 Latoudis v Casey (1990) 170 CLR 534 PARTIES : COMMONWEATH DIRECTOR OF PUBLIC PROSECUTIONS v. MAXIMILIANO DIEZ FILE NUMBER(S) : SC No 10408 of 2000 Plaintiff: T Muir COUNSEL : Defendant: G Jones Plaintiff: Commonwealth DPP SOLICITORS : Defendant: Freemans Solicitors LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION GREG JAMES, J. 15 APRIL 2005 No 10408 of 2000 COMMONWEATH DIRECTOR OF PUBLIC PROSECUTIONS v. MAXIMILIANO DIEZ JUDGMENT 1 HIS HONOUR: The Court of Appeal in Diez v DPP 2004 NSWCA 452, unanimously concluded that the order I had made on 28 October 2003, declining to order costs in favour of the defendant, Mr Diez, be set aside and the question of the costs of the proceeding be remitted for determination, in accordance with the reasons given by the Court of Appeal. The salient facts are set out by the Court of Appeal in that judgment. I need not repeat them here. 2 The relevant statutory provisions are also set out in that judgment, again I need not repeat them. In that judgment the court had regard, not only to the statutory provisions of the Proceeds of Crime Act 1987 (Cth), but also to the statutory and general basis for making costs orders against the Commonwealth. The Court noted that it was common ground that Section 101 (1) of the Act, provided for a discretion to award costs in the event that the conditions referred to in paragraph (a), (b), (c) of Section 101 (1) are satisfied. In the judgment of Santow JA, appears the following;- 47 That rather suggests that there is no exhaustive code at all under s101 of the Act. Rather there is simply a non-exclusive delineation of a set of circumstances in which the court has a discretion to order all, some, or no costs against the Commonwealth. Bissett then points to the strong likelihood that even if s101 were not exhaustive, nonetheless courts would in practice rarely if ever award costs against the Commonwealth when the conditions in s101 were not made out. 48 However, that would still leave the court free in an appropriate case, exceptional as it may be, to exercise a discretion to order costs against the Commonwealth. This is so, even if the applicant had been involved " in any way in the commission of the offence in respect of which the forfeiture order or restraining order were sought or made ". The breadth of the expression "involved in any way" militates against the court being denied the discretion it could otherwise exercise to award party and party costs to the successful party against the unsuccessful party, as for example where the successful applicant's involvement was wholly peripheral. This would, as with indemnity costs, reflect the wholly conventional position in civil litigation, here reflected in Part 52A r11 of the Supreme Court Rules . It provides that " if the court makes any order as to costs, the court shall, subject to this Part, order that the costs follow the event, except where it appears to the court that some other order should be made as to the whole or any part of the costs ". 49 In Oshlack v Richmond River Council (1998) 193 CLR 72 at 67 McHugh J analysed the basis for the rule noting that: "[67] …. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. [68] As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice ." 50 Hayne J in Bissett did not conclude that there was no general power to award costs left by s101. Rather he concluded that he did not consider that it should be exercised in favour of the applicant " if all that is demonstrated is that the property in question was lawfully acquired ". But it does not follow that it is inconceivable there would not be proper cases for a favourable exercise of discretion as I have earlier explained. 3 At paragraph 61, at the conclusion of his judgment, Justice Santow refers to the prospect of a party not being "precluded from seeking a favourable exercise under the Courts general power to order costs, though Section 101 (1) (c) be not satisfied." The circumstances may still, as Hayne J said in Bissett v Commonwealth DPP SC (Vic), 24 February 1993 (unreported), lead to an exercise of discretion against any costs being awarded against the Commonwealth. But that outcome is not preordained, so long as more is relied upon for such an order than "the bare fact of lawful acquisition" of the property freed. 4 It has been submitted that those portions of Justice Santow's judgment agreed to, as they were by the other members of the Court, amounted to a statement by that Court of Appeal, that it was necessary for the defendant to show exceptional circumstances, which would warrant the exercise of costs against the Commonwealth and that costs would rarely, if ever, be awarded against the Commonwealth. 5 Accepting, as I do the public purpose in such litigation is a consideration on costs issues, Oshlack v Richmond River Council (1998) 193 CLR 72, I do not see that, that consideration, considering what was said by Justice Santow, is such as would operate to require the successful defendant to show exceptional circumstances why there should be a costs order in his/her favour, even if the requirement in Section 101 (1) (c) has not been found to be established. 6 Whilst I do not regard the conduct of the plaintiff here in continuing to resist the application of the defendant as unmeritorious, deliberate or high handed, such as would appropriately lead to an indemnity costs order, I find here circumstances extending well beyond the bare fact of lawful acquisition, even though those circumstances are attended by some doubts I expressed as to the credibility generally of the defendant. The property was not only innocently acquired but it was obvious from well before my judgment that it would not be used by the applicant for the term of his natural life, because of his sentence, but that it would be used by his wife and daughters, who would be deprived of the opportunity of housing if an order were to be made in favour of the plaintiff. The only prospect the applicant, defendant had of defending the occupation of the premises by his wife and children, was to bring the application, and that of necessity, with competent legal assistance. Such matters as these are highly complex. Absent legal assistance, the defendant would have been unable to deal with the burden on him of defending both his innocently acquired property from forfeiture and the dispossession of his innocent family. In, The Queen v Dietrich (1992) 177 CLR 292, the High Court emphasised the necessity in complex, serious criminal proceedings of legal representation. The principles there apply similarly here. 7 In those circumstances the availability of legal costs orders to fund representation, is one of the considerations referred to by the High Court in Latoudis v Casey (1990) 170 CLR 534, and Oshlack (supra), and is an appropriate consideration for me to take into account here 8 Unless costs orders might be made, it would be almost impossible to obtain legal assistance to resist the prospect of forfeiture under the Act. Further it is the ordinary rule of civil litigation that costs follow the event. These matters have, as a matter of policy, loomed large in persuading me that an order should be made. 9 Not withstanding, however the oral offer in court of a payment of $40,000 and a written offer of payment of $45,000, I regard it as entirely proper for the Director to have continued to test the evidence and the provenance of the property, particularly where the concession was made not to challenge or attack evidence from overseas relating to the origin of the funds necessary to obtain the property. I do not consider a case made out for all, or indemnity costs. 10 I have therefore for those reasons determined that it is appropriate that the plaintiff pay the defendants costs on a party, party 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. 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