New South Wales Court of Appeal CITATION: State of New South Wales v Stanley [2007] NSWCA 330 HEARING DATE(S): 6 Novemer 2007 JUDGMENT DATE: 26 November 2007 JUDGMENT OF: Beazley JA at 1; Tobias JA at 2; Hislop J at 3 DECISION: Appeal dismissed; appellant to pay the costs of the appeal, including the leave application. CATCHWORDS: COSTS - discretion. Crimes Act, 1900 LEGISLATION CITED: Civil Procedure Act, 2005 Uniform Civil Procedure Rules, 2005 Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 CASES CITED: Waters v PC Henderson (Australia) Pty Ltd (unreported, NSWCA, 6 July 1994) House v The King (1936) 55 CLR 499 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 PARTIES: State of New South Wales (Appellant) Stephen Stanley (Respondent) FILE NUMBER(S): CA 40422/06 COUNSEL: G. Butler (Appellant) M. Barko (Respondent) SOLICITORS: Crown Solicitor (Appellant) Gaitanis Lawyers (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): 347/04 LOWER COURT JUDICIAL OFFICER: Sorby DCJ LOWER COURT DATE OF DECISION: 26 May 2006 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40422/06 DC 347/04 BEAZLEY JA TOBIAS JA HISLOP J Monday 26 November 2007 STATE OF NEW SOUTH WALES v STEPHEN STANLEY Judgment 1 BEAZLEY JA: I agree with Hislop J. 2 TOBIAS JA: I agree with Hislop J. 3 HISLOP J: Introduction At about 11.50 pm on 8 February 2001 the respondent was standing on a footpath in Oatlands with two men who were at the time the subject of a police drug investigation. The respondent was not part of that investigation. The respondent and the other men were there confronted by police officers who pointed pistols at them and ordered them to get onto the ground. There then ensued various actions by police officers. Ultimately, the respondent was arrested at the scene at 12.30 am on 9 February 2001 and conveyed to the Parramatta Police Station where he arrived at 1.00 am. He was charged with goods in custody and released at 7.00 am on 9 February 2001. The charge of goods in custody was ultimately dismissed in the Local Court on 5 February 2002. 4 The respondent commenced proceedings in the District Court against the appellant which he alleged was vicariously liable for the actions of the police officers. In his further amended ordinary statement of claim filed on 1 February 2006 the respondent pleaded a claim for damages on a number of bases. He also pleaded an estoppel. 5 The District Court proceedings were heard by Sorby DCJ. The respondent's evidence took approximately two days, the appellant's approximately four days. Submissions took two part days. 6 His Honour divided the respondent's claim into six categories. The categories, and his Honour's conclusions in respect of them, were as follows. (i) Assault by police by virtue of police screaming at the [respondent] and pointing their firearms at the [respondent's] head and/or body His Honour found it was reasonable for the police to approach the three men with surprise and guns drawn to "stop, search and detain" under s 357E of the Crimes Act. (ii) Assault/battery and false imprisonment by the police by virtue of the [respondent] being physically forced to the ground, physically held on the ground, searched and handcuffed His Honour found the actions of forcing the [respondent] to get on the ground and the subsequent "pat down" search and handcuffing was reasonable in the circumstances and did not give rise to the torts of assault or battery. The pat down search, in the overall circumstances, was reasonable as it was appropriate to ascertain the identity of the [respondent] and then check whether or not he was carrying a weapon or anything relevant to the investigation. Such a search does not constitute assault. (iii) Assault/battery by the police by virtue of the further search of the [respondent] and false imprisonment by the police by virtue of the continued use of handcuffs on the [respondent] The [respondent] was in the company of men who were under surveillance and who had a known propensity for violence. In these circumstances, the grabbing of the [respondent], his handcuffing whilst on the ground and the brief search of his person by a police officer was reasonable and justified. There was no false imprisonment by police. (iv) The wrongful arrest of the [respondent] by the police for the alleged offence of "goods in custody" It was argued a search of the [respondent's] vehicle was illegal and the discovery of its contents unlawful and it was those contents which formed the basis of the goods in custody charge. His Honour held he was not estopped by the magistrate's finding that the search of the [respondent's] vehicle was illegal. He concluded the police held a reasonable suspicion that the [respondent's] vehicle, in the overall circumstances of the evening, might contain a prohibited drug, and the search was lawful. He concluded that in the circumstances the police had objective and reasonable grounds for suspicion as to the source of the money found in the briefcase, notwithstanding the [respondent's] explanation proffered at the time. He therefore found that there was no wrongful arrest of the [respondent] for the offence of goods in custody, and the arrest was carried out in good faith by the police in "the proper exercise of their duties." (v) The false imprisonment of the [respondent] by police by the renewed application of handcuffs, the transport of the [respondent] to Parramatta Police Station, and the detention of the [respondent] in custody before his release His Honour found that once the [respondent] was placed under arrest, it was quite proper and reasonable that the handcuffs be applied again for the journey to the police station. In his Honour's opinion, the time taken to carry out the charging procedures was excessive. The total period in custody of 6½ hours was excessive in the circumstances. Even allowing for time taken by police not in the actual investigation, the prescribed time of four hours was exceeded after deducting the time for the charging procedure. No extension of time was sought by warrant. His Honour found the [respondent] had made good his claim for false imprisonment for at least four hours of the time he was at the Parramatta Police Station. (vi) The malicious prosecution of the [respondent] by police in respect of the alleged offence of goods in custody His Honour found that the police, after receiving advice, did not honestly and reasonably believe that the laying of the goods in custody charge was not justified. Further, there was no evidence that the police officer who laid the charge acted with spite or ill-will towards the [respondent] or acted with indirect or improper motive. 7 His Honour concluded "The only part of the [respondent's] claim in which he was successful was his claim for false imprisonment for a period of four hours whilst at the Parramatta Police Station on 21.1.01 [sic]. The offence with which he was charged was relatively minor. The [respondent] was not targeted in that night's drug surveillance operation. The discovery of the briefcase was accidental, that is, it was not part of any planned police operation. The goods in custody offence carries a maximum of 6 months in gaol and/or a $550 fine. The [respondent] was forced to remain in police custody for 6½ hours, during part of which time 'investigations' were carried out, notwithstanding that the police were not targeting the [respondent] that night or at all. He was forced to remain in the dock. He was denied a solicitor. He was given one toilet break. His personal liberty was unnecessarily restrained for at least four hours of this length of time. In my view, his treatment at the police station given the factors set out above was high-handed and humiliating and unnecessarily long and I award $15,000 general damages." His Honour ordered that there be judgment for the respondent in the sum of $15,000 and that the appellant pay the respondent's costs of the trial. 8 When judgment was handed down, senior counsel for the appellant sought leave to apply on the question of costs. The costs argument was heard on 15 June 2006 when his Honour delivered an ex tempore judgment in which he confirmed the order that the appellant pay the respondent's costs of the trial. Discussion 9 The appellant has appealed, with leave, to this court from the judgment dated 15 June 2006. 10 There are four grounds of appeal. They are dealt with separately hereunder: 1. His Honour, Sorby DCJ, erred in law in failing to make an order apportioning costs between the respective causes of action 11 The appellant submitted that in the circumstances of this case some order other than that the costs follow the event should have been made because: (a) the proceedings involved six discrete causes of action; (b) his Honour made separate findings in respect of each cause of action as well as on the claim of "issue estoppel"; (c) the respondent was successful on only one issue; (d) that issue was not the dominant action in the proceedings, and the finding was not reliant upon whether or not the arrest of the respondent was lawful or not; (e) each of the causes of action was separable and distinguishable on the evidence; (f) the quantum of damages was very small; (g) the proceedings were protracted as the appellant was required to defend each action and call numerous witnesses; (h) the appellant's witnesses were serving police officers, former police officers and a chemist. 12 The respondent submitted he, being innocent of any criminal activity, was detained at gunpoint, physically restrained, detained, searched, handcuffed, transported to the police station and taken into custody for some 6½ hours. He had been successful in the Local Court where the magistrate, in dismissing the goods in custody charge against him, stated that the actions of the police were illegal. The appellant's notice of grounds of defence filed on 15 February 2005 was essentially formal and did not plead the substance of the appellant's defence. It was not until the first day of the trial that the appellant obtained leave to file an amended notice of grounds of defence, particularising in some detail the essence of its defence. The appellant's evidence was adduced to establish lawful justification for the police actions. The evidence given during the trial concerning the background to and the arrest and initial detention of the respondent was inextricably linked to the evidence concerning his transport to and imprisonment at Parramatta Police Station. The trial judge took all relevant matters into account when awarding costs. There is no error of principle such as to justify any intervention by this Court. 13 The relevant statutory provisions are s 98(1) of the Civil Procedure Act, 2005 and r 42.1 of the Uniform Civil Procedure Rules, 2005. 14 Section 98(1) provides relevantly: "(1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and… (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or…" 15 Rule 42.1 provides: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 16 "The commencing position is that costs follow the event so that a successful party is entitled to [the] costs" of the proceedings - Yazgi v Permanent Custodians Ltd (No. 2) [2007] NSWCA 306 at [24] - unless there is some competing fact which requires special consideration - Waters v PC Henderson (Australia) Pty Ltd (unreported, NSWCA, 6 July 1994). 17 When there are multiple issues litigated, the court may, in the exercise of its discretion, order that a successful party have part only of its costs. However, it does not necessarily follow that that is the appropriate order - Yazgi at [24]. 18 Whether an order contrary to the general rule that costs follow the event should be made will depend upon the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed. 19 As the exercise of that power is discretionary, an appeal will succeed only if it is shown that the exercise of discretion miscarried, in accordance with the principles in House v The King (1936) 55 CLR 499 at 504-505. 20 In House v The King it was held: "It must appear that some error has been made in exercising the discretion. If the Judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate Court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 21 As observed by this court in Waters, in determining appeals as to costs the court will not interfere unless there is a clear error of principle warranting intervention. 22 In the present case, his Honour referred in his costs judgment to the discretion conferred upon him by s 98 and the principle in Waters. No misdirection in law is apparent on the face of the judgment. 23 His Honour set out in his costs judgment the essence of the appellant's argument. It is not apparent on the face of that judgment that in so doing his Honour overlooked or mistook any relevant consideration or allowed irrelevant material to affect him. 24 The appellant ultimately submitted that his Honour's exercise of discretion was so unreasonable as to bespeak error of principle, albeit that error was not capable of being identified. 25 I do not agree. His Honour found a verdict for the respondent. The respondent, as the successful party, was entitled to his costs of the proceedings in the absence of special considerations. His Honour held there were no special considerations. As he observed: "While the [respondent's] claim was divided up into separate divisible parts and dealt with separately by me in my judgment, those divisible parts were to a large extent a matter of convenience because the [respondent's] claim arose out of a series of events that occurred over a very short period of time leading up to his spending some 6 hours plus in the Parramatta lock-up…This was a case in which the [respondent's] claim arose out of a series of incidents involving the [appellant] on the one night. In those circumstances, it seems to me, notwithstanding that the [respondent] was not successful in relation to some of the claims he brought against the police, he should have his costs." 26 It was not contested that the claims made were appropriately brought as the respondent was prima facie entitled to succeed on them subject to the appellant establishing a defence of lawful justification. Moreover, there was no evidence that the respondent had unnecessarily prolonged the trial or that the litigation was conducted in such a manner that costs would inevitably far exceed the damages recoverable. The respondent would have recovered substantial damages if wholly successful. In these circumstances, it was open to his Honour to exercise his discretion in the manner in which he did. The exercise of his discretion was not such as to bespeak error. Accordingly, the first ground of appeal fails. 2. His Honour, Sorby DCJ, failed to properly consider and apply s 60 of the Civil Procedure Act 2005 27 Section 60 of the Civil Procedure Act 2005 provides: "In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute." 28 His Honour referred to s 60 in his judgment on costs. The appellant submitted he had failed to direct himself in accordance with that section which, it was submitted, required that regard be had to the proportionality of costs. 29 Section 60 is contained in Div 1 of Pt 6 of the Civil Procedure Act 2005. Part 6 contains ss 56-89 of the Act. Division 1 of Pt 6 deals with the objectives of the Act and rules and generally how those objectives may be achieved. 30 The object of s 60 is to reduce the costs of proceedings by ensuring that appropriate procedural steps are taken in the preparation and conduct of proceedings to ensure the costs are proportionate to the importance and complexity of the subject matter in dispute. As such, it is to be distinguished from rules dealing with the liability for costs which are contained in Pt 7 Div 2 of the Act and which contain express powers to limit or apportion the costs awarded to the successful party. 31 Section 60 had no application to the exercise of the costs discretion in this case. It was not suggested there had been any failure by the respondent to comply with any directions or other orders of the court made pursuant to s 60 or that the costs were disproportionate to the importance and complexity of the subject matter in dispute. 32 Error by his Honour has not been demonstrated. 3. His Honour, Sorby DCJ, erred in law when exercising his discretion to award costs in his failure to take into consideration all of the circumstances of the proceedings 33 The considerations relevant to this ground are discussed under Ground 1. No fresh submissions were made by either party in this regard. 4. In the absence of the appellant serving a "Calderbank" offer, did his Honour, Sorby DCJ, err in his discretion not to make an apportionment of costs? 34 The service of a Calderbank letter does not automatically bring a different order as to costs. All of the circumstances must be considered - SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323. In my opinion, there is no obligation under the Act or rules which requires a party to serve a Calderbank letter. It is unnecessary to determine whether the failure to serve a Calderbank letter may, in particular circumstances, be a factor to be taken into account on the issue of costs as neither party served a Calderbank letter in this case, neither made any reference to Calderbank letters in their submissions to the trial judge and it would have been purely speculative to consider what may have been the outcome if either or both parties had served a Calderbank letter or letters. No error is disclosed in this regard. Conclusion 35 In my opinion, it has not been demonstrated that his Honour was in error in making the costs order which he did. Orders 36 I propose the following orders: 1. Appeal dismissed. 2. Appellant to pay the costs of the appeal, including the leave application. ********** 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.