Dr Bronte Douglass v Lawton Pty Limited (No 2) [2007] NSWCA 90

New South Wales Court of Appeal

CITATION: Dr Bronte Douglass v Lawton Pty Limited (No 2) [2007] NSWCA 90

HEARING DATE(S): 7 December 2006

JUDGMENT DATE: 18 April 2007

JUDGMENT OF: Beazley JA at 1; Hodgson JA at 31; Basten JA at 32

DECISION: The Summons for Leave to Appeal is dismissed with costs.

CATCHWORDS: Costs – application to amend defence on day of trial – matter adjourned as unable to be heard within allotted time – whether trial judge erred in making costs orders against defendant - Costs – primary purpose of costs not to punish unsuccessful party but to indemnify successful party – whether trial judge applied wrong principle in exercising discretion to order costs

CASES CITED: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

PARTIES: Dr Bronte Douglass (Appellant) Lawton Pty Limited (Respondent)

FILE NUMBER(S): CA 40161/06

COUNSEL: M Einfeld QC; M Sneddon (Appellant) D Higgs SC; F Assaf (Respondent)

SOLICITORS: Gadens (Appellant) Jackson Smith (Respondent)

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 2975/04

LOWER COURT JUDICIAL OFFICER: Gibson DCJ

LOWER COURT DATE OF DECISION: 5 December 2005

- 8 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40161/06

BEAZLEY JA HODGSON JA BASTEN JA

18 April 2007 DR BRONTE DOUGLASS v LAWTON PTY LIMITED Judgment (No 2) 1 BEAZLEY JA: This is a Summons for Leave to Appeal against an order made by her Honour Judge Gibson on 5 December 2005 in which her Honour ordered the appellant to pay the costs of the respondent thrown away by reason of an adjournment of the proceedings when first listed for hearing before her in the District Court. 2 The Summons for Leave to Appeal and, if granted, the appeal, have been heard concurrently. These proceedings are related to proceedings CA 40385/06. For that reason, it is convenient to call Dr Douglass the appellant and Lawton Pty Limited the respondent. 3 The hearing of the proceedings had been set down before her Honour for 4 days. On the first day of the hearing the appellant made an application to amend the defence. The proposed amendment alleged first that the area of the leased premises was less than 1,000m2 and that there had been a breach of the covenant as to quiet enjoyment. The proposed amendment reflected the contents of an expert's report, as well as the contents of an affidavit by the appellant, both being evidence which the appellant intended to adduce in the proceedings if the amendment was allowed. 4 There was considerable argument as to the proposed amendment up until the luncheon adjournment, including, at one stage, the question whether the appellant in fact needed to amend, or whether these assertions could be made notwithstanding that they had not been expressly raised in the defence. 5 The position which had been reached by the luncheon adjournment was that the appellant's counsel had accepted that a formal amendment was necessary. Her Honour directed the appellant to draft the amendment and to return after the luncheon adjournment. She indicated that it would be necessary to then determine whether or not the respondent would be prejudiced by the late amendment. She indicated that if there was prejudice, then there would be a question of whether the amendment would be allowed, or whether an adjournment would be necessary. 6 After lunch, senior counsel for the respondent informed the Court that the respondent opposed the proposed amendment because the draft alleged conclusions rather than the facts upon which those conclusions were based. Senior counsel also informed her Honour that the respondent was prejudiced, but would be more prejudiced if the matter was to be adjourned. He informed her Honour that "his clients" (referring to principals of the respondent) were elderly and not well and that the case "had been around for a long time". During the course of that discussion, her Honour made the comment "[w]hat about if there was a really big costs order?". 7 In a continuing long exchange with counsel, her Honour indicated that there were time constraints in her hearing the matter. She observed that the matter had been set down for four days and that most of the first day had been taken up with an argument about the amendment. She also indicated that she had in fact only three days of that week to deal with the matter and could have allocated some further time to it on the Monday and Tuesday of the following week, when she otherwise had a jury trial. 8 Her Honour expressed the view that she needed to balance the interests of both parties in determining what to do. She was concerned that the appellant's counsel, in the short time over the luncheon adjournment, had not been able to properly formulate the defence, the essence of which she considered "probably for the first time … [puts Nargol and the appellant] on some kind of secure footing". Her Honour said this had to be balanced against the prejudice to the respondent. 9 During the course of expressing her thinking on these matters, her Honour added: "[Counsel for the appellant] is going to have an uphill battle persuading me that he shouldn't be facing a very large costs order if I have to adjourn the case." 10 Her Honour articulated the claim which she understood the appellant wished to make in the amended defence. Counsel for the appellant agreed with her Honour's formulation. Her Honour then said: "If that's their argument, it's disgraceful that they're bringing it on the [day] of a trial and they should be punished firmly by a nasty costs order ." (Emphasis added) 11 Senior counsel for the respondent continued to resist the amendment, but then asked for a short adjournment. Her Honour granted that request, making the comment: "You can and you can have a serious talk to Mr Sneddon about what particularly painful costs order you would like in the event that he wants to persist with this amendment." (Emphasis added) 12 On resumption, senior counsel for the respondent indicated that he would try to meet the appellant's case overnight. Her Honour then referred to the length that the hearing would then take if the amendment was allowed. She offered to see whether another judge could hear the case. Having made enquiries of the list judge and obtaining the assessment of both parties that the case was probably a five day case and stating that she did not have the time to hear it, her Honour also indicated, in response to another application by the appellant for the case to proceed and to go over part heard, that the Court "did not proceed in that manner". 13 At that point, it was obvious that the matter was going to be adjourned and the question of costs was raised. Counsel for the appellant raised the question whether the costs order that her Honour was contemplating was costs thrown away by reason of the vacation of the hearing date, or whether it was costs thrown away by reason of the amendment. Her Honour indicated that the latter costs, at the least, would be ordered and that "that was the usual rule". Her Honour added: "What you must accept is that this case is not proceeding today in circumstances where this is because your client should have put this evidence on a very long time ago." 14 Counsel then asked whether her Honour had in mind a costs order for one day or four days and submitted that the costs should be limited to one day. Her Honour said: "… I think it's a matter for the assessing officer, the order that is routinely made in this Court is that the party whose late amendment has occasioned the adjournment should pay the costs thrown away by reason [of] vacating the hearing date, and you can fight out with the costs assessor whether that's one or four days. It's not my fault, not my problem." 15 Her Honour rejected an application to exercise her discretion to expressly limit the costs order to one day. 16 Her Honour then made the following orders: "On the application of the [appellant] for leave to amend the defence to include paragraph 19A to reflect the contents of the expert's report of 26 October and the affidavit of the [respondent] of 11 November 2005, such application granted on the following conditions: (a) hearing date be vacated, (b) [the appellant] to pay [the respondent's] costs occasioned by reason of the vacating of the hearing date and by reason of the amendment, such costs to be assessable forthwith." 17 The appellant contends that her Honour erred in the exercise of her discretion in ordering an adjournment of the proceedings on her own motion and in ordering the appellant to pay the costs in circumstances where: "3.1 neither the [appellant], nor the [respondent] requested nor wished, that the hearing be adjourned;