New South Wales Court of Appeal CITATION: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): On the papers JUDGMENT DATE: 20 December 2006 JUDGMENT OF: Mason P; Hodgson JA; Tobias JA DECISION: Order (j) made by the Court on 18 October 2006 is to remain undisturbed and the plaintiff's notice of motion filed on 25 October 2006 is dismissed with costs. CATCHWORDS: COSTS – consequential orders – exercise of discretion by primary judge – reopening of argument – principles LEGISLATION CITED: Suitor's Fund Act 1951 Uniform Civil Procedure Rules 2005, Part 36 Rule 16 Autodesk Inc v Dyason [No.2] (1993) 176 CLR 300 DeL v Director-General, NSW Department of Community Services [No 2] (1997) 190 CLR 207 CASES CITED: Morgan v Johnson (1998) 44 NSWLR 578 Multiplex Constructions Pty Ltd v Irving [2005] NSWCA 1 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 Sydney City Council PARTIES: Layla Geftlick Ronali Pty Ltd t/as Tim Green Commercial\ Edremo Holdings Pty Ltd FILE NUMBER(S): CA 040866/05 Cl: G Laughton SC / G J Parker COUNSEL: Opp1: S C Campbell SC / G Walsh Opp2: S A Kerr / S E Gray Opp3: J E Sexton SC Cl: McCulloch & Buggy, Sydney SOLICITORS: Opp1: CMC Lawyers, Sydney Opp2: Wotton & Kearney, Sydney Opp3: Thompson Cooper Lawyers Pty Ltd IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40866/05 DC 4587/03 MASON P HODGSON JA TOBIAS JA Wednesday 20 December 2006 SYDNEY CITY COUNCIL v GEFTLICK & ORS (No.2) Judgment 1 THE COURT: On 18 October 2006 the court delivered judgment (the substantive judgment) in which it granted leave to appeal and allowed the appeal of the Sydney City Council (the Council) against orders made by his Honour Judge Hughes on 12 October 2005. It therefore set aside orders that the Council pay the costs of the plaintiff, Ronali Pty Ltd (Ronali) and Edremo Holdings Pty Ltd (Edremo) of the proceedings at first instance, and which involved an arbitration and a rehearing before the primary judge, all on an indemnity basis. 2 The essential basis upon which that order was made by his Honour was that the Council had failed to call a critical witness in the arbitration whose evidence would have resulted in judgment for the Council. In the absence of that witness being called, the plaintiff succeeded before the Arbitrator who awarded her damages in the sum of $39,501.89. 3 At the rehearing before the primary judge the Council called the witness in question as a consequence whereof his Honour found in favour of the Council and dismissed the plaintiff's proceedings. Consequential orders followed with respect to the cross-claims to which Ronali and Edremo were parties. 4 The Council applied to this Court for leave to appeal from the whole of the primary judge's decision. That application and the substantive appeal were heard concurrently. 5 The Council submitted on the appeal that the primary judge's discretion whereby it was ordered to pay the costs of all parties on an indemnity basis with respect to both the arbitration and the rehearing had miscarried for the reasons set out in [58] of the substantive judgment. 6 The Court accepted the Council's submission and determined (at [80]) that the primary judge's discretion to make the orders he did had miscarried in that first, he had gone too far in ordering the Council to pay the plaintiff's Ronali's and Edremo's costs of the action and cross-claims both in the arbitration and the re-hearing and, second, in ordering that those costs be paid on an indemnity basis. 7 However, in [82] of the substantive judgment it was accepted that it would have been within his Honour's discretion to have ordered the Council to pay the plaintiff's Ronali's and Edremo's costs with respect to the action and of the first, second and third cross-claims as and from the date upon which the Council sought a re-hearing, namely, 7 November 2004. However, because there was no basis upon which the principle adumbrated by this Court in Morgan v Johnson (1998) 44 NSWLR 578 upon which the primary judge had relied could, in the circumstances of the case, have justified his Honour's order so far as it related to the costs of the arbitration, the exercise of his discretion in ordering that those costs be paid by the Council had miscarried. So also had it miscarried in ordering that those costs be paid on an indemnity basis. 8 Having determined that the primary judge's exercise of his discretion had miscarried, the Court was required to re-exercise that discretion. At [94] of the substantive judgment it was noted that it was not in contest that the plaintiff would have failed before the Arbitrator had the missing witness' evidence been before him, in which event there would have been a verdict for the defendants. It was therefore considered that there was no reason why costs should not follow the event so that the plaintiff should be ordered to pay the Council's and Ronali's costs of the action in the arbitration on the ordinary basis. 9 On the other hand, the Court considered that the Council should be ordered to pay the plaintiff's and Ronali's costs of the action on and from 7 November 2004 on the ordinary basis as it was the Council's failure to call the relevant witness in the arbitration that led to the re-hearing and the costs incurred with respect thereto. The Court made orders accordingly. 10 At no time during the hearing of the appeal or in the written submissions was the question of the costs of the appeal raised and argued. The Court ordered that the plaintiff, Ronali and Edremo pay the Council's costs of the summons for leave to appeal and the appeal but to have with respect to the latter a certificate under the Suitor's Fund Act 1951, if otherwise qualified. In doing so, the court followed its usual practice of addressing and determining all issues, inclusive of costs. It is not the practice of the Court to entertain costs arrangements after judgment is delivered unless arguments to do this are made during the hearing or unless Calderbank issues touching the appeal itself arise. 11 It is in respect of that order that an application is now sought by the plaintiff supported by Ronali and Edremo, to have that order set aside and that in lieu thereof the Court should order that each party bear its or her own costs of the summons for leave to appeal and the appeal. 12 This application was made by notice of motion filed on behalf of the plaintiff on 25 October 2006 pursuant to Pt 36 r36.16(1) of the Uniform Civil Procedure Rules 2005 (the UCPR). That rule is in the following terms: "The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order." 13 The rule is applicable to the present case as the orders made by this Court on 18 October 2006 had not been entered before the notice of motion was filed and, in fact, have yet to be entered. The Registrar of the Court of Appeal confirmed this notwithstanding a submission by the Council to the contrary. 14 The notice of motion came before the Registrar on 27 November 2006 who, apparently, directed the plaintiff and the Council to file written submissions in support of their respective positions on the notice of motion which would then be determined by the Court on the papers. Written submissions have been filed by the plaintiff as the claimant in the notice of motion, Ronali and Edremo (being the second and third opponents to the motion) having appeared on 27 November 2006 and indicated that they each adopted the written submissions of the plaintiff. The Council has filed written submissions in reply to those of the plaintiff. 15 In her submissions, the plaintiff acknowledged that in Autodesk Inc v Dyason [No.2] (1993) 176 CLR 300 at 302, Mason CJ (albeit in dissent) observed that the jurisdiction to reopen a judgment and to grant a rehearing, although not confined to circumstances in which the applicant can show that, by accident or without fault on the applicant's part, he or she has not been heard, nevertheless the jurisdiction was required to be exercised with great caution having regard to the importance of the public interest in the finality of litigation. 16 The Chief Justice nevertheless observed that although the High Court in Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684 noted that generally speaking the power would not be exercised unless the applicant can show that by accident without fault on his or her part the applicant has not been heard, nonetheless the jurisdiction was not excluded where a judgment had apparently miscarried for other reasons at least when the orders pronounced had not been perfected by the taking out of formal orders. 17 These principles were reiterated in the joint judgment of Toohey, Gaudron, McHugh, Gummow and Kirby JJ in DeL v Director-General, NSW Department of Community Services [No.2] (1997) 190 CLR 207 at 215 where their Honours said (omitting footnotes): "The power of this Court to reopen its judgments or orders is not in doubt. The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded on a misapprehension as to the facts or the law, where 'there is some matter calling for review' or where 'the interests of justice so require'. It has been said repeatedly that a heavy burden is cast upon the applicant for a reopening to show that such an exceptional course is required 'without fault on his part', i.e. without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, the Court seeks to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice." 18 These principles were reiterated by Ipp JA, with whom Santow JA and Pearlman AJA agreed, in Multiplex Constructions Pty Ltd v Irving [2005] NSWCA 1 at [15]-[24]. However, it should be noted that in that case the applicant to reopen sought to raise a totally new argument with respect to the merits of the appeal: on its facts, it is clearly distinguishable from the current application. 19 All parties in the present case are ad idem that the question of the costs of the appeal was not addressed by any counsel at the hearing of the leave application and the appeal itself. However, the plaintiff submitted that this was so as the focus of the parties at the hearing was upon the substance of the contest rather than the costs of the appeal (see DeL at 216) and that in any event, it was only sought to reopen that part of the Court's decision relating to the costs of the appeal and not the decision going to the merits of the appeal itself. 20 More to the point, the plaintiff submits that although the Council was successful in obtaining a grant of leave and securing an order that the appeal be allowed, in the re-exercise of its discretion in respect of the costs below, this Court did not accede fully to the relief sought by the Council, namely, that the plaintiff should pay its costs of the whole proceedings including not only the hearing before the Arbitrator but also the hearing before the primary judge. Rather, the Court recognised that the Council had breached the Morgan principle in its conduct of the proceedings below. Accordingly, the plaintiff retained a substantial benefit with respect to the costs at first instance insofar as this Court ordered the Council to pay those costs as and from 7 November 2004. 21 Accordingly, the outcome of the appeal so far as the plaintiff was concerned was that each party was partially successful. In such circumstances a more appropriate order on the summons for leave to appeal and the appeal should, so she submitted, be that each party pay its or her own costs. 22 The Council accepted that no party directed any submissions to the question of costs of the summons for leave to appeal or the substantive appeal at the hearing of the latter. Nevertheless, each of the parties had an opportunity to address on costs but, at least impliedly, chose not to upon the basis that the issue for costs was left to the Court's discretion. Accordingly, it was not a matter which was necessarily overlooked by the parties. 23 The Council then cited from the judgment of the Chief Justice in Autodesk to which we have referred in [15] above and submitted that the plaintiff had not discharged the onus of establishing that she was not heard on the question of costs by accident and without fault on her part. In any event, so it was submitted, the Council substantially succeeded on the appeal, so that costs should follow the event in the normal way. Accordingly, the plaintiff had not made out any case to displace the ordinary rule reflected in the order made by this Court with respect to the costs of the leave application and the appeal in its judgment of 18 October 2006. Furthermore, so it was submitted, the plaintiff would have the protection of a certificate under the Suitor's Fund Act 1951. 24 One of the difficulties of accepting the Council's submissions is that there is no question but that it contended on the appeal that not only should the primary judge's order requiring it to pay the costs of the plaintiff, Ronali and Edremo be set aside, but that those parties, or at least the plaintiff, should pay the Council's costs of the whole proceedings including those incurred in the arbitration as well as the rehearing before the primary judge. 25 However, the plaintiff submits, it may well be that the bulk of the costs which were incurred by the parties were incurred at the rehearing before the primary judge rather than at the arbitration. At the very least, they were no less than the costs of the arbitration. To that extent the result of this Court's orders were, in effect, a line ball. 26 In our opinion the plaintiff's application should be refused. The Council was substantially successful on the appeal and, in accordance with the ordinary rule that a successful appellant should get its costs of the appeal absent exceptional circumstances, the order for costs made in its favour on 18 October 2006 should not be disturbed. 27 That is not to say that there are not special cases where a successful appellant may not be the beneficiary of such an order. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue. Again, as already observed in [10] above, the existence of a Calderbank offer may justify departure from the usual costs order in favour of a successful appellant. 28 In the present case none of these factors are present. No separate issue upon which the Council was successful was involved. Further, the plaintiff could have protected herself by making a Calderbank offer to the Council but did not and she has in any event the benefit of a Suitor's Fund certificate. 29 There being no exceptional circumstances, Order (j) made by the Court on 18 October 2006 should remain undisturbed and the plaintiff's notice of motion filed on 25 October 2006 should be dismissed with costs. ********** 31/01/2007 - Decision date corrected on coversheet. - Paragraph(s) NA 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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