New South Wales Supreme Court CITATION : Galea v Commonwealth of Australia (No. 2) [2008] NSWSC 260 JUDGMENT DATE : 18 April 2008 JUDGMENT OF : Johnson J at 1 DECISION : The Defendant is to pay two-thirds of the Plaintiff's costs of the application. CATCHWORDS : LIMITATION OF ACTIONS - collision between HMAS Voyager and HMAS Melbourne - extension of time granted - costs of application - reasonableness of conduct of Defendant - just, quick and cheap resolution of real issues in proceedings - model litigant obligations of Defendant LEGISLATION CITED : Limitation Act 1969 Civil Procedure Act 2005 CATEGORY : Consequential orders Galea v Commonwealth of Australia [2008] NSWSC 44 Commonwealth of Australia v Smith [2005] NSWCA 478 Williams v Commonwealth of Australia [2007] NSWSC 1342 CASES CITED : Commonwealth of Australia v Lewis [2007] NSWCA 127 Commonwealth of Australia v Smith [2006] HCA Trans 242 Scott v Handley (1999) 58 ALD 373 Badraie v Commonwealth of Australia (2005) 195 FLR 119 Commonwealth of Australia v Smith [2007] NSWCA 168 TEXTS CITED : --- PARTIES : Joseph George Galea (Plaintiff) Commonwealth of Australia (Defendant) FILE NUMBER(S) : SC 20778/1997 COUNSEL : Mr G Melick SC; Ms K Sant (Plaintiff) Mr C Barry QC; Mr I McLachlan (Defendant) SOLICITORS : James Taylor & Co (Plaintiff) Australian Government Solicitor (Defendant) LOWER COURT DATE OF DECISION : --- LOWER COURT MEDIUM NEUTRAL CITATION : --- IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Johnson J 18 April 2008 20778/97 Joseph George Galea v Commonwealth of Australia (No. 2) JUDGMENT (on costs) 1 JOHNSON J: On 31 January 2008, I made an order pursuant to the Limitation Act 1969 extending the limitation period for the Plaintiff's cause of action until 14 August 1997. On the same day, I made an order that costs of the application be costs in the cause. On the application of counsel for the Plaintiff, the costs order was vacated to allow written submissions to be made on the question of costs. 2 On 5 February 2008, I published my reasons for extending the limitation period: Galea v Commonwealth of Australia [2008] NSWSC 44. Submissions of the Parties 3 Detailed written submissions have been made by the parties on the issue of costs. The Plaintiff's Submissions 4 In essence, the Plaintiff submits: (a) costs are in the discretion of the Court and there is no rule that binds a judge at first instance to not award costs to a successful applicant for extension of a limitation period: Commonwealth of Australia v Smith [2005] NSWCA 478 at [160] (" Commonwealth of Australia v Smith [2005]"); (b) the Plaintiff did not allow himself to get out of time - it was not his fault in any sense that the action was not brought within the limitation period - findings were made in his favour in relation to his lack of knowledge of all three matters under s.60I(1)(a): Williams v Commonwealth of Australia [2007] NSWSC 1342 at [2]-[5]; (c) the Defendant's opposition to the application was unreasonable - the test is not whether the Defendant had arguments which were capable of being articulated and properly presented, but whether opposing the application was unreasonable when the likely outcome was considered, bearing in mind the overriding purpose of the just, quick and cheap resolution of the real issues in dispute - that is to be judged by making a practical judgment as to the likely outcome of the application - the overwhelming likelihood that the Plaintiff would succeed in his application means that opposition to it was unreasonable so that an order for costs should be made in his favour - the Defendant joined issue on virtually every point (unsuccessfully) and advanced evidence and arguments on broad discretionary matters of a type which had been rejected in previous cases: Commonwealth of Australia v Smith [2005]; Williams v Commonwealth ; s.56 Civil Procedure Act 2005 ; (d) the conduct of the proceedings by the Defendant was unreasonable - it involved concentration on irrelevant or peripheral matters in such a way that the proceedings were protracted - objection was taken to the reports of Professor McFarlane with the belated indication that he was required for cross-examination - a significant part of the Defendant's evidence related to delay in the proceedings to which it had acquiesced - no reasonable concessions were made by the Defendant in the proceedings; (e) in all the circumstances, the Defendant should be ordered to pay the Plaintiff's costs of the application. 5 The Plaintiff submits, in the alternative, that if the Court concludes that the Defendant's decision to oppose the application was reasonable as a matter of practical judgment as to the likely outcome, and the conduct of the Defendant was at all times reasonable and did not result in any delay or unduly concentrate on irrelevant or peripheral matters, then, even though the Plaintiff has been successful on the application, costs should be costs in the cause. The Defendant's Submissions 6 In essence, the Defendant submits: (a) any costs application following the extension of a limitation period ought be considered in light of the decision of the Court of Appeal in Commonwealth of Australia v Lewis [2007] NSWCA 127; (b) if the behaviour of the Defendant was not unreasonable in opposing the application for an extension of time, the Plaintiff should pay the Defendant's costs; (c) care should be taken in approaching certain passages in the judgment of Santow JA in Commonwealth of Australia v Smith [2005] in light of comments made by the High Court of Australia in the course of refusing an application for special leave to appeal from the decision: Commonwealth of Australia v Smith [2006] HCA Trans 242; (d) the question is whether the Defendant's conduct in opposing the application was unreasonable - it is irrelevant to the consideration of that question that there have been other cases where the Defendant has opposed unsuccessfully applications to extend the limitation period; (e) the reasoning in Williams v Commonwealth of Australia is erroneous and ought not be followed - if a plaintiff knew that he had sustained a psychiatric injury and took no steps, then he would not have obtained an extension of time because he would fail to satisfy the threshold requirement of s.60I - there could never be a ground for exercising the discretion in relation to costs in his favour on a limitation application; (f) in this case, there was a live issue properly to be determined as to when the Plaintiff ought to have become aware that he suffered a psychiatric injury - if a defendant does not oppose the application, it cannot explore the state of mind of the plaintiff in the only way available for that to be done, namely, cross-examination; (g) there was an important issue of timing involved in the present application which was resolved in favour of the Plaintiff ( Galea v Commonwealth of Australia at [38]) - the fact that the Plaintiff succeeded on this issue does not mean that it was unreasonable for the Defendant to explore it by cross-examination of the Plaintiff and his witnesses; (h) the introduction of Professor McFarlane's reports into the litigation enabled the Plaintiff to place expert evidence before the Court on the normative issue - that evidence was objected to but allowed - the significant issue, however, was the history given by the Plaintiff upon which expert opinion was based, and aspects of this history were challenged in cross-examination; (i) there was an obvious inconsistency between the Plaintiff's affidavit and contemporaneous RAN documents concerning the important matter of his alcohol intake prior to the collision - there was a real issue in relation to the Plaintiff's alcohol use or abuse prior to the hearing because of this inconsistency - the issue was resolved in favour of the Plaintiff ( Galea v Commonwealth of Australia at [55]), but it does not follow that it was not a proper matter for the Defendant to test on the application; (j) the Court was satisfied that delay in the prosecution of proceedings should not preclude the exercise of discretion in favour of the Plaintiff ( Galea v Commonwealth of Australia at [71]) - in doing so, the Court relied upon inferences to be drawn from the failure of the Defendant to serve a report dated 3 March 1999 from Dr Jonathon Phillips - whether that inference outweighed the additional prejudice caused by the delay in the prosecution of the proceedings was a proper matter for determination; (k) the Plaintiff's submissions suggest that costs ought be used to punish the Defendant, contrary to the principles in Latoudis v Casey (1990) 170 CLR 534 at 543 and Ohn v Walton (1995) 36 NSWLR 77 at 79; (l) in all the circumstances, the appropriate order is that the Plaintiff pay the Defendant's costs of the application. 7 The Defendant submits, in the alternative, that costs should be costs in the cause. If this alternative submission is accepted, the Defendant contends that the costs associated with further submissions on costs since 31 January 2008 should be borne by the Plaintiff, regardless of what order the Court otherwise makes, given that the Plaintiff would not have secured a more favourable order than that contained in the original order of 31 January 2008. Decision 8 There is no rule that binds a judge to deny costs to a successful applicant for extension of a limitation period. A costs order on such an application is a matter of practice and procedure within the discretion of the judge: Commonwealth of Australia v Smith [2005] at [160]. 9 The Court has full power to determine by whom, to whom and to what extent costs are to be paid: s.98 Civil Procedure Act 2005. 10 It is pertinent to consider whether a successful applicant has allowed himself to get out of time and the reasonableness of the Respondent's opposition to the application: Commonwealth of Australia v Lewis at [94]. I approach the question of costs in this application with these principles in mind. 11 I have considered the submissions of the parties concerning the decision of Adams J in Williams v Commonwealth of Australia. With respect, I have difficulty with that part of his Honour's reasoning concerning a plaintiff allowing himself to get out of time. As I understand the principles considered in Commonwealth of Australia v Lewis, it may be taken that the present Plaintiff allowed himself to get out of time given that it was necessary for him to make application under the Limitation Act 1969. I do not see that any inquiry as to fault on the Plaintiff's part would assist on the question of costs. 12 That conclusion, however, is not decisive of the costs application. The remaining critical question involves an assessment of the reasonableness of the Defendant's approach to the application. 13 What conclusion ought be reached concerning the reasonableness of the Defendant's opposition to the present application? I accept the Plaintiff's submission that the Defendant took virtually every point on the present application. 14 It is correct that an issue arose from RAN documents concerning the Plaintiff's alcohol intake prior to his discharge in 1967. Further, there was a question concerning the date of the conversation between the Plaintiff and Ms Burr which bore upon the Plaintiff's ability to satisfy the requirements of s.60I(1)(a) of the Act. These matters were the subject of evidence from the Plaintiff and Ms Burr at the hearing and, in the result, I resolved these questions favourably to the Plaintiff. The hearing, however, was not confined to these issues. 15 There were significant aspects of the Defendant's approach to the application which were not reasonable. The Defendant objected to the tender of the reports of Professor McFarlane, but there was no indication that, if the reports were admitted, the Defendant wished to cross-examine Professor McFarlane. Thereafter, detailed written submissions were filed on behalf of the Plaintiff and the Defendant and, once again, the Defendant did not submit that, if the reports were admitted, an opportunity should be granted to cross-examine Professor McFarlane. 16 It was not until what was intended to be the third and last day of hearing (11 May 2007), when I elected to hear oral submissions in addition to the written submissions, that senior counsel for the Defendant indicated, for the first time, that if the reports of Professor McFarlane were admitted, then the Defendant wished to cross-examine him (T182). I indicated that I proposed to admit the reports into evidence (T184). It was then necessary for arrangements to be put in place for Professor McFarlane to give evidence by audio-visual link from Adelaide so that he could be cross-examined. When this took place on 25 May 2007, the cross-examination was relatively brief and did not, in my view, touch in any material way upon the issues falling for determination on the application. 17 As I indicated to senior counsel for the Defendant on 11 May 2007, the Defendant's position with respect to Professor McFarlane appeared to me to be relevant to the question of costs (T189). I referred to the model litigant obligations of the Defendant in this respect, and decisions including Scott v Handley (1999) 58 ALD 373 at [43]-[45] and Badraie v Commonwealth of Australia (2005) 195 FLR 119 at [94]. 18 In Commonwealth of Australia v Smith [2007] NSWCA 168 ("Commonwealth of Australia v Smith [2007]"), McColl JA (Studdert J agreeing) referred to the provisions of s.56(1) Civil Procedure Act 2005 and the model litigant principle at [120]-[124] in the context of the approach by the Commonwealth of Australia to applications for extension of limitation periods in claims by former HMAS Melbourne personnel. In my view, the observations of McColl JA are pertinent to this case as well on the question of costs. 19 A further feature of the present application which affects the reasonableness of the Defendant's position is the provision of extensive material in support of claimed prejudice where investigators have, in reality, conducted superficial enquiries only: Galea v Commonwealth of Australia at [94]. In addition, the Defendant had in its possession a report of Dr Phillips arising from an examination of the Plaintiff on 3 March 1999 which was not served upon the Plaintiff or relied upon by the Defendant on the present application: Galea v Commonwealth of Australia at [72]. In my view, this feature does not assist the Defendant on the question of costs, especially when the Defendant advanced a positive case on suggested prejudice, but did not seek to place before the Court a report which the Defendant had in its possession for some eight years prior to the hearing in March 2007. 20 Having considered the submissions of the parties concerning the discretionary question of costs, I am satisfied that the appropriate order, to accord with the justice of the case, involves an order that the Defendant pay two-thirds of the Plaintiff's costs of the application. There were some issues which the Defendant was entitled to explore on the application, but those matters are substantially outweighed by the unreasonable approach of the Defendant in other respects. The Defendant did not facilitate the just, quick and cheap resolution of the real issues in the proceedings: s.56(1) Civil Procedure Act 2005. 21 This conclusion is not intended to punish the Defendant. Rather, it is to give effect to s.56(1), (3) and (5) Civil Procedure Act 2005, the model litigant obligations of the Defendant and the need to make effective use of the Court's resources: Commonwealth of Australia v Smith [2007] at [121]. 22 As the Plaintiff has achieved a more favourable outcome than that contained in the original order of 31 January 2008, it is appropriate that the proposed order extend to the costs of the application generally, including the costs application itself. 23 I order that the Defendant pay two-thirds of the Plaintiff's costs of the application under the Limitation Act 1969. ********** 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. 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