New South Wales Supreme Court CITATION : Leallee v The Commissioner of the NSW Department of Corrective Services [2009] NSWSC 518 19 December 2008 HEARING DATE(S) : 2 February 2009 17 March 2009 28 May 2009 JUDGMENT DATE : 28 May 2009 JUDGMENT OF : Price J at 1 EX TEMPORE JUDGMENT DATE : 28 May 2009 DECISION : Amended Summons dismissed. As to costs: 1. The plaintiff is to pay the defendant's costs in respect of the claim assessed on an ordinary basis. 2. Order 1 does not apply to the defendant's costs of hearing on 19 December 2008. 3. Each party is to pay its own costs of the hearing on 19 December 2008. CATCHWORDS : Costs - court's discretion as to costs - adjournment of hearing - declaratory relief no longer sought Civil Procedure Act 2005 s 98(1) LEGISLATION CITED : Public Sector Employment and Management Act 2002 s 86(2) Uniform Civil Procedure Rules Pt 42 r 42.1 CATEGORY : Procedural and other rulings Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Hagan v Waterhouse [No 2] (1992) 34 NSWLR 400 CASES CITED : Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 Perder Investments Pty Ltd v Elmer (1991) 31 FCR 201 Windsurfing International Inc v Petit & Anor [1987] AIPC 90-441 TEXTS CITED : Ritchies Uniform Civil Procedure 42.1.10 PARTIES : Ino Leallee The Commissioner of the NSW Department of Corrective Services FILE NUMBER(S) : SC 030100/08 COUNSEL : Mr S I J Prince (Defendant) SOLICITORS : Mr S Ryan (Plaintiff) Ms C Thomas (Plaintiff) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Price J 28 May 2009 030100/08 Ino Leallee v The Commissioner of the NSW Department of Corrective Services EXTEMPORE JUDGMENT 1 HIS HONOUR: The plaintiff's amended summons filed 28 August 2008 was dismissed this morning following confirmation by Mr Ryan, who appears for the plaintiff, that the declaratory relief was no longer sought. The argument has been confined to the issue of costs. Shortly stated Mr Ryan seeks an order for costs of the hearing on 19 December 2008 and the directions hearing on 1 December 2008. 2 The defendant contends that it is the successful party and is entitled to the usual order that costs follow the event. It is necessary, in order to consider these issues, to refer in some detail to the history of the proceedings. 3 By an amended summons filed 28 August 2008 Ino Leallee, the plaintiff, sought declaratory relief as follows: "That the NSW Department of Corrective Services sick leave policy is unlawful." 4 The plaintiff is a correctional officer employed in the Department of Correctional Services by the defendant. Whilst employed as a correctional officer (1st class), the plaintiff applied for a position as a senior correctional officer. On 27 February 2008, the plaintiff's temporary appointment in that position commencing 31 March 2008 was recommended and approved. On 28 March 2008, the plaintiff's temporary appointment was cancelled for the reason that the plaintiff "was in category 4 for his sick leave". The sick leave policy then in place with the Department provided shortly stated that an officer who was absent on more than 15 days or seven occasions in the 12-month period (excluding special circumstances sick leave) would be deemed to be within category 4. Sanctions which were imposed on officers falling within category 4 included "non-recommendation of transfer" and the cancellation of the temporary appointment was stated to have been effected to implement the Department's sick leave policy. 5 The proceedings came on for hearing before me on 19 December 2008. The plaintiff was represented by Mr S Ryan, solicitor, and the defendant by Mr B Adam of counsel. Written submissions had been forwarded to the court by each party. 6 The plaintiff sought to challenge the sick leave policy by submitting that it was unlawful. There were various bases for the challenge which included the submission that the effect of the non-recommendation of the transfer was that it prohibited the exercise of the statutory discretion in s 86(2) of the Public Sector Employment and Management Act 2002 (the Act). 7 The defendant disputed that contention and raised various arguments which included that nothing in the sick leave policy had the effect of fettering the general power conferred by s 86(2) of the Act. 8 During oral argument the issue of futility was raised and Perder Investments Pty Ltd v Elmer (1991) 31 FCR 201 was cited. It appears from what was said by Mr Ryan during the hearing that he had been notified the previous night that the defendant would rely on that case. The defendant's argument was that as the opportunity for a temporary internal secondment had passed, the declaratory relief that the plaintiff sought would be futile. What was being argued by the defendant was the well-established principle that a declaration can be refused where it would be of little or no use: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334. 9 It emerged from further exchanges with Mr Adam that a fresh departmental sickness policy which was said to wipe the plaintiff's "slate clean" was to be implemented on 1 January 2009. Mr Adam contended on this further basis that the grant of declaratory relief would be futile. 10 I pointed out to Mr Adam that there was no evidence before the court of what was said to be a fresh policy. When asked by me whether his client appreciated that there was to be such a fresh policy, Mr Ryan responded that he was not aware of whether or not this new policy would be implemented but had heard that there was "a draft policy going around". 11 A short adjournment was granted to enable the defendant to obtain a copy of the new policy and for it to be provided to Mr Ryan. After the document was obtained Mr Ryan sought an adjournment which was granted. Directions were made for the filing of any further evidence on or before 24 January 2009 and the proceedings were adjourned for mention on 2 February 2009. 12 On 2 February 2009, Mr Ryan appeared for the plaintiff and Mr Prince of counsel for the defendant. Mr Ryan acknowledged that the defendant had served the 2009 sick leave policy by facsimile. 13 Mr Ryan said (T 2 2/2/09): "The position of the plaintiff is therefore that he is not in a situation where he is considered a category where sanctions are imposed upon him by way of the previous sick leave policy so in fact he has a fresh start, so to speak. That certainly, as your Honour noted on the last occasion, raises the issue of futility." 14 Mr Ryan did not inform the Court that the plaintiff no longer sought declaratory relief. He made reference to an affidavit served by the defendant which raised certain issues to which the plaintiff needed to respond. He said the plaintiff had instructed him to brief counsel. 15 Directions were made for the plaintiff to file any further affidavit material on or before 4pm on 16 February 2009 and that the defendant file any further affidavit material on or before 19 February 2009. The proceedings were listed for further hearing on 20 March 2009. 16 On 17 March 2009, the hearing date was vacated. On that date, Mr Ryan informed the Court that he was no longer seeking on behalf of the plaintiff a declaration that the New South Wales Department of Corrective Services leave policy is unlawful. The matter was set down for hearing solely on the issue of costs. No further directions were made as to the filing of affidavit material. 17 The costs of an action are, however, pursuant to s 98(1) of the Civil Procedure Act 2005 (CPA) a matter of discretion. The Court may order that costs are to be awarded on an ordinary basis or an indemnity basis: s 98(2) of the CPA. 18 Part 42 r 42.1 UCPR is as follows: "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" 19 What is meant by the words "follow the event" was considered in Windsurfing International Inc v Petit & Anor [1987] AIPC 90-441 when Waddel J said at 37, 861 –37, 862: " It is, I think, probably generally accepted that the words, 'follow the event' refer to the event of the claim or counter-claim. However, it may be noted that in other contexts similar words have been held to refer to the event of distinct issues with the result that the general costs went to the party who on the whole succeeded in the action but that the other party got the costs of separate issues on which he succeeded." 20 In Ritchies Uniform Civil Procedure at [42.1.10] Windsurfing International Inc is cited as authority for the general acceptance that the expression "follow the event" refers to the practical result of a particular claim. 21 The overriding objective, however, is to make a costs order which is appropriate to the justice of the case: Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10, Hagan v Waterhouse [No 2] (1992) 34 NSWLR 400. 22 In the present proceedings the event refers to the plaintiff's claim. The plaintiff's claim has been dismissed and the ordinary rule is that the defendant should have its costs for its successful defence of the claim. That, however, is not the end of the present consideration. 23 The hearing on 19 December 2008 was adjourned because of the disclosure by the defendant's counsel during the hearing of the Department's new sick leave policy to commence on 1 January 2009 which was advanced as a further argument in support of the defendant's contention that the declaration be refused as it would be of little or no use. 24 There is in the affidavit affirmed 23 January 2009 reference by Cathy Thomas, the defendant's solicitor, to settlement negotiations which occurred shortly after the hearing commenced on 19 December 2008. Following discussions with counsel the opportunity was given by me to the parties to consider settlement. Ms Thomas at para 4 refers to an offer of settlement being made, that the plaintiff withdraw and each party pay its own costs. It appears that the offer of settlement was rejected by the plaintiff. 25 Mr Prince referred to a passage in the transcript (T2 19/12/08) in which Ms Thomas told the court prior to the adjournment: "There has been some discussion. There is a new sick leave policy that will come into the Department on 1 January so I think there was some confusion about what the plaintiff actually wanted from us given that the actual secondment, the original secondment, finished. So we were trying to work out what was wanted and we didn't really get that information. If we have some discussions now I would need to get instructions." 26 Mr Prince argued that Mr Ryan was not taken by surprise at the hearing as to the issue of the new sick leave policy. 27 In my opinion, if the defendant had intended to place any reliance on the implementation of a new sick leave policy an affidavit at the very least should have been filed prior to the hearing annexing the new policy and providing some evidence as to when it was to be implemented. It is not enough for the defendant to rely on some knowledge on the part of the plaintiff as to the possible introduction of a new sick leave policy. By the filing of such an affidavit the defendant would have disclosed the situation to the plaintiff thereby precluding any consideration of an adjournment. 28 What then is the consequence of this finding? 29 As the plaintiff did not proceed with his application and the defendant was successful, it seems to me that it is not appropriate to the justice of the case that a successful defendant be ordered to pay the plaintiff's costs thrown away by the adjournment. On the other hand, the justice of the case leads me to the conclusion that the plaintiff should not be required to pay the defendant's costs of the adjourned hearing. If the defendant's evidence had been put on prior to the hearing, it is more probable than not that the plaintiff would have foreseen the futility of the application for declaratory relief and the hearing would not have proceeded. 30 What then is to be made of the defendant's open offers of settlement by letters dated 16 January 2009 and 2 February 2009? The defendant in that correspondence offered the following terms of settlement: 1 . A costs order will not be sought against Mr Leallee 2. Each party will pay their own costs 3. Mr Leallee will discontinue the proceedings currently before the Supreme Court. 31 I am informed that the defendant does not seek to rely on those open offers to found an application for the costs to be paid on an indemnity basis. 32 It seems to me that those offers have little impact upon the present consideration other than to confirm that the plaintiff, save as to hearing on 19 December 2008, should pay the defendant's costs. 33 Accordingly, I make the following orders: 1. The plaintiff is to pay the defendant's costs in respect of the claim assessed on an ordinary basis. 2. Order 1 does not apply to the defendant's costs of hearing on 19 December 2008. 3. Each party is to pay its own costs of the hearing on 19 December 2008. ********** 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.