New South Wales Supreme Court CITATION : Buzrio Pty Limited v Consumer, Trader and Tenancy Tribunal [No. 3] [2009] NSWSC 1132 HEARING DATE(S) : 19 October 2009 JUDGMENT DATE : 29 October 2009 JUDGMENT OF : Davies J DECISION : Order that the Third Defendant James Chan pay the Plaintiff's costs of the proceedings on an indemnity basis. CATCHWORDS : PROCEDURE - costs - right of successful party to obtain costs against defendant who filed submitting appearance - where submitting party brought about the need for the litigation - indemnity costs - whether delinquent conduct in the conduct of the proceedings. CATEGORY : Consequential orders Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Harrison v Schipp [2001] NSWCA 13 Khan v Hadid (No. 3) [2008] NSWSC 819 CASES CITED : Latoudis v Casey (1990) 170 CLR 534 Liverpool City Council v Estephan [2009] NSWCA 161 Mahenthirarasa v State Rail Authority of NSW [2008] NSWCA 101 Mahenthirarasa v State Rail Authority of NSW [2008] NSWCA 201; 72 NSWLR 273 Mead v Watson [2005] NSWCA 133 Oshlack v Richmond River Council (1998) 193 CLR 72 Buzrio Pty Limited (Plaintiff) Consumer, Trader And Tenancy Tribunal (First Defendant) PARTIES : Axiom Property Consulting Pty Limited (Second Defendant) James Chan (Third Defendant) The Owners Corporation of Strata Plan 75633 (Fourth Defendant) FILE NUMBER(S) : SC 30080/2009 J Knackstredt (Plaintiff) No appearance (First Defendant) COUNSEL : No appearance (Second Defendant) S Epstein SC (Third Defendant) No appearance (Fourth Defendant) McLachlan Thorpe Partners Lawyers (Plaintiff) Crown Solicitor's Office (First Defendant) SOLICITORS : Dominic Sisinni & Co (Second Defendant) Submitting Appearance (Third Defendant) No appearance (Fourth Defendant) - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DAVIES J 29 OCTOBER 2009 30080/09 BUZRIO PTY LIMITED V CONSUMER, TRADER AND TENANCY TRIBUNAL & 3 ORS COSTS JUDGMENT 1 I made Orders in the form of certiorari and prohibition on 9 September 2009. 2 The hearing before me had proceeded without active opposition to the orders sought. Submitting appearances were filed for Axiom Property Consulting Pty Ltd and James Chan. I declined to permit a Mr Kit Man Chan from appearing on behalf of the Owners Corporation and ultimately there was no appearance for the Owners Corporation. 3 What remains to be determined in the matter is the question of the costs of the proceedings before me. The Plaintiff claims that the costs should be paid by Mr James Chan and that those costs should be paid on an indemnity basis. Mr James Chan was the Secretary of the Owners Corporation and it was his actions on 24 August 2009 in applying to the Tribunal for a further interim order that led to the proceedings that I determined. 4 The costs argument first came before me on 23 September 2009 when Mr James Chan appeared in person. He sought and was granted an adjournment to obtain legal advice in relation to the Plaintiff's application for costs. On that occasion I directed that he was to file and serve any affidavit evidence on which he wished to rely by 12 October 2009. 5 The matter then came before me for hearing of the costs application on 19 October 2009 when Mr Epstein of Senior Counsel appeared for Mr Chan. No affidavit evidence had been filed by Mr Chan and Mr Epstein indicated that no evidence was to be given by him. 6 Mr Epstein resisted any order for costs on the basis that Mr Chan had filed a submitting appearance at the hearing and took no part in the proceedings. He relied in that regard on the two decisions of the Court of Appeal in Mahenthirarasa v State Rail Authority of NSW [2008] NSWCA 101 and [2008] NSWCA 201, the latter also being reported at 72 NSWLR 273. 7 In that case the Plaintiff was an employee of the State Rail Authority who suffered an injury in the course of his employment. He was at some stage referred to a medical specialist for assessment of total percentage of permanent loss attributable to the injury. The Plaintiff was dissatisfied with the Certificate issued and sought to appeal to an Appeal Panel. The appeal did not proceed because the State Rail Authority submitted successfully to the Registrar that the appeal should not proceed to the Appeal Panel. The Plaintiff challenged that decision in proceedings for judicial review. The State Rail Authority filed a submitting appearance in the Court. The Plaintiff was successful, ultimately, in the Court of Appeal in showing that the decision of the Registrar was an error. The question for consideration then became whether the State Rail Authority should pay the Plaintiff's costs when it filed a submitting appearance and took active part in the proceedings. As in the present case, the decision maker, the Registrar, was named as a Defendant in the proceedings and also filed a submitting appearance. 8 In the first judgment of the Court of Appeal, Basten JA (who gave the principal judgment) said this: "[64] Where no party opposes relief sought by an applicant, it will often be appropriate to make orders by consent. At least that is so where the parties are sui juris, the orders properly formulated, the Court has no reason to suppose that its procedures are being abused and the public interest does not require a different result: … . That result will minimise the costs incurred, although the applicant would normally be entitled to an award of costs which would follow the event. [65] Judicial review applications may be thought to fall into a different category. Because relief is discretionary, and because the order below will stand unless set aside, and because it may be seen to be inappropriate to set aside the decision of an administrative officer and order him or her to reconsider without identifying the precise error, some cases require that the court be persuaded of error: … . That may have been the view adopted in the present case so that, despite the lack of opposition, the primary judge required to be persuaded of error. [66] The applicant incurred costs before the primary judge as a result of an error on the part of an officer of the State, namely the delegate. There is something to be said for the view that it is the State which should bear the legal costs involved. The only way that such an order could be made is if the review proceedings fell within the scope of the Suitors' Fund Act 1951 (NSW). … [70] There will also be a question whether a party which sits by, taking no active part in the proceedings, but not consenting to an order, can avoid payment of the applicant's costs incurred in making good a claim to relief. The Registrar and the medical specialist [the Third Defendant] were acting properly in not actively resisting the order: … . No order is sought against them. It may be that the SRA falls into a different category." 9 Because the issue of costs had not been fully argued a further hearing took place which resulted in the second judgment of the Court of Appeal. It is this judgment on which Mr Epstein principally relies because Basten JA discussed the State Rail Authority's responsibility as a statutory body representing the Crown as being required to act as a model litigant. 10 However, I do not read Basten JA's decision as having been based, or being based only, on any determination that the State Rail Authority was obliged to act as a model litigant. Before turning to discuss the position of the State Rail Authority as a body representing the Crown and, therefore, needing to act as a model litigant his Honour made reference, first, to what Mason CJ said in Latoudis v Casey (1990) 170 CLR 534 at 543: "[costs] are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings …" (emphasis added) 11 Basten JA then went on to say: "[11] In the present case, there was nothing in the conduct of the appellant which would lead to a refusal to award costs in his favour. Rather, the question is whether it is just and reasonable to expect the SRA to pay his costs in circumstances where it did not actively oppose the orders he sought. The submissions for the SRA in effect rely upon two propositions. The first is that, not having actively opposed the orders, the SRA is not responsible in any relevant sense for the costs incurred by the appellant. Secondly, even if it had consented to the orders, it is likely that some costs would have been incurred in any event in satisfying the Court that the orders were appropriate, in accordance with the approach adopted in Kovalev v Minister for Immigration and Multicultural Affairs [1999] 100 FCR 323 at 326 [9], … . [12] There are two considerations which significantly diminish the force of the SRA's contentions. The first is that, as appears from the certificate issued by the delegate of the Registrar under s 327(4) of the Workplace Injury Management and Workers Compensation Act , the decision to reject the appeal in the Commission was made after consideration of submissions received from both the appellant and the SRA: … . Having opposed the appeal in the Commission, and having obtained a favourable result, in accordance with its submissions to the Registrar, the SRA cannot disclaim all responsibility for the situation in which the appellant was placed in seeking to enforce his legal entitlements. [13] In relation to the second point, the stance adopted by the SRA with respect to the proceedings in the Court are not entirely favourable to it. In not opposing the orders sought by the appellant, it no doubt helped to minimise the costs incurred. Nevertheless, appreciating, as a matter of fact if not law, that the other respondents would not and could not properly appear in opposition to the claims, it would have been appropriate for the SRA to explain its position to the Court and indicate why it was not opposing the orders sought. A concession that it was reasonably open for the Court to accept that the approach adopted by the delegate of the Registrar was legally flawed would probably have limited costs further and removed the requirement that the appellant spend time persuading the Court as to the correctness of his position." 12 Both of those reasons appear in that part of the judgment which precedes any discussion of the State Rail Authority's obligations as a model litigant. 13 Having then discussed the position of the State Rail Authority as a model litigant his Honour continued: "[23] … Given its conduct in obtaining the order in its favour from the Registrar and its failure to provide assistance to the Court at either level, it is just and reasonable that the SRA should pay the appellant's costs of the proceedings, both in this Court and in the Court below. The remaining question is whether it should pay all of those costs. [24] In submissions resisting any order for costs, the SRA sought to obtain support from the likelihood that, in accordance with Kovalev , the appellant would have been required to satisfy the Court in any event that orders should be made, even if not opposed. However, that consideration in part weighs against the SRA. A concession by the active respondent that the orders sought were appropriate, with brief reasons for that conclusion, would have been likely to limit if not avoid the need for a hearing at either stage. The respondent did not take that step. [25] Nor did the respondent suggest that there was some basis upon which the costs actually incurred by the appellant could be divided so that he might recover part only of the costs and not those which would have been inevitable because of the nature of the proceedings. That position is understandable, the court proceedings being, in a practical sense, necessary because of the stance taken by the SRA before the Registrar, opposing the appeal within the Commission. It is therefore appropriate that the appellant have the whole of his costs in this Court and in the Court below …" (emphasis added) 14 The position of the Plaintiff in the present case is stronger than the position of the Plaintiff in Mahenthirarasa. As in that case, and noting in particular what Basten JA said in the second judgment in paras [12] and [25], the Plaintiff in the present case was placed in the position of needing to come to the Court to overturn the decision of the adjudicator. Mr Chan cannot disclaim responsibility for the decision that was made. It was his application that the order ought to be made that must be regarded as the principal reason for its making. The costs the Plaintiff incurred were an expense that it incurred by reason of the legal proceedings (to use Mason CJ's words in Latoudis), those legal proceedings having been made necessary by reason of the actions of Mr Chan. 15 But unlike the position in Mahenthirarasa where the State Rail Authority made submissions to the Registrar which were accepted but which the State Rail Authority later did not seek to justify, Mr Chan must be taken to have known that he was not entitled to make the application he did nor to obtain the order he did at the time he made the application. Only days before, Rothman J delivered a judgment which made it clear that the adjudicator had no power to make such an order. Mr Chan annexed that part of Rothman J's judgment to his application. He has filed no evidence to indicate that he did not understand that the judgment meant what it said nor evidence that he did not understand he was entitled to apply for the order. In those circumstances, his conduct made the proceedings necessary and justifies an order that he should pay the Plaintiff's costs of the proceedings. 16 The Plaintiff seeks an order that the costs should be payable on an indemnity basis. In that regard, the Plaintiff relies on what was said in the judgment of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at [44]. It is also suggested that one should apply analogously the principle that it is appropriate to award indemnity costs where it appears that an action is being commenced or continued in circumstances where the Applicant, properly advised, should have known that he had no chance of success - see in this regard Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. 17 It is said that Mr Chan's conduct in making the further application to the Tribunal necessitating the proceedings that came before me was so unreasonable and was such misconduct that costs should be payable on an indemnity basis. It is said that the conduct was in connection with the proceedings. 18 Mr Epstein disputes that the conduct of Mr Chan's in making further application to the Tribunal was conduct in relation to the proceedings. Mr Epstein draws attention in this regard to what was said by the Court of Appeal in Mead v Watson [2005] NSWCA 133 especially at paras [8] to [10]. He says that the principle to be derived is that the conduct being viewed must be related to the way the litigation is conducted and it is insufficient that the litigation arises from the conduct. 19 He identifies the proceedings as being the new proceedings which Rothman J gave leave to be commenced and which I ultimately heard. Mr Epstein says that whether or not Rothman J might have been prepared to entertain a motion in the earlier proceedings or whether such an order was possible is not to the point. What ultimately happened was that he directed new proceedings should be commenced. 20 Mr Epstein says further that that was a correct approach because the event which gave rise to the fresh proceedings was an event which post-dated the commencement of the earlier proceedings before Rothman J and that alone justified the need for fresh proceedings. 21 In my opinion, in the history of the litigation brought by the Plaintiff against Mr Chan and others, it is far too narrow a view to regard the misconduct or the relevant delinquency as needing to have been committed in the course of the particular proceedings that were before me. 22 After the judgment of Rothman J Mr Chan made the application to the Tribunal and obtained the interim order. The Plaintiff sought a further hearing before Rothman J to quash that order. The application was made in the earlier proceedings. In the course of argument about the procedure that should be followed Rothman J made passing reference to his earlier decision in Khan v Hadid (No. 3) [2008] NSWSC 819 where he had discussed the authorities concerning the reopening of a case. But Rothman J also noted that one of the exceptions to reopening was where a contempt had been committed and he thought that some of the allegations made against the Tribunal and Mr Chan might have amounted to a contempt of court. The Plaintiff did not wish to proceed down the contempt path because of the urgency of the situation and the technical aspects of bringing a contempt charge. In those circumstances, Rothman J thought that the better course was that the Plaintiff should commence fresh proceedings and it was those proceedings which came before me although evidence which had been used in those earlier proceedings was used in the proceedings before me. 23 In my opinion, it would equally have been open to Rothman J either to have determined the further application himself in those earlier proceedings or, because of his adverse credit findings about Mr Chan, to have referred the application in the earlier proceedings for hearing by another Judge. Had either of those courses been followed, it could more easily be seen that the conduct of Mr Chan in making further application to the Tribunal in the circumstances he did was misconduct or delinquency in relation to those proceedings. 24 The mere fact that the event that gave rise to the further application was an event that took place after the earlier proceedings were instituted would not have been a bar to amendment of those proceedings. In fact, that is what happened in those proceedings when further applications were made to the Tribunal after the commencement of those proceedings. 25 It seems to me to be a triumph of form over substance to suggest that Mr Chan's conduct in applying to the Tribunal immediately after Rothman J's judgment and in the face of Rothman J's determinations concerning the jurisdiction of the adjudicator and the need for due notice of the proceedings to be given was not misconduct in relation to the proceedings. It was such misconduct and delinquency to justify an order for indemnity costs in the present case. 26 If I am wrong in my view about what constituted the proceedings and whether Mr Chan's conduct was in those proceedings, I consider that it is appropriate to apply analogously the principle from Fountain Selected Meats, namely, that where an action is commenced or continued in circumstances where the Applicant should have known he had no chance of success it is appropriate to award indemnity costs. In the usual application of this principle it would be on Mr Chan's application to the adjudicator for an interim order that the issue of indemnity costs would arise because that application was doomed to failure. In saying that, I do not overlook any particular legislative provisions associated with costs in respect of applications to the Tribunal. However, Mr Chan himself prevented the Plaintiff from being able to make any appropriate submission to the Tribunal about Mr Chan's hopeless application to the Tribunal because neither Mr Chan nor the Tribunal gave any notice to the Plaintiff or anybody else that the application was to be made. This also was in the face of Rothman J's judgment that procedural fairness demanded notice of an application. 27 The result, therefore, of Mr Chan's actions meant that the Plaintiff was forced into the position of having to take the further proceedings in this Court to overturn the Tribunal's decision and, in effect, have Mr Chan's application determined as hopeless. The Plaintiff's submission that the principle and cases such as Fountain Selected Meats can be applied analogously should be accepted. 28 In Liverpool City Council v Estephan [2009] NSWCA 161 Giles JA, with whom McColl JA agreed, made reference at [93] to the remarks of Sheppard J in Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 at 233 noting that Sheppard J emphasised that the circumstances in which the discretion to award indemnity costs might be exercised were not closed. Giles JA further accepted the principle in Fountain Selected Meats as a proper basis and then went on to say at [95]: "In principle, in my view, where the "relevant delinquency" (to take the phrase used by Gaudron and Gummow JJ) [in Oshlack ] is in the conduct of the proceedings, the order can be expected to be as to the costs incurred by reason of that conduct." That statement seems to envisage that the "relevant delinquency" might, in some circumstances, not take place in the conduct of the proceedings but might be anterior to them. The particular passage in the judgment of Gaudron and Gummow JJ (at [44]) does not refer to the relevant delinquency needing to occur in the conduct of the proceedings although I accept that the Court of Appeal's decision in Harrison v Schipp [2001] NSWCA 13 might be taken to suggest that that had been regarded as the correct approach – see at [132] to [136]. 29 If Giles and McColl JJA in Estephan were leaving the door open in the way I have suggested, then the present case would be precisely the sort of case where the principle would operate because of the immediately preceding judgment of Rothman J and what must be regarded as the deliberate attempt to circumvent or undermine it by Mr Chan making the application he did. 30 In my opinion, it is a proper exercise of the discretion to award indemnity costs, bearing in mind what has been said in various cases and particularly in Mead v Watson at [8] - [10], that an indemnity costs order should be made in the present case. 31 In my opinion the following order should be made: Order that the Third Defendant James Chan pay the Plaintiff's costs of the proceedings on an indemnity basis. ********** 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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