New South Wales Supreme Court CITATION : RTA of NSW v Rolfe (No 2) [2010] NSWSC 816 HEARING DATE(S) : 19 July 2010 JUDGMENT DATE : 27 July 2010 JURISDICTION : Common Law JUDGMENT OF : Harrison AsJ (1) The appeal is upheld in part. DECISION : (2) The judgment contained in paragraph (2) of the orders made by her Honour Magistrate Freund on 3 August 2009 is set aside. (3) The judgment contained in paragraph (2) made by her Honour Magistrate Freund on 15 June 2009 is affirmed. (4) The judgment of her Honour Magistrate Freund contained in paragraph (1) of the orders dated 15 June 2009 and repeated in paragraph (1) of the orders made on 3 August 2009 are affirmed. CATCHWORDS : ORDERS and COSTS Civil Liability Act 2002 LEGISLATION CITED : Civil Procedure Act 2005 Roads Act 1993 CATEGORY : Principal judgment Dodds Family Investments Pty Ltd v Lane Industries Pty ltd (1993) 26 IPR 261 Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 CASES CITED : James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Madden (in his capacity as Official Liquidator of Aquanaut Constructions Pty Ltd (in Liq)) v McConnell [2001] NSWSC 1051 Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Supreme Court of New South Wales, 3 June 1998, unreported) Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338 PARTIES : Roads & Traffic Authority of New South Wales (Plaintiff) Russell Clift Rolfe (Defendant) FILE NUMBER(S) : SC 2009/295227 COUNSEL : J Rowe (Plaintiff) A Hourigan (Defendant) SOLICITORS : Milne Berry & Freedman (Plaintiff) Fraser Clancy Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON TUESDAY, 27 JULY 2010 2009/295227 ROADS & TRAFFIC AUTHORITY OF NSW v RUSSELL CLIFT ROLFE (No 2) JUDGMENT (Orders and costs) 1 HER HONOUR: The orders I make are that the appeal is upheld in part. The judgment contained in paragraph (2) of the orders made on 3 August 2009 is set aside. The judgment contained in paragraph (2) made on 15 June 2009 is affirmed. The judgment contained in paragraph (1) of the orders dated 15 June 2009 and repeated in paragraph (1) of the orders made on 3 August 2009 are affirmed. 2 The discrete costs orders made in the Local Court, namely, that the RTA pay the costs of Mr Rolfe on a party/party basis as agreed or assessed for firstly, the preparation and attendance at the review hearing on 19 February 2008; secondly, the preparation and attendance at Mr Rolfe's notice of motion hearing on 289 February 2008; and thirdly, the preparation for the further hearing of Mr Rolfe's notice of motion (costs argument) on 15 April 2008 are unaffected by this appeal and still stand. 3 Mr Rolfe seeks a costs order be made in his favour for the appearance at court on 15 April 2008 when those above costs orders were made by consent. The Magistrate reserved the costs of the appearance on 15 April 2008. The above costs orders were agreed by the RTA (ironically about costs) the day before so it necessitated the solicitors appearance at court on 15 April 2008 to hand up the consent orders. It is my view that as the RTA agreed to those orders at a late stage, namely, the day before the hearing, it should pay Mr Rolfe's costs of 15 April 2008. The Local Court costs orders 4 In the Local Court the costs orders were made on 15 June 2009 and 3 August 2009. I have reproduced those orders in full in this judgment as the reasons that those particular costs orders were made. 5 On 15 June 2009, her Honour Magistrate Freund made the following orders: 1. Judgment and verdict for the Plaintiff in relation to the Statement of Claim in the sum of $10,134.50. 2. Judgment and verdict for the Cross Claimant against the Cross Defendant for the sum of $33,829.99 together with interest from 8 October 2004 to date to be calculated by the registry. 3. In relation to costs, although each party was successful in relation to their respective claim and cross claim, it was ultimately the Defendant/Cross Claimant who recovered all of his damages (despite the judgment for the Plaintiff in relation to the damage caused to the guard rail) in relation to the accident. Accordingly I propose that the Plaintiff/Cross Defendant pay 75% of the Defendant/Cross Claimant's costs of the proceedings in a sum agreed between the parties or as assessed. 6 On 3 August 2009, her Honour Magistrate Freund made the following orders: 1. Judgment and verdict for the Plaintiff in relation to the Statement of Claim in the sum of $10,134.50. 2. Judgment and verdict for the Cross Claimant against the Cross Defendant for the sum of $43,964.49 (which includes the amount of $10,134.50 which the Cross Defendant is to indemnify the Cross Claimant) together with interest from 8 October 2004 to date to be calculated by the registry. 3. The Plaintiff/Cross Defendant to pay the costs of the Defendant/Cross Claimant: i. On a party/party basis up until 9 January 2008; ii. On an indemnity basis from 10 January 2008 up until 15 June 2009; and iii. With respect to the Cost Application of 7 July 2009 and Submissions filed in relation thereto on a party/party basis 7 It is debatable that this offer of compromise is effective because the ultimate result is that Mr Rolfe will be paid about $23,695.49. The indemnity costs orders were made on the basis of Mr Rolfe's offer of compromise. It was dated 9 January 2008 for the sum of $31,000 plus costs. 8 Initially, at this hearing on what orders for costs should be made in relation to the Local Court of this appeal, counsel for the RTA submitted that there was nothing unusual in the way in which the case was run in the Local Court or on appeal and in those circumstances the RTA was entitled to recover its costs both in the Local Court and on appeal. Counsel for the RTA also submitted that Mr Rolfe was not entitled to recover any orders for indemnity costs made or considered in the Local Court. However, counsel for Mr Rolfe conceded that some compromise should be made to this end he has foregone the order made on 3 August 2009 that costs payable on an indemnity basis. In oral submissions counsel for the RTA submitted that orders should be made that each party pay their own costs both in the Local Court and this Court. 9 Mr Rolfe submitted that the appropriate orders for costs should be, firstly, that the RTA pay Mr Rolfe 75 percent of its costs of the proceedings in the Local Court, such costs to be agreed between the parties or assessed on a party/party basis; secondly, that the RTA pay its own costs of the proceedings in the Local Court; thirdly, that the RTA pay Mr Rolfe 75 percent of its costs of the proceedings in the Supreme Court such costs to be agreed between the parties or assessed on a party/party basis; fourthly, the RTA pay Mr Rolfe's costs thrown away by reason of the amendments to the second further amended summons on 4 February 2010; and fifthly, the RTA pay its own costs of the proceedings in the Supreme Court. In oral submissions counsel for Mr Rolfe submitted that he should have 100 percent of his costs for the Local Court proceedings and 75 percent of his costs on appeal. I have already stated that he has given up on the indemnity basis of a costs order made on 3 August 2009. 10 Mr Rolfe further submitted that the claim for indemnity costs should be considered with the proviso that this is a way of redressing the absurdity of s 102 of the Roads Act 1993, an order that the RTA pay 75 percent or indeed 80 percent of the costs of both sets of proceedings. Section 102 is an unusual provision but it is a legislative provision so I am not persuaded that I should reflect its unusual nature of the provision in making costs orders. 11 Many issues raised by the RTA were hard fought in both the Local Court and on appeal. 12 In the Local Court and on appeal the RTA failed on the following issues: (a) There was no evidence to indicate that the RTA had failed to comply with the general procedures and applicable standards. The RTA relied on s 42 of the Civil Liability Act 2002 as evidence that there was no duty of care owed by the RTA to Mr Rolfe and/or there was no breach of duty of care; (b) Section 43 of the Civil Liability Act is in relation to proceedings against public or other authorities based on breach of statutory duty. This was a case where Mr Rolfe alleged a failure by the RTA to exercise statutory duties or functions. (c) There was no evidence upon which the court could have found in the circumstances the plaintiff was acting so unreasonably that no authority having the functions of the plaintiff could properly consider the omission to be a reasonable exercise of its functions. (d) Section 43A is in similar terms as s 43 but refers to a special statutory power. The powers bestowed on the plaintiff would appear to also come within a definition of special statutory power. If so, the argument in relation to s 43 was applicable to s 43A. (e) Section 45 of the Civil Liability Act confers a special nonfeasance protection for roads authorities that requires the defendants to show actual knowledge of the particular risk that materialisation of which resulted in the harm. (f) There was no evidence of "actual knowledge". 13 The RTA succeeded on one issue which I shall refer to as the "s 5 issue". In this regard, on 12 March 2010, I made the following relevant orders: 1. Grant leave to the plaintiff to file a second further amended summons in Court today. 2. The plaintiff to file and serve written submissions on or before 4.00 pm on 11 February 2010. 3. Defendant to file and serve notice of contention and written submissions on or before 4.00 pm 25 February 2010. 4. … 5. The costs thrown away by the amendments to the second further amended summons to be paid by the RTA/appellant on a party/party basis. 14 The s 5 issue was articulated in the amended summons as follows: "The Magistrate erred in finding that Mr Rolfe was entitled to relief pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 and/or s 5(2) of the Act because, firstly, no determination was made that Mr Rolfe answered the description of "Any tortfeasor liable …" ; secondly, such a determination was a precondition to the operation of s 5; and thirdly, there was no evidence upon which any such determination could have been made. On its true construction, s 102 of the Roads Act precludes reliance by Mr Rolfe on s 5 of the Law Reform (Miscellaneous Provisions) Act and entitles the RTA to relief irrespective of fault on its part." (Amended summons [13A] and [13B]). 15 On 12 March 2010, during the hearing of this appeal, this issue upon which the RTA was ultimately successful was properly and articulately raised for the first time. 16 In James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 the Court of Appeal discussed costs generally and in circumstances where there can be a departure from the usual rule at [31] - [40]. "Costs orders in the Supreme Court are governed by the provisions of s.76 of the Supreme Court Act 1997 and the Supreme Court Rules . Section 76 provides, relevantly that subject to the Act and the Rules, costs shall be in the discretion of the Court: s.76(1)(A). Part 52A r.11 acts as a limited proscription of the Court's discretion conferred by s.76. Part 52A r.11 provides that, subject to Part 52A, the Court shall order that costs follow the event " except where it appears to the Court that some other order should be made as to the whole or any part of the costs ". The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said: 'Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.' 17 Section 76 of the Supreme Court Act 1970 has been replaced by s 98 of the Civil Procedure Act 2005. Part 52A of the Supreme Court Rules has been replaced by Rule 42.1 of the Uniform Civil Procedure Rules 2005. 18 Toohey J in Hughes v Western Australian Cricket Association (1986) ATPR 40-748 made similar observations in relation to costs. His Honour stated: "1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. (references omitted) Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called "discrete issues", for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to " any disputed question of fact or law " before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter. In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a "rule" that where there are "discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated", an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of "rules". However, the underlying approach to the "rule" stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances. Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261: 'Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.'" 19 It is my view that the RTA has been almost entirely unsuccessful on the issues it raised in both the Local Court and on appeal. The only issue upon which it succeeded was the s 5 issue. As previously stated, that issue was properly articulated for the first time on the morning of the hearing of the appeal. That necessitated an adjournment being granted and a costs order being made against the RTA and submissions being made on this issue. In these circumstances, the RTA should pay Mr Rolfe's costs in the Local Court on a party/party basis and 75 percent of his costs of this appeal, also on a party/party basis. For more abundant caution, the costs order made in favour of Mr Rolfe on 4 February 2010 is to be on a party/party basis. The order of the 4 February 2010 stands alone and does not fall within the 75 percent costs order. 20 As previously stated, many issues raised by the RTA were hard fought in both the Local Court and on appeal when at best the quantum awarded would be less than $50,000. Hence the outcome of this case is that the costs far outweigh the total sum awarded. In any proceedings, it is important to consider the proportionality between the cost of litigation and the importance and complexity of the subject matter of the dispute: see s 60 of the Civil Procedure Act 2005. The court orders: (1) The appeal is upheld in part. (2) The judgment contained in paragraph (2) of the orders made by her Honour Magistrate Freund on 3 August 2009 is set aside. (3) The judgment contained in paragraph (2) made by her Honour Magistrate Freund on 15 June 2009 is affirmed. (4) The judgment of her Honour Magistrate Freund contained in paragraph (1) of the orders dated 15 June 2009 and repeated in paragraph (1) of the orders made on 3 August 2009 are affirmed. The proposed orders are: (5) I set aside paragraph 3 of the orders made by her Honour Magistrate Freund on 15 June 2009. (6) I set aside paragraph 3 of the orders made by her Honour Magistrate Freund on 3 August 2009. (7) The RTA is to pay Mr Rolfe's costs of 15 April 2008 in the Local Court on a party/party basis. (8) The RTA is to pay Mr Rolfe's costs in the Local Court on a party/party basis. (9) The RTA is to pay 75 percent of Mr Rolfe's costs of this appeal on a party/party basis. (10) Judgment is to take effect as from today. 21 If I do not hear from the RTA within seven days in relation to the form of proposed costs orders I shall make those orders. ********** 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.