Supreme Court New South Wales Medium Neutral Citation: Fitzpatrick v Lithgow and District Workmens Club Limited (No 2) [2012] NSWSC 374 Hearing dates: 17 April 2012 Decision date: 19 April 2012 Jurisdiction: Equity Division Before: Hallen AsJ Decision: Order that the Plaintiff should pay one half of the Defendant's costs of the proceedings, such costs to be calculated on the ordinary basis. Such costs should not include the costs of the argument on costs in respect of which each party should bear his, or its, own costs. Order that the exhibits should be dealt with in accordance with the Uniform Civil Procedure Rules. Catchwords: Costs of the proceedings - Defendant seeks costs, calculated on the ordinary basis; or, in the alternative, an order that the Plaintiff should pay 90 per cent of those costs - Plaintiff seeks an order that there be no order as to costs Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 Dynamics Co Pty Limited v G and M Nicholas Pty Limited (No 2) [2012] NSWSC 301 Fitzpatrick v Lithgow and District Workmens Club Limited [2012] NSWSC 265 Kazar (liquidator) v Kargarian; Re Frontier Architects Pty Ltd (in liq) (2011) 284 ALR 237 Latoudis v Casey (1990) 170 CLR 534 Luxmore Pty Ltd v Hydedale Pty Ltd (2008) 20 VR 481; [2008] VSCA 212 Ohn v Walton (1995) 36 NSWLR 77 Category: Costs Parties: Keith James Fitzpatrick (Plaintiff) Lithgow and District Workmens Club Ltd (Defendant) Representation: Counsel: Mr R Weaver (Plaintiff) Mr J Hyde (Defendant) Solicitors: Higgins Lawyers (Plaintiff) Barry F Cosier & Associates (Defendant) File Number(s): 2011/339511 Judgment 1HIS HONOUR: In this matter, I published my reasons for judgment on 17 April 2012, the medium neutral citation of which is Fitzpatrick v Lithgow and District Workmens Club Limited [2012] NSWSC 265. I ordered that the Plaintiff's Summons should be dismissed. I concluded that Mr Alexander, on behalf of the Defendant, had formed an opinion that the Plaintiff was "quarrelsome" and that, at that time, he had cause for, and was justified in, doing so. I was not satisfied that the suspension of the Plaintiff by the Defendant was ultra vires or void, or that it was wrongful. Nor was the suspension of the Plaintiff by the Club without reasonable cause. 2The issue that now arises, and these reasons concern, the costs of the proceedings. I had expressed the tentative view that each party should pay his, or its, own costs of the proceedings, but provided that I was prepared to hear further submissions if either party wished to contend for a different costs order. I stood the proceedings over until 17 April 2012, to enable the parties to consider what further orders or directions, if any, should be made, and to argue costs if agreement could not be reached. 3On 16 April 2012, my Associate received an email, a copy of which had also been sent to the Plaintiff, to the effect that the Defendant wished to argue the question of costs. 4Now, the Defendant seeks costs, calculated on the ordinary basis; or, in the alternative, an order that the Plaintiff should pay 90 per cent of those costs. The Plaintiff seeks an order that there be no order as to costs. The parties agree that no other orders or directions are necessary in respect of the substantive proceedings. 5The Defendant did not rely upon any additional evidence on the costs application. 6Without objection, the Plaintiff tendered a copy of some correspondence passing between the solicitors for each of the parties between 27 March 2012 and 16 April 2012. It is necessary to refer to some of this correspondence verbatim. 7In the letter dated 27 March 2012, from the Defendant's solicitors to the Plaintiff's solicitors, the following passage appears: "... I advise that following a meeting of the Board of Directors on 26 March, 2012, it was resolved that the need for your client to attend any disciplinary proceedings is no longer required and your client's suspension from the Club has effectively ended on the basis of time served. Accordingly, your client is entitled to utilize the Club's facilities. I am further instructed that we are instructed to seek costs of the proceedings on a party and party basis in light of the letter of offer dated 14 February 2012. I anticipate that in the absence of your clients (sic) agreement to the above the matter will require a hearing before the court on 17 April 2012." 8In a letter dated 29 March 2012, from the Plaintiff's solicitors to the Defendant's solicitors, the following passage appears: "... We also note your confirmation that, "(a)ccordingly (our) client is entitled to utilize the Club's facilities". We must assume, given that the bowling greens are regularly used by Club members who are not members of the LWC Bowling Club, that use of the "facilities of the Club" includes use of the bowling greens for social play, coaching and practice. However, the General Manager of the Club, Mr Michael Alexander, gave evidence in the Supreme Court that our client was not entitled to use the Club's greens, simply because he was not a member of the LWC Bowling Club. Obviously, clarification is now required. Please provide the Board's confirmation that our client, or any other member of the Club, whether or note he or she is a member of the LWC Bowling Club, is entitled to use all of the facilities of the Club, including the bowling greens. We refer to your claim for costs. Our client would be prepared to consent to an order such as that suggested by his Honour, that there be no order as to costs with the intent that each party bears his and its own costs. We reserve the right to rely on this correspondence in the event that an argument in relation to costs becomes necessary." 9Finally, with a letter dated 13 April 2012, from the Defendant's solicitors to the Plaintiff's solicitors, there was sent a copy of a by-law relating to the use of bowling greens, passed by the Defendant, after the proceedings were concluded: "5. Any person who is refused membership to the MBC or WBC will not be permitted to use the bowling facilities at the LWC, and may appeal any such refusal to the Board of Directors of the LWC." 10The "MBC" is the Bowling Club and the LWC is the Women's Bowling Club referred to at paragraph [21] in the reasons for judgment. 11Neither party tendered the letter dated 14 February 2012, which is referred to in the Defendant's letter of 27 March 2012. Nor was any other correspondence disclosing any offer made by either party tendered on the costs application. The Submissions 12I received written submissions from counsel for the Defendant. However, counsel for the Plaintiff made his submissions orally. 13The Defendant submitted that, the Plaintiff should bear the Defendant's costs of the proceedings (or, in the alternative, 90 per cent of those costs), as he had been unsuccessful in the proceedings. The Defendant, of course, relied upon s 98(1) of the Civil Procedure Act 2005 ("the Act") and Uniform Civil Procedure Rules 2005 ("UCPR"), rules 42.1 and 42.7. 14Counsel for the Defendant referred to paragraphs [64], [79] - [83], [129], [134], [135], [138], and [142] of my reasons for judgment. 15Furthermore, the Defendant's counsel pointed out that the Plaintiff had amended his Summons, substantially, shortly prior to the hearing. However, counsel frankly conceded, during the submissions, that all of the affidavit evidence prepared, on each side, in respect of the Summons as originally filed, was relied upon at the hearing. He also conceded that the time for the hearing had been shortened as a result of reliance by the Plaintiff upon the amended Summons. The only costs and expenses that had been "wasted" were fees charged by counsel for the time spent in considering the relief not pressed at the hearing, prior to the occasion when the Defendant was informed of that relief not being pressed. (No estimate of the amount for those fees was provided.) 16Counsel for the Plaintiff relied upon the proviso in rule 42.1 of the UCPR, that it may appear to the Court that "some other order should be made as to the whole or any part of those costs". 17Counsel for the Plaintiff also relied upon paragraphs [67] - [71], and [130] of the reasons for judgment. In addition, he referred to the by-law which was added to the Constitution after the conclusion of the proceedings. He submitted that it must have been created to avoid any ambiguity in the Club's Constitution, and any argument about the entitlement of a member of the Club to use the Club's facilities, even if the member was not a member of the Bowling Club at the relevant time. 18Finally, counsel for the Plaintiff referred to the letter dated 4 October 2010 from the Plaintiff's solicitors to the Club, in which letter particulars were sought, to which letter, I referred, briefly, in paragraph [52] of the reasons for judgment. He referred to the response from Mr Alexander on behalf of the Club, having commenced with the statement that "there is no legal obligation imposed upon the Club to provide answers to the matters raised in that letter". However, he failed to mention that the letter went on to provide answers to the solicitor's request for particulars "in the spirit of candour and to better enable you to advise your client". 19He submitted, in all the circumstances, that the Defendant's entitlement to costs was undermined, and that there were good reasons for departing from the order for costs contemplated by UCPR r 42.1. The Legislation and some General Principles 20There was really no dispute about the principles that apply to the determination of the costs question. I have referred to the Act, s 98(1), which provides that subject to the rules of Court, and that, or any other, Act, costs are in the discretion of the Court. 21I have also referred to UCPR, rule 42.1, which provides that costs should 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. 22It is clear that the discretion to award costs in civil proceedings is unconfined or "absolute and unfettered" (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, per Dawson J, at 557). However, it must be exercised judicially, that is, according to relevant considerations, and taking account of the contextual features and facts of the litigation. 23As has recently been noted (albeit in another context), in Kazar (liquidator) v Kargarian; Re Frontier Architects Pty Ltd (in liq) [2011] FCAFC 136; (2011) 284 ALR 237, at [9] (by Greenwood and Rares JJ): "The exercise of the discretion takes account of all of the contextual circumstances of the litigation and the conduct of the parties. One aspect of the award of costs is a recognition that a party has been put to expense which, taking account of the merits as ultimately found on the trial of the action, might otherwise have been avoided. That consideration does not infuse the award of costs with any sense of penalty or punishment but simply recognises the compensatory nature of an award of costs, in context and according to principle. That is why an award of costs, although involving the exercise of a discretion, generally favours the successful party. As to the importance the community attaches to legal costs incurred of and incidental to the resolution of controversies before courts, see Clark v Cmr of Taxation [2010] FCA 415 at [90]; Uniline Australia Ltd v S Briggs Pty Ltd (No 2) [2009] FCA 920; (2009) 82 IPR 56 at [38]; and, Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [130] to [132]." 24A relevant consideration is, or may be, whether the Plaintiff acted reasonably in commencing the proceedings and whether the Defendant acted reasonably in defending them. All the relevant circumstances, and not just the fact of dismissal of the Summons, should be considered. 25Ultimately, the Act and the UCPR require the court to make such order as it thinks just in the particular circumstances of the case: Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 at [10]. 26In Ohn v Walton (1995) 36 NSWLR 77, at 79, Gleeson CJ said: "The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement." 27Finally, it is to be noted that in Luxmore Pty Ltd v Hydedale Pty Ltd (2008) 20 VR 481; [2008] VSCA 212, Maxwell P and Kellam JA, said, at [12]: "In the ordinary case, it is both appropriate and desirable that a costs question be decided at the conclusion of argument. Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This court will assume, as should the parties, that every matter addressed in argument on costs has been considered. This court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons." Determination 28There was no submission made by the Defendant's counsel to the effect that the Plaintiff's claim was made frivolously or vexatiously; that it had no reasonable prospects of success; or that it was groundless. However, it cannot be forgotten that the Plaintiff chose to bring the proceedings and, thereby, to incur costs, and cause costs to be incurred, which otherwise might not have been incurred. 29The Plaintiff's counsel is correct in submitting that the letter in response to his instructing solicitor's request for particulars did not set out, in any detail, the precise basis for the request made to the Plaintiff on 29 August 2010, to remove himself, and, that in particular, it did not refer to the Article of the Constitution upon which reliance had been placed. 30I have earlier referred to the paragraphs of the reasons for judgment in which I expressed a view about Mr Alexander's conduct on 29 August 2010. The views that I expressed in those paragraphs cannot be forgotten on the issue of costs. 31Another matter that I consider important is the amendment of the by-laws, which, it seems to me, suggests that the Club came to appreciate that there was, or may have been, some ambiguity in its Constitution, which required consideration and amendment. To that extent at least, the proceedings were of utility. Some clarification of the manner in which the Club's Constitution operates has now been achieved. 32Yet, I am also entitled to, and should, consider the matters to which I have referred relating to the Plaintiff's conduct both on 29 August 2010 and subsequently. Very important in such conduct is the speed with which the Plaintiff commenced the proceedings (a few days before the meeting of the Board of the Club, at which the Plaintiff could have attended, and advanced his case) and his refusal to attend that meeting. 33I refer to my reasons for judgment, at paragraphs [143] - [146], where I dealt with the discretionary considerations, which considerations apply equally, on the question of costs. 34Against the lack of detailed information provided by the Defendant to which I have referred, I take into account the failure by the Plaintiff to specifically identify the matters upon which he relied, and in particular, his failure to disclose any reference to that part of the Club's Constitution, which, he asserted, provided the basis of the entitlement to use the bowling green. 35Having heard, and otherwise considered, the submissions made by each counsel, and all of the matters to which I have referred above and in the reasons for judgment, the tentative view expressed in my reasons for judgment, that each party should pay its own costs, should not prevail. However, I am not satisfied that the Defendant should receive all of its costs of the proceedings. 36In the exercise of my discretion, I order that the Plaintiff should pay one half of the Defendant's costs of the proceedings, such costs to be calculated on the ordinary basis. 37The question of the costs of the costs argument should be determined by reference to the success of each of the parties in that argument: Dynamics Co Pty Limited v G and M Nicholas Pty Limited (No 2) [2012] NSWSC 301, at [6], per Black J. The order that I have made is less favourable to the orders (in the alternative), or order, that each party sought. Accordingly, the costs the Plaintiff is to pay should not include the costs of the argument on costs, in respect of which each party should bear his, or its, own costs. 38I also order that the exhibits should be dealt with in accordance with the Uniform Civil Procedure Rules. ********** 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. Decision last updated: 19 April 2012