Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Parramatta City Council v Stewart [2013] NSWCA 163 Hearing dates: 3 June 2013 Decision date: 03 June 2013 Before: Emmett JA at [1], [18]; Sackville AJA at [17], [19]; Decision: The Court orders that: 1. The application for leave be refused. 2. The applicant pay the respondent's costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: COSTS - indemnity costs for whole proceeding until date of order awarded against defendant as condition of adjournment sought by defendant - where defendant accepted indemnity costs order without complaint as condition of adjournment - leave to appeal refused COSTS - indemnity costs - offer of compromise by respondent - where only compromise was to forego costs of appeal - whether genuine compromise where costs already limited by s 338 of Legal Profession Act 2004 Legislation Cited: District Court Act 1973 s 127(2)(b) Civil Procedure Act 2005 ss 56, 61 Legal Profession Act 2004 ss 338, 341 Category: Principal judgment Parties: Parramatta City Council (Appellant) James Williams Stewart (Respondent) Representation: Counsel: D Kelly (Appellant) R Royle (Respondent) Solicitors: McCulloch and Buggy (Appellant) Ray Wehbe & Co (Respondent) File Number(s): CA 2012/208608 Decision under appeal Jurisdiction: 9101 Date of Decision: 2012-06-20 00:00:00 Before: Delaney DCJ File Number(s): 2011/191197 Judgment 1EMMETT JA: The Court has before it an application for leave to appeal from an order made by a judge of the District Court on a question of costs. The applicant for leave, Parramatta City Council (the Council), was the defendant in a proceeding brought in the District Court by the respondent, Mr James Stewart. Mr Stewart alleged that the Council was in breach of its duty in the maintenance of a public footpath and that he tripped and fell on the footpath. 2The proceeding was fixed for hearing on 20 June 2012. That fixture was made in January 2012 and the fixture was confirmed in March 2012. When the proceeding was called on for hearing, counsel for the Council indicated to the presiding judge that he wished to make an application for an adjournment. The basis for the adjournment was that the Council wished to maintain a defence that the alleged fall had not occurred. However, the Council's principal witness in relation to that issue was not available. The application for an adjournment was opposed by counsel for Mr Stewart, the plaintiff. 3The primary judge was taken to an affidavit sworn by the Council's solicitor and observed that there was nothing in the affidavit that indicated when the solicitor had started to try to arrange for the witness to be available. A second affidavit was also read, which the primary judge said did not do any better. His Honour observed that the problem was that it was not disclosed when the Council knew about the prospective witness. Further, the evidence did not disclose what connections the Council had ever had with the witness, such as when the Council first knew about the witness's knowledge of the plaintiff's fall and what arrangements were made with the witness. 4Counsel for the Council said that the witness was a vital witness and that the Council knew of her existence at the end of 2011. The primary judge asked why a subpoena was not served when the matter was fixed for hearing. There was no satisfactory answer to that enquiry. Indeed, counsel for the Council accepted that the position was entirely unsatisfactory. He conceded that the Council was seeking the indulgence of the Court and appreciated the position in which Mr Stewart was placed. Counsel for the Council accepted that it was unsatisfactory and that he appreciated that there would be "a penalty that would flow" if his Honour was prepared to grant the indulgence. 5The primary judge responded that the penalty would be severe: "[i]t would even be indemnity costs for the whole of the action". The response of counsel for the Council, according to the transcript, simply was: "[n]otwithstanding what your Honour - your Honour, if that's the consequence, your Honour, that's the consequence". That is to say, no submission was advanced to the primary judge that an order for indemnity costs for the whole of the action would be a miscarriage of his discretion as to costs. 6Counsel for Mr Stewart then addressed the primary judge, indicating that Mr Stewart wished to proceed and that, if the adjournment were not granted, the matter would proceed. Counsel for Mr Stewart indicated that he would advise his client that adjournments cannot be granted unless there is a remedy in relation to costs. He indicated that Mr Stewart was firm on the point of costs. The primary judge responded "[s]o you should be". 7The primary judge then gave reasons for granting the adjournment applied for on behalf of the Council. His Honour said that he would grant the adjournment on terms that the Council pay Mr Stewart's costs of the action up to date on the indemnity basis, with Mr Stewart to have the right to have those costs assessed forthwith, including counsel's fees. His Honour vacated the hearing date and listed the matter for hearing on 6 August 2012, subject to any application to the contrary that might be made within five minutes. 8At that point, no dissent was indicated on behalf of the Council to the order for costs that his Honour had proposed as a term of the grant of the adjournment. Rather, it appears that counsel for the Council accepted those terms without complaint. The hearing on the 20 June 2012 was then vacated. 9The application presently before us is for leave to appeal under s 127(2)(b) of the District Court Act 1973. The draft notice of appeal specifies the following grounds: 1) in a matter subject to costs limitations under the Legal Profession Act 2004, in granting an adjournment application made on behalf of the Council, the primary judge erred in ordering that the Council pay Mr Stewart's costs from the commencement of the proceeding to date on the indemnity basis; 2) the primary judge erred in making a costs order not sought by Mr Stewart; 3) the primary judge erred in not giving the Council an opportunity to make submissions as to the appropriateness or reasonableness of the costs order; 4) the primary judge erred in failing to give any or any adequate reasons for his decision as to costs; and 5) the primary judge erred in exercising his discretion as to costs in a manner that was manifestly excessive and unreasonable in the circumstances. 10The reference in the grounds of appeal to the costs limitation under the Legal Profession Act is a reference to s 338, which provides that, if the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed, in the case of legal advice services provided to a plaintiff, at 20% of the amount recovered or $10,000, whichever is the greater. There is a qualification in s 341 to the effect that a court hearing a claim for personal injury damages may, by order, exclude from the operation of Div 9, in which s 338 appears, legal services provided to a party to the claim if the court is satisfied that the legal services were provided in response to any action on the claim by and on behalf of the other party to the claim that, in the circumstances, was not reasonably necessary for the advancement of that party's case or was intended or reasonably likely to delay or complicate determination of the claim unnecessarily. 11It was not contended on behalf of the Council that the primary judge did not have power to make the order that was made. It is not appropriate for this Court, in circumstances where we do not propose to grant leave, to determine whether or not there was a miscarriage of the discretion to order costs. However, one would expect that the more appropriate order, in the circumstances before the primary judge, would be to require that the Council pay the costs thrown away by the adjournment on the indemnity basis, rather than all of the costs of the proceeding to date. There is a basis for concluding that the order was intended to penalise the Council, rather than to compensate Mr Stewart for the indulgence sought by the Council. 12Counsel for Mr Stewart supported the exercise of discretion by the primary judge under s 56 and s 61 of the Civil Procedure Act 2005. Under s 61(1), the Court may, by order, give such directions as it thinks fit for the speedy determination of the real issues between the parties to the proceeding. Under s 61(3)(f), if a party to whom a direction has been given fails to comply with the direction, the court may, amongst other things, direct the party to pay the whole or part of the costs of another party. 13Section 56 provides that the overriding purpose of the Civil Procedure Act is to facilitate the just, quick and cheap resolution of the real issues in the proceeding. Under s 56(3), a party to a civil proceeding is under a duty to assist the court to further that overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and order of the court. Under s 56(5), the court may take into account any failure to comply with s 56(3) in exercising its discretion with respect to costs. 14Whether or not those provisions would ultimately lead to the making of the order in question is debatable. Nevertheless, having regard to the circumstances briefly outlined above, I do not consider that this is an appropriate case for the grant of leave. Counsel for the Council offered some personal explanation as to the circumstances in which his response to the primary judge was made. However, there was no formal material before the Court to indicate an oversight or misunderstanding on the part of counsel. The Court can only have regard to the material before it, which includes a transcript of the hearing and of the primary judge's reasons for his decision. It has not been suggested that the transcript is inaccurate. 15In circumstances where counsel was informed that a term of the grant of the indulgence being sought could well be that an order for indemnity costs for the whole of the action would be made, and there was no challenge to that order, I do not consider that this is an appropriate case for the grant of leave to appeal. 16Having regard to the provisions of the Civil Procedure Act to which I have referred, there may have been some basis for the order made by his Honour, although, as I have said, I would regard it as a surprising order in all of the circumstances. Nevertheless, I consider that leave to appeal should be refused with costs. 17SACKVILLE AJA: I agree with the presiding judge's reasons and with the orders that his Honour proposes. 18EMMETT JA: Mr Stewart has asked for indemnity costs in respect of the application for leave, on the basis of an offer made by him that, if the application were withdrawn, he would forego his costs. My view is that this is not a case where it is appropriate to order indemnity costs. Assuming that the offer of compromise complied with the Rules, my view is that it is appropriate to order otherwise. The order of the Court would simply be that the Council pay the costs of Mr Stewart on the ordinary basis. 19SACKVILLE AJA: I agree. The argument proceeded on the basis, which may or may not be correct, that the limit of $10,000 for costs applicable by reason of s 338 of the Legal Profession Act 2004 would also apply to the proceedings seeking leave to appeal. If that assumption be correct then the reality is that the offer of compromise did not involve any genuine compromise at all. I repeat that the assumption upon which the point was argued may or may not be correct, but we should proceed on the same basis as the parties. For those additional reasons I agree with the orders proposed by the presiding Judge. ********** 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: 17 June 2013