Supreme Court New South Wales Medium Neutral Citation: Wurth v Betteridge [2014] NSWSC 793 Hearing dates: 13 June 2014 Decision date: 17 June 2014 Before: Harrison J Decision: Grant leave to the plaintiff to discontinue the proceedings with no order as to costs Catchwords: COSTS - discontinuance - application for leave to discontinue proceedings with no order as to costs - consideration of factors relevant to exercise of costs discretion Legislation Cited: Limitation Act 1969 Cases Cited: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497 Category: Procedural and other rulings Parties: Mark Wurth (Plaintiff) Neville Betteridge (First Defendant) Representation: Counsel: D S Weinberger (Plaintiff) P R Glissan (First Defendant) Solicitors: Karp O'Neill (Plaintiff) McGowan Lawyers (First Defendant) File Number(s): 2011/405907 Publication restriction: Nil Judgment 1HIS HONOUR: By his amended statement of claim filed on 2 November 2012, Mr Wurth claimed compensation from a series of defendants alleging loss and damage arising out of sexual abuse to which he was subjected when a student at Blue Mountains Grammar School in the early 1970s. Neville Betteridge was employed at that time as a teacher at the school and was the person who assaulted Mr Wurth. By his defence filed on 17 December 2013, Mr Betteridge made certain admissions concerning Mr Wurth's allegations. Mr Betteridge had also earlier pleaded guilty to some of the sexual assaults committed upon Mr Wurth and on 26 November 2004 had been convicted and sentenced to two s 9 bonds each of three years on two counts of indecent assault. 2The other defendants named in the proceedings were the Anglican Church Diocese of Sydney and related entities and the Public Trustee of Queensland. A mediation of the proceedings took place on 19 November 2013. All parties were present and legally represented and all agreed to meet their own costs of the mediation. Mr Wurth subsequently settled the proceedings against all defendants apart from Mr Betteridge. Judgment was entered for the second, fourth and fifth defendants with no order as to costs. Mr Wurth discontinued against the third defendant with no order as to costs. I am unaware of whether or not some additional arrangement between Mr Wurth and any of these defendants accompanied the formal documents giving effect to the disposition of the proceedings against them. 3Mr Wurth now wishes to discontinue the proceedings against Mr Betteridge. He has filed a notice of motion seeking a single order that he be granted leave to discontinue the proceedings against Mr Betteridge with no order as to costs. Mr Betteridge opposes any order that seeks to relieve Mr Wurth of any obligation to pay his costs as the price of discontinuing the proceedings against him. 4The rules concerning discontinuance of proceedings are clear. They are to be found in UCPR 12.1 and 42.19: "12.1 Discontinuance of proceedings (1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant: (a) with the consent of each other active party in the proceedings, or (b) with the leave of the court. ... 42.19 Proceedings discontinued (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued." 5The result of a discontinuance of the proceedings is that the discontinuing party must pay the costs "unless the court orders otherwise." The rules preserve the Court's discretion as to the appropriate costs outcome. Because of this residual discretion the rules do not give rise to a formal presumption that the mere fact of discontinuance itself justifies a costs order against the discontinuing party: see Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497. 6A discontinuing party must nevertheless provide a proper basis for any costs order different from the conditional direction contained in the rules: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32. One matter for consideration in the exercise of that discretion will be the reason why the proceedings were discontinued, although this will not necessarily be a determinative consideration: Fordyce v Fordham at [84] ff. 7In support of his application, Mr Wurth swore an affidavit on 8 April 2014. Mr Wurth indicated in that affidavit that he wished to discontinue the proceedings for a number of reasons that included the fact that he has recently realised that Mr Betteridge is unlikely to have any assets with which to meet a judgment against him. In addition, Mr Wurth says that he and his daughter are both experiencing significant stress and anxiety through the lengthy process of obtaining a criminal conviction against Mr Betteridge as well as in the prosecution of these proceedings. Mr Wurth also described what he called "a waste of Court time and legal costs for solicitors and barristers for both parties to continue to act in these proceedings when it appears [Mr Betteridge] cannot meet a judgment." 8Annexed to Mr Wurth's affidavit is a medical report dated 19 April 2013 from Dr John Albert Roberts. Dr Roberts is a psychiatrist. He diagnosed Mr Wurth as suffering from post-traumatic stress disorder with features of depression, anxiety and suicidal ideation. He concluded that Mr Wurth's condition was substantially, but not solely, the result of the sexual assaults upon him by Mr Betteridge. He was of the opinion that Mr Wurth would benefit from long-term psychiatric intervention in the form of nominated medication and twice yearly psychiatric monitoring. Dr Roberts in effect opined that Mr Wurth's condition would be unlikely to improve without treatment but would in all likelihood respond to it. Dr Roberts offered no opinion about Mr Wurth's ability to deal with the stress of this litigation or upon the advisability or otherwise on medical grounds of discontinuing the proceedings. 9Mr Wurth also tendered costs agreements between Mr Betteridge and his solicitors and barrister respectively in support of the contention that Mr Betteridge will have incurred no legal costs if the proceedings are discontinued. That is said to be so by reason of the conditional nature of those agreements, which allegedly do not trigger an entitlement to solicitor and client costs if Mr Wurth discontinues the proceedings. In the case of Mr Betteridge's solicitors, that contention appears to be accurate. That is because they are only entitled to costs if there is a "successful outcome of the matter", which is agreed to be "a verdict and judgment" for Mr Betteridge. It also appears to be correct in the case of Mr Betteridge's barrister, whose entitlement to costs is conditional upon "the successful outcome of the matter", which is defined as a judgment in favour of Mr Betteridge or the payment of money to him, or an offer of settlement to Mr Betteridge that is either acceptable to him or that he is reasonably advised he should accept. 10Mr Betteridge did not swear an affidavit in support of his opposition to Mr Wurth's application. He relied upon an affidavit of Frances Therese McGowan sworn 16 April 2014. Ms McGowan deposed to the following matters. Mr Betteridge is 70 years of age, receives an age pension from Centrelink and resides in rented accommodation in Queensland. He owns no assets of any appreciable value and "is presently in severe financial difficulty." He is unable to afford the cost of travelling to Sydney for the hearing of the current application. 11Mr Betteridge previously retained other solicitors to act for him in these proceedings. That firm invoiced Mr Betteridge for fees totalling $10,333.55. I have not seen a copy of any costs agreement between Mr Betteridge and his former solicitors and I have not been advised whether or not payment of the costs charged by them is conditional upon some particular event or outcome in these proceedings. I am unable to say, therefore, that Mr Betteridge has a current or even a contingent liability to his former solicitors for the fees in question. 12The defence filed by Mr Betteridge was pleaded very economically. It contained one paragraph as follows: "1. In answer to the whole of the statement of claim, the [first] defendant says the alleged cause of action did not accrue within 3 years before the commencement of this action and the plaintiff's cause of action is therefore statute barred pursuant to the Limitation Act 1969" 13It was contended on behalf of Mr Betteridge that he has in the circumstances a complete defence to the proceedings and that Mr Wurth has no prospect of success. Mr Wurth has put that contention in issue. I have not seen any application that Mr Wurth proposes to make with respect to Mr Betteridge's Limitation Act defence or any evidence or submissions upon which Mr Betteridge proposes to rely to support it. I am not in a position to form or express a view about whether or not Mr Wurth or Mr Betteridge is more likely than the other to succeed on that issue. I an therefore not in a position to form a helpful view about whether or not Mr Betteridge would inevitably become entitled to the usual costs order upon the dismissal of the proceedings and judgment in his favour based upon this ground of defence. Disposition 14Doing the best I can it seems reasonably clear to me that the following matters emerge. First, Mr Wurth does not want to go to trial. This may be because the prospect of doing so is too emotionally difficult for him or because there is no prospect of a successful monetary or financial outcome. It may also be because the risk of Mr Betteridge mounting a successful limitation defence potentially exposes him to an adverse costs order. 15Secondly, Mr Wurth's fears of any victory that he might achieve being hollow are well founded. Mr Betteridge does not contest the fact that he has no assets of any value and indeed asserts precisely that. The proceedings would in that sense be a complete waste of time. Any further costs that Mr Wurth might incur in proving his case on liability, having regard to the terms of the defence, or of establishing his case on damages, would be wholly wasted whether he were successful or not. Mr Betteridge would also presumably be unable to afford to attend the hearing in just the same way that he has indicated he is unable to afford to attend the hearing of this application. 16Thirdly, Mr Betteridge does not, at least upon the material before me, appear to have incurred any liability to his present lawyers for costs that would be activated if the proceedings were discontinued. Neither of the costs agreements to which I have been referred characterises a discontinuance, whether with or without costs, as an event obliging Mr Betteridge to pay legal costs at all. I infer that if Mr Betteridge's previous solicitors had an unconditional agreement with him for costs, or an agreement that incorporated an obligation to pay costs in the foreshadowed circumstances, I would have been given evidence of the fact in terms. 17The practical difference between an order that Mr Wurth be granted leave to discontinue the proceedings with no order as to costs, and an order that he be permitted to do so on terms that obliged him to pay costs, is therefore non-existent. Mr Betteridge's lawyers cannot benefit from an order for costs that accompanies a discontinuance. Mr Betteridge does not otherwise appear to have incurred costs for which I am presently satisfied Mr Wurth would become liable. The further conduct of the proceedings in this Court would be a conspicuous waste of emotional and financial resources. 18In the exercise of my discretion I consider that Mr Wurth should be granted leave to discontinue these proceedings with no order as to costs. ********** 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 2014