Supreme Court New South Wales Medium Neutral Citation: AB v Constable Joshua Hedges (No 2) [2014] NSWSC 1768 Hearing dates: 31 October 2013 Decision date: 10 December 2014 Jurisdiction: Common Law Before: Hidden J Decision: Judgment for plaintiff Catchwords: COSTS - summary criminal proceedings - whether binding contract for payment by prosecutor of costs of defendant's costs established through correspondence Legislation Cited: Criminal Procedure Act 1986 Cases Cited: AB v Constable Joshua Hedges (No 1) [2013] NSWSC 814 Hadley v Baxendale (1854) 156 ER 145 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979-80) 144 CLR 577 Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 Tutt v Doyle (1997) 42 NSWLR 10 Category: Costs Parties: AB (plaintiff) Constable Joshua Hedges (1st defendant) Magistrate Albert Sbrizzi (2nd defendant) Representation: Counsel: Mr B Coles QC & Ms P Conway (plaintiff) Mr M Hutchings (1st defendant) Submitting appearance (2nd defendant) Solicitors: Mr Emanueli Oliveri, Oliveri Lawyers (plaintiff) Phillip Salem, Sparke Helmore Lawyers (1st defendant) IV Knight, Crown Solicitor (2nd defendant) File Number(s): 2012/76236 Publication restriction: Yes Judgment 1The background to this matter is to be found in my earlier judgment, of 21 June 2013, at [2]-[17]. In that judgment I refused an application by the plaintiff for judicial review of the magistrate's decision to set aside an order for the costs of the Children's Court proceedings which he had made in chambers. The outstanding issue is the claim for damages for breach of contract. 2In relation to [33] of my earlier judgment, no further application for costs in the Local Court has been pursued. The issues in the claim in contract have been articulated in points of claim and points of defence. The plaintiff's case is that the parties entered into a valid and enforceable contract by the correspondence to which I referred in [7] of my earlier judgment, that is, Mr Oliveri's letter to Sergeant Palmer of 29 April 2011 offering to settle the issue of costs for $90,730, and Sergeant Somers' email of 19 May conveying his instructions to accept that offer. To understand the issues raised, it is necessary to examine more closely the course of events after the issue of costs relating to the charge of resisting an officer was remitted to the Local Court by McCallum J. 3As I said in [25] of my earlier judgment, when the matter came back before the magistrate on 29 April 2011 it appears that his Honour understood, erroneously, that the issue had been remitted only on the question of quantum. It is apparent from the affidavits in this court that that misunderstanding was shared by Sergeant Palmer and Sergeant Somers. 4Mr Oliveri's letter conveying the settlement offer enclosed a copy of the written submissions prepared by counsel appearing for the plaintiff in the Local Court, to which I referred at [2] in my earlier judgment. The effect of those submissions was that there was no case to answer in respect of the charge of resisting an officer, and that in relation to the traffic offences the evidence failed to establish that the plaintiff had been the driver of the vehicle at the relevant time. The letter asserted that the settlement offer was open until the close of business on 20 May 2011 and that, if the matter were not resolved before that time, the plaintiff would incur further costs "in seeking appropriate costs orders from the Court." 5As I have said, the acceptance of the offer relied upon by the plaintiff was Sergeant Somers' email of 19 May 2011 conveying his instructions from the commander of the relevant Local Area Command to do so. Constable Hedges was stationed in that Area Command. The email went on to enquire whether Mr Oliveri required "any further documentation in this regard", and Sergeant Somers added that he would prepare a letter to be sent to the registrar of the court "indicating the costs hearing can be vacated due to the agreement reached." He enquired whether Mr Oliveri wanted him to include anything in that letter or preferred to send his own, and made a suggestion about the listing of the matter. 6Mr Oliveri responded by an email of the same day, saying that he did not believe that any further documentation was required to settle the matter, adding that it might be best for the matter to remain in the list until payment was made "as it may be necessary to have the Court make the orders." On 24 May Sergeant Somers emailed Mr Oliveri to tell him that "our procedures are such that I am unable to submit the forms which authorise payment until the magistrate actually makes the order in Court." This led to an email from Mr Oliveri to Sergeant Somers in which he expressed the view that the need to attend court might be disposed of by filing consent orders. The orders Mr Oliveri proposed were these: "1. Police to pay the defendant ... costs in the amount of $90,730. 2. Cheque to be made payable to Oliveri Lawyers." 7Sergeant Somers responded by an email of 17 June, confirming that he had instructions "to agree to the filing of consent orders for this matter in the amount agreed." It was three days later that Sergeant Somers emailed Mr Oliveri to inform him that "the prosecution in the costs matter ... withdraws the agreement to consent orders being filed." There then ensued the further correspondence summarised in my earlier judgment at [9]-[11]. 8For the plaintiff, Mr Coles QC submitted that the evidence established an agreement between the parties for the payment of costs in the amount specified. Mr Hutchings relied upon the view I expressed at [27]-[28] of my earlier judgment that an order for costs against the prosecution could not be made simply by consent, without the magistrate having found that one of the bases for that order under s 214(1) of the Criminal Procedure Act 1986 had been made out. However, Mr Coles submitted that there is nothing to prevent the parties reaching an agreement for the payment of costs without seeking an order of the court, and such an agreement would be binding. He noted that in Sergeant Somers' email of 19 May it was proposed that the costs hearing be vacated because agreement had been reached. 9Of course, as I have said, a few days later Sergeant Somers emailed Mr Oliveri to tell him that orders of the court had to be sought, and agreement was reached as to consent orders. This, Mr Coles argued, did not alter Constable Hedges' contractual obligation. He cited a passage from the judgment of Mason J (as he then was) in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979-80) 144 CLR 577. In the context of the factual issues in that case, which I need not examine, Mason J said at 607: "But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick [(1881) 6 App. Cas. 251, at p 263]: 'as a general rule ... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect'." 10Here, Mr Coles argued, the agreement was repudiated before the consent orders could be effectively entered. He submitted that the parties were contractually bound to seek the entry of those consent orders, which might have required the prosecution to concede that there was a basis for a costs order in s 214(1)(b), that is, that the proceedings were initiated without reasonable cause. Plainly enough, that basis was available. 11In response, Mr Hutchings submitted that the evidence fails as to establish any contract to which his client, Constable Hedges, was a party. He observed that there was no reference to Constable Hedges in any of the correspondence upon which the plaintiff relies. In particular, he noted that Mr Oliveri's offer of 29 April 2011 to settle the costs issue was addressed to Sergeant Palmer, that the response to that offer of 19 May emanated from Sergeant Somers, and that in that response Sergeant Somers purported to be acting on instructions from the commander of the relevant Local Area Command. Accordingly, Mr Hutchings argued, the correspondence of 29 April and 19 May did not bind Constable Hedges, as the purported acceptance of the offer by Sergeant Somers was not made with his authority, express, implied or ostensible. 12It should be noted that in the course of argument before me prior to the delivery of my earlier judgment, in response to my enquiry whether "for all intents and purposes Sergeant Somers was representing the informant", Mr Hutchings agreed that he was: see the judgment at [23]. However, viewed in context, I accept that that was not necessarily a concession that Sergeant Somers had the authority to bind Constable Hedges contractually. Nevertheless, for the reasons advanced by Mr Coles, I am satisfied that he did have that authority. 13Constable Hedges was the informant in the prosecution and, formally at least, is liable for any costs awarded. Of course, in practice that is not the case and he is a serving police officer subject to the discipline which that status involves, including the direction of the commander of the Local Area Command where he is stationed. On 29 April 2011, when the matter was before the magistrate after having been remitted by McCallum J, he was represented by the police prosecutor, on that occasion Sergeant Palmer. The author of the email of 19 May, Sergeant Somers, had been the prosecutor in the substantive Children's Court proceedings. It is apparent that the commander of the relevant Local Area Command gave instructions to accept Mr Oliveri's offer in his capacity as Constable Hedges' superior. 14It should also be noted, although it is not of itself determinative of the issue, that Constable Hedges has provided no evidence in these proceedings that the various steps relied upon by the plaintiff were taken without his authority. Nor is there any such suggestion in the affidavits of Sergeant Palmer and Sergeant Somers. 15It should also be noted that s 214 of the Criminal Procedure Act is expressed to deal with the award of professional costs against the "prosecutor" in criminal proceedings. The term "prosecutor" is defined in s 3 of the Act to mean "the Director of Public Prosecutions or other person who institutes or is responsible for the conduct of a prosecution and includes (where the subject-matter or context allows or requires) an Australian legal practitioner representing the prosecutor." Mr Coles pointed out that that definition would encompass Constable Hedges, as the person who instituted the prosecution in the present case, and Sergeant Somers, as the person responsible for the conduct of it. In that capacity, Mr Coles argued, Sergeant Somers was authorised to enter into correspondence with Mr Oliveri on the question of costs. 16Mr Coles' arguments are also an effective answer to Mr Hutchings' allied submission that the evidence does not establish that the offer to settle the issue of costs was ever made to a person with authority to accept it. In this context Mr Hutchings referred to a passage from the judgment of Starke J in New South Wales v Bardolph (1933-34) 52 CLR 455, at 502: "... contracts made on behalf of the Crown by its officers or servants in the established course of their authority and duty are Crown contracts, and as such bind the Crown. The nature and extent of the authority may be defined by constitutional practice or express instructions, or inferred from the nature of the office or the duties entrusted to the particular officer or servant. It is not every contract made or purporting to have been made by an officer or servant of the Crown on its behalf that will bind the Crown, but only such as are within the authority delegated to that officer or servant." 17It is not suggested that the Crown (or the State) is a party to the contract in the present case. The contract for which the plaintiff contends is one between him and Constable Hedges, as the informant in a summary prosecution. 18I am persuaded by the submissions of Mr Coles that the correspondence of 29 April and 19 May 2011 did constitute an enforceable contract for the payment of costs, to which Constable Hedges was a party. I accept that it was open to the parties to bind themselves by such an agreement without seeking an order of the court. I also accept that, if the prosecution wished to obtain consent orders, it was incumbent upon it to proceed in the manner articulated by Mr Coles. 19In the event that I found the contract established, Mr Hutchings sought an order that it be set aside on the basis that it was formed under the influence of a mistake of fact. This was expressed in the points of defence as follows: "... the first defendant says that it is entitled in equity to relief by way of rescission or rectification in respect of the asserted contract, which if entered into, was entered into under the influence of a material mistake of which the plaintiff 'knew or ought to have known'." 20It is not necessary for present purposes to examine authority on this form of relief, which was succinctly summarised by Handley JA in Tutt v Doyle (1997) 42 NSWLR 10 at 14-15. Nor is it necessary to deal with Mr Coles' submission that the claim for relief should be the subject of separate proceedings, citing Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 at 696-7: see [22] of my earlier judgment. 21The points of defence do not articulate the mistake alleged. However, in written submissions Mr Hutchings asserted that it was "tolerably clear" that the acceptance of the offer of settlement was founded upon a mistaken belief that McCallum J had remitted for rehearing the issue of costs for all six charges, including the traffic matters. This was said to be apparent from Mr Oliveri's letter of 29 April 2011 to which, as I have said, were attached the written submissions which were before the Local Court on the day on which the charges were withdrawn and the original application for costs was made. The letter stated that those submissions would be relied on if a rehearing were to proceed. The letter also enclosed the tax invoices for Mr Oliveri and for counsel of July 2010, obviously relating to the original proceedings in the Children's Court. 22However, there is no evidence from Constable Hedges asserting such a mistaken belief. Nor is there any suggestion to that effect in the affidavits of Sergeant Somers or Sergeant Palmer. Moreover, the transcript of the proceedings before the magistrate on 29 April 2011, when Sergeant Palmer and Mr Oliveri were present, records that his Honour said: "The Supreme Court said I made an error in not considering the issues of costs in relation to one of the charges. That's been remitted back to this court, to deal with the issue of costs in relation to one charge, a charge of resist police." 23The fact that Mr Oliveri in his letter of the same day attached the written submissions which were originally before the magistrate, asserting that they would be relied upon, does not convey that the costs of the proceedings generally were to be re-agitated. It is consistent with an intention to rely upon so much of them as was relevant to the rehearing, that is, the costs of the charge of resisting an officer. Equally, although the original tax invoices of solicitor and counsel were enclosed with the letter, the offer to reduce them by $17,000 is consistent with the recognition of a more limited claim. The claim of mistake of fact in this respect is not made out. 24In para 2 of the points of defence, recording the decision of McCallum J and referring to the brief hearing before the magistrate on 29 April 2011, it is noted that the magistrate "indicated the only issue was quantum." That was not referred to in the written submissions as a mistake of fact founding equitable relief. As I have said, Sergeant Somers and Sergeant Palmer deposed to the same misunderstanding, and reference was made to it by Mr Hutchings in oral submissions on this aspect of the matter. 25Nevertheless, I understood Mr Hutchings to be referring to it as an additional matter demonstrating a misunderstanding of the basis of McCallum J's remitter of the issue, rather than as a discrete basis for relief. Mr Coles characterised it, in any event, as a mistake of law rather than one of fact. Moreover, Mr Oliveri's letter of 29 April 2011, asserting reliance upon the written submissions as to the merit of the prosecution in the event of a rehearing, clearly anticipated that entitlement to costs under s 214 would, if necessary, be litigated. This matter could not provide a basis for rescission or rectification consistently with the principles summarised by Handley JA in Tutt v Doyle (supra). 26Accordingly, I am satisfied that the plaintiff is entitled to recover the amount which was the subject of the contract, $90,730. However, the plaintiff also seeks as damages the costs expended in opposing the application to set aside the consent order made by the magistrate on 6 March 2012, an amount of $41,723. Mr Coles submitted that they were damages properly considered as "arising naturally, ie according to the usual course of things," from the breach of contract: Hadley v Baxendale (1854) 156 ER 145. 27This aspect of the matter has troubled me, but I have concluded that those costs do not meet that test and are not recoverable. The entry of the consent order in the circumstances in which it occurred was an unexpected development, as the parties were expecting to deal with the matter on the day appointed for the rehearing, 28 July 2011. The entry of the order was irregular for the reasons I have given in my earlier judgment at [24]-[28], and it had to be set aside. That was so notwithstanding the fact that it was consistent with the contract the parties had entered into. It was open to the plaintiff to consent to the order being set aside without prejudice to his contractual rights. 28I shall consult the parties about the formal orders to be made and hear argument on 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: 10 December 2014