Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Racing New South Wales v Fletcher (No 2) [2020] NSWCA 67 Hearing dates: On the papers Decision date: 17 April 2020 Before: Bell P Meagher JA Payne JA Decision: Order that the respondent pay the appellant's costs of the proceedings at first instance and the costs of the written argument concerning the making of this order. Catchwords: COSTS – appeals – costs of proceedings at first instance – where judgment overturned on appeal – whether successful appellant's conduct as defendant invited litigation so as to disentitle it to costs at first instance – whether respondent had partial success as plaintiff at first instance on issue of substance – whether proceedings of "public importance" so as to warrant departure from ordinary rule that costs follow the event – no departure justified – respondent ordered to pay costs of proceedings at first instance Cases Cited: Botany Bay City Council v Minister for Local Government (No 2) [2016] NSWCA 127 Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Latoudis v Casey 170 CLR 534; [1990] HCA 59 People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) [2017] NSWCA 157 Ruddock v Vadarlis (No 2) [2001] FCA 1865 Category: Costs Parties: Racing New South Wales (Appellant) Stephen Fletcher (Respondent) Representation: Counsel: G Ng (Appellant) A Cheshire SC and S Jeliba (Respondent) Solicitors: YPOL Lawyers (Appellant) Cockburn & Co Pty Ltd (Respondent) File Number(s): 2019/142713 Publication restriction: Nil [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.] Judgment 1. THE COURT: The parties have been unable to reach agreement as to whether any, and if so what, costs order should be made in relation to the proceedings at first instance. That makes it necessary for the Court to address and determine that question: Racing New South Wales v Fletcher [2020] NSWCA 9 at [31]. It is to be recalled that the primary judge made no order as to the costs of the proceedings below on the basis that each "party has attained partial success": Fletcher v Racing NSW [2019] NSWSC 358 at [150]. 2. Mr Fletcher's primary position is that the Court should not determine this question in circumstances where Racing NSW made no submissions about those costs on the concurrent hearing of the application for leave and the appeal, and the appeal papers did not contain "all of the evidence that is relevant to an assessment of the costs below". In the alternative Mr Fletcher contends that no order for costs should be made in favour of Racing NSW for three reasons - Racing NSW's conduct "disentitles it to an award of costs"; the proceedings concerned in part "issues of privilege" on which he was successful; and the proceedings concerned issues of public importance making it appropriate that there be no order as to costs. In response, Racing NSW maintains that the outcome of the appeal is that it was successful on the only substantial issue on which it failed at first instance and accordingly it is entitled to an order for its costs of those proceedings. In other words, having regard to the outcome of the appeal it could no longer be said that Mr Fletcher had any degree of "partial success". 3. Mr Fletcher's primary position is without merit. The orders sought by Racing NSW in its notice of appeal included an order that Mr Fletcher pay its costs of the proceedings below. In the argument of the appeal, neither party addressed the Court as to the costs consequences for the proceedings at first instance which might follow if the appeal was allowed, no doubt considering it appropriate to await the outcome of the Court's decision before addressing that subject. That approach was both sensible and not uncommon, and to accommodate it the Court gave the parties an opportunity to agree on that costs order and directed that in the absence of agreement they should exchange and provide the Court with written submissions. Those written submissions were received. Neither party sought to rely on any further affidavit evidence as relevant to the determination of that question. Although the Court did not expressly give leave to rely on such evidence, it was plainly open to the parties to make an application to do so. In these circumstances, Mr Fletcher's submission, that having received written submissions on the issue the Court "could not" determine it, is rejected. 4. We turn now to Mr Fletcher's submission that no adverse order should be made against him in relation to the costs at first instance. The starting point is that if on appeal it is determined that the appropriate way for this Court to remedy error in the court below is to set aside the judgment and enter judgment for a different party, Uniform Civil Procedure Rules 2005 (NSW), r 42.1 requires that the costs at first instance and on appeal be awarded to the successful appellant, unless there is reason to do otherwise: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [62] (Campbell JA, Young and Meagher JJA agreeing); see also Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 at [16] (Black CJ and French J (as his Honour then was)) . 5. As the introductory comments in the reasons of the primary judge make clear the question raised by Mr Fletcher's claim was whether he was entitled to deny Racing NSW access to information on his mobile phone about racing activities not directly relevant to its inquiry into the betting activities of Mr and Mrs Snow. That question arose notwithstanding that Mr Fletcher had initially complied with the Racing NSW Stewards' direction that he deliver that phone into their possession. In doing so he also provided them with a password thereby facilitating their accessing and copying the information on it. That compliance was secured on the basis that the Stewards agreed he would be allowed "an opportunity to quarantine information in respect of which he anticipated asserting a claim for legal professional privilege": [2019] NSWSC 358 at [2]. That privilege claim related in particular to communications concerning criminal charges then pending against Mr Fletcher in the District Court. He was later acquitted of those charges: R v Fletcher [2019] NSWDC 587. 6. The primary judge also observed "having done little since the commencement of these proceedings to particularise and prove his claim to legal professional privilege [Mr Fletcher] seeks an opportunity to establish his claim for privilege beyond the opportunity which, in consultations between the parties' legal representatives before the commencement of the proceedings, [Racing NSW] afforded him": [2019] NSWSC 358 at [2]. There was no issue between the parties that Mr Fletcher should have that opportunity, Racing NSW having "consistently maintained that [Mr Fletcher] … be allowed a reasonable opportunity to particularise and prove any entitlement he may have to legal professional privilege. It… also consistently disclaimed any interest in communications between [him] and his lawyers and communications relating to the criminal charges pending against him": at [7]. 7. Although the primary judge made orders setting a timetable for the determination of any "claim of privilege to be made" by Mr Fletcher, the enforcement of any such claims was not raised or relied on as the basis for commencing Mr Fletcher's claims to injunctive relief and to delivery up of any material recording information obtained from his phone. Rather the position in relation to that subject was as recorded by the primary judge at [134] and [135]: [Mr Fletcher's] solicitors initially engaged constructively with the defendant in identification of data which might be the subject of an entitlement to privilege. That data was, co-operatively, quarantined so as to be beyond the investigative reach of the defendant. When [Mr Fletcher] commenced these proceedings challenging the validity of the stewards' direction to hand over his mobile phone, his attention was diverted away from a continuing need to assert, and to establish, any claim of privilege he proposed to make. 1. Mr Fletcher's argument that Racing NSW engaged in "disentitling" conduct in essence contends that it acted peremptorily or arbitrarily in refusing him a sufficient opportunity to claim privilege over parts of the contents of his phone, thereby making it necessary for him to commence the proceedings. That assertion is not supported by reference to Mr Fletcher's claim as formulated, and is contradicted by the primary judge's observations extracted above. At [101] the primary judge found that Racing NSW had taken possession of the phone "on an agreed basis that [Mr Fletcher] would be allowed a reasonable opportunity to assert, and prove, an entitlement to legal professional privilege". No relief was sought to enforce that arrangement. 2. There was no need to commence the proceedings to maintain or protect any entitlement to legal professional privilege because Racing NSW "consistently disclaimed any interest in communications between [Mr Fletcher] and his lawyers and communications relating to the criminal charges pending against him". The submission that there was any "disentitling conduct" warranting a departure from the ordinary rule as to costs is rejected. 3. Mr Fletcher's submission that his "success" in "obtaining orders concerning privileged material" justified a departure from the ordinary rule as to costs must also be rejected. As the discussion above makes clear there was no dispute as to Mr Fletcher's entitlement to a reasonable opportunity to particularise and maintain his claim to legal professional privilege. That the primary judge made incidental directions to assist the parties to give effect to that entitlement does not alter the fact that in the light of the outcome on appeal Mr Fletcher did not succeed on any substantive issue so as to justify a departure from the ordinary rule. 4. Finally, it is submitted that because the proceedings on appeal raised a question of "public importance", no order as to costs should be made. That question was identified in the judgment of Meagher JA at [8] in discussing whether or not leave to appeal should be granted. In that context his Honour said that "[i]n circumstances where the statutory functions and duties of Racing NSW include to 'control, supervise and regulate horse racing' in this State, the resolution of questions as to the scope of its powers conferred for that purpose is a matter of significant public importance". 5. The common law has long recognised that the "compensatory principle" underlying the ordinary rule as to costs is subject to a limited public interest qualification: Latoudis v Casey 170 CLR 534; [1990] HCA 59 at 538 (Mason CJ) 557 (Dawson J) and 567 (McHugh J); Ruddock v Vadarlis (No 2) at [14]. It has been said that the process of characterising proceedings as in the "public interest" is one which proceeds in a principled manner and looks to substance rather than form: People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) [2017] NSWCA 157 at [35] (Meagher, Ward and Payne JJA). A number of factors are relevant to that question of characterisation including the nature of the proceedings, the relief sought and the motivations of the party bringing the proceedings. Furthermore the characterisation of proceedings as being in the "public interest" is not by itself a sufficient condition to warrant a departure from the ordinary rule as to costs: People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) at [40] (Meagher, Ward and Payne JJA); Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 at [45] (Bennett J). To proceed otherwise would bring about absurdity because to the extent that there is a general public interest in the rule of law, every exercise of judicial power involves to some degree a question of public importance. As was said in Botany Bay City Council v Minister for Local Government (No 2) [2016] NSWCA 127 at [17] (Bathurst CJ, Beazley P and Ward JA): [B]y the very nature of the adversarial common law tradition, the success of one party in proceedings will often, if not inevitably, entail a clarification of the law to some extent or in some respect. In that light, it is hard to see how clarification of the law could amount to a factor tending strongly in favour of a departure from the usual rule as to costs. 1. Whilst the present proceedings did raise questions as to the statutory functions and duties of Racing NSW which are plainly of significant public importance, those questions were raised solely in relation to the validity of an exercise of power which affected Mr Fletcher and, perhaps, other people associated with him by information found on his phone. The proceedings were ultimately concerned with the vindication of Mr Fletcher's private rights and interests, and for that reason are not properly characterised as brought in the public interest. Furthermore, Mr Fletcher does not point to any other compelling reason flowing from the "public importance" of the issues raised as to why this Court should depart from that ordinary rule. For example, it is not suggested that he was or is impecunious, or that he took any steps to alter the manner in which he conducted the litigation to ensure that particular questions of public importance were adequately ventilated. For these reasons, this is not a case in which a departure from the ordinary costs rule is justified. 2. In the result Mr Fletcher should pay the costs of Racing NSW at first instance and the costs of the written argument concerning the making of this order, those costs to be assessed on the ordinary basis. ********** 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 April 2020