AW v State of NSW

[2005] NSWSC 1173

CITATION:	AW & Ors v State of NSW [2005] NSWSC 1173
HEARING DATE(S):	18/11/05
JUDGMENT DATE :	30 November 2005
JUDGMENT OF:	Bell J at 1
DECISION:	1. The first plaintiff is to pay twenty percent of the defendant’s costs of the proceedings not previously dealt with; 2. the defendant is to pay the second and third plaintiffs their costs of the proceedings, not otherwise dealt with, limited to the costs of briefing one set of counsel (senior and junior) and one firm of solicitors to be apportioned fifty percent as to the second plaintiff on a party and party basis and fifty percent as to the third plaintiff on a party and party basis to 11 July 2003 and thereafter on an indemnity basis; such costs to be calculated on the basis that allowance is made for representation of up to one senior counsel, one junior counsel and one solicitor in court on any hearing day; allowance for out of court work by counsel not involving duplication that is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that related to the claim of the first plaintiff specifically; allowance for out of court work by Greg Walsh & Co, Solicitors, not involving duplication, that is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that which is related to the claim of the first plaintiff specifically; 3. allowance is to be made for the work done by Verekers Solicitors in the period 18 July 2003 to 17 September 2003 that is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically but not that which is related to the claim of the first plaintiff specifically and not that which is in duplication of work done by Greg Walsh & Co.

CATCHWORDS:	Costs judgment
LEGISLATION CITED:	Civil Procedure Act 2005 Crown Proceedings Act 1988 Supreme Court Rules 1970 Uniform Civil Procedure Rules 2005
CASES CITED:	AW & Ors v State of New South Wales [2005] NSWSC 543 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 Cummings v Lewis (1993) 113 ALR 285 Monier Ltd v Metalwork Tiling Company of Australia (No 2) (1985-6) 43 SASR 588 Ritter v Godfrey [1920] 2 KB 47 Toomey v John Fairfax & Sons Ltd (1985) 1 NSWLR 291 Vignoli v Sydney Harbour Casino Pty Ltd [1999] NSWSC 1227
PARTIES:	AW (First Plaintiff) LW (Second Plaintiff) JS (Third Plaintiff) State of NSW (Defendant)
FILE NUMBER(S):	SC 20218/99
COUNSEL:	L Whalan (First Plaintiff) D.R. Campbell SC / L. Whalan (Second Plaintiff) D.R. Campbell SC / L. Whalan (Third Plaintiff) C.F. Hodgson (Defendant)
SOLICITORS:	Greg Walsh & Co (First, Second and Third Plaintiffs) Crown Solicitors (Defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Wednesday 30 November 2005

20218/99 AW & Ors v State of New South Wales

JUDGMENT - Costs

1 BELL J: Judgment was delivered in this matter on 5 July 2005: AW & Ors v State of New South Wales [2005] NSWSC 543. There was a verdict for the defendant on the claim brought by the first plaintiff and verdicts for the second and third plaintiff on the claims that each brought for the torts of malicious prosecution and false imprisonment. The second plaintiff was awarded damages of $35,000 for her claim of false imprisonment and damages of $65,000 for her claim for malicious prosecution. A substantial component of the damages in respect of each cause of action was exemplary damages. The third plaintiff died before judgment was delivered and the second plaintiff as trustee of the estate of the third plaintiff was substituted as third plaintiff by leave granted on 30 June 2005. The third plaintiff was awarded damages of $25,000 on her claim for false imprisonment and damages of $40,000 on her claim for malicious prosecution.

2 The parties were invited to have the proceedings re-listed in order to make submissions on any issue with respect to the interest component of the judgment sums and costs. On 18 August 2005 the proceedings were re-listed to this end. There was agreement with respect to interest and judgment was entered for the second plaintiff in the sum of $107,933.33 and for the third plaintiff in the sum of $79,191.67. Written submissions were received from the parties on the question of costs. It was not possible to hear full argument on the costs issue on that day. The proceedings were stood over to 18 November. I received supplementary written submissions on behalf of each of the parties. Subsequently by leave the second and third plaintiffs and the defendant each delivered a further short submission on the form of any order and the defendant submitted a further submission in reply.

3 The proceedings were commenced by statement of claim by which each plaintiff pleaded a cause of action in negligence against the defendant on the basis of its liability for the acts of certain police and officers of the Department of Community Services. On 28 September 2001 O’Keefe J struck out the pleading and gave the plaintiffs leave to amend in order to plead causes of action for malicious prosecution and abuse of process. By further amended statement of claim filed on 21 December 2001 each of the plaintiffs pleaded causes of action in accordance with the grant of leave. None pleaded a claim for damages for false imprisonment. The first and second plaintiffs pleaded as a material fact that the arrest of each had been wrongful and without just cause or excuse.

4 On 17 July 2003 the proceedings came before Whealy J. Mr Campbell SC, who appeared on the plaintiffs’ behalf, informed the Court that a problem had arisen in connection with the plaintiffs being jointly represented and that leave would be sought to file further amended statements of claim and for one of the plaintiffs to be represented by another solicitor. Mr Hodgson, who appeared on the defendant’s behalf, noted that the course proposed might have costs implications (T 17/06/03 2.4-6).

5 On 18 July 2003 Whealy J made orders giving leave to the third plaintiff to appoint a solicitor to represent her in the proceedings in substitution for Gregory Walsh, Solicitor, and to file a second further amended statement of claim naming her new solicitor as the solicitor on the record, reserving the defendant’s position as to any substantive amendments.

6 Pursuant to the orders made by Whealy J, a notice of change of solicitor, appointing Robert John Tassell, Solicitor, of Verekers Lawyers, dated 22 July 2003 was filed on the third plaintiff’s behalf on 28 July 2003. The third plaintiff filed a second further amended statement of claim on 25 July 2003. Conformably with the grant of leave, the defendant’s position with respect to the third plaintiff’s right to include a claim for false imprisonment was reserved. On 18 August 2003, which was the first day of the trial, each plaintiff sought leave to amend to plead a cause of action for the tort of false imprisonment. The defendant opposed the grant of leave. The amendment was allowed.

7 The facts that gave rise to the claims were largely common to each of the plaintiffs’ cases. The hearing occupied sixty-one days.

8 At the commencement of the trial the first plaintiff was represented by Mr Bartley SC with Mr Kostopoulos and Ms Whalen. The second plaintiff was represented by Mr Bartley SC with Mr Campbell SC, Mr Kostopoulos and Ms Whalen. The third plaintiff was represented by Mr Campbell with Mr Kostopoulos and Ms Whalen. The retention of two junior counsel was for a brief time only and thereafter Ms Whalen was the sole junior counsel briefed on the plaintiffs’ behalf in the proceedings.

9 The first plaintiff submits that notwithstanding that he was unsuccessful on each of his claims the Court should depart from the usual order and make a costs order in his favour or, alternatively, direct that he and the defendant bear his/its own costs.

10 Findings that were said to be “in favour of AW” were set out in written submissions filed on his behalf and it was noted that the issue of absence of reasonable and probable cause with respect to the charges laid on 23 June had been resolved in his favour (WS, 15 August 2005, [27]). It was submitted that the defendant had put the first plaintiff to strict proof in relation to this issue and this had occupied a substantial part of the trial. The first plaintiff relied on the observations of Cooper J (with whom Sheppard and Neaves JJ agreed) in Cummings v Lewis (1993) 113 ALR 285 at 327-328 contending that the defendant had unreasonably prolonged the trial and that this consideration justified a departure from the usual order.

11 I do not consider that the conduct of the defendant with respect to proof of the element of absence of reasonable and probable cause for the 23 June charges was unreasonable. A good deal of the oral evidence, which occupied some fifty days, was taken up with issues that were relevant to proof of malice: the relationship between MOD and SW; the conduct of police interviews with JW; the circumstances in which the personal violence order was taken out against JS. Some factual issues such as the scope of the investigation prior to 23 June were relevant both to a consideration of reasonable and probable cause and to malice. A further body of evidence related to the circumstances surrounding the arrest of each of the plaintiffs. My impression is that the amount of time that was devoted to proof of the absence of reasonable and probable cause for the 23 June charges was not substantial. The determination of this issue turned largely on an analysis of the material that was available to MOD as at 23 June. The statements of SW and EW formed part of the plaintiff’s tender bundle. Some time was taken up with the question of the contents of the disclosures made by SW to MOD on 19 April 1994 and with the circumstances in which the annotations came to be made to the Cruickshank statement.

12 In supplementary written submissions the first plaintiff contended that the defendant’s conduct justified an order that it pay his costs or in the alternative that each party bear his/its own costs. The court was invited to take into account the “the serious misconduct of the State” evidenced by a number of findings (WS, 24 October 2005, paragraph (1a) – (c)). Reliance was placed on Ritter v Godfrey [1920] 2 KB 47 and Monier Ltd v Metalwork Tiling Company of Australia (No 2) (1985-6) 43 SASR 588 at 592. The serious misconduct that the first plaintiff asserts arises from the findings as to the absence of reasonable and probable cause.

13 The finding that the prosecution of the first plaintiff on the complaints of SW and EW in respect of the thirty-eight charges that were laid against him on 23 June was lacking in reasonable and probable cause does not support the contention that the defendant engaged in misconduct. To my mind this case is far removed from the considerations with which the Court was concerned in Monier. The findings that that the first plaintiff relies on were, as the defendant submits, findings of error and not of impropriety.

14 The first plaintiff failed on each of his claims and there is no reason why costs should not follow the event. As the defendant acknowledged, it is not possible to determine with precision the amount of costs of the proceedings that were attributable solely to the claims brought by the first plaintiff. The defendant proposed as a practical rule of thumb that one third of the costs of the proceedings be attributed to the claims brought by the first plaintiff.

15 It is true that the trial would have been shorter had the first plaintiff not been brought his claims. However, I do not believe that it would have been shorter by one third. The circumstance that the first plaintiff was charged with a greater number of charges than the second or third plaintiffs is not a matter of moment. The second plaintiff proceeded on a third further amended statement of claim. She pleaded facts in support of her cause of action in malicious prosecution including the interview and charging of the first plaintiff on 19 April and the further charges laid against him on 23 June. The third plaintiff also relied on proof of these facts in support of her claim. In my view, it is reasonable to assess twenty percent of the costs of the proceedings as being attributable solely to the claims brought by the first plaintiff.

16 I turn now to the costs with respect to the claims brought by the second and third plaintiffs. They submit that they are entitled to an order for their costs to be paid on an indemnity basis from the date the proceedings were commenced. In the alternative, they submit that their costs should be awarded on a party/party basis to the day following the making of offers of compromise and from that date on an indemnity basis.

17 The defendant submitted that the second and third plaintiffs ought not to obtain an order for costs. Their awards of damages, individually and in the aggregate, were for an amount less than $250,000. In written submissions, dated 17 August 2005, the defendant relied on the provisions of Pt 52A

r 33 of the Supreme Court Rules 1970 (SCR), submitting that the proceedings fell well within the jurisdictional limit of the District Court and that the plaintiffs had not established that there was sufficient reason for commencing or continuing them in this Court. It was submitted that costs should be dealt with pursuant to the SCR, notwithstanding that the Civil Procedure Act 2005 had come into effect. This submission was not pursued at the resumed hearing on 18 November 2005. The Uniform Civil Procedure Rules 2005 (UCPR) do not contain a corresponding provision to the provisions of Pt 52A r 33 of the SCR. The defendant accepted that Sch 6 cl 10 of the Civil Procedure Act does not apply and thus did not press that this issue be dealt with pursuant to the SCR. In the defendant’s submission, the circumstance that the proceedings had been commenced and maintained at a time when Pt 52A r 33 of the SCR was in force was a relevant matter to take into account in the exercise of the general discretion.

18 I do not consider the fact that the second and third plaintiffs’ claims were commenced and continued in this Court at a time when Pt 52A r 33 of the SCR was in force to be a matter that should be taken into account as justifying depriving them or some or all of the costs to which they may otherwise be entitled. In my view the second and third plaintiffs had sufficient reason for commencing and continuing their claims in this Court. The allegations made in support of their claims were of a most serious character and each was entitled to seek vindication in this Court: Toomey v John Fairfax & Sons Ltd (1985) 1 NSWLR 291; Vignoli v Sydney Harbour Casino Pty Ltd [1999] NSWSC 1227.

19 The defendant submitted that neither the second nor the third plaintiff had been successful on the whole of her claims. Each pleaded a cause of action in the tort abuse of process. These claims were not successful. Neither of these claims issued any prominence at the trial and no time was occupied pursuing them. The second plaintiff did not succeed with respect to that part of her claim of malicious prosecution arising out of the prosecution of the charges laid on 23 June and in January 1995. Neither plaintiff was successful with that part of her claim arising out of the maintenance of the prosecution after the Director of Public Prosecutions (the Director) took over the conduct of the proceedings. The second plaintiff was not successful on that part of her cause of action in malicious prosecution that related to the charges laid on or after 23 June. Evidence relating to the charges preferred against the first and second plaintiffs on 23 June was relevant to the third plaintiff’s case of malicious prosecution. By her fourth further amended statement of claim the third plaintiff pleaded as a material fact the charging of the first and second plaintiffs with a number of further counts of aggravated sexual assault on their children on 23 June. While some focus in the course of submissions was directed to the role of the Director in taking over the prosecution and to the factual issue of when that had occurred, comparatively little time was taken up in evidence with that part of the claims that related to the maintenance of the prosecutions.

20 I do not consider in the context of the conduct of this lengthy trial that it is appropriate to structure the costs order to take account of the defendant’s success on discrete issues. It is to be recalled that a considerable amount of hearing time was occupied with the evidence of MOD, a witness called by the defendant whose evidence in the event was not completed.

21 In written submissions, dated 21 October 2005, it was contended on behalf of the second and third plaintiffs that an award of costs on the indemnity basis should be made from the date of the originating process. For the second plaintiff, it was submitted that the order should be made, in light of the findings that are set out in paragraph 6(a) – (j) (WS 21 August 2005). For the third plaintiff, reliance was placed on the findings set out in paragraph 7(a) – (g)(WS 21 August 2005). The plaintiffs also rely on the defendant’s failure to offer an apology and to the circumstance that officers in its employ (or former employ) attested to their continued belief in the plaintiffs’ guilt throughout the trial.

22 The proceedings were originally framed as a claim in negligence. The second and third plaintiffs have not established that it would be appropriate to make an order for costs on the indemnity basis from the date of the filing of the originating process. The findings of malice on which the plaintiffs rely do not justify an order that their costs be paid on the indemnity basis. No feature of the conduct of the litigation is identified in support of the claim for an order that costs be paid on the indemnity basis from the date of the commencement of the proceedings: see Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J at 256-257.

23 On 10 July 2003 the second plaintiff made an offer of compromise in the sum of $100,000, which was expressed to expire on 11 August 2003. On 10 July 2003 the third plaintiff made an offer of compromise in the sum of $50,000, which was expressed to expire on 11 August 2003.

24 At the time each plaintiff’s offer of compromise was made causes of action were pleaded in malicious prosecution and abuse of process. The defendant was on notice of the third plaintiff’s intention to enlarge her claim to include a count of false imprisonment prior to the expiration of her offer. The defendant’s right to object to this substantive amendment had been reserved in the orders made by Whealy J on 18 July 2003 and was exercised by it.

25 Part 42 r 42.1(4) of the UCPR provides:

42.14 Where offer not accepted and judgment no less favourable to plaintiff (cf SCR Part 52A, rule 22; DCR Part 39A, rule 25)

42.14 (1) This rule applies if the offer concerned is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim concerned no less favourable to the plaintiff than the terms of the offer.
(2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim:
(a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and
(b) assessed on an indemnity basis:
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

26 The defendant acknowledges that the judgments in favour of the second and third plaintiffs are more favourable than their offers of compromise. In its submission it does not flow from this that an order for indemnity costs from the day after the making of the offers should be made. This is because the offers were made on the claim pleaded in the further amended statement of claim filed on 21 December 2001. Neither plaintiff pleaded claims in false imprisonment. The offers expired prior to leave being granted to amend the statements of claim in each case to include a count claiming damages for false imprisonment. No further offer was made after the amendment of the claims. Neither plaintiff obtained a judgment on her claim for malicious prosecution that was no less favourable than the terms of her offer.

27 Mr Campbell noted that the second plaintiff had pleaded the fact of her wrongful arrest and imprisonment and that in this respect her case had been made known to the defendant at the time of her offer. The fact is that she was not making a claim for damages in respect of the tort of false imprisonment at the date of her offer.

28 Mr Campbell submitted that in considering the third plaintiff’s claim it was open to take into account that, but for her death during the course of the proceedings, she would have received an award of exemplary damages on her claim for malicious prosecution, which would have resulted in an award of damages on that count in excess of the terms of her offer. The defendant fairly conceded in light of the findings that this must be so. However, in its submission it remained that in the event the third plaintiff does not bring herself within the Rule.

29 The third plaintiff’s damages on the malicious prosecution count with interest as at the date of her offer was of the order of $47,000. While the offer remained open the defendant was on notice of her intention to seek leave to amend so as to include a count for false imprisonment. The judgment exceeds her modest offer by a significant amount when consideration is given to the damages on both causes of action. Her claim in malicious prosecution alone would have produced a judgment no less favourable to her than the offer had it been delivered during her life. I consider that the proper exercise of discretion favours the award of costs on the indemnity basis from the day after the making of her offer.

30 I have concluded that it is not appropriate to make an order that the second plaintiff’s costs be paid on the indemnity basis. At the time she made her offer of compromise her claim was for malicious prosecution and abuse of process. She did not succeed on a substantial part of this claim and her offer was for a sum well in excess of the damages awarded on it.

31 At the commencement of the trial, Mr Donovan QC, who with Mr Hodgson appeared on the defendant’s behalf, submitted that the circumstance that the third plaintiff was proceeding on a separate statement of claim with separate representation had the potential to prejudice the defendant (T 50). He returned to this concern in the course of submissions on 10 September, observing that at the time the orders were made by Whealy J they had been supported on the basis of a possible conflict and that in the event none had emerged. Mr Campbell responded:

What happened in this case is Mr Walsh at the beginning took on the task of trying to look after three plaintiffs in a very difficult case and it became apparent that it was an inconvenient joinder. … And it became apparent that Mr Walsh may have to give evidence in the proceedings. Well, that has happened, but it has not been a matter of great moment. There is always the possibility of some unforeseen conflict arising in the course of the case. (T 851)

32 On 17 September 2003 Mr Tassell filed a notice of ceasing to act on behalf of the third plaintiff and Mr Walsh resumed acting for her.

33 Each of the parties provided further written submissions as to the form of any order. The defendant submitted that any order in favour of the second and third plaintiffs should provide that each receive fifty percent of their costs of the proceedings not otherwise dealt with, those costs being limited to the costs of briefing one set of counsel (senior and junior) and one firm of solicitors. In the defendant’s submission the following limitations should apply:

1. Allowance should be made for representation of up to one senior counsel, one junior counsel and one solicitor in court on any hearing day;
2. allowance should be made for out of court work by counsel, not involving duplication, which is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that which is related to the claim of the first plaintiff specifically;
3. allowance should be made for out of court work for Greg Walsh & Co, Solicitors, not involving duplication, which is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that which is related to the claim of the first plaintiff specifically, and also for work by Verekers, Solicitors, for the period from 18 July 2003 to 17 September 2003 which is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that which is related to the claim of the first plaintiff specifically, and not that which is in duplication of work done by Greg Walsh & Co.

34 The second plaintiff acknowledged that there had been no occasion for her to be represented by two senior counsel.

35 The second and third plaintiffs acknowledged that any order for costs in their favour should be expressed to be subject to the following limitations:

No additional brief on hearing fees for senior and junior counsel – i.e. one brief fee for senior and junior counsel.
Excepting the period when Verekers were instructing, there will only be claimed fees for one instructing solicitor only.
During the period respecting Verekers involvement (18/7/2003 – 17/9/2003), Verekers ought be allowed to charge fees for work done concerning JS and Greg Walsh & Co for work done concerning LW.

36 Mr Campbell submitted that an order structured such as to allow each of the plaintiffs fifty percent of their costs of the proceedings would deprive them of the indemnity to which they are entitled and that to allow each fifty percent of preparation/conference times would deprive recovery of the balance, thus imposing on each an unjust result. I consider the form of order proposed by the defendant to make appropriate provision for preparation/conference time without duplication thereby avoiding injustice to the defendant. The interests of the second and third plaintiffs were substantially similar. I consider an order allowing the second and the third plaintiffs fifty percent of their costs of the proceedings subject to the limitations proposed by the defendant to achieve a result that is just.

ORDERS

1. The first plaintiff is to pay twenty percent of the defendant’s costs of the proceedings not previously dealt with;

2. the defendant is to pay the second and third plaintiffs their costs of the proceedings, not otherwise dealt with, limited to the costs of briefing one set of counsel (senior and junior) and one firm of solicitors to be apportioned fifty percent as to the second plaintiff on a party and party basis and fifty percent as to the third plaintiff on a party and party basis to 11 July 2003 and thereafter on an indemnity basis; such costs to be calculated on the basis that allowance is made for representation of up to one senior counsel, one junior counsel and one solicitor in court on any hearing day; allowance for out of court work by counsel not involving duplication that is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that related to the claim of the first plaintiff specifically; allowance for out of court work by Greg Walsh & Co, Solicitors, not involving duplication, that is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically, but not that which is related to the claim of the first plaintiff specifically;

3. allowance is to be made for the work done by Verekers Solicitors in the period 18 July 2003 to 17 September 2003 that is related to the proceedings generally, the claim of the second plaintiff specifically or the claim of the third plaintiff specifically but not that which is related to the claim of the first plaintiff specifically and not that which is in duplication of work done by Greg Walsh & Co.

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