Daoud v GIO General Limited

[2012] NSWSC 29

Supreme Court

New South Wales

Medium Neutral Citation:

DAOUD v GIO GENERAL LIMITED [2012] NSWSC 29

Hearing dates:

1 September 2011

Decision date:

04 April 2012

Before:

HALL J

Decision:

(i) An order that the respondent pay the appellant's costs of the proceedings commenced by Summons in this Court on the ordinary basis.

(ii) An order that the order of the Local Court awarding costs for the proceedings in that Court against the appellant be set aside.

Catchwords:

Costs, where new trial ordered - special circumstances justifying departure from general rule that costs of first trial should abide the second trial - no special circumstances existed.

Cases Cited:

Brittain v The Commonwealth of Australia (No 2) [2004] NSWCA 427 at [30]

Category:

Costs

Parties:

Nabih DAOUD
GIO General Limited

Representation:

M Campbell (P)
J Sleight (D)
Peter Michael Ives (P)
Hicksons Lawyers (D)

File Number(s):

2011/68389

Publication restriction:

Nil

Judgment

1. HIS HONOUR: Judgment in the principal proceedings in this matter was delivered on 1 September 2011: [2011] NSWSC 1001. The appeal against the Local Court's decision delivered on 2 February 2011 was upheld and the decision was accordingly set aside. An order was made remitting the proceedings to the Local Court for a re-hearing.

1. The proceedings in the Local Court concerned an issue as to whether or not the appellant was entitled to rely upon a motor vehicle insurance policy which he took out with the respondent in respect of an accident said to have occurred on 20 September 2008.

1. The respondent refused to make payment on the policy on the grounds, inter alia, that the accident had been staged and that any claim made by the appellant upon the policy was fraudulent.

1. On the question of the costs of the appeal, I ordered that the respondent pay the appellant's costs of the appeal proceedings in this Court on the ordinary basis.

1. There remains the question of the costs of the proceedings in the Local Court.

1. I have received written submissions from Ms Campbell of Counsel for the appellant dated 9 September 2011 and written submissions from Mr Sleight of Counsel for the respondent dated 16 September 2011.

1. The respondent's submissions annexed a Notice of Orders by the Local Court. That document related to an order for costs in the proceedings in favour of the respondent insurer on an indemnity basis.

1. Subsequent to the above submissions, Ms Campbell replied, stating in effect, that it has been agreed between the parties that no order for costs had in fact been made by the Magistrate, observing, in particular, that the transcript had made no reference to an indemnity costs order being made.

1. It is clear that the proper exercise of the power with respect to costs requires that any order awarding costs of the Local Court proceedings to the respondent must be set aside in light of the errors of law that vitiated the Local Court's decision.

1. Mr Sleight confirmed that the respondent consented to the Summons being amended for the purpose of including a prayer for relief to set aside the costs order at first instance.

Submissions on costs

1. The contention for the appellant was that an order should be made awarding him costs of the proceedings before the Local Court.

1. In this respect it was submitted on his behalf that, notwithstanding the ordinary rule that where a new trial is ordered, costs of the first proceedings should abide the outcome of the new hearing, there are special circumstances that would justify a departure from that rule. In this respect reference was made to the judgment of McColl JA in Brittain v The Commonwealth of Australia (No 2) [2004] NSWCA 427 at [30]. Particular reliance was placed upon the proposition that a departure from the normal rule is permissible where injustice would arise from its application.

1. The appellant submitted in this respect that special circumstances exist in this case. This was said to be due to the manner in which the defence of fraud was raised. It was contended that the defence was established only by reason of the expert evidence adduced by the defendant, and that the defendant ought to have known that some of that evidence was inadmissible by reason of a failure of the witness, Mr Sculthorpe to establish that the opinion expressed by him was based on "training, study or experience": Dasreef Pty Ltd v Hawchar [2011] HCA 21 at [42].

1. It was additionally submitted that in respect of the conduct of the defendant/respondent associated with its pursuit of the defence of fraud, the defence was tenuous at best. Nonetheless it gave rise to a necessity for the appellant to obtain expert evidence in reply resulting in substantial expense to him. These matters too were relied upon as creating "special circumstances".

1. In reply, the respondent submitted that the ordinary rule ought to apply, namely, that the question of costs of the initial hearing should follow the determination of the substantive claim on the re-hearing: Knudsen v Kara Kar Holdings Pty Ltd (No 2) (2000) 52 NSWLR 254.

1. It was submitted that the error giving rise to the success of the appeal involved a failure by the learned Magistrate to give adequate reasons for his decision. That error, it was submitted, could not be said to have been caused by either party.

Consideration

1. The question for determination is whether the general rule referred to above may and should be departed from upon the basis that there are special circumstances which would make application of the general rule unjust: Brittain v The Commonwealth of Australia (No 2) [2004] NSWCA 427 at [30].

1. The relevant principal concerning this question of costs was recently considered by the Supreme Court of Western Australia, Court of Appeal in Nudrill Pty Ltd v La Rosa [2010] WASCA 158. The Court (McLure P, Buss and Murphy JJA) stated:

"11. There is no dispute that the general rule when a re-trial is ordered is that the costs of the first trial should be costs in the cause of the re-trial, unless it would be unjust to do so.

12. In Brittain v The Commonwealth of Australia (No 2), McColl JA (with whom Handley and Tobias JJA agreed) explained the rationale underpinning the general rule as follows: [30]:

The logic of the general rule is manifest. While the Court has a plenary discretion concerning costs... the ordinary principle is that costs follow the event... Where a new trial is ordered the party's rights have not been finally determined. The identity of the successful party has not been established. The general rule is clearly intended to ensure that the ultimate costs order reflects the ordinary principle when the party's rights are finally determined. Departures from the general rule are intended to deal with situations where its application will lead to injustice."

1. The court in Nudrill dealt with the exception to or departure from the general rule in the following terms:

"15. For the court to depart from the general rule, it is not necessary for there to have been an impropriety or malicious intent in the way one party ran its case. An award of the costs of a mis-trial is not made by way of punishment and is, rather, an application of the principle that costs thrown away should be borne by the party responsible."

1. On the question as to the costs incurred by the successful appellant the relevant principles are not in doubt and may be summarised as follows:

(i)The general rule is that where a new trial is ordered, the costs of the first trial should abide the event of the second trial. The logic behind this general rule is that where a new trial has been ordered, the parties' rights have not been fully determined: Brittain, supra per McColl JA at [30].

(ii)Earlier cases have contemplated that special circumstances may exist that require or warrant a departure from the general rule. Such a departure is intended to deal with situations where application of the general rule would lead to injustice: Brittain at [30].

(iii)The conduct of a party in the first proceedings may be a relevant consideration in this latter respect. Accordingly, where a new trial is ordered because the respondent led the trial judge into error on a substantive issue or matter, it may be unjust to deprive the other party of the costs of the first trial.

1. In the present case findings were made that the learned Magistrate had failed to provide an adequate exposition of the reasoning process which he had followed and applied and that the Magistrate had accordingly failed to provide adequate reasons for the critical findings made in relation to the defence of fraud. That was not a matter to which either party could be said to have been responsible. A submission was made on behalf of the appellant to the effect that it became clear during the hearing of the appeal that certain of the evidence of Mr Sculthorpe, the expert called for the respondent, was inadmissible. In particular it was submitted that Mr Sculthorpe failed to demonstrate that his opinion in relation to a "double impact" was based on his specialised knowledge and the respondent should not have relied upon such evidence (submissions at [11] and [13]).

1. However the primary judgment of this Court delivered on 1 September 2011 did not turn on questions of admissibility as to some or all of the expert evidence of Mr Sculthorpe. Indeed the question of the admissibility of his evidence was not relied upon or raised in the Appeal Grounds in the Summons filed on 2 March 2011, a fact which was conceded in the appellant's costs submissions at [11]. I do not consider that the respondent's conduct in calling evidence from Mr Sculthorpe in these circumstances can provide a basis for determining that an exception to the general rule arises in this case. The judgment setting aside the decision of the Local Court was as stated above, founded on quite a different basis.

1. In the circumstances I do not consider that the matters raised in the written submissions on behalf of the appellant can or do give rise to special circumstances or provide a basis for excluding the general rule.

1. It follows that the costs of the Local Court proceedings is a matter that can and should only be determined by the Local Court on the re-trial of the proceedings.

1. Accordingly, the orders on costs are as follows:

(i)An order that the respondent pay the appellant's costs of the proceedings commenced by Summons in this Court on the ordinary basis.

(ii)An order that the order of the Local Court awarding costs for the proceedings in that Court against the appellant be set aside.

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