Diamond v Baulkham Hills Shire Council

[1999] NSWCA 277

CITATION:	DIAMOND v BAULKHAM HILLS SHIRE COUNCIL & ORS [1999] NSWCA 277 revised - 04/08/99
FILE NUMBER(S):	CA 41059/98
HEARING DATE(S):	26 July 1999
JUDGMENT DATE:	26 July 1999
PARTIES :	Neville Francis Diamond - Claimant Baulkham Hills Shire Council - First Opponent ETRA Pty Ltd - Second Opponent Norah Bernadette Hurney - Third Opponent Tinda Creek Spiritual & Environment Centre - Fourth Opponent
JUDGMENT OF:	Sheller JA at 1; Cole AJA at 14

LOWER COURT JURISDICTION:	Land & Environment Court
LOWER COURT FILE NUMBER(S) :	40066/97
LOWER COURT JUDICIAL OFFICER:	Sheahan J

COUNSEL:	T F Robertson - Claimant F Kunc - First Opponent A M Edwards - Second and Third Opponents
SOLICITORS:	Woolf Associates - Claimant Coleman & Greig - First Opponent Atkinson & Vinden - Second and Third Opponents
CATCHWORDS:	SECURITY FOR COSTS - against third party - not a party to proceedings - man of straw - sufficient interest and active role in litigation
CASES CITED:	Knight v FP Special Assets Ltd (1992) 174 CLR 178 Symphony Group PLC v Hodgson [1994] QB 179
DECISION:	Application for leave to appeal is dismissed with costs

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 41059/98
L & E 40066/97

SHELLER JA
COLE AJA

Monday, 26 July 1999

DIAMOND v BAULKHAM HILLS SHIRE COUNCIL & ORS

JUDGMENT

1    SHELLER JA: This is an application for leave to appeal from a decision of Sheahan J of 26 November 1998. The claimant is Mr Neil Francis Diamond. The fourth opponent, Tinda Creek Spiritual and Environment Centre, took class 4 proceedings in the Land and Environment Court against the other three opponents to this application, Baulkham Hills Shire Council, ETRA Pty Limited, Norah Bernadette Hurney, Calcidon Camilleri, Carmen Ann Camilleri, Tony Dominelli and Letizia Dominelli.

2    In those proceedings, after a hearing that took some days, an order for security for costs was made against the applicant, which I shall refer to as Tinda. That order was self-executing in the sense that when it was not complied with, the proceedings were dismissed. After dismissal applications for costs were made by the respondents to that application against both Tinda and the present claimant, Mr Diamond.

3    The judgment from which leave is sought to appeal dealt with the application for an order for costs personally against Mr Diamond. His Honour granted that application. He did so having regard in particular to the decision of the High Court in Knight v FP Special Assets Limited (1992) 174 CLR 178.

4    In his reasons for judgment, having carefully and thoroughly examined the law and the facts, his Honour made a number of findings which are set out in paragraph 95. This led him to the conclusion that Tinda was indeed a “man of straw” and that the real party bringing the proceedings was Mr Diamond.

5    On this application, Mr Robertson, who appears for the claimant, acknowledges that the Land and Environment Court had power to make a costs order against a third party, that is to say a person not a party to the proceedings. The attack made upon Sheahan J's decision was directed to the exercise of discretion which was said to disclose error in a number of respects.

6    The first of these was said to be that Mr Diamond had no financial interest in the proceedings. There was no doubt that he had been a prominent witness. It was accepted that he was a driving force in the litigation and that he was an environmental activist. We were taken to a passage in the joint judgment of the Chief Justice Sir Anthony Mason and Deane J in Knight v FP Special Assets Limited, particularly at 193. Their Honours referred to the general category of case in which an order for costs should be made against a non-party. That category consisted of circumstances where the party to the litigation was an insolvent person or man of straw, the non-party had played an active role in the conduct of the litigation and the non-party had an interest in the subject of the litigation.

7    It is to be observed that their Honours do not confine interest to financial interest. Quite clearly in the present case, Sheehan J was satisfied that Mr Diamond had a sufficient interest in the proceedings to warrant the order for costs that he made. With due respect to the submissions that have been made to us, I see no error in his Honour coming to that conclusion.

8    The second error related to the absence of any notice being given by the respondents to Mr Diamond that an order for costs would be sought against him until the application itself was made. In that respect, Mr Robertson took us to the decision of the English Court of Appeal in Symphony Group PLC v Hodgson [1994] QB 179 and particularly passages in the judgment of Balcombe LJ at 192 and following. In the course of that exposition of material considerations to be taken into account when determining whether or not a costs order should be made against a non-party, his Lordship said at 193:

“Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him. At the very least this will give the non-party an opportunity to apply to be joined as a party to the action.”

9    This was a matter that Sheahan J considered in his reasons for judgment under the heading “The Interests of Justice”. His Honour said:

“I reject the submission by Mr Robertson that the interests of justice require Mr Diamond to have been placed specifically on notice of his personal risk of an order for costs before the costs now sought against him were incurred by the respondents. It may not emerge until the end of any proceedings that an individual played such a role as to expose him or her to such risk. There is no traditional requirement that non-parties be advised of such personal risk, but some element of risk was quite clearly identified in the letter of 15 May 1997 and Mr Diamond was legally represented at various relevant stages of the matter thereafter. There is absolutely no authority for the proposition that costs should not be ordered against him in the absence of a clear warning given, in terms, in advance.”

10    I am by no means persuaded that the passage referred to in the judgment of Balcombe LJ applies to a situation such as the present. It is true that the application for security for costs was brought by the respondents and took up a considerable amount of court time. However, and while there may be occasions when it is appropriate to deny the making of an order for want of due notice, I do not think this can be said to be one. I again see no error in the approach that Sheahan J took to this argument. In my opinion, it is not a point of argument which has any substantial prospect of succeeding on an appeal.

11    The third and final point that was put by Mr Robertson was the failure to take into account in an appropriate manner the security for costs application and the order that had been made. It was submitted that an order for costs against a non-party is an alternative and not an additional remedy to an order for security for costs. In support of that submission, we were taken to passages in the joint judgment in Knight at 191 and in the judgment of Dawson J at 204.

12    Clearly enough, if no security for costs has been sought against a party there is a strong argument, as was acknowledged in the High Court, for saying that at the end of the proceedings an order for costs should not be sought against a non-party because the party, against whom security was not sought, is “a man of straw”. That is not this case. In this case, security for costs was sought and obtained. It is apparent that despite that the security for costs was not provided. His Honour made a finding that that party, Tinda, was a man of straw. That being so, it seems to me that it was open to his Honour to come to the conclusion that it was appropriate to make a cost’s order against Mr Diamond.

13    In my opinion, no error has been demonstrated in Sheehan J's judgment. At the least it is clear that, if leave were granted the appeal would have no real prospects of success. Accordingly, I would dismiss this application with costs.

14    COLE AJA: I agree.

15    SHELLER JA: The application for leave to appeal is therefore dismissed with costs.

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