French v McKenna (No 2)

[2012] TASSC 8

[2012] TASSC 8

COURT:  SUPREME COURT OF TASMANIA

CITATION:               French v McKenna (No 2) [2012] TASSC 8

PARTIES:  FRENCH, Denise Monica
  v
  McKENNA, Wayne

FILE NO/S:  46/2006
DELIVERED ON:  22 March 2012
DELIVERED AT:  Hobart
HEARING DATE:  Written submissions
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Procedure – Costs – Departing from the general rule – Other cases – Indulgence of court – Successful application to set aside judgment – Ordinary principles – Exercise of discretion.

Supreme Court Civil Procedure Act 1932 (Tas), s12.

Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 and Burgoine v Taylor (1878) 9 Ch D 1 referred to.

Aust Dig Procedure [598]

REPRESENTATION:

Counsel:
             Plaintiff:  P L Jackson                
             Defendant:  C J Bartlett                  
Solicitors:
             Plaintiff:  C N Dockray  
             Defendant:  Bartletts

Judgment Number:  [2012] TASSC 8
Number of paragraphs:                   19

Serial No 8/2012
File No 46/2006

DENISE MONICA FRENCH v WAYNE McKENNA

REASONS FOR JUDGMENT  HOLT AsJ

26 March 2012

1. The plaintiff succeeded in having an order dismissing her claim set aside.  The dismissal followed a consent order requiring the plaintiff to deliver a statement of claim and particulars of loss, expense and damage with the claim to be dismissed upon the filing of an affidavit of non-compliance.  The matter comes back before me for the disposition of questions as to costs. 

1. The defendant has applied for an order that the plaintiff pay the costs of the application.  The plaintiff opposes the making of such an order and submits that the costs should be in the cause or, alternatively, that there should be an order that the parties bear their own costs. 

1. The jurisdiction to award costs is contained in the Supreme Court Civil Procedure Act 1932, s12: "Whilst the discretion [is] absolute and unfettered, it [is] to be exercised judicially, that is to say, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation." Latoudis v Casey (1990) 170 CLR 534 at 557 per Dawson J.

1. Principles have been developed to guide the exercise of the discretion.  Relevantly, for the purposes of this application, there is the principle referred to by Wilcox J in Hunter Valley Developments Pty Ltd v Cowen (1984) 3 FCR 44. His Honour said at 353:

"There is a long line of authority to support the general rule that a successful applicant should pay the costs of the respondent of an application to set aside a default judgment: see Ritchie, Supreme Court Procedure NSW par34.5.4 and cases cited therein. Those authorities are based upon the fact that the default of the applicant has occasioned the necessity for the making of the application and that a respondent, other than in exceptional circumstances, should not be prejudiced in costs because of the applicant's default. The same principle applies to this case. Had the present applicants complied with the time requirements of s11 this application would not have been necessary. The applicant should pay the respondent's costs of this application."

1. The leading case cited in Ritchie is Burgoine v Taylor (1878) 9 Ch D 1. There Jessel MR said at 4 – 5:

"Solicitors cannot, any more than other men, conduct their business without sometimes making slips;  and where a solicitor watches the list, and happens to miss the case, in consequence of which it is taken in his absence, it is in accordance with justice and with the course of practice to restore the action to the paper, on the terms of the party in default paying the costs of the day, which include all costs thrown away by reason of the trial becoming abortive.  As a general rule, solicitors in my branch of the court consent to such an order as is now asked, and that such an application should be opposed is to be a novelty.  Still, as the Appellant was in default, he must pay the costs of the application to the Court below, …".

1. The application of such principles, however, is not necessarily determinative.  In Norbis v Norbis (1986) 161 CLR 513, Brennan J (as he then was) said at 537:

"It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise. …

There may well be situations in which an appellate court will be justified in setting aside a discretionary order if the primary judge, without sufficient grounds, has failed to apply a guideline in a particular case. Where there is nothing to mark the instant case as different from the generality of cases, the failure will suggest that the discretion has not been soundly exercised." 

1. The plaintiff submits that the defendant's opposition to the application to set aside the dismissal order "was entirely without merit and wholly unreasonable".  In order to consider the submission it is necessary to refer in detail to the circumstances leading to the dismissal of the claim and the manner in which the defendant responded to the set aside application. 

1. The dismissal of the plaintiff's claim was entirely due to the fault of her solicitor.  By her writ the plaintiff claimed damages for personal injuries sustained in a motor vehicle accident.  The unchallenged evidence was that the plaintiff was stationary behind another vehicle at an intersection when the defendant drove his vehicle into the rear of a vehicle behind shunting it into the plaintiff's vehicle.  She sustained a lower back injury.  The writ was filed in June 2006, but a statement of claim and particulars of injury and the claim for loss, expense and damage were not supplied.  On 20 October 2006 the defendant obtained a consent order requiring the plaintiff to deliver these documents within 28 days.  The order was not complied with and the defendant applied for an order dismissing the plaintiff's claim.  On the return of that application on 16 February 2007 a self-executing order was made by consent extending the time for compliance to 9 March with the claim to be dismissed upon the filing of an affidavit of non-compliance.   There being no further communication from the plaintiff's solicitor the defendant filed an affidavit of non-compliance and on 19 March the dismissal order was formally entered. 

1. At the time of consenting to the self-executing order the plaintiff's solicitor had not commenced the necessary investigations to enable the particulars to be prepared and had no basis for a belief that the particulars could be prepared by the due date.  Had the consent not been forthcoming and the court informed that compliance could not be achieved within the short timeframe proposed the dismissal order would not have been made.

1. The plaintiff's solicitor did not notify the plaintiff that the self-executing order had been made and did nothing to achieve compliance other than to prepare a draft statement of claim which was neither settled nor filed.  The plaintiff had not been unco-operative nor dilatory and her solicitor had led her to believe that her action was progressing satisfactorily. 

1. The plaintiff was advised by the firm which employed her solicitor of the dismissal of the claim and the file was transferred to a new solicitor.  The new solicitor wrote to the defendant's solicitor in June 2007 noting that the defendant's solicitor had previously advised that he expected to receive instructions to admit liability.  The letter set out the circumstances in which the non-compliance had occurred.  Reference was made to a large number of relevant authorities and the plaintiff sought the consent of the defendant to a set aside order with the plaintiff to pay the defendant's costs.  The defendant's solicitors advised that affidavits in support of the application would need to be filed and the non-compliance remedied before the dismissal order could be set aside. 

1. A supporting affidavit was filed in December 2007 setting out the primary facts which ultimately led to the dismissal order being set aside.  Still, the defendant's consent was not forthcoming and so the application had to be made ready for hearing.  Further affidavits were filed, the last being from the plaintiff's former solicitor.  That affidavit was filed in May 2011.  The defendant had been served with the plaintiff's particulars of injury, loss and damage in May 2009, but in light of the defendant's earlier indication that liability was likely to be admitted a statement of claim was not delivered until the day of the hearing being 25 August 2011. 

1. The hearing proceeded with the defendant's solicitor briefly cross-examining the plaintiff, the plaintiff's former solicitor and the plaintiff's new solicitor on their affidavits.  Detailed submissions were presented on behalf of the plaintiff.  Then followed brief submissions from the defendant's solicitor to the effect that there had been unacceptable delay in the provision of the particulars and the progress of the set aside application and that the conduct of the plaintiff's former solicitor and the application of case management principles combined to justify the retention of the dismissal order.  The defendant's solicitor did not claim that the chances of a fair trial had been materially diminished and the day following the hearing filed a defence admitting the collision had been caused by the negligent driving of the defendant, but denying resultant injury. 

1. Favouring the defendant's application for costs is the general rule that a successful applicant should pay the costs of the respondent of an application to set aside a default order.  The rule is underpinned by the fact that the default of the applicant has occasioned the necessity of the application.  The defendant was entitled to keep the benefit of the dismissal order until the non-compliance which caused it to be granted had been remedied.  See Ridge Lane Pty Ltd v Gadzhis & Ors (2007) VSC 212 at [35]. The defendant was also entitled to have the plaintiff justify a favourable exercise of the discretion by evidence and argument at a hearing.

1. The defendant did not misconduct himself in securing the dismissal order nor did he misconduct himself by unnecessarily prolonging the set aside hearing.  It was not used as an opportunity to investigate the merits and substance of the plaintiff's claim for damages.  It was not submitted that the defendant was motivated by, or predominantly by, a desire to increase costs.  Although the favourable outcome of the plaintiff's set aside application could have been predicted with a high degree of likelihood at an early time following the filing of the plaintiff's new solicitor's first affidavit in December 2007 it does not follow that the opposition was thereafter, using the words of the plaintiff's counsel, "entirely without merit and wholly unreasonable". 

1. Taking into account that from early on the defendant was furnished with sufficient information for him to predict with a high degree of likelihood that the dismissal order would be set aside I nonetheless conclude that the factors which I have set out supporting an order for costs in favour of the defendant outweigh those against.

1. Where costs are ordered on interlocutory applications the usual form of the order is "costs in any event".  The effect of an order in these terms is to defer the taxation and recovery of the costs until the conclusion of the primary proceedings.  It is only in exceptional circumstances that a party on an interlocutory application will be entitled to recover costs without awaiting the outcome of the action.  Bull Nominees Pty Ltd v McElwee (1997) 7 Tas R 339. The defendant was invited to provide written submissions if immediate taxation and recovery was sought. No such submissions were provided.

1. There is one further matter to be mentioned.  The court has an inherent jurisdiction to make a wasted costs order against a solicitor.  There is also a supplementary jurisdiction to make an order under the Supreme Court Rules 2000, r61. Myers v Elman (1940) AC 282 and Ridehalgh v Horsefield & Anor (1994) Ch 205. The plaintiff has filed an application seeking such an order in respect of the set aside application against the plaintiff's former solicitors. The order which I am about to make, accordingly, may have an adverse impact on those solicitors. The former solicitors are now legally represented and through their solicitor advised that they did not wish to have the application against them heard and determined at the same time as the present application.

1. There will be an order that the plaintiff pay the defendant's taxed costs of the set aside application filed 4 September 2007 in any event.