Hamod v New South Wales

[2007] NSWSC 707

CITATION:	Hamod & Anor v State of NSW & Anor [2007] NSWSC 707
HEARING DATE(S):	13 June 2007
JUDGMENT DATE :	6 July 2007
JURISDICTION:	Common Law
JUDGMENT OF:	Simpson J
DECISION:	Costs be assessed and payable forthwith
CATCHWORDS:	COSTS - interlocutory application - application that costs be payable forthwith - discretion - circumstances - relevant factors
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005
CASES CITED:	Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; 55 NSWLR 1
PARTIES:	Anthony Hamod (First Plaintiff) Hamock Investments Pty Ltd (Second Plaintiff) State of NSW (First Defendant) UBS Australia Ltd (Second Defendant)
FILE NUMBER(S):	SC 20147 of 2003
COUNSEL:	R McKeand SC (Plaintiffs) M Hutchings (First Defendant) N/A (Second Defendant)
SOLICITORS:	Simon Diab & Associates (Plaintiffs) I V Knight Crown Solicitor (First Defendant) Allens Arthur Robinson (Second Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Simpson J

6 July 2007

20147/03 Anthony Hamod & Anor v State of NSW & Anor

JUDGMENT

1 HER HONOUR: On 13 June 2007 I delivered judgment (Hamod & Anor v State of NSW [2007] NSWSC 600) with respect to an appeal by the first defendant against an order made by Harrison AssJ that it give discovery of documents identified by reference to a list.

2 I dismissed the appeal (confirming the order for discovery made by Harrison AssJ) and ordered that the first defendant pay the plaintiffs’ costs. On delivery of the judgment senior counsel who appeared for the plaintiffs sought an order that costs be ordered to be payable forthwith. The statutory authority for taking such a course is to be found in UCPR 42.7, which is in the following terms:

“ 42.7 Interlocutory applications and reserved costs
(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including:
(a) costs that are reserved, and
(b) costs in respect of any such application or step in respect of which no order as to costs is made,
are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.
(2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.”

3 As will be seen from sub-r (2), prima facie an order for costs made with respect to an interlocutory application do not become payable until the substantive proceedings are concluded. This, however, is subject to the discretion of the court otherwise to order.

4 The predecessor to r 42.7 was Pt 52A, r 9 of the Supreme Court Rules 1970. Although framed in different terms, the effect of sub-r (1) of that rule was similar to that of r 42.7(2) – that is, the prima facie position is that costs of interlocutory skirmishes are not to be paid or payable until the conclusion of the proceedings. That, too, was subject to a discretion to order otherwise. Circumstances in which it is appropriate to make such an order are spelled out in sub-r (3). Those circumstances arose where it appeared to the court that:

“(1) A party has been subject to unreasonable delay or default on the part of any other party;

(2) the proceedings are unreasonably protracted; or

(3) justice otherwise demands it …”

5 Sub-r (3) was not an original component of r 9 but was added with effect from January 2000. Even before the insertion of sub-r (3), r 9(1) had contained such a power, and had been the subject of judicial consideration, and delineation of circumstances in which departure from the prima facie rule would be appropriate. The authorities are collected in (now defunct) Ritchie: Supreme Court Procedure NSW at 3154.1-3154.2. In Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; 55 NSWLR 1, Barrett J concluded that sub-r (3) was not intended to confine the discretion conferred by sub-r (1). Thus the authorities relevant to SCR Pt 52A r 9(1) are of guidance in the construction of UCPR 42.7. Barrett J identified three relevant factors. They may be paraphrased as follows:

(i) where the costs order is relevant to a discrete, separately identifiable aspect of the proceedings;

(ii) where there is demonstrated some unreasonable conduct on the part of the party against whom the costs have been ordered;

(iii) where the proceedings have some distance and time to run, and it may be some time before ultimate disposition.

6 I see no reason not to regard these as relevant to the application now made.

7 Senior counsel who appeared for the plaintiffs disclaimed (for reasons I do not understand) reliance upon the first – that is, that the costs ordered to relate to the separately identifiable component of the proceedings. He relied upon the second, what he described as unreasonable conduct on the part of the first defendant; and he relied upon the third, that the proceedings have some distance to travel before finalisation could be envisaged.

8 In this respect it is apposite to note that the substantive proceedings are a claim for damages for, inter alia, malicious prosecution and false imprisonment. They are set down for a hearing, estimated to be at least seven weeks, with respect to liability only, to commence at the end of October of this year. Given that that hearing is confined to issues of liability, it cannot confidently be anticipated that that hearing will bring the proceedings to finality. That will be so only if the plaintiffs are unsuccessful.

9 Senior counsel also pointed out that the proceedings involve an individual (and a company of which he is the principal) against the State of NSW, with its considerably – immeasurably – greater resources.

10 The unreasonableness upon which senior counsel relied was said to be the intransigence of the first defendant in responding to the plaintiffs’ application for discovery. This, it was said, was illustrated by its failure to make any offer of discovery more limited than that which the plaintiffs sought. It is true that, in the appeal before me, the first defendant set its face against the order made by Harrison AssJ, but failed, until prompted to do so by myself, and after the conclusion of the hearing, to put an alternative proposal.

11 As will be apparent from the judgment, I took the view that the first defendant’s legal representatives misconceived the nature and extent of the issues raised by the pleadings, and the extent to which particularisation of the plaintiffs’ claim confined what they could hope to achieve by discovery. But that is not necessarily unreasonable conduct. The evidence as to the first defendant’s failure to negotiate on the extent of discovery was scanty, and drawn, really, from inferences to be drawn from the materials put before me on the appeal. I am not satisfied that the first defendant’s conduct was unreasonable in the sense that it calls for sanction in the form of an immediate payment of the costs order.

12 I am, however, troubled by the plaintiffs’ abandonment of discreteness as a basis for such an order. In my opinion, this is a classic instance of a discrete issue having arisen and being determined adversely to the first defendant. Further, and as I have already indicated, the substantive proceedings have some distance to go before they are likely to be resolved. The plaintiffs have been put to considerable expense in a proceeding in which they are pitted against the resources of State. It is not difficult to infer, from examination of the pleadings, and the historical matters referred to in the appeal, to infer that the plaintiffs’ resources are limited. Nor could it be suggested that an order of the kind now sought would work any hardship to the first defendant.

13 Whatever the outcome of the substantive proceedings, the first defendant will be liable to the plaintiffs for the costs of the discovery application. I can see no reason why it should not be required to make that payment forthwith. I recognise that, should the first defendant ultimately prevail, there may be some risk that its recovery of costs that could be then expected to be ordered against the plaintiffs would not be recoverable, and that, in the ordinary course, the costs of the discovery application would be offset against whatever the first defendant was entitled to.

14 However, in the end, I am of the view that the interests of justice are best served by making an order of the kind sought on behalf of the plaintiffs.

15 Accordingly, I order that the costs be assessed and payable forthwith.

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