Hopoate v National Rugby League Limited

[2016] NSWSC 1029

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Hopoate v National Rugby League Limited [2016] NSWSC 1029
Hearing dates:	1 July 2016
Date of orders:	26 July 2016
Decision date:	26 July 2016
Jurisdiction:	Equity
Before:	Robb J
Decision:	See par 37
Catchwords:	COSTS – discontinuance of proceedings – application for alternative cost order made by plaintiff under UCPR r 42.19(2) – whether plaintiff should pay defendant’s costs – consideration of circumstances of discontinuance – held reasonable commencement of proceedings – held plaintiff failed to achieve practical success by the commencement of proceedings – held no unreasonable conduct by the defendant – application for alternative cost order not made out – plaintiff to pay defendant’s costs of the proceedings and the notice of motion
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 CGU Insurance Limited v Blakeley [2016] HCA 2 Fordyce v Fordham [2006] NSWCA 274 Mao v Yehuaxin Enterprise Pty Ltd [2009] NSWSC 1270 Re Minister for Immigration and Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; 186 CLR 622
Category:	Costs
Parties:	John Hopoate (plaintiff) National Rugby League Limited (defendant)
Representation:	Counsel: M Smith (plaintiff) S Kanagaratnam (defendant)      Solicitors: Brander Law (plaintiff) Kennedys (Australasia) Pty Ltd (defendant)
File Number(s):	2016/070226
Publication restriction:	None

JUDGMENT

Introduction

1. By notice of motion filed on 24 May 2016, the plaintiff, Mr John Hopoate, sought an order that he and the defendant, the National Rugby League Limited (NRL), each bear their own costs following the discontinuance of these proceedings by Mr Hopoate, and an order that the NRL pay the costs of the motion. The order was sought pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.19(2). At the hearing, Mr Hopoate sought different relief, namely that the NRL pay his costs from 30 March 2016, as well as for the motion.

2. Unless a contrary order is made pursuant to UCPR r 42.19(2), Mr Hopoate will be liable to pay the NRL’s costs up to the filing of the notice of discontinuance. Mr Hopoate seeks such a contrary order. Mr Hopoate filed a notice of discontinuance on 4 July 2016. The NRL consents to the discontinuance, but opposes leave to discontinue the proceedings on terms that each party pay their own costs. The NRL submits that there is no reason to depart from the prima facie position that it is entitled to costs.

3. By way of background, Mr Hopoate was a professional rugby league player for a National Rugby League club known as the Manly Sea Eagles, which is operated by the Warringah Sea Eagles Limited (the Manly Club). Mr Hopoate has also coached New South Wales Junior Rugby League (NSWJRL) players for the past 21 years. The NRL is the single controlling body and administrator of the national rugby league competition, in which the Manly Club participates.

4. The Manly Club is a party to the NRL Club License Agreement with the NRL dated 1 December 2011 (the Licence Agreement). The License Agreement, among other things, permits the Manly Club to participate in competitions that the NRL administers, but also imposes obligations on it, including the obligation to abide by the NRL Rules to register relevant members and officials of the Manly Club with the NRL. Breach of those rules attracts penalties.

Procedural history

5. On 21 October 2015, the NRL first wrote to the Manly Club enquiring about Mr Hopoate’s prospective role as an under 18’s SG Ball coach with the Manly Club. The NRL indicated that, because Mr Hopoate was at that stage not registered with the NRL, he could not coach for the Manly Club pursuant to the NRL Rules. The Manly Club wrote back the next day, submitting an application for the registration of Mr Hopoate with the NRL signed by him.

6. In or around November 2015, Mr Hopoate commenced coaching the Manly Club under 18’s SG Ball team for the SG Ball competition.

7. On 3 November 2015, the NRL rejected Mr Hopoate’s registration on the grounds that the NRL did not consider Mr Hopoate to be a fit and proper person.

8. On 6 November 2015, Mr Nick Weeks, General Manager of Integrity of the NRL, wrote to Mr Joe Kelly, Chief Executive Officer of the Manly Club stating, among other things, that if the requirement for registration was not adhered to, then the Manly Club would be in breach of the NRL Rules, and thus subject to a variety of penalties that flow from such breaches. Mr Weeks drew Mr Kelly’s attention to the penalty provisions under Rule 9 of the NRL Rules, which relevantly provides that the NRL may impose fines not exceeding $1 million on a club and $100,000 on individuals, and may exclude a team from participating in the NRL competition. In response, the Manly Club said its belief was that the issue of registration with the NRL did not arise as Mr Hopoate, as a SG Ball coach, did not fall under the jurisdiction of the NRL, pursuant to the NRL Rules.

9. Since then, the parties on several occasions have exchanged correspondence and telephone calls regarding the Manly Club’s contractual obligations under the Rules. On at least two further occasions, 24 November 2015 and 22 December 2015, Mr Weeks reiterated the NRL’s position that any involvement by Mr Hopoate with the Manly Club while he was unregistered constituted a breach of the NRL Rules by the Manly Club, leaving it exposed to the penalties prescribed.

10. In response to this situation, the Manly Club informed the NRL on 19 February 2016 that it had stood Mr Hopoate down from coaching, and requested further discussions on the matter.

11. On 25 February 2016, by way of letter, the Manly Club invited the NRL to participate in a mediation, in order to resolve the jurisdictional issue, and indicated that it would commence proceedings in court otherwise. That mediation did not resolve the dispute.

12. It was in these circumstances that Mr Hopoate commenced these proceedings by summons on 4 March 2016. The summons sought a declaration that the under 18’s SG Ball is under the sole jurisdiction of the NSWJRL, and not the NRL. Such a declaration was apparently sought to ensure that the threats of penalties made to the Manly Club and Mr Hopoate personally could not have been imposed.

13. Following the filing of the summons, discussion ensued regarding the NRL’s jurisdiction over the matter, but no agreement was reached. Apparently, following the negotiations between the parties, a decision was made that Mr Hopoate apply to be registered with the NRL for the second time. In the submissions made on his behalf, Mr Hopoate implied that the parties reached an accommodation that, if Mr Hopoate reapplied to be registered, the NRL would grant the application, and that would resolve the dispute. The NRL strongly denies that any such accommodation was reached, and there is no evidence that it was.

14. Nevertheless, on 17 March 2016, Ms Julianne Levick, counsel for Mr Hopoate, caused a second application for Mr Hopoate’s registration with the NRL to be sent to the NRL.

15. By an email dated 22 March 2016 to the Chairman of the Australian Rugby League Commission, Ms Levick advised, for the first time, that it was Mr Hopoate’s intention to withdraw these proceedings. She said: “In the spirit of mutual respect I am currently in the process of obtaining instructions from Mr Hopoate to withdraw from his Supreme Court litigation.”

16. On 4 April 2016, Mr Hopoate’s solicitor sent by email a notice of discontinuance to the solicitors for the NRL, on the basis that each party would bear their own costs. The solicitors for the NRL replied the next day, indicating that the NRL had not agreed to the proceedings being discontinued on the basis that each party bear its own costs, and refused to sign the notice provided. The parties appeared before the Registrar on the same day, and the matter was adjourned until 20 April 2016. No agreement as to costs was reached at that point.

17. On 6 April 2016, the solicitors for the NRL wrote to the solicitors for Mr Hopoate again, and repeated that their instructions were that that their client at no stage agreed to pay its own costs of the proceedings when discontinued. In particular, the solicitors for the NRL refuted the assertion that an agreement had ever been negotiated between the parties, whereby the NRL would approve the application for registration and consent to pay its own costs, if Mr Hopoate discontinued these proceedings.

18. The matter came before Registrar Walton for directions on 27 April 2016. The representatives for Mr Hopoate confirmed on that day that the proceedings would be discontinued with the consent of the parties, pursuant to UCPR r 12.1. Orders were made for Mr Hopoate to file and serve a notice of motion, as to who should bear the costs of the proceedings, by 18 May 2016. Mr Hopoate filed the notice of motion on 24 May 2016. The notice of discontinuance was filed on 4 July 2016.

Legal principles

19. A plaintiff who discontinues proceedings must ordinarily pay the costs of the party against which the discontinued claim was brought, unless the court otherwise orders: UCPR r 42.19(2). This would mean that Mr Hopoate would pay the costs of the NRL. The rule falls short of a presumption that costs will be ordered against the discontinuing party: Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497. However, it does create a starting point by requiring the plaintiff to pay the defendant's costs of the proceedings unless that outcome is displaced by a discretionary decision. Ultimately, any order as to costs remains a matter in the court’s discretion and will be awarded as the court sees fit: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365.

20. The effect of r 42.19 is that if some other order is to be made, the discontinuing party will have to show some proper justification for a different costs consequence: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32; Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365.

21. In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 McHugh J said at 624 – 625 (citations omitted):

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

…

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.

…

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

22. As I apprehend the present case, Mr Hopoate relies on the principle in Lai Qin to argue for a contrary order costs on three bases. First, that the proceedings were commenced reasonably; secondly, that the discontinuance of the proceedings was a consequence of having achieved practical success in relation to the claim, thereby rendering the prosecution of the proceedings futile; and thirdly, that the NRL was unreasonable in its conduct during the proceedings. I will deal with each of these submissions in turn.

23. It is important to note from the outset that in Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 at [64], and Bitannia Pty Ltd v Parkline Constructions [2009] NSWCA 32 at [78], the Court of Appeal has said that McHugh J’s statements in Lai Qin are not readily applicable to a decision to be made under UCPR in r 42.19, because the starting point is different than the starting point considered in Lai Qin. Lai Qin involved different rules of court. In those cases, the Court of Appeal held that whilst the question of whether the plaintiff has acted reasonably in commencing and continuing proceedings is a relevant consideration, it is not determinative.

Reasonable commencement of proceedings

24. Mr Hopoate submits that the purpose of these proceedings was to prevent the NRL following through with threats made to the Manly Club and Mr Hopoate, by seeking a declaration that an under 18’s SG Ball game is under the sole jurisdiction of the NSWJRL rather than the NRL. The NRL however submitted that because Mr Hopoate was not party to the contract, he has no standing to seek the declaratory relief he sought. 

25. It is generally correct to say that a party in Mr Hopoate’s position has no standing to seek a declaration about the meaning and effect of a contract to which he is not a party. However, Mr Hopoate may have had standing to seek declaratory relief in this case, if he could demonstrate that he had some real interest or right that would be affected by the contract between the Manly Club and the NRL: Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564; CGU Insurance Limited v Blakeley [2016] HCA 2.

26. The question of whether an “outsider” to the contract has standing to seek a declaration as to the meaning and effect of a contract was recently addressed by the High Court in CGU Insurance Limited v Blakeley [2016] HCA 2. In that case, it was argued by counsel that the Victorian Court of Appeal erred in finding that there was jurisdiction to grant declaratory relief as to the meaning and effect of a contract where the party seeking relief was not a party to the contract. However, the plurality of the High Court held that the relevant party had a sufficient interest. It should be noted that the case concerned a claim for declaratory relief in the federal rather than the state jurisdiction of the Supreme Court of Victoria.

27. Relevantly in a separate judgment, Nettle J referred to Ainsworth and stated that a party seeking declaratory relief must demonstrate a “real interest” in the subject matter of the declaration, and that it must be apparent that the declaration will be productive of foreseeable consequences for the parties. While noting some conflict of authority, Nettle J at [99] concluded: “[d]epending upon the circumstances, it is sufficient that a claimant will derive some benefit or advantage from the declaration over and above any benefit or advantage that might be derived by an ordinary citizen”.

28. In the circumstances of the present case, where the NRL threatened to fine the Manly Club up to $1 million and Mr Hopoate up to $100,000 if he continued coaching, it appears to have been reasonable for Mr Hopoate to have commenced these proceedings.

29. It is not the function of this court, on a cost application, to make a prediction as to the outcome of a hypothetical case. It is enough that Mr Hopoate acted reasonably, and there is nothing to suggest that Mr Hopoate acted unreasonably in bringing his application, particular under circumstances where, after more than two decades of coaching under 18’s SG Ball team, Mr Hopoate appears to have been abruptly removed from his coaching position due to a threat of hefty fine, and under circumstances where he and the Manly Club were advised by lawyers that they had reasonable grounds for challenging the NRL’s decision. At the same time, if the matter had proceeded further, it would also have been reasonable for the NRL to defend its decision and insist that Mr Hopoate had no right to demand the declaratory relief he sought on grounds of privity of contract, a stance that the NRL made clear to the Manly Club at the outset.

30. Mr Hopoate then submitted that these proceedings prevented the NRL from issuing breach notices. However, these proceedings only commenced on 4 March 2016, after Mr Hopoate had already been stood down in late February. As such, the submission that these proceedings were commenced in order to avoid a penalty imposed against Manly Club does not follow. Put shortly, the NRL withheld issuing a breach notice to the Manly Club because the Manly Club had voluntarily stood Mr Hopoate down from coaching the SG Ball team, and not because at the commencement of these proceedings.

Practical success

31. The courts have recognized that a discontinuing plaintiff may be relieved of an order to pay the other party’s costs in circumstances where the plaintiff has obtained practical success in the proceedings: Re Minister for Immigration and Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; 186 CLR 622 and Mao v Yehuaxin Enterprise Pty Ltd [2009] NSWSC 1270. Mr Hopoate submits that this is such a case. Mr Hopoate contends that he has achieved substantial success because the proceedings gave him sufficient time to negotiate and reapply for registration with the NRL, and as an act of good faith, Mr Hopoate withdrew proceedings pending the NRL’s consideration of his second application. It was under these circumstances that Mr Hopoate submitted that it was reasonable and appropriate for him to cease pursuing the proceedings further.

32. In reality however, the NRL has not yet determined the outcome of Mr Hopoate’s reapplication for registration. There is also no evidence to suggest that Mr Hopoate’s reapplication would be accepted by the NRL should he discontinue these proceedings. At the hearing, Mr Kanagaratnam, counsel for the defendant, submitted that this was not a case of quid pro quo, whereby, if these proceedings were discontinued, Mr Hopoate’s reapplication would be looked on more favourably by the NRL; indeed, there does not appear to be evidence to support that claim. As it currently stands, Mr Hopoate has started the proceedings and simply discontinued them. At its highest, by commencing these proceedings, Mr Hopoate prompted the NRL to reconsider his application, but achieved no more.

33. Further, Mr Kanagaratnam submitted, and I agree, that Mr Hopoate’s subjective motivations are irrelevant to the exercise of the court’s discretion under UCPR r 42.19(2), which is to be exercised on the basis of the objective circumstances established on the evidence: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [81]. Absent a final determination of the application by the NRL, it cannot be said that Mr Hopoate succeeded in achieving practical success, even if he did believe, based on correspondence with the NRL, that that would be the likely outcome. For these reasons, I do not consider Mr Hopoate to have achieved practical success.

Unreasonable conduct of the defendant

34. Mr Hopoate then submitted that it was unreasonable for the NRL to have taken more than three months to consider his reapplication, in circumstances where they knew these proceedings were on foot. In reality however, it was Mr Hopoate who has acted prematurely in discontinuing proceedings where his second application has not yet been determined. While it has taken longer for the NRL to reconsider Mr Hopoate’s second application than the first, I do not consider the time the NRL has taken to consider Mr Hopoate’s second application to be so unreasonable as to warrant a contrary order. What transpired does not alter the fact that the NRL was brought to court and caused to incur costs by proceedings which it submitted have no basis, and denied the chance to make good its claim, by Mr Hopoate’s decision to discontinue.

34. I add that Mr Hopoate might have had an arguable case that the defendant acted unreasonably in the conduct of proceedings, if the NRL had threatened Manly Club with fines after his commencement of the proceedings. That, however, was not the case. Mr Hopoate withdrew voluntarily without having actually achieved the remedy he wanted.

Conclusion

36. For these reasons, I have come to the conclusion that sufficient ground for a contrary order pursuant to UCPR r 42.19(2) is not made out and therefore, Mr Hopoate should pay the costs of the NRL up to the filing of the notice of discontinuance.

37. For these reasons, I make the following orders:

1. order that the plaintiff’s notice of motion filed 24 May 2016 be dismissed;

2. order that Mr Hopoate pay the NRL’s costs of the proceedings up until 4 July 2016; and

3. order that Mr Hopoate pay the costs of the notice of motion.

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Amendments

02 August 2016 - Par 12 change 2014 to 2016

Par 37(3) change notion to notice

Decision last updated: 02 August 2016