Hutley v Cosco (No 2)

Case •

[2021] NSWCA 335

•

21 December 2021

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Hutley v Cosco (No 2) [2021] NSWCA 335
Hearing dates: On the papers
Date of orders: 21 December 2021
Decision date: 21 December 2021
Before: Basten JA at [1];
Macfarlan JA at [35];
White JA at [37]
Decision:

(1)   Refuse the application to vary order 2(b) made and entered on 23 February 2021.

(2)   Otherwise dismiss the amended notice of motion dated 6 September 2021, with no order as to costs.

Catchwords:

COSTS – application for indemnity costs – offers of compromise – Calderbank offers – scope of Defamation Act 2005 (NSW) s 40 – whether offers were reasonable when made – whether non-acceptance reasonable – whether offers genuine offers of compromise – offers made no provision for existing legal costs – application dismissed

COSTS – claim for interest – claim for interest to be back-dated to date costs paid – scope of Civil Procedure Act 2005 (NSW), s 101(5) – whether

variation of existing costs order – application of UCPR r 36.16(3A) – if applicable, variation sought out of time – whether order should be made

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 56, 57, 98, 99, 100, 101

Courts and Justice Portfolio Legislation Amendment Act 2015 (NSW), Sch 1 cl 2

Defamation Act 2005 (NSW), s 40

Supreme Court Act 1970 (NSW), s 46

Uniform Civil Procedure Rules 2005 (NSW), r 36.7, 36.15, 36.16

Cases Cited:

Bailey v Marinoff (1971) 125 CLR 529

Bullock v London General Omnibus Co [1907] 1 KB 264

Calderbank v Calderbank [1975] 3 All ER 333

Cornes v The Ten Group Pty Ltd (No 2) [2012] SASCFC 106

Cosco v Hutley [2021] HCASL 153

Cotie v Cox [2006] NSWSC 859

Drummond and Rosen Pty Ltd v Easey & Ors (No 2) [2009] NSWCA 331

Flower & Hart v White Industries (Qld) Pty Ltd (2001) 109 FCR 280; [2001] FCA 370

Grace v Grace (No 9) [2014] NSWSC 1239

Gray v Richards (No 4) [2017] NSWSC 1714

Hutley v Cosco [2021] NSWCA 17

Illawarra Hotel Co Pty Ltd v Walton Construction Pty Ltd (No 2) (2013) 84 NSWLR 436; [2013] NSWCA 211

Lahoud v Lahoud [2006] NSWSC 126

Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140

Rodi v Gelonesi [2016] NSWCA 348

Short v Crawley (No 45) [2013] NSWSC 1541

Spedding v Nobles; Spedding v McNally (No 2) [2007] NSWCA 87

Tjiong v Tjiong (No 2) [2018] NSWSC 1981

Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2013] NSWCA 227

Category:Costs
Parties: Vanessa Hutley (Appellant)
Anthony Cosco (Respondent)
Representation:

Counsel:
M Richardson (Appellant)
S T Chrysanthou SC / N G Olson (Respondent)

Solicitors:
Harris & Company (Appellant)
D’Arcy Sloman Peacock (Respondent)
File Number(s): 2020/226530
 Decision under appeal 
Court or tribunal:
Supreme Court
Jurisdiction:
Common Law Division
Citation:

[2020] NSWSC 893

Date of Decision:
13 July 2020
Before:
Rothman J
File Number(s):
2016/332100A

Judgment

  1. BASTEN JA: The respondent, Anthony Cosco, was successful in the Common Law Division in proceedings brought in defamation against Vanessa Hutley,[1] the appellant in this Court. On 23 February 2021 the Court upheld Ms Hutley’s appeal and set aside the judgment and orders in the Common Law Division. [2] The Court made consequential orders dismissing the claim and ordering that Mr Cosco pay the costs of the proceedings in the Division and in this Court. On 3 March 2021 Ms Hutley filed a notice of motion seeking certain variations of the costs orders. Although there were 10 proposed orders, they fell into two categories. The first sought that the costs of the trial be assessed on an indemnity basis from a number of possible dates, together with an order for interest on those costs; the second sought an order that Mr Cosco’s father, John Cosco, be liable for the costs for which Anthony Cosco was found to be liable.

    1. Cosco v Hutley (No 2) [2020] NSWSC 893.

    2. Hutley v Cosco [2021] NSWCA 17.

  2. Shortly thereafter, Anthony Cosco filed an application in the High Court seeking special leave to appeal from the judgment of this Court.

  3. On 29 March 2021 Ms Hutley’s solicitor filed an affidavit and submissions by counsel in support of her notice of motion. These steps appear to have led to a number of issues being agreed between the parties, which resulted in the filing of short minutes of order dated 6 April 2021. The orders envisaged the payment into court on behalf of Mr Cosco of an additional sum of $345,000, bringing the total amount of security for costs paid into court by him to $750,000. The amount was to remain in court until further order. Upon payment of the additional sum into court, Ms Hutley withdrew the orders sought in her notice of motion against Mr John Cosco, namely orders 4, 5 and 7. (She also withdrew a notice to produce documents.) It was agreed that further steps with respect to the remaining orders (orders 1, 2, 3, 6 and 8) be stayed until determination of the special leave application. The High Court dismissed the special leave application on 12 August 2021. [3]

    3. Cosco v Hutley [2021] HCASL 153.

  4. On 6 September 2021 Ms Hutley filed an amended notice of motion which included a fourth option as to the date from which indemnity costs were sought in the Common Law Division and varied the wording of order 6 which sought the payment of interest on the costs. Curiously, the paragraphs dealing with the claim against Mr John Cosco were not removed, but the written submissions filed in reply on 14 September 2021 confirmed that such orders were no longer sought. (The reply was in response to submissions filed on behalf of Mr Anthony Cosco on 10 September 2021.)

  5. A further curiosity was that order 10 of the amended notice of motion sought authority for the appellant’s solicitor to release to the appellant an amount of $450,000 which had been held in a controlled moneys account pursuant to a court order made on 21 August 2020. That was order 5 made by the Registrar by consent on 7 April 2021 and need not be further addressed.

  6. It follows that there are only two matters outstanding, namely the application for indemnity costs of the proceedings in the Common Law Division and an order for payment of interest on those costs.

Payment of costs on an indemnity basis

  1. Order (2)(b) made on 23 February 2021 was that Mr Cosco pay Ms Hutley’s costs of the proceedings in the Common Law Division. The first variation sought was that those costs be paid on an indemnity basis from one of the following dates:

  1. from 21 April 2017 (order 1);

  2. from 25 June 2017 (order 2);

  3. from 2 March 2019 (order 3); or

  4. an order that the whole of the costs be assessed on the indemnity basis (order 3A).

  1. The affidavit of Ms Hutley’s solicitor of 29 March 2021 identified the selection of the dates by reference to settlement offers made in the proceedings in the Common Law Division. The offers were as follows:

  1. an offer made on 19 April 2017 to pay the sum of $10,000 in full and final settlement, being open for acceptance until 10 May 2017;

  2. an offer made on 23 June 2017 to pay the sum of $40,000 in full and final settlement, being open for acceptance until 21 July 2017, and

  3. an offer made on 28 February 2019 by which the proceedings would be dismissed upon –

  1. Mr Cosco agreeing to purchase Ms Hutley’s property, which adjoined the Cosco property, for an amount of $4,000,000; or

  2. Ms Hutley paying the sum of $40,000 and providing an apology,

the offer being open for acceptance until 14 March 2019. (A form of apology was attached.)

  1. The letters of offer each invoked the principles enunciated in Calderbank v Calderbank. [4] Those principles envisage that such an offer, whilst made without prejudice, may be tendered on an application for costs in circumstances where the offer is not accepted, and the offer proposed a more favourable outcome than that achieved. To support an order that costs be assessed on the indemnity basis from the date of the offer, there had to be a basis to conclude that failure to accept the offer was unreasonable in all the circumstances.

    4. [1975] 3 All ER 333.

  2. Although not referred to in the offers, Ms Hutley also relied upon the terms of s 40 of the Defamation Act 2005 (NSW). So far as relevant to a case where the claim has failed, that section provides:

40   Costs in defamation proceedings

(1)   In awarding costs in defamation proceedings, the court may have regard to—

(a)   the way in which the parties to the proceedings conducted their cases (including any misuse of a party’s superior financial position to hinder the early resolution of the proceedings), and

(b)   any other matters that the court considers relevant.

(2)   Without limiting subsection (1), a court must (unless the interests of justice require otherwise)—

…

(b)   if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant—order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.

(3)   In this section—

settlement offer means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made.

  1. Neither party suggested that anything turned for present purposes on the scope of s 40(1). To engage s 40(2)(b), it was necessary that there be a “settlement offer” within the terms of subs (3). That requires that the offer be “reasonable” at the time it was made. Further, the contingent obligation contained in subs (2)(b) requires that the plaintiff’s non-acceptance be unreasonable. There are two aspects in which s 40(2) may vary from the principles governing Calderbank offers. First, the expression of an obligation to make an order, albeit contingent upon the possibility that the interests of justice may require otherwise, suggests that an order should be made unless the unsuccessful plaintiff can persuade the court to a different conclusion. Secondly, the obligation to award indemnity costs only arises if the proceedings are “unsuccessfully brought by a plaintiff”. The effect of the Calderbank principle is somewhat wider, as it applies where the plaintiff fails entirely or obtains a successful outcome, though one less favourable than that proposed in the offer. It is not clear whether the statutory provision should be interpreted to have a similar effect. Little seems to turn on these differences of language and the Court was invited to deal with the question on the same basis as either a Calderbank offer or a claim under s 40(2)(b).

  2. There is a separate reason, addressed below, for rejecting Ms Hutley’s order 3A (that the whole of the costs of the trial should be awarded on an indemnity basis). However, the claim was expressly based on a reading of s 40(2)(b) as requiring that the order sought be made whenever a plaintiff loses: so understood, the application for such an order should be rejected. In fact, it is an implausible reading of s 40(2), although it has some support in case law. [5] It is said to be justified because the purpose of the provision is to encourage early settlement of a claim; however, the section is silent as to when a reasonable offer is to be made. It may be open to conclude that an offer is not “reasonable” in circumstances where the plaintiff’s claim, or the defence, has not been particularised, so that the provision is not engaged. However, the inflexible consequence of engagement (namely payment of all the defendant’s costs) was not explored in the written submissions and it is preferable that the issues be addressed on the usual basis of the Calderbank principles.

    5. See, eg, Cornes v The Ten Group Pty Ltd (No 2) (2012) 114 SASR 106; [2012] SASCFC 106 at [13]-[15] (Kourakis CJ, Gray and Blue JJ).

  3. The proceedings have a long history: they were commenced shortly after the television broadcast on 4 July 2016, but the trial did not take place until some three years later, in 2019, judgment being delivered in July 2020. Although the proceedings were well underway when the first offer was made on 19 April 2017, the offer of $10,000 with no order as to costs was fairly described in the plaintiff’s submissions as an invitation to capitulation and not a genuine offer of compromise. It was not unreasonable for the plaintiff to reject it.

  4. The second offer, made two months later on 23 June 2017, increased the payment to $40,000, again with no order as to costs. In submissions, the parties did little more than assert that the offer was “a significant sum” in the face of the poor prospects of success on the claim (the defendant), and “a modest increase” which was not sufficient to make the offer a genuine compromise (the plaintiff).

  5. While the sum offered was not insignificant, a successful claim in defamation, having regard to the medium of publication, namely a well-known television program which was likely to reach a wide audience, was capable of resulting in a judgment many times greater than the offer. Again, the fact that it included no amount on account of costs and involved no apology diminished its sufficiency. Further, it was accompanied by a draft deed requiring confidentiality of the proposed settlement, thus preventing the plaintiff using it in vindication of his claimed harm to reputation. While it may be wrong to dismiss the offer as other than a reasonable offer, it does not follow that the Court should be satisfied that the plaintiff was acting unreasonably in failing to accept it. The increase from the first offer was inadequate in the circumstances to justify an indemnity costs order.

  6. The third offer, made some 18 months later and a few weeks before the trial was due to commence had two limbs. The first involved the purchase of Ms Hutley’s house for the sum of $4 million. As the plaintiff fairly submitted, the reasonableness of the proposal was not capable of being evaluated and should be disregarded.

  7. The second alternative was the payment of the same sum of $40,000 which had been proffered 18 months earlier, with the addition of a proposed apology. The lateness of the apology lessened its value to the plaintiff. It did, however, effectively remove the confidentiality clause in the draft deed of settlement which accompanied the second offer. The apology was terse: it merely referred to the allegations (unspecified) broadcast on the program, A Current Affair, and stated,

“I withdraw the allegations I made on that program and apologise for any hurt or embarrassment caused.”

  1. Further, the use of the apology was conditioned in the following terms:

“Defendant to provide an apology to the Plaintiff in the form annexed and marked ‘A’. The Defendant [sic] is not to publish the apology in any print or social media or internet but may show the apology to persons who raise the 60 Minutes [sic] program.”

The limited use was undoubtedly intended to be a condition imposed on the plaintiff (not the defendant as stated) and may well have been intended to refer to the A Current Affair program. Even if read in this way, it permitted an unreasonably limited use, especially given that some three years had elapsed since the program was broadcast. If the plaintiff was not acting unreasonably in failing to accept the second offer, he was not acting unreasonably in failing to accept the third offer.

  1. It remains to consider the option contained in order 3A in the amended notice of motion. The justification for such an order, as noted above, is not to be found in Calderbank principles, but rather upon a reading of s 40(2)(b) of the Defamation Act. Assuming that such a reading is justified, it provided an entirely new basis for claiming indemnity costs. It was not raised in the original notice of motion, but only as amended. The proposed amendment was first set out in the submissions filed on 29 March 2021; it was formalised as an amended notice of motion, apparently at the request of the plaintiff. Thus, the written submissions added to the claims in the notice of motion a claim for “an order that the plaintiff pay the defendant’s costs of the defamation proceedings on an indemnity basis”, namely without limitation as to time. The submissions justified such an order by reference to s 40(2)(b).

  2. Pursuant to the Uniform Civil Procedure Rules 2005 (NSW), r 36.16(3A), a party seeking to vary an entered order must give notice of a motion to do so within 14 days after the order is entered. The Court has no power to extend time: UCPR, r 36.16(3C). The general principle is that orders, once entered, cannot be varied. Rule 36.16(3A) provides an exception to that general principle in circumstances where the criteria permitting a review of an order set out in r 36.15 are not engaged. Although the plaintiff did not object to the late addition of a fourth proposed order, it is clear that he opposed and did not consent to any variation of the order made by the Court.

  3. Order 3A was not sought in the notice of motion dated 3 March 2021, nor was there evidence that it was sought prior to filing the submissions dated 29 March 2021. Even accepting that the making of a claim for a variation of an order in a document other than a notice of motion may be sufficient notice, the notice was not given until more than four weeks after the delivery of judgment and entry of the order sought to be varied. Although some leniency may be accorded in the case of minor changes to the form of a proposed variation, a fresh proposal, having a substantially different effect and based on a different legal principle, first raised beyond the 14 day period, should not be entertained. If it were to be entertained, the fourth option should be rejected in the exercise of the Court’s discretion namely that the interests of justice require otherwise, pursuant to s 40(2).

  4. It follows that each of the bases upon which an application for indemnity costs was sought should be rejected. Order (2)(b) dealing with the costs in the Common Law Division should remain as made on 23 February 2021.

Interest on costs

  1. Pursuant to the amended notice of motion, Ms Hutley sought an order for payment of interest on costs, from the date on which she paid those costs, pursuant to s 101(4) and (5) of the Civil Procedure Act 2005 (NSW). Those provisions relevantly state:

101   Interest after judgment

…

(4)   Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs.

(5)   Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.

  1. The order was first articulated in the submissions for Ms Hutley prepared by counsel and dated 29 March 2021. The submissions stated that, because the proceedings were commenced in late 2016, such an order “would have real value.” The Court undoubtedly has power to make an order that interest run from some earlier date than the date of the order. The amount of costs is not however normally known until the claimed costs have been assessed or agreed. Usually, neither will have happened when the order for costs takes effect. It is therefore necessary to make provision for a method of calculation if, for example, interest is to run from the date on which costs were in fact paid, where the costs paid are likely to exceed those allowed on assessment. [6]

    6. Lahoud v Lahoud [2006] NSWSC 126.

  2. As noted above, if a party seeks to vary an entered order, it must give notice of a motion to do so within 14 days after the order is entered. The notice of motion filed within time by Ms Hutley sought interest pursuant to s 100 of the Civil Procedure Act, not s 101(4) and (5). The submissions filed more than four weeks after judgment sought the different order, conceding that the first order was sought by mistake. Nor was it correct, as the submissions suggested, that no variation was sought in the amended notice of motion of the default position under s 101(5): a different date required an affirmative step to be taken by this Court.

  1. Despite the fact that the original notice of motion did not expressly claim interest on costs, Ms Hutley’s submission of 29 March addressed the claim and the new order sought was reflected in the amendment to order 6 made in the notice of motion dated 6 September 2021. There was no response in Mr Cosco’s submissions filed four days later. Ms Hutley’s submissions in reply did not address the fresh issue raised in the amended notice of motion namely that interest should be paid “from the date or dates on which costs were paid by the appellant until payment of the amounts by the respondent”.

  2. The notice of motion filed within time cannot be read as seeking such an order. In the circumstances, the order originally sought was misconceived and the order now sought cannot be made, if it were not in fact sought within time.

  3. As White JA explains, there has been discussion in past cases as to whether an order for costs can be varied if an appropriate application is not made within 14 days of the judgment being entered. The present form of s 101(5) has been in operation only since 24 November 2015. Earlier cases were dealing with different issues under a different provision. However, the accepted principle is that UCPR r 36.16(3) precludes the variation of any judgment or order which determines any claim for relief or determines any question arising on any claim for relief. Assuming that an order for costs is an order disposing of a claim for relief or determines a question arising on a claim for relief, variation of a costs order must be made within 14 days pursuant to subr (3A). That is the practice universally adopted where a costs order is made, but is sought to be varied on the basis of an offer of compromise which was not accepted. If a judgment on a money claim is sought to be varied to include pre-judgment interest, such variation must be sought within 14 days. The same conclusion should follow with respect to an order for costs which does not include interest, whether because interest was not sought, or because the claim was overlooked. The effect of the inclusion of interest is to vary the amount the subject of the costs order. It is difficult to see why any different outcome should follow in relation to interest on costs.

  4. In Rodi v Gelonesi [7] Payne JA (with whom Meagher JA agreed, Gleeson JA not deciding) considered whether an application for an order that costs payable by the plaintiff should be paid by the plaintiff’s solicitor, made long after the expiration of the 14 day period, should be refused on that basis. Because the application was to be refused on other grounds, Payne JA did not decide the matter, but nevertheless identified the point of principle:

“[37]   … It seems to me that the orders sought here, that a different person pay the costs ordered to be paid by Beazley and Ward JJA by way of indemnity, is more accurately to be described as a variation of the order already made that those costs be paid by [the plaintiffs].”

In my view that reasoning applies with greater force to the variation of the amount of a costs order by including pre-judgment interest.

7. [2016] NSWCA 348.

  1. The default position under s 101(4) and (5) is that interest is payable on an amount payable under an order for costs, and interest will run at the prescribed rate from the date the order is made. The issue in the present case is whether an earlier date should be fixed, a possibility which is provided for in s 101(5), since the 2015 amendment. There is no obvious reason why the party liable to pay the costs would seek such an order; the order for back-dating will be sought by the party to whom costs are payable. An order seeking that interest run from an earlier date was not sought prior to judgment, nor was it sought within 14 days of judgment being delivered. An order for costs was made on 23 February 2021; it did not include an order that interest be paid from an earlier date than the date of the order. In my view, although the matter was not addressed in submissions, the application is out of time and should be dismissed on that basis.

  2. If the Court had power to vary the order in the manner now sought, it would be necessary to have regard to the fact that Mr Cosco has not had control of the amounts paid into court which, on the evidence, cover the total costs incurred by Ms Hutley. The evidence does not reveal whether she has paid those costs, nor, if so, when. Further, the figure for recoverable costs will be reduced on a party and party assessment. Although loss to the defendant of use of the money paid into Court on account of costs does not affect the compensatory effect of a payment of interest on costs in fact paid by Ms Hutley, the security for payment is a considerable benefit to her and will have accrued interest. These considerations would militate against an order for interest on costs for the full amount of the prescribed rate.

  3. For these reasons and those given by White JA, if the Court had power to make the order sought it should not do so.

Costs of the motion

  1. Although Ms Hutley has been unsuccessful in seeking the outstanding orders which are still in dispute, what may be seen in practical terms to be the most significant orders sought in the motion, namely those which gave rise to full security for the costs order being met, were conceded. In the circumstances there should be no order as to the costs of the motion.

Orders

  1. The Court makes the following orders:

  1. Refuse the application to vary order 2(b) made and entered on 23 February 2021.

  2. Otherwise dismiss the amended notice of motion dated 6 September 2021, with no order as to costs.

  1. MACFARLAN JA: I agree that the application for indemnity costs should be refused for the reasons given by Basten JA. I agree also that the application concerning interest on costs should be refused, but I confine my agreement to the reasons relevant to discretion given by Basten and White JJA. I prefer not to express a view on the jurisdictional issues discussed by their Honours in the absence of full argument having occurred.

  2. For these reasons I agree with the orders that Basten JA proposes.

  3. WHITE JA: I agree with Basten JA that the appellant’s application for an order for indemnity costs should be refused. I agree with his Honour’s reasons for that conclusion. I would add that as the respondent succeeded before the primary judge in obtaining a judgment for damages well in excess of the amounts in the offers of compromise, it could not be said that his rejection of the offers of compromise was unreasonable.

  4. By her notice of motion filed on 3 March 2021, Ms Hutley sought an order:

“Pursuant to s 100 of the Civil Procedure Act 2005 (NSW), the respondent is to pay, in addition to costs, interest on the amount of costs assessed in the Common Law Division in accordance with Order 1-3 above, from 4 November 2016 at the rate of 3.5% per annum.”

  1. That application was misconceived. Section 100 of the Civil Procedure Act allows for the inclusion of interest in the amount of a judgment in proceedings for the recovery of money. That section has nothing to say as to the power to order interest on costs. At common law the power to order costs is wholly statutory. That power is now conferred by s 98 of the Civil Procedure Act. The power to order costs under s 98 does not include power to order interest on costs (Flower & Hart v White Industries (Qld) Pty Ltd (2001) 109 FCR 280; [2001] FCA 370, approved by this Court in Spedding v Nobles; Spedding v McNally (No 2) [2007] NSWCA 87). The only power to order interest on costs is that conferred by s 101 of the Civil Procedure Act.

  2. Section 101 relevantly provides:

“(1)   Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.

...

(4)   Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs.

(5)   Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.

...

(7)   In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section.”

  1. The rate of interest prescribed for the purposes of s 101(7) is set out in r 36.7 of the Uniform Civil Procedure Rules. It is a rate that is 6% above the cash rate published by the Reserve Bank.

  2. By an amended notice of motion filed on 6 September 2021, Ms Hutley withdrew her application for an order under s 100 of the Civil Procedure Act for interest on costs and instead sought the following order:

“Pursuant to ss 101(4) and 101(5) of the Civil Procedure Act 2005 (NSW) (CPA), interest is to be paid on the amount of costs assessed in the proceedings in the Common Law Division (2016/332100) at the rate prescribed by the Uniform Civil Procedure Rules 2005 (NSW) for the purposes of the CPA from the date or dates on which costs were paid by the Appellant, until payment of the amounts by the Respondent and/or John Cosco.”

  1. This was the first time that a competent application was made for an order for interest on costs from the time costs were paid.

  2. The orders of this Court made on 21 February 2021 were in substance to allow the appeal, to set aside the orders below, in lieu thereof to dismiss the Amended Statement of Claim, and to order that Mr Cosco pay Ms Hutley’s costs of the proceedings in the Common Law Division and in this Court.

  3. The first question is whether the application under s 101 of the Civil Procedure Act for an order under s 101(5) that interest be calculated as from the dates costs were paid by the appellant, rather than from 21 February 2021, is barred because that application has not been brought within 14 days after the making of the orders on 21 February 2021. Neither party made submissions on this question, but the Court must itself address the question of its jurisdiction to make the order sought.

  4. Rule 36.16 of the Uniform Civil Procedure Rules provides:

“36.16 Further power to set aside or vary judgment or order(cf SCR Part 40, rule 9)

(1)    The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.

(2)   The court may set aside or vary a judgment or order after it has been entered if—

(a)   it is a default judgment (other than a default judgment given in open court), or

(b)   it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or

(c)   in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.

(3)   In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it—

(a)   determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or

(b)   dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.

(3A)   If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.

(3B)   Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.

(3C)   Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).

(4)   Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.”

  1. Prior to 2015 no interest was payable on costs except if the court made an order for interest on costs ([65] below).

  2. There is authority that r 36.16(3A) required that an application for an order for interest on costs be made within 14 days after the costs order is entered (Drummond and Rosen Pty Ltd v Easey & Ors (No 2) [2009] NSWCA 331 (at [49]); and Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2013] NSWCA 227 (at [85])).

  3. The discussion of this question in Drummond and Rosen Pty Ltd v Easey & Ors (No 2) was obiter and lacked reasoning. The decision of McColl JA in Zepinic v Chateau Constructions (Aust) Ltd (No 2) was given when her Honour was sitting as a single judge of appeal under s 46 of the Supreme Court Act 1970 (NSW). Since those decisions there has been a number of first instance judgments to contrary effect including Short v Crawley (No 45) [2013] NSWSC 1541 (White J), Grace v Grace (No 9) [2014] NSWSC 1239 (Brereton J), Gray v Richards (No 4) [2017] NSWSC 1714 (McCallum J), and Tjiong v Tjiong (No 2) [2018] NSWSC 1981 (Parker J).

  4. The same issue arises with respect to an application under s 101(5) for the court to order that interest be payable from a different date than the date of the costs order.

  5. I adhere to the reasons I gave in Short v Crawley (No 45).

  6. The first question is whether the application to vary the date from which interest on costs is payable is an application to set aside or vary the orders made on 21 February 2021. The answer to that question is no. The orders made by this court on 21 February were made pursuant to s 98 of the Civil Procedure Act. They did not engage and did not address the power to make an order varying the date from which interest on costs is payable pursuant to s 101(5). The orders made on 21 February 2021 will be unaffected whether such an order is made or refused.

  7. In Rodi v Gelonesi [2016] NSWCA 348, Payne JA held (at [35]-[36]) that it was arguable that an application under s 98(1)(b) or s 99 of the Civil Procedure Act that a solicitor for the plaintiffs pay the costs of the successful party could be characterised an application to vary the costs order already made that those costs be paid by the plaintiffs. His Honour said that it was arguable that the costs order determined a claim for relief, the claim being orders disposing of the costs of the proceedings. Payne JA found support for this approach in Roads and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140. There a plaintiff succeeded against three defendants at trial. An appeal by one defendant was successful but the appeals by the other defendants were dismissed. The court ordered the plaintiff to pay the costs of the ultimately successful defendant. It dismissed the appeals brought by the other defendants with costs. Thus the unsuccessful defendants were ordered to pay the plaintiff’s costs of the appeal and of the trial.

  8. Two years later the plaintiff sought a Bullock order (Bullock v London General Omnibus Co [1907] 1 KB 264) that the unsuccessful defendants pay the plaintiff the costs she had been ordered to pay the successful defendants. [8]

    8. There is a clear typographical error in Palmer at [7].

  9. Giles JA, with whom Spigelman CJ and Handley JA agreed, held that this was an application to vary the costs orders previously made and did not fall within Pt 40 r 9(3) of the Supreme Court Rules (the equivalent of UCPR r 36.16(3)) because the costs orders did determine the claim for relief, being orders disposing of the costs of the trial (at [21]).

  10. There can be no quarrel with either conclusion. The costs orders determined the extent of the liability of the unsuccessful defendants to the plaintiff. In the present case this Court has not determined whether there should be any variation to the default position concerning interest on costs.

  11. In Zepinic v Chateau Constructions (Aust) Ltd (No 2) McColl JA held (at [85]) that the application for the order for interest on costs sought a variation of the orders of the court by way of making an additional order (at [85]). If that were so, then the Court would nonetheless have the power to make the order under r 36.16(3) because the Court has not determined the claim for relief, namely the claim to vary the date from which interest on costs is to be payable. The 14 day limitation under r 36.16(3A-3C) does not apply to an application under r 36.16(3). (Short v Crawley (No 45) at [77]-[78]).

  12. Having concluded that the application is not one to vary the previous orders, the question is whether the Court can made no order under s 101 because of the principles of finality of litigation. The classic expression of those principles was given by Barwick CJ in Bailey v Marinoff (1971) 125 CLR 529 at 530:

“Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.”

  1. That principle is subject to statutory qualification. In Short v Crawley (No 45) I held that there was such a statutory qualification in s 98(3) of the Civil Procedure Act. I there held, and I adhere to that view, that an application for an order for interest on costs is an order “as to” costs within the meaning of s 98(3) even though the power to order interest on costs is a separate power from the power to order costs.

  2. In Grace v Grace (No 9) [2014] NSWSC 1239, Brereton J reached the same conclusion for different reasons. His Honour said:

“[35]    ... Generally speaking, unless the question of costs has been dealt with, explicitly or implicitly, in the final judgment, a costs order does not involve any variation of or attack on the final substantive judgment. Accordingly, the finality principle is not offended by subsequently entertaining and dealing with an application for costs because it does not involve impugning "the operative and substantive part" of the judgment. In NSW Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8, the Court of Appeal held that a judge was not functus officio after giving judgment and making costs orders if the duties in the case were not otherwise completed (even though the judge was not then aware of it), and that in circumstances where there was a costs argument still to be heard - although it had not until that point been made - he was not functus officio and was entitled to entertain and deal with an application for a special costs order made immediate[ly] following the delivery of judgment. While that result could be supported as a variation to the order made on application before it was entered, under the then equivalent of UCPR r 36.16, that is not how the Court of Appeal put it (at 12E):

Also in my opinion there is no merit in the argument concerning the judge being functus officio at the point where he announced his verdicts and costs orders in the two actions. Although he did not know it at that moment, he had not then completed his duties in the cases, there was a costs argument still to be heard. He heard it immediately and acted quite properly and with proper authority in doing so.

…

[37] However, provision to similar effect was made in the Rules [(NSW) Supreme Court Rules 1970, Pt 52, r 5; Pt 52A, r 5]. It may be allowed that s 98(3) is concerned with costs orders after the substantive decision has been given, and must be subject to finality from entry of costs orders already made, so that it would not not authorise re-opening a final costs order that has already been made [Roads and Traffic Authority of New South Wales, Council of the Shire of Evans and Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140, [17] (considering (former) SCR, Pt 52A r 5)]. But subject to that qualification it is, in the words used by Barwick CJ, a "specific and relevant statutory provision" to the contrary.

[38]   Accordingly, an order for costs can be made after the conclusion of proceedings, so long as it does not impugn or alter a final costs order already made [see also Cotie v Cox [2006] NSWSC 859, [22]-[27] (Latham J)]. And if an order as to costs can be made after the conclusion of proceedings, it must follow that an order for interest on costs can be made after the conclusion of proceedings.”

  1. Brereton J also concluded that a claim for interest on costs does not merge in the relevant costs order (at [40]) and by reference to authority on cognate rules prior to the introduction of the Civil Procedure Act concluded that the power to make an order for interest on costs did not have to be exercised at the time of making the relevant costs order so that a judge was not rendered functus officio and precluded from making a later order for interest on costs (at [43]-[52]).

  2. Brereton J concluded:

“[53] The foregoing analysis results in the following conclusions. As an order for interest on costs derives from a different statutory source than the costs order, does not impugn the operative and substantive costs order, and results in a separate judgment from the judgment under the costs order, a claim for interest on costs does not merge in the relevant costs order, and a judge does not become functus officio in that respect on making the relevant costs order. Prior to the commencement of the costs assessment regime in 1994, it was accepted that an order for interest on costs did not have to be sought when the relevant costs order was made, but could be made subsequently; the introduction of the costs assessment scheme, while removing the power from taxing officers, was not intended to affect this; and the substantial re-enactment of SCA, s 95 as CPA, s 101 assumed the established position. The predominance of judicial authority also favours that view.

[54] In my judgment, therefore, if there is a time limit for seeking an order under CPA, s 101(4), it is not the making of the relevant costs order (or 14 days thereafter), and no viable alternative has been identified, let alone suggested to be applicable in this case. (Arguably, the (NSW) Limitation Act 1969 may provide one, by s 14(1)(d) or s 17, and the Court might decline as a matter of discretion to entertain an unduly belated application [cf Cotie v Cox, [25]-[26]], but it is unnecessary to explore those possibilities further).”

  1. Whether for the reasons I advanced in Short v Crawley (No 45) or for the separate reasons advanced by Brereton J in Grace v Grace (No 9), with which I agree (save that in any event I consider the issue to be resolved by s 98(3)), the Court is not functus officio.

  2. Mr Cosco did not submit otherwise.

  3. In Short v Crawley (No 45) at [84]-[85] I advanced a number of reasons as to why the construction of r 36.16 which I favoured was consistent with the dictates of ss 56 and 57(2) of the Civil Procedure Act. Section 101 of that Act was amended in 2015 (Courts and Justice Portfolio Legislation Amendment Act 2015 (NSW) Sch 1 cl 2). Prior to the amendment no interest was payable on costs unless the court made an order for such payment; in which event interest was payable from the date or dates on which costs were paid or such later date as the court might order.

  4. The 2015 amendment to s 101 raises a different question, but one which also indicates that in accordance with ss 56(2) and 57(2) of the Civil Procedure Act r 36.16 should not be interpreted as requiring an application for a contrary order under s 101(4) or (5) to be brought within 14 days of the making of the costs order. A good reason for a party liable to pay costs to seek a contrary order under s 101(4) or (5) would be if the party entitled to costs had not made any payment. In the ordinary course that would not be known to the party liable to pay costs within 14 days of the making of the costs order.

  5. Ms Hutley adduced no evidence as to what costs payments she made. Nor did she lead evidence as to how any payments she might have made were funded. She led no evidence as to whether she has sustained loss by making payments towards costs, whether by borrowing, or by withdrawing moneys that would otherwise have earned interest, or dividends, or appreciated in capital value.

  6. The appellant submitted that evidence as to the dates on which costs were paid is not essential for an application for an order for interest on costs, citing Drummond and Rosen Pty Ltd v Easy (No 2) [2009] NSWCA 331 (at [3]-[4]). That is true. But the absence of such evidence and evidence as to how the appellant is out of pocket is a discretionary reason for not making an order for interest on costs (Spedding v Nobles; Spedding v McNalley (No 2) [2007] NSWCA 87 at [17]; Illawarra Hotel Co Pty Ltd v Walton Construction Pty Ltd (No 2) (2013) 84 NSWLR 436; [2013] NSWCA 211 at [38]).

  7. If the prescribed rate of interest under s 101 (6% above the Reserve Bank cash rate) is materially higher than any interest cost incurred by Ms Hutley in paying costs, or any return which she would otherwise have received from the moneys used to pay costs, that would be a material consideration in the exercise of the discretion under s 101(5) to order that interest be paid at the rates prescribed for the purposes of s 101 from the date or dates on which costs were paid by Ms Hutley.

  8. Further, $750,000 has been provided by way of security for costs. That money has been paid to the NSW Trustee and Guardian for payment into a common fund. Ms Hutley will be entitled to any interest earned on so much of those moneys as she is entitled to receive in payment of her costs from the money paid into court (Uniform Civil Procedure Rules r 41.6).

  9. In the absence of evidence on these matters, the application to vary the date from which interest on costs is payable should be refused.

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Endnotes

Decision last updated: 21 December 2021

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Cases Cited

20

Statutory Material Cited

5

Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11
Bailey v Marinoff [1971] HCA 49
Cornes v The Ten Group Pty Ltd (No 2) [2012] SASCFC 106