Jansen v Greville [No 3]
[2021] WADC 103
•28 OCTOBER 2021
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: JANSEN -v- GREVILLE [No 3] [2021] WADC 103
CORAM: STEVENSON DCJ
HEARD: 10 AUGUST & WRITTEN SUBMISSIONS ON 24 SEPTEMBER, 8 & 12 OCTOBER 2021
DELIVERED : 28 OCTOBER 2021
FILE NO/S: APP 71 of 2020
BETWEEN: JAN JANSEN
Appellant
AND
GUY DAVID GREVILLE
First Respondent
ZENITH TRUST CO LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: MAGISTRATE WALTON
File Number : GCLM 14740 of 2012
Catchwords:
Appeal - Magistrates Court - General procedure claim - Negligence - Nuisance - Issue whether building works caused damage to adjoining property - Claimant not the owner - Wrong party - Costs in the Magistrates Court proceedings when appeal upheld
Legislation:
District Court Rules 2005 (WA), r 59(1)
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 25, s 25(2), s 43(7)(b), s 43(7)(e)
Result:
Non-party ordered to pay appellant's costs of the appeal and in the Magistrates Court proceedings
Representation:
Counsel:
| Appellant | : | Mr M J McCusker QC & Mr P V Lansell |
| First Respondent | : | Mr J R Criddle |
| Second Respondent | : | Mr J R Criddle |
Solicitors:
| Appellant | : | Lansell Legal |
| First Respondent | : | McCabe Curwood |
| Second Respondent | : | McCabe Curwood |
Case(s) referred to in decision(s):
Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523
City of Fremantle v Imago Holdings Pty Ltd [2019] WASC 127
City of Fremantle v Imago Holdings Pty Ltd [2020] WASCA 61 (S)
Harold v Smith (1860) 5 H & N 381
Jansen v Greville [No 2] [2021] WADC 60
Oshlack v Richmond River Council (1998) 193 CLR 72
STEVENSON DCJ:
Introduction
On 18 June 2021, I published reasons for decision allowing Mr Jansen's appeal: Jansen v Greville[No 2] [2021] WADC 60 (the appeal judgment).
On 10 September 2021, after the parties had filed further written submissions, I heard submissions from counsel as to the appropriate orders consequent on the appeal judgment. At that time, the following six issues were extant:
(a)whether the matter should be remitted back to the Magistrates Court, and if so, on what basis;
(b)Mr Jansen's application for a suspension order dated 18 November 2020 and associated appeal dated 18 February 2021;
(c)what costs orders should be made in respect of the proceedings in the Magistrates Court;
(d)what costs orders should be made in respect of the costs of the appeal, and Mr Jansen's application for indemnity costs;
(e)whether a costs order should be made against a non-party, and not the respondents to the appeal; and
(f)the costs of the hearing on 10 September 2021.
On 10 September 2021, I delivered oral reasons for decision on the above issues, but leaving open, at the request of the appellant's senior counsel, the issue of what orders should be made in relation to the costs of the proceedings in the Magistrates Court.
In summary, I determined, subject to making final orders:
(a)it is not in the interests of justice, having regard to the finality principle in litigation and the expiry of the limitation period, for the matter to be remitted for further hearing in the Magistrates Court;
(b)that the orders made by Registrar Kingsley on 12 February 2021 dismissing the suspension application be set aside; and that the suspension application and appeal be stayed permanently on the basis each party bear their own costs;
(c)the respondents should pay the costs of the appeal, including the application to adduce further evidence and the notice of contention, such costs to be taxed in default of agreement (no indemnity costs order to be made); and
(d)in the circumstances of this case Chubb Insurance Company of Australia Limited, not the respondents, should pay Mr Jansen's costs as an interested non-party.
At the hearing I raised the question of whether the costs order in relation to the costs of the proceedings in the Magistrates Court should reflect the fact that Mr Jansen was unsuccessful on the issue of causation, even though the result of this appeal has removed any liability for the damage caused.
The parties filed the following written submissions on this last outstanding issue (after over 13 years of disputation) and have agreed I can determine this aspect of the matter on the papers:
(a)appellant's submissions on costs of the Magistrates Court proceedings dated 24 September 2021;
(b)respondent's submissions on costs of the Magistrates Court proceedings dated 8 October 2021; and
(c)appellant's reply to the first respondent's submissions on costs of the Magistrates Court proceedings dated 12 October 2021.
For the reasons which follow, I am satisfied that the proper costs order in relation to the costs of the Magistrates Court proceedings should be 'the usual order as to costs' in private litigation, namely, that the successful party is entitled to an award of costs in its favour. None of the exceptions apply in this case, and in any event, the appeal notice raises relevant grounds of appeal which it has not been necessary to determine.
Statutory provisions and case law as to costs orders
The court has jurisdiction and power to make costs orders in relation to the appeal itself, and also the costs of the parties in the Magistrates Court proceedings from which the appeal arises: see s 43(7)(e) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCP Act) which relevantly provides -
The appeal court may -
…
(e)make an order as to the costs of the appeal and as to the costs in the Magistrates Court ...
(emphasis added)
Consistently with this provision, r 59(1) of the District Court Rules 2005 (WA) provides that 'the awarding of the costs of and incidental to an appeal is in the discretion of the court'.
This court's discretion as to the issue of costs on the hearing of an appeal is also informed by the jurisdiction conferred by s 43(7)(b) of the MCCP Act to 'give any judgment and make any order that the Magistrates Court could have given or made'.
In this regard, s 25 of the MCCP Act provides as to costs in civil proceedings in the Magistrates Court:
25Costs
(1)The Court may order a party to a case to pay the whole or a part of another party's costs in the case.
(2)A successful party is entitled to an order under subsection (1) that the whole of its costs in the case be paid by the unsuccessful party, unless the Court considers there is good reason not to make such an order or subsection (5) applies.
The discretion of the court to make a costs order is a discretion that must be exercised judicially having regard to the circumstances of the matter and applying the principles to be found in relevant statutes and case law.
Consistent with the adversarial nature of private litigation it is trite law that the 'usual rule' is that costs follow the event. This is noted in Dal Pont's Law of Costs (5th ed, 2021) par 7.2:
As noted in Chapter 6, even though superior courts (and most other courts) are statutorily given an apparently unfettered discretion to make what order as to costs they consider the justice of the case requires, a judicial exercise of that discretion involves applying, though not uncritically, the 'usual rule' that 'costs follow the event'. What this means, generally speaking, is that the successful party is entitled to receive his or her costs from the unsuccessful party. This is ordinarily a just outcome because the party who turns out to have unjustifiably either brought another party before the court, or given another party cause to have recourse to the court to obtain his or her rights, should be required to recompense that other party in costs. For this reason, courts speak of a successful litigant having a 'reasonable expectation' of obtaining an order for costs.
This represents the simplest case scenario, namely where one party has wholly succeeded and the other wholly failed. As the 'event' is seen as the ultimate outcome of the case, the rule may need modifying where each litigant has enjoyed some success, in which case, for reasons of justice and fairness, courts have been willing to make costs orders that reflect the litigants' relative success (and failure). Moreover, being grounded in justice, courts have on occasion made orders inconsistent with the 'costs follow the event' rule where the justice of the case requires a successful litigant to bear his or her own costs or, in some more restricted circumstances, even pay the unsuccessful litigant's costs.
(footnotes omitted)
In Oshlack v Richmond River Council (1998) 193 CLR 72 [66] ‑ [67] McHugh J explained why 'the usual order as to costs' is that costs follow the event. He said:
66By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. As Devlin J said in Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2], when setting aside an arbitrator's costs award: "the arbitrator is not directing his mind to one of the most, if not the most, important of the elements which ought to affect his discretion, namely the result of the case. Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure." The combined force of the sentiments recognised above by Mason CJ, regarding the need for consistency in order to avoid injustice, and by Devlin J, regarding the most significant factor affecting the costs discretion, provides the jurisprudential basis for the important principle commonly referred to as the "usual order as to costs".
67The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
68As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.
69The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:
'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.'
'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.
70Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won. For present purposes it is not necessary to attempt to list any further exceptions to the principle of the usual order as to costs. The question at issue in this appeal concerns only the suggested public interest nature of the litigation. This factor may often be alternatively expressed in terms of the plaintiff's motives in commencing the litigation being grounded in the public interest rather than self interest. Does this factor, however expressed, constitute or provide partial support for a further exception to the principle of the usual order as to costs? In my view, both authority (in the form of Latoudis) and principle compel the conclusion that the public interest nature of the litigation is irrelevant to the exercise of the costs discretion.
(footnotes omitted)
In Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523, 530 Hill J stated the proposition amongst others:
In determining the question of costs, it would be appropriate, however, for the court to determine whether the application acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them.
(footnote omitted)
Furthermore, as noted in Dal Pont's Law of Costs (4th ed, 2018) par 7.5:
When a court makes a costs order against a party - most commonly an unsuccessful litigant, pursuant to the 'costs follow the event' principle - it aims to provide the opposing (successful) party some indemnity (but no more) for the legal costs the latter has been required to incur in vindicating or upholding his or her rights in court (hence the expression 'indemnity rule'). A leading statement of the theory behind the indemnity rule appears in the judgment of Branwell B in Harold v Smith, who said:
'Costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained. Of course, I do not say that there are not exceptional cases in which certain arbitrary rules of taxation have been laid down, but as a general rule costs are an indemnity, and the principle is this, - find out the damnification, and then you find out the costs which should be allowed.'
It follows that the aim of awarding costs as between the parties to litigation (thus termed 'party-party' costs) is not punitive, but to compensate the successful party for the legal costs incurred by reason of the proceedings. A remaining substantial burden of costs in a successful party could, as remarked by the High Court, 'otherwise render its success nugatory'.The likely exposure of an unsuccessful party to a double costs liability - to pay his or her own lawyers' costs as well as indemnify the successful party for the latter's costs - moreover serves to 'instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved'. It is therefore a disincentive to commencing frivolous proceedings, a discouragement to litigation disproportionate to the occasion and, moreover, a driver to settlement.
Prima facie, pursuant to s 25(2) of the MCCP Act, Mr Jansen, as the successful party is entitled to the 'usual order as to costs' that the respondents pay the whole of his costs in the case unless the court considers there is good reason not to make such an order.
It is also observed that the respondents did not on their own volition contend that there was a 'good reason' why the usual order as to costs should not be made. The issue was raised by me at the directions hearing on 10 September 2021.
Mr Jansen's submissions on costs in the Magistrates Court proceedings
Mr Jansen contends the order should be that the respondents pay the whole of his costs of the proceedings in the Magistrates Court, to be taxed if not agreed. Such an order is said to be consistent with the usual order and would have been the result if the learned magistrate had correctly decided the respondent's claim according to law in the Magistrates Court at first instance. That is, the order would have been in the normal course, 'claim dismissed with costs'.
It is submitted on behalf of Mr Jansen that there is no good reason not to order that the whole of his trial costs be paid by the respondents, and very good reasons to make that order, quite apart from the fact that it is 'the usual order'. The proposition that Mr Jansen should pay a proportion of the respondents' costs of the trial, because much of the time was taken up with evidence as to negligence (causation and fault) is submitted 'to be tantamount to say that Jansen engaged in misconduct by defending the claim - a species of 'misconduct' which does not come close to what McHugh J said is meant by misconduct; and for which there is no precedent'.
Mr Jansen contends this is not a case where it can be said that a defendant who is unsuccessful on one issue, has wasted the court's time by running an unsuccessful argument on another issue, or issues which had no conceivable prospect of success. This proposition is said to be supported by the time taken by the learned magistrate (nearly two years) to deliver his decision on the basis it demonstrates that the argument on negligence raised by Mr Jansen was not specious, so unreasonable, and certainly not 'misconduct'.
To illustrate the importance attached to the principle that 'costs follow the event' Mr Jansen relies on the costs order of Kenneth Martin J in City of Fremantle v Imago Holdings Pty Ltd [2019] WASC 127. Relevantly for present purposes, the joint judgment of President Buss and Justices Beech and Smith in City of Fremantle v Imago Holdings Pty Ltd [2020] WASCA 61 (S) is illustrative of the application of the general principle.
14In support of their position, the City relied primarily upon its success in the appeal, as well as the conduct of the case below by Imago.
15Imago relied on the fact that the appeal succeeded on a point that was not argued below. Imago pointed to several cases in which that circumstance was found to justify a departure from the ordinary rule that a successful appellant would have its costs: Wickstead v Browne; Spies v Commonwealth Bank; and Miller v Miller.
In Spies, the fact that the case turned on a point not argued below led the court to make no order for costs. In Miller, where the appeal succeeded on a ground added only by leave at the commencement of the hearing, the court ordered the appellant to pay the costs of the hearing. In Wickstead, the court ordered the appellants to pay 1/8 of the respondent's costs.
17The varying orders made in these cases reflect the fact that the appropriate costs order turns on the circumstances of the particular case.
18In this appeal, the 1962 amendment was raised by the City in the lead up to the hearing of the appeal. The focus of the hearing was the effect of the 1962 amendment. The respondents fought the appeal at the hearing. They were unsuccessful in doing so.
19On the other hand, the merits of the contentions and submissions advanced in the appellants' written cases were not determined. It was not appropriate for this court to attempt to evaluate, for costs purposes, the merits of the arguments in the written cases. Some of the work done in preparation of the appellants' written cases was relevant to, and necessary for, the case that ultimately succeeded on appeal. To that end, the court determined that it was appropriate to allow, in the appellants' favour, 50% of the costs of the preparation of the appellants' written cases.
(footnotes omitted)
In addition to the successful ground of appeal relied upon by Mr Jansen, namely, that there is no evidence that either Zenith Trust Co Ltd or Mr Greville was the owner of 19 Walter Street, Claremont and therefore neither was entitled to claim damages, it is contended that he, on the hearing of the appeal could have required this court to determine the appeal on the alternative ground 'that the magistrate erred in law and in fact, in holding that Mr Jansen was negligent'. It is submitted on behalf of Mr Jansen 'that both potential grounds have reasonable prospects of success' but because he was advised that the successful ground was 'certain to succeed' a forensic decision was made not to argue the second possible ground, because it would have taken far more time and 'although strongly arguable, was not certain to succeed'.
It must be accepted that at the commencement of the hearing of the appeal, I suggested to the parties that by reason of the apparent likelihood of the 'wrong party' ground of appeal being successful that this ground should in effect be argued as a preliminary issue. It is unarguable that Mr Jansen's forensic decision in this regard was (with the benefit of hindsight) the correct decision which plainly saved both parties and the court a great deal of cost and time.
There is some force, consistent with the interests of justice and public policy reasons, that appellants should not be encouraged to argue every point on appeal and to adopt a forensic approach with an eye to the time and cost involved in the appeal process. I accept it is not appropriate for this court to attempt to evaluate, for costs purposes, the merits of the arguments that might have been advanced in relation to the unargued 'negligence' ground of appeal and by not doing so it should not, in effect, deprive the successful party of the usual costs order.
In my view, it would be unjust in the circumstances of this case to, in effect, penalise Mr Jansen for the forensic decision taken on the appeal by not arguing 'the negligence ground'. I agree it would set a bad precedent and possibly encourage appellants to feel pressure to include unnecessary grounds and issues in appeals, resulting in wastage of time and costs to the public purse.
It is submitted by Mr Jansen that the respondents had ample opportunity before and during the trial to discontinue the claim but did not do so in circumstances where they had no standing to do so based on the alleged cause of action.
The submissions filed on behalf of the respondents, correctly accept that on the pleas, Mr Greville was described as the owner of the property and that this contention was neither admitted or denied by Mr Jansen. The respondents rely upon two matters which concern the way in which the issue of ownership of the property arose in the course of the litigation to contend that Mr Jansen and his legal advisers should have approached the issue in a different way.
For example, it is said that Mr Jansen was aware from the date of service of Mr Greville's witness statement in May 2017 (some 17 months before the commencement of the trial) that Mr Greville was not the owner of the property and that ownership rested with an off shore trust of which he was a beneficiary. Similarly, it appears to be suggested that the respondents were taken by surprise prior to the commencement of the trial that 'ownership' or lack thereof would be an issue at trial, in part based on Mr Jansen's agreement to the tender of Mr Greville's witness statement without requiring his presence for cross-examination.
There is also complaint, that the respondents were placed in an 'iniquitous position' because Mr Jansen's outline of submissions was only provided on the weekend before the trial and a practical decision had to be made as to whether or not the trial should proceed in the context of both parties having arranged their witnesses.
With respect, the submissions on behalf of the respondents overlook the nature of private litigation and the adversarial nature of such proceedings. Contrary to the respondents' submissions and irrespective of any alleged knowledge by Mr Jansen of the true position on ownership, the onus was always on the respondents to ensure that there was an arguable case including that the cause of action whether in negligence or nuisance was being maintained by a party that had legal standing to commence the proceedings.
Paragraph 23 of the written submissions filed on behalf of the respondents, contains three separate submissions why it is said there is good reason why Mr Jansen should not be awarded the costs of the Magistrates Court trial. The submissions in reply filed on behalf of Mr Jansen took great exception to the statements made on behalf of the respondents. It is not necessary for present purposes to repeat the submissions here, but in response to the contentions, it must be said there is an absence of any recognition by the respondents that the findings on causation made by the learned magistrate were not dealt with on the appeal, in part because of the forensic decision made by the appellant already referred to. As mentioned, it is not appropriate for the purpose of determining costs, in this case to attempt to evaluate the merits of the arguments that might have been advanced if this ground of appeal had been heard and determined.
For the same reasons, it is not necessary for present purposes to refer to the reasons why Mr Jansen's defence on the issue of ownership cannot properly be described as 'technical'. Ownership, on any view, was a fundamental issue factually and was the obvious starting point of the respondents' claims. The onus of proving ownership at trial never shifted from the respondents, irrespective of the evidentiary material provided to Mr Jansen including any awareness that Chubb had paid $44,000 for repairs which, on its own, is meaningless. For it to be meaningful one or both of the respondents would have needed to possess an entitlement to damages and Chubb would have needed to have a right of subrogation from that party.
Conclusion
Pursuant to s 25(2) of the MCCP Act the onus is on respondents to establish a 'good reason' not to make the usual order as to costs, namely that the successful party in the litigation is entitled to an order that the unsuccessful party bear the whole of its costs to be taxed unless otherwise agreed.
In circumstances where first, the respondents have always known that neither was the legal owner of the property which in itself required the decision of the learned magistrate to be set aside, and secondly where the appeal notice raised a number of grounds of appeal including as to the learned magistrate's decision on causation, which were not ultimately argued, there is no good reason why costs should not follow the event in the primary proceedings.
In my view, in the circumstances of this case there is no demonstrated exception, in the appeal or otherwise, as to why the usual order as to costs following the event should not be made in relation to the costs in the Magistrates Court proceedings below. In the words of Branwell B in Harold v Smith (1860) 5 H & N 381, 385 there is no discernible 'damnification' that would justify a departure from the usual rule.
I will hear the parties as to the final form of the orders to be made. The parties are requested to confer and to confirm if orders can be made in the following terms, and if not, to file a separate minute of proposed orders. To assist the process of conferral the following orders are suggested.
Draft proposed orders
The terms used are defined as below:
(a)the Magistrates Court proceedings - the respondents' claim in Magistrates Court Case number GCLM 14740/2012
(b)the appeal - the appellant/judgment debtor's appeal by amended appeal notice dated 20 October 2020.
(c)the notice of contention - the respondents'/judgment creditors' notice of contention dated 13 November 2020.
(d)the respondents' application to adduce further evidence - the respondents'/judgment creditors' application dated 5 March 2021 to adduce further evidence.
(e)the suspension application - the appellant/judgment debtor's application for a suspension order filed the 18 November 2020.
(f)the suspension appeal - the appellant/judgment debtor's appeal dated 18 February 2021.
1.The respondents' application in the appeal to adduce further evidence be dismissed.
2.The appeal be allowed.
3.The:
(a)General Order (judgment) dated 25 August 2020;
(b)General Order (interest) dated 1 October 2020; and
(c)General Order (taxation of costs) dated 17 May 2021
in the Magistrates Court proceedings be set aside.
4.The respondents' claim in the Magistrates Court proceedings be dismissed.
5.The respondents pay the appellant/judgment debtor's costs in the Magistrates Court proceedings, including the costs of taxation of the respondents' bill of costs.
6.The orders made by Registrar Kingsley on 12 February 2021 dismissing the suspension application be set aside.
7.The suspension application and the suspension appeal be stayed permanently.
8.Each party bear their own costs of the suspension application and the suspension appeal.
9.Chubb Insurance Company of Australia Limited, as the interested non‑party, pay the appellant/judgment debtor's costs of:
(a)the Magistrates Court proceedings;
(b)the respondents' application to adduce further evidence;
(c)the notice of contention; and
(d)the appeal,
such costs to be taxed in default of agreement.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
MD
Associate to Judge Stevenson
27 OCTOBER 2021
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