Judith Kathryn Narayan Bhnf Jane Wignall v Michael John Morphett (No. 2)
[2010] ACTSC 32
•16 April 2010
JUDITH KATHRYN NARAYAN BHNF JANE WIGNALL v MICHAEL JOHN MORPHETT (No. 2)
[2010] ACTSC 32 (16 April 2010)
LITIGATION AND PROCEDURE - Orders for payment out of court of money paid into court – when made – rule 1015, Court Procedures Rules 2006 (ACT) – section 25 Public Trustee Act 1985 (ACT).
LITIGATION AND PROCEDURE - Order for payment out of court of money paid into court – costs of such order – Discretionary decisions - Decision to pay money to private trustee.
LITIGATION AND PROCEDURE - Orders made after judgment - Finality to litigation – functus officio.
Public Trustee Act 1985 (ACT), s 25
Court Procedures Rules 2006 (ACT), rr 1619, 1015, 1721(2), 1751(2), 1701
Singh by her next friend Singh v Calvary Hospital ACT Incorporated & Anor [No 2] [2009] ACTSC 57
Narayan by her next friend Wignall v Morphett [2010] ACTSC 9
Bailey v Marinoff (1971) 125 CLR 530
DJL v Central Authority (2000) 201 CLR 226
Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224
Arktos Pty Ltd v Idyllic Nominees Pty Ltd [2003] FCA 574
New South Wales Insurance Ministerial Corporation v Edkins [1998] 45 NSWLR 8.
Sirius Shipping Corporation v The Ship Sunrise [2007] NSWSC 766
Grincelis bhnf Grincelis v House (ACTSC, Master Hogan, SC 570 of 1989, 8 December 1995, unreported)
Victoria Legal Aid v The County Court of Victoria [2004] VSCA 115
Knatchbull v Fowle (1876) 1 Ch D 604
Rhodes v Swithenbank (1889) 22 QBD 577
Nominal Defendant v Gardikiotis (1996) 186 CLR 49
Purkess v Crittenden (1965) 114 CLR 164
Kavanagh v Akhtar (1998) 45 NSWLR 588
Friend v Solly (1847) 10 Beav 329; 50 ER 608
Oldaker v Currington [1987] VR 712
Schweppes’ Ltd v Archer (1934) 34 SR(NSW) 178
Bennett v Seaman (1993) 117 ACTR 1
Marriage of Stanistreet (1987) 89 FLR 419
Re Broad and Broad (1885) 15 QBD 420
No. SC 236 of 2001
Judge: Refshauge J
Supreme Court of the ACT
Date: 16 April 2010
IN THE SUPREME COURT OF THE )
) No. SC 236 of 2001
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:JUDITH KATHRYN NARAYAN BHNF JANE WIGNALL
Plaintiff
AND:MICHAEL JOHN MORPHETT
Defendant
ORDER
Judge: Refshauge J
Date: 16 April 2010
Place: Canberra
THE COURT ORDERS THAT:
Order 4 of the orders made on 3 February 2010 be vacated.
In lieu of it, the defendant pay the costs of this application, limited to:
(a) the Application in Proceedings dated 10 November 2009 and its service;
(b) the Affidavit of John Fitzjames Little sworn on 10 November 2009;
(c) the attendance at court on 3 February 2010 of counsel and instructing solicitor but on a consenting basis;
(d) the taking out and service of the order of 3 February 2010;
(e) any necessary attendances, correspondence, engrossing, perusing, copying or filing associated with any of the foregoing.
On 19 May 2009, I ordered by consent that a settlement of proceedings between the plaintiff, a person with a legal disability, and the defendant, in which the plaintiff claimed damages for personal injury, be approved and thereupon entered judgment for the plaintiff in the sum of $5,500,000 and costs. I made some consequential orders, including the “usual order as to interest”: r 1619 of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules).
By virtue of r 1015 of the Court Procedures Rules the judgment sum was required to be paid into court and may only be paid out of court under an order of the court, which does not include a consent order.
This provision in the Court Procedures Rules may be strictly unnecessary as s 25 of the Public Trustee Act 1985 (ACT) (the Public Trustee Act) makes the same requirement, namely that such money be paid into court and may, by order, be paid out (to the public trustee under the Public Trustee Act). The two provisions are consistent. The procedural provisions that appear in the Court Procedures Rules are, however, an appropriate gloss on the provision in the Public Trustee Act, namely, by making the procedural provision that payment out must be effected by an order and that cannot be a consent order.
The judgment sum was duly paid into court and subsequently, the plaintiff brought an application by Application in Proceedings dated 10 November 2009 to deal with the judgment sum in court. Some money was sought to be paid out to recompense those who paid disbursements during the course of the proceedings. The substantive order sought was the payment of the balance of the judgment sum to a public trustee company, Perpetual Trustee Company (Canberra) Limited as a trustee of a trust established by Deed. That trust was to provide for investment of the moneys paid out and the use of it and earnings from it for the care and maintenance of the plaintiff.
Although courts have hesitated before authorising payments to other than statutory officers, such as the public trustee, it has been done: Singh by her next friend Singh v Calvary Hospital ACT Incorporated & Anor [No 2] [2009] ACTSC 57.
The application was adjourned to 3 February 2010 when I made an order to authorise payment as sought: Narayan by her next friend Wignall v Morphett [2010] ACTSC 9. Among the orders I then made was the following:
The costs of this application be the plaintiff’s costs in the proceedings, unless the defendant seeks to be heard within seven days after the plaintiff serves on the defendant a sealed copy of this order.
The defendant did seek to be heard and the matter was originally listed for oral hearing, but the parties agreed to proceed by written submissions. I received a written submission from the defendant, a written submission in response from the plaintiff and a written submission in reply from the defendant.
In essence, the defendant submitted that:
(i) the proceedings had terminated when I made the orders on 19 May 2009 and this ended the plaintiff’s right to receive and the defendant’s liability to pay any further damages or costs in respect of the proceedings;
(ii) the settlement, which followed negotiations, included the costs of management of the fund to be established, whether by the public trustee or otherwise, and thus to add the costs referred to in the order of 3 February 2010 would amount to “double dipping” by the plaintiff;
(iii) there was no agreement that such costs would be paid; and
(iv) the application was one which was entirely discretionary to the plaintiff and if the plaintiff chose to make it, the plaintiff should bear the costs of it, particularly as there was already a public official, the Public Trustee of Queensland, who had been appointed as manager of the plaintiff’s affairs.
The defendant further submitted, as a test of whether the order for costs was appropriate, that, were the plaintiff to seek to change the trustee at some later time, the defendant would plainly not be liable for such costs. The defendant also referred to the affidavit of the next friend, in which she deposed:
I understand that if the court approves the proposed settlement of $5,500,000.00 plus costs, then that approval will extinguish all of my sister’s rights against the Defendant arising out of the events of 29 November 1997.
The plaintiff responded in her submissions:
(i) by pointing to the relevant rules in the Court Procedures Rules, namely rr 1721(2), 1751(2) and 1701 which gave the court a wide discretion as to costs, which may be awarded “after the proceeding ends” and which are to be allowed to the extent they are “fair and reasonable ... for enforcing ... the rights of the party”;
(ii) that the fundamental consideration is that, by the defendant’s negligence, the plaintiff is a person under a disability;
(iii) as a matter of principle, that the costs of prosecuting the plaintiff’s claim, including applicable special provisions in legislation, such as in the Court Procedures Rules, must form part of the recoverable costs;
(iv) that the Public Trustee Act and the Court Procedures Rules required the judgment sum to be paid into court and required a court order for payment out;
(v) that the fact that the application for which the costs were ordered to be paid by the defendant was for payment to a private trustee rather than to a public official was irrelevant; and
(vi) by disputing that the relevant costs were included in the agreement in terms of the costs of management of the trust fund and submitting that these costs were entirely different.
The plaintiff also submitted that an application to change the trustee would be made in separate proceedings, a submission that, I must say, is by no means obvious to me and may not be correct. Nevertheless, it seems agreed by both parties, and I agree, that the costs of such an application would not be borne by the defendant, unless there were very exceptional or extraordinary circumstances.
The defendant’s submissions in reply were brief and relied on what was said to be the “ordinary” procedure where payment out would be ordered at the time of judgment. The departure in this case should be borne by the plaintiff.
Neither party referred to any authorities in the submissions to support their assertions. This was not helpful.
Consideration
I shall deal with the issues seriatim:
(a) Jurisdiction
The defendant was in effect submitting that as judgment had been given on
19 May 2009, there was no jurisdiction for the court to make any order imposing any additional liability on the defendant thereafter. This is a deceptively seductive submission. It is true that there is an important principle of finality to litigation: Bailey v Marinoff (1971) 125 CLR 529 at 539; DJL v Central Authority (2000) 201 CLR 226 at 245.
That principle, however, is not absolute. Thus, for example, in Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224, the Full Court of the Federal Court of Australia accepted that the Court had power to make a costs order against a solicitor three years after judgment. The Court said (at 235-6):
The principle behind denying the right of the Court to vary or alter a judgment regularly given and entered is the need for finality of litigation. The Court has adjudicated upon the facts of the claim brought by a plaintiff against a defendant, found for one side and entered the relevant judgment. Neither the facts nor the law are to be agitated again, save on appeal. But the issues involved where a claim is made against a solicitor for costs by a party to the litigation have not been determined by the judgment which has been entered. They remain yet to be resolved. Ultimately the submission put on behalf of Flower & Hart was that an order could be made by the Court prior to the entry of judgment in the main proceedings against the solicitor in default of his or her obligations to the Court, but that no such order could be made once the order in the main proceedings had been entered. Thus a solicitor who was able to keep hidden information of his misconduct would escape an order for costs by the Court once judgment had been entered and become liable only in damages in tort, if not otherwise statute barred. Such a submission cannot be accepted.
See also Arktos Pty Ltd v Idyllic Nominees Pty Ltd [2003] FCA 574; New South Wales Insurance Ministerial Corporation v Edkins [1998] 45 NSWLR 8 (at 12).
An essential issue is whether the court is making a further or supplemental order or whether it is reconsidering or amending an order already made. Even in the latter case, there is some room for a court to act: Sirius Shipping Corporation v The Ship Sunrise [2007] NSWSC 766 at [37]-[42].
It is correct that ordinarily a court may, and perhaps will, make an order for payment out of court of the judgment sum paid into court at the same time as entering judgment. Grincelis bhnf Grincelis v House (ACTSC, Master Hogan, SC 570 of 1989, 8 December 1995, unreported) is an example of this.
Where, however, it does not do so, the court retains the statutory jurisdiction to make an order for payment out of court of the moneys in court. That order seems to me a supplemental order which the court can make: Victoria Legal Aid v The County Court of Victoria [2004] VSCA 115 at [15].
The power to make such an order is given by r 1015 of the Court Procedures Rules, which is in the following terms:
1015(1) An amount (including an amount of damages) recovered, awarded or agreed to be paid in a proceeding in relation to the claim for relief of a person with a legal disability must be paid into court.
(2)The amount may be paid out of court only under an order of the court.
(3)In this rule:
order of the court does not include a consent order.
As noted above (at [3]), there is also power under s 25 of the Public Trustee Act, which is relevantly in the following terms:
25Payment of money etc to public trustee on behalf of person under disability
(1)Where, in the proceedings, it is adjudged or ordered, or it is agreed, that money, not being money to which subsection (3) applies, be paid to a person under disability (whether or not that person is a party to a cause or matter), the money –
(a)shall be paid into court; and
(b)shall, unless the court otherwise directs, be paid out to the public trustee.
(2)Where money, not being money to which subsection (3) applies –
(a)is paid into court –
(i)before the commencement of this Act; or
(ii)after the commencement of this Act under a judgment, order or agreement given, entered or made before the commencement of this Act; and
(b)the money is being held in court on behalf of a person under disability;
the court may, by order, direct that the money be paid out to the public trustee.
(3)Where –
(a)money payable as compensation under the Workers Compensation Act 1951 is paid into court, whether before or after the commencement of this Act; and
(b)the money is being held in court on behalf of a person under disability;
the court may, by order, direct that the money be paid out to the public trustee.
(4)Where, as a result of a direction given under subsection (1), money in court is not paid out to the public trustee, the court may, by order, direct that the money be paid out to the public trustee and may make such other order as it thinks fit.
There is, on the face of both of these provisions, no temporal limitations as to when the power in them may be exercised.
I also note that r 1701(1)(a) of the Court Procedures Rules empower the court to make award costs “at any stage of a proceeding or after the proceeding ends”. Thus, even if the judgment had ended the proceedings in this case, the rule would have permitted the court to make the costs order I made on 3 February 2010.
The reference to the next friend’s affidavit by the defendant seemed to suggest that it somehow bound the plaintiff not to seek these costs nor the court to award them. That the next friend can make admission in proceedings is not in doubt: Knatchbull v Fowle (1876) 1 Ch D 604. The statement in Ms Wignall’s affidavit, however, is not an admission of the kind that binds the plaintiff. Indeed, if it was a waiver, or compromise of an entitlement, it could not bind the plaintiff, at least not without express leave of the court: Rhodes v Swithenbank (1889) 22 QBD 577. In any event, I do not read the statement as relevant, for it refers to the damages “plus costs”. If, as I held, the order on the application is an order for costs, then it is encompassed in what is said to be part of the settlement.
I do not consider that I was functus officio when I made the order on 3 February 2010, nor otherwise barred from making it or that the plaintiff had waived any right to the order.
(b) Double counting
It is correct that an award of damages in circumstances such as this, where the plaintiff has, by virtue of the defendant’s negligence, become incapable of managing the fund constituted by the balance of the judgment sum which must provide for her ongoing care, should include, as appropriate, a sum to meet the costs of management of the fund by others: Nominal Defendant v Gardikiotis (1996) 186 CLR 49 (at 52).
Although I have no evidence as to the precise composition of the settlement sum, which became the judgment sum, I do have the plaintiff’s counsel’s advice in support of the application for approval of the compromise that the settlement represented. That opinion made reference to “Funds Management” and gave a range of likely damages that it would attract. The final settlement figure shows that, on the basis of that opinion, some significant damages were likely to have been received by the plaintiff for that head of damages.
It seems to me, however, that management of the fund is different from the costs of court proceedings to order payment out of the moneys in court to the fund. Ordinarily, I would not think of those costs as part of the management of the fund and nothing is said by the defendant in his submissions to suggest that the ordinary approach is wrong. Although not addressing this issue, the decision of Master Hogan in Grincelis bhnf Grincelis v House is supportive. There, the Learned Master calculated the costs of management of the fund in his reasons so as to add them to the sum for which he had earlier assessed the damages payable to the plaintiff. This calculation was entirely directed to the post-establishment administration costs of the fund. This is, of course, not determinative, but confirmatory of my view.
In any event, the costs of an application to the court, as this was, and an application which was part of the proper conduct of the litigation, would ordinarily be regarded as part of the costs of the litigation. In this case, the settlement was on the basis of a “plus costs” agreement, and so the costs of, for example, the application for approval of the compromise and entry of judgment would be payable under the order for costs and not as part of the judgment sum. That appears to me to apply to the costs of the application for payment out of court of the moneys payed in as required by the Court Procedures Rules and the Public Trustee Act.
I do not accept that the costs of an application for payment out of court of the judgment sum under r 1015 of the Court Procedures Rules or under s 25 of the Public Trustee Act would ordinarily be, or in this case was, included in the damages for which judgment was entered.
(c)Not part of the settlement
I do not have evidence of the precise terms of the settlement, save as it became recorded in the judgment of the court. I do not, of course, have evidence of the course of the negotiations between the parties leading to the settlement insofar as I would be permissibly able to rely on them to throw light on any ambiguity in the contents of the agreement.
Nevertheless, I have the terms of the agreement as expressed in the judgment of the court. The order was relevantly that “[t]here be judgment for the plaintiff in the sum of $5,500,000 and costs”.
It seems to me that the “and costs” part of it includes the costs which are, to use the words of r 1751(2) of the Court Procedures Rules, “fair and reasonable ... for enforcing ... the rights of the party” who has the benefit of the court order.
Such costs commonly include the cost of activities that take place after judgment has been pronounced. These would include, for example, the costs of engrossing and filing a draft of the judgment and serving a sealed copy, reasonable negotiation over costs, the preparing, filing and serving of a bill of costs and the attendance on any assessment of the bill.
It seems to me that the order for payment out of court of the judgment sum is a clear part of the enforcement of the rights of the plaintiff to compensation. Given that the plaintiff cannot benefit from the judgment sum without an order for payment out, such a conclusion seems plain to me.
Accordingly, I find that, insofar as the settlement is expressed in the judgment, the costs of the application for payment out of court of the judgment sum under r 1015 of the Court Procedures Rules or under s 25 of the Public Trustee Act was not included in award of damages for which judgment was entered as distinct from the order for costs.
(d)The payment to a private trustee was discretionary
This I find the more complex of the issues raised by the defendant.
On the one hand, the law requires an order of the court for the moneys paid into court to be paid out of court. The law also permits payment to a private trustee, whether a public trustee company or a private trust established for the purpose: Singh by her next friend Singh v Calvary Hospital ACT Incorporated & Anor. To some extent, the defendant must take the plaintiff as he finds her: Purkess v Crittenden (1965) 114 CLR 164 (at 171-2); Kavanagh v Akhtar (1998) 45 NSWLR 588 (at 601). If she happens to be a person who does not, for any reason, wish the Public Trustee to manage the funds, then that is the person whom the defendant has injured.
On the other hand, there are many decisions made by a plaintiff in the conduct of litigation which are discretionary and may not be recoverable on a party and party basis. Examples, not exhaustive, include the number of counsel retained: (Friend v Solly (1847) 10 Beav 329; 50 ER 608) and whether senior counsel is retained (Oldaker v Currington [1987] VR 712), whether interstate or out-of-town expert witnesses should be retained (Schweppes’ Ltd v Archer (1934) 34 SR(NSW) 178) and whether copies are taken of documents on subpoena for retention on the solicitor’s file (Bennett v Seaman (1993) 117 ACTR 1) to list a few.
Such decisions may be reasonable. For example, costs recoverable as between solicitor and client will include the costs of actions which a solicitor has reasonably undertaken, but which are not recoverable from an adverse litigant on a party and party basis, such as an unusual expense, like a high counsel fee (Marriage of Stanistreet (1987) 89 FLR 419) or employment of two or more counsel (Re Broad and Broad (1885) 15 QBD 420).
It seems to me that a decision to choose a manager for the relevant fund other than the public trustee, described accurately by the plaintiff as “the default option”, is a discretionary decision of this character. That is to say, ordinarily the costs of establishing the fund are what might be called “special costs” that would not fall within the party and party costs that a defendant should have to pay. There may, of course, be special circumstances where the public trustee cannot manage the funds or for some reason is an inappropriate manager and then this approach may not obtain.
That, however, is not the end of it. The order for payment out of court has to be made, and is, as I have found, an ordinary incident of the litigation. The parties are entitled to the benefit of r 1751(2) of the Court Procedures Rules, namely that the plaintiff should receive all the costs that are “fair and reasonable” but that the defendant should only be required to pay the costs that are “fair and reasonable”.
While ordinarily a plaintiff would be likely to seek payment out of court of the moneys paid into court at the time the compromise is approved and the judgment entered, I do not consider that, by depriving the plaintiff of the costs of a subsequent application, it is proper to place any pressure on the plaintiff to adopt that approach. It is not unreasonable for a plaintiff to take some time to consider his or her position, investigate (at his or her own expense) the comparative costs and relative benefits of the options available to him or her and then to make the application. Again, there will be situations where the delay in doing this or some other circumstances would require that the defendant not be required to pay the costs of such an application. From the submissions of the defendant, I cannot say that this is one of those situations and so the defendant should pay the appropriate costs of the application.
That is to say, the discretionary costs or “special costs” of the application for which the defendant should not be responsible can be separated out from some costs which the defendant should pay because the application is one which the plaintiff has to make to enforce her rights.
In my view this can be achieved as best as possible by ordering that the defendant pay the costs of the application for payment out of court of the judgment sum, such costs limited to:
(a) the Application in Proceedings dated 10 November 2009;
(b) the affidavit of John Fitzjames Little sworn 10 November 2009;
(c) the attendance at court on 3 February 2010 of counsel and instructing solicitor but as on a consenting basis only;
(d) the taking out and service of the order of 3 February 2010; and
(e) any necessary attendances, correspondence, engrossing, perusing, copying and filing associated with any of the foregoing.
I shall so order.
I have not included in (b) of [45] above the affidavit of Patricia Jane Wignall sworn on 19 May 2009 as it was used primarily for the purpose of approval of the settlement on that day and should be included in the costs ordered then to be paid.
Costs
Neither party addressed the costs of this application. In my view, the plaintiff has been substantially successful and I consider that the costs of the written submissions and the attendance to take judgment and any necessary associated costs should be paid by the defendant. Before so ordering, however, I will give the parties an opportunity to be heard.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate:
Date: 16 April 2010
Counsel for the plaintiff: Mr D J C Mossop
Solicitor for the plaintiff: Maliganis Edwards Johnson
Counsel for the defendant: Mr D Wilson
Solicitor for the defendant: Moray & Agnew
Date of hearing: 3 February 2010
Date of judgment: 16 April 2010