Landini v State of New South Wales

[2009] NSWSC 431

CITATION:	LANDINI v STATE OF NEW SOUTH WALES & ORS [2009] NSWSC 431
HEARING DATE(S):	Application conducted on written submissions
JUDGMENT DATE :	22 May 2009
JURISDICTION:	Common Law
JUDGMENT OF:	Hall J at 1
DECISION:	In respect of the first cause of action (malicious prosecution proceedings in respect of the 1980 charge), I make the following orders:- (1) Verdict in favour of the plaintiff against the first defendant in the amount of $230,000 made up as follows:- (a) Consequential economic loss (legal expenses) $5,000 (b) Injury to person and restriction on liberty $35,000 (c) Aggravated damages $30,000 (d) Exemplary damages $160,000 Total $230,000 (2) Order that the first defendant pay interest on the amount of $5,000 at the rates prescribed in Schedule 5 of the UCPR from 2 November 2001 to 20 May 2009 calculated at the rates prescribed for that period totalling $3,524.25. (3) Order that the first defendant pay interest on the amount of $35,000 at the rate of four percent per annum from 2 November 2001 to 20 May 2009 totalling $10,574.79. (4) Order that the first defendant pay interest on the amount of $30,000 at the rate of four percent per annum from 2 November 2001 to 20 May 2009 totalling $9,064.11. (5) Judgment in favour of the plaintiff in the amount of $253,163.15, being the amount of the verdict of $230,000 together with interest calculated in accordance with paragraphs (2), (3) and (4) above. (6) The first defendant to pay the plaintiff’s costs of and in relation to the malicious prosecution proceedings in respect of the 1980 charge. In respect of the second cause of action (the malicious prosecution proceedings in respect of the 1982 charges), the Court makes the following orders:- (1) Verdicts and judgments in favour of the first, second, fourth and fifth defendants. (2) The plaintiff is to pay the first defendant’s costs of the said proceedings on the ordinary basis. (3) The plaintiff is to pay the second defendant’s costs on the following bases:- (a) on the ordinary basis up to 21 March 2006, and (b) on an indemnity basis from 22 March 2006. (4) The plaintiff is to pay the fourth defendant’s costs of the said proceedings on the following bases:- (a) on the ordinary basis from 12 December 2005 to 22 March 2006, and (b) on an indemnity basis from 23 March 2006. (5) The plaintiff to pay the fifth defendant’s costs and expenses on the ordinary basis.
CATCHWORDS:	PROCEDURE - costs
LEGISLATION CITED:	Civil Procedure Act 2005 Supreme Court Act 1970 Uniform Civil Procedure Rules 2005
CASES CITED:	Australian Beverage Distributors Pty Limited v Evans & Tait Premium Wines Pty Limited [2006] NSWSC 560 Commonwealth Bank of Australia v Gretton [2008] NSWCA 117 Doherty v Liverpool District Hospital (1991) 22 NSWLR 284 Henriksens Rederi A/S v THZ Rolimpex (The Brede) (1974) QB 233 MBP (SA) Pty Limited v Gogic (1991) 171 CLR 657 Mitchell v Oldfield (1791) 4 Term Rep 123; 100 ER 929 New South Wales v Stanley [2007] NSWCA 330 Pringle v Gloag (1879) 10 Ch D 676 Ruby v Marsh (1975) 132 CLR 642 SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 Signature Resorts Pty Limited v DHD Constructions Pty Limited (1995) 18 ACSR 627 Waters v PC Henderson (Australia) Pty Limited [1994] NSWCA 338; 254 ALR 328 Wheeler v Page (1982) 31 SASR 1
TEXTS CITED:	The Law of Set-off (R Derham) 3rd ed, 2003, paras. 2.71 to 2.83
PARTIES:	Henry Charles LANDINI v STATE OF NEW SOUTH WALES & ORS
FILE NUMBER(S):	SC No 20525 of 2002
COUNSEL:	P: C Steirn SC/P Barham/P Strain 1D: J E Maconachie QC/D Mallon 2D: A Katzmann SC/I Butcher 4D: P Strickland SC 5D: In person
SOLICITORS:	P: Burn & Company 1D: I V Knight 2D: Australian Government Solicitor 4D: Holding Redlich 5D: In person

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HALL J

FRIDAY 22 MAY 2009

No 20525 of 2002

HENRY CHARLES LANDINI v STATE OF NEW SOUTH WALES & ORS

JUDGMENT
(On application for costs and interest)

1 HIS HONOUR: Judgment was delivered on 17 December 2008. The parties were directed to file submissions as to costs and orders to give effect to the judgment.

2 The plaintiff pleaded two separate causes of action based on the tort of malicious prosecution. The first, referred to in the judgment as the 1980 charge, was a claim against the first defendant only, the State of New South Wales. The second, referred to in the judgment as the 1982 charges, was a claim against:-

• The State of New South Wales – first defendant.

• The Commonwealth of Australia –second defendant.

• Mr Dennis Reginald Pattle – fourth defendant.

• Mr Glen John Matinca – fifth defendant.

3 In the judgment, the 1980 charge was determined in favour of the plaintiff against the first defendant. The 1982 charges were determined in favour of the defendants.

Costs: the 1980 charge

(1) Costs principles and the UCPR

4 The first defendant accepted that, pursuant to “the general rule that costs follow the event”, it should pay the plaintiff’s costs in relation to the 1980 charge subject to matters raised in submissions: First Defendant’s Submissions in relation to Costs and Interest dated 24 February 2009, paragraph 11.

5 In relation to the costs of the application by the plaintiff to amend the Fourth Further Amended Statement of Claim, it is the contention of the first defendant that the plaintiff should pay its costs of, and incidental to, his application of 27 April 2006 to amend the Fourth Further Amended Statement of Claim insofar as it related to the charge (ie, the 1980 charge). Reliance was placed upon the provisions of Part 42 rule 42.7 of the Uniform Civil Procedure Rules 2005 (UCPR). So far as relevant, that rule provides:-

“42.7(1) Unless the Court orders otherwise, the costs of any application or other step in any proceedings, including:-
(a) costs that are reserved, and
(b) costs in respect of any such application or step in respect of which no order as to costs is made,
are to be paid and dealt with in the same way as the general costs of the proceedings.”

6 The costs of the application were reserved on 9 and 12 October 2006.

(2) Submissions on costs

7 The plaintiff contended that costs of the application, together with the general costs of the proceedings, should be awarded in his favour. In that respect, the plaintiff relied upon the following:-

• The broad discretion in the Court in relation to costs: s.98 of the Civil Procedure Act 2005 and UCPR 42.1.

• That whilst it was open to the first defendant to consent to the amendments proposed, it opposed the application to amend. The plaintiff relied upon the fact that amendments, although not in terms strictly proposed, were allowed.

• There was nothing that displaced the general principle that costs follow the event.

• Consent by the first defendant to the amendments proposed would have avoided what became a lengthy hearing of the application. The first defendant, on the other hand, has contended that there was nothing “unreasonable” in its opposition.

• The first defendant should not be “rewarded” for its “intransigence” by an award of costs, having failed in its opposition to the application.

• The plaintiff relied upon observations in New South Wales v Stanley [2007] NSWCA 330 as to costs following the event unless there is a competing fact which requires special consideration and to the dicta of McColl JA, with whom Ipp and Basten JJA agreed, at [21] as to the circumstances in which a court may depart from the general rule in UCPR 42.1.

8 The first defendant submitted that the application to amend sought an “indulgence” from the Court and the “general rule” in such circumstances is “that the applicant should pay the costs”.

9 The first defendant relied upon the fact that the application was made after the evidence of Mr Haken and the plaintiff “also sought to plead common law vicarious liability against the first defendant”. Reference was made in this respect to the judgments of 9 and 12 October 2006.

10 Insofar as the claim in relation to the 1980 charge for reputation damages was unsuccessful, the first defendant contended that the plaintiff should pay the first defendant’s costs of defending that aspect of his claim, the claim concerning his time in custody from 19 July 1982 onwards and his economic loss claim, so far as it related to the 1980 charge (except for the award of $5,000). The first defendant relied upon the fact that the plaintiff lost those items of his claim.

11 The first defendant also claimed costs “of and incidental to the application made on 11 April 2006 and in respect of which his Honour reserved costs on that day. The plaintiff applied to amend the statement of claim in terms of the document marked MFI 13 after initially indicating that he wanted to attempt ‘some sort of mid-course’ without actually making the application …”. Reference was made in this respect to the judgment of 11 April 2006. The first defendant contended the need for an amendment to the Statement of Claim arose “because of the disconformity between the opening and the Fourth Amended Statement of Claim …”. Reference was made to the judgment of 11 April 2006, paragraph [16].

12 The plaintiff’s written submissions responded to “… the specific parts of the hearing such as Mr Landini’s reputation …” contending, in essence, that the matter of “reputation” was a small part of the damages claimed and was not “an issue” involving a significant part of the hearing such as to warrant departure from the general rule that the successful party should have costs of the proceedings.

The application to amend - consideration

13 In order to resolve the questions of costs of the application to amend the Fourth Further Amended Statement of Claim, I record the following matters:-

(1) The original Statement of Claim was filed on 20 November 2002.

(2) There were a number of amendments, in particular:-

(a) The Further Amended Statement of Claim filed on 12 December 2003.
(b) The Further Further Amended Statement of Claim.
(c) The Further Further Further Amended Statement of Claim filed on 24 February 2005.
(d) The Fourth Further Amended Statement of Claim filed on 15 May 2005.
(e) The Fifth Further Amended Statement of Claim. In relation to this document, I further note:-
(i) A form of the Fifth Further Amended Statement of Claim was handed up in Court on 16 October 2006.
(ii) The final form of the Fifth Further Amended Statement of Claim was verified on 27 April 2007.

14 The amendments sought in relation to the proposed Fifth Further Amended Statement of Claim, so far as the 1980 charge was concerned, were directed to the following matters:-

(1) Allegations against specified officers in support of the claim as to an absence of reasonable and probable cause: Paragraphs 6(a) to (f).

(2) An allegation of conspiracy to place heroin in the plaintiff’s motor vehicle (paragraph 6(g)), bringing proceedings with knowledge of the same (paragraph 6(h)) and of carrying out the conspiracy (paragraph 6(u), paragraph 6(z)).

(3) An allegation that proceedings against the plaintiff were instituted and maintained when it was known the plaintiff had no knowledge of heroin being in the vehicle (paragraphs 6(i) and (j)) or in the premises in Parklands Avenue, Leonay (paragraph 6(k)).

(4) An allegation of instituting/maintaining proceedings knowing that evidence against the plaintiff was false (paragraphs 6(l), (m), (n), (o), (p) and (q)) and of a conspiracy to mislead the Court (paragraphs 6(v) and (w)).

(5) An allegation of the absence of a true informant (paragraph 6(r)).

(6) An allegation of an illegal search of premises (paragraph 6(s)) and that no search warrant had issued (paragraph 6(t)).

(7) An allegation of maintaining proceedings exceeding authority (paragraph 6(x)).

(8) An allegation of instituting/maintaining proceedings with intention to injure the plaintiff (paragraph 6(y)).

(9) An allegation of spite and ill will towards the plaintiff (paragraph 6(aa)).

15 The remaining amendments, apart from paragraphs 21 and 22, concerning the 1980 charge were largely consequential or formal in nature (paragraphs 7, 8, 9 and 10).

16 Paragraphs 21 and 22 pleaded grounds in support of the claims for aggravated and exemplary damages against the first defendant.

17 In the Fourth Further Amended Statement of Claim filed on 15 May 2005, particulars of the malicious prosecution allegations in respect of the 1980 charge were as follows:-

“6. The NSW Police Officers were at all material times activated by malice in the institution of and the prosecution of the first charge proceedings against the plaintiff.
Particulars
(a) The NSW Police Officers did not hold a belief, honestly or at all, that the plaintiff had participated in any way in the supply of heroin,
(b) The NSW Police Officers instituted the proceedings without making any or any proper inquiry into whether the plaintiff had participated in any way in the supply of heroin,
(c) The NSW Police Officers instituted the proceedings in the knowledge that no evidence existed to support an allegation that the plaintiff had knowingly taken part in the supply of heroin.
7. There was no reasonable and probable cause for the institution and maintenance of the proceedings.
8. The proceedings were terminated in the plaintiff’s favour on the 2 November 2001 by the Court of Criminal Appeal.”

18 The plaintiff’s case was opened by Mr C Steirn SC on 29 March 2006 in which it was stated that the defendants, “either personally or vicariously as the case may be”, fabricated criminal charges and that “they did this by wilfully fabricating evidence and committing perjury against the plaintiff, certainly in relation to the second charges” (transcript, 29 March 2006, p.1). The factual matters in relation to the 1980 charge about which it was said evidence would be called were then outlined. That included reference to the matter of arresting police in 1980 having “conspired in advance to arrest and charge the plaintiff by planting heroin on him” (transcript, 29 March 2006, p.6, lines 5 to 10).

19 The plaintiff was called to give evidence on the first day of the hearing (transcript, 29 March 2006, p.25). No issue or objection was taken on behalf of the first defendant to the case as opened by Mr Steirn as having been outside the Fourth Amended Statement of Claim or particulars in relation thereto.

20 A question relating to the plaintiff’s pleadings was raised by Mr J E Maconachie QC on 10 April 2006 during the evidence of Mr X (transcript, 10 April 2006, p.592). This related to evidence sought to be adduced with regard to a conversation he said he had with Mr Dent in relation to the 1982 charges. Mr Maconachie observed (transcript, 10 April 2006, p.593, lines 5 to 10) that “… There is no conspiracy pleaded …” and that if relied upon it would have to be pleaded. Thereafter, lengthy submissions took place on questions concerning pleaded issues and amendment of pleadings. At transcript, 10 April 2006, p.597, lines 40 to 45, Mr Steirn observed that “It may well be given what my friends say, we have to amend the pleadings in accordance with the new evidence …”. That was said in the context of the 1982 charges. Mr Maconachie then addressed on relevant principles of pleading (transcript 10 April 2006, pp.579 to 603).

21 At transcript, p.602, I observed that the case had thus far proceeded upon the basis, so far as the 1980 charge was concerned, of drugs having been “planted” on the plaintiff even though such a case appeared to go beyond the pleadings. The evidence of Mr Haken, it was noted, was due to be taken the following day, that is on 10 April 2006 (transcript p.602, lines 25 to 30).

22 On 11 April 2006, Mr Steirn advised that “a draft amended pleading is on its way …”. The document “Proposed Fifth Further Amended Statement of Claim” was marked as MFI 13 at transcript p.609. An amendment application was, for the first time, foreshadowed at transcript p.611, lines 50 to 58. That application was made a little later at transcript p.614 and at p.614, lines 15 to 20, Mr Maconachie objected to the proposed amendment. At transcript, p.620, he opposed evidence being taken from Mr Haken until the application to amend had been determined, observing that, in relation to paragraph 6(h) of the proposed amendments, the first defendant was entitled to know “who is said to be part of it …” (transcript, 11 April, p.620 lines 50 to 55). He stated he would need to know this in order to take instructions noting that there had been no allegation of an agreement before transcript p.621, lines 1 to 5. He continued submissions at transcript, pp.622 to 628.

23 I interrupt this summary of the history concerning the plaintiff’s case on the 1980 charge to observe that it was a fact, and one known to those acting for the first defendant, that Mr Haken had given evidence to the Royal Commission into the New South Wales Police Force. In his evidence, he provided an account of a meeting between various police officers, including himself, in which he said a plan was discussed and steps taken to implement it. Mr Haken’s evidence was that the plaintiff would be “loaded” with heroin and that he, Mr Haken, and others participated in both the preparations for the plan and its execution at Leonay. There was no suggestion by the first defendant that, when called to give evidence in the present proceedings, it had not been anticipated that Mr Haken would give evidence of such matters as he had claimed before the Royal Commission had occurred.

24 Mr Haken was first referred to in the opening of the plaintiff’s case at transcript, 29 March 2006, p.1, line 29. At transcript, p.3, line 14, reference was made to the claim as to the “planting” of heroin. At transcript, p.6, lines 5 to 26, in the opening of the plaintiff’s case, it was foreshadowed that Mr Haken would give evidence that “arresting police had conspired in advance to arrest and charge the plaintiff by planting heroin on him …”.

25 Mr Maconachie acknowledged that he had been aware of the evidence that Mr Haken had given to the Royal Commission concerning the alleged preparation and execution of the plan to which Mr Haken had referred but that, as to the actual preparation of statements and evidence at the committal, Mr Haken had not given evidence on those aspects to the Royal Commission, that is, the statements or the giving of evidence (transcript, 11 April 2006, p.627, lines 25 to 30). He referred to the fact that he was not ready to deal with an alleged conspiracy to prepare statements and give evidence about the primary conspiracy to plant drugs (transcript, 11 April 2007, p.627, line 45 to p.628, line 12).

26 Judgment on the application to amend was given on 9 October 2006.

27 It is unnecessary here to repeat the matters referred to in that judgment concerning the amendments permitted to the Fourth Further Amended Statement of Claim in relation to the 1980 charge. It is sufficient to note here that at paragraph [153] of the judgment I stated:-

“153. I am of the opinion, upon consideration of the application, that amendments should be permitted to raise the following:-

(a) Alleged pre-arrest activities of (then) New South Wales police officers asserted to have been directed to the fabrication of evidence against the plaintiff.
(b) Alleged pre-committal activities including the alleged making of false statements and the provision of such statements to prosecuting authorities for use in committal proceedings.
(c) The allegation that false evidence was given for the purpose of obtaining a conviction on a charge of possession of a prohibited drug, namely, heroin for the purposes of supply.”

28 The history of these proceedings, including in particular, the history of amendments, establishes that whilst the Fourth Further Amended Statement of Claim, unlike earlier versions, failed to particularise an agreement and a plan to “load” the plaintiff with heroin, it was always understood by the first defendant that those matters would be at the centre of the plaintiff’s case. That would explain why there was no objection taken to the opening and that the proceedings continued until the issue of amendment was raised at a later stage.

29 The only specific factual matter that was claimed to have fallen outside evidence given by Mr Haken to the Royal Commission was that concerning the actual preparation, following the plaintiff’s arrest, of statements as to what had occurred or allegedly occurred and the fact of an agreement to give evidence at the committal consistent with such statements.

30 I do not consider that, understood against the background to the matters to which I have referred, that the first defendant had any basis for a contention that it would be taken by surprise or prejudiced in meeting the case which the plaintiff sought leave to pursue in accordance with the proposed Fifth Further Amended Statement of Claim. There was no evidence adduced on the application, nor any submission made, that any actual prejudice would arise and it is clear that the first defendant had, at all times, access to the relevant officers who were involved both before and after the plaintiff’s arrest on 15 January 1980.

31 The matter that first drew attention to the pleadings was the evidence of Mr X which related to the 1982 charges not the 1980 charge and all of the defendants objected at some length to any proposal to amend the pleadings in respect to the 1982 charges. The 1980 charge only arose at a later point of time in the context of the earlier submissions that were directed to the 1982 charges.

32 In the particular and special circumstances of this case and against the relevant background, which included the evidence which Mr Haken gave to the Royal Commission, I do not consider that there was any basis upon which the first defendant was justified in objecting as it did to the amendments. In so concluding, I have not failed to take into account the unsatisfactory history associated with the multiple amendments to the Statement of Claim and, in particular, to the delay in properly pleading the plaintiff’s case. At the end of the day, it was necessary to decide whether or not this was a case in which the pleadings ought to be amended to accord with the evidence that had already been given by the plaintiff as to the 1980 charge, subject to being satisfied that the first defendant would not suffer any prejudice by reason of the amendments sought be made to the 1980 charge. In the judgment of 9 October 2006, it was affirmatively established that no prejudice flowed or would flow to the first defendant in the circumstances of the case.

33 Accordingly, although the application to amend was made at a late stage, the plaintiff was successful in obtaining leave to amend in relation to the matters set out in paragraph [27] to the 1980 charge and essentially the scope of the permitted amendments were such as to accommodate the case which the plaintiff’s proposed pleadings had foreshadowed. The plaintiff, accordingly, having been the successful applicant and there being no sound basis for opposing the proposed amendments to the 1980 charge, I consider that the plaintiff should have included in his favour in his general costs, the costs associated with that application.

The plaintiff’s failure to recover damages for loss of reputation, custody from 19 July 1982 and economic loss (except for award of $5,000)

34 In relation to the 1980 charge, the plaintiff was awarded damages as follows:-

(1) Consequential economic loss (legal expenses) $5,000

(2) Injury to person and restriction of liberty $35,000

(3) Aggravated damages $30,000

(4) Exemplary damages $160,000

Total $230,000

35 In Waters v PC Henderson (Australia) Pty Limited [1994] NSWCA 338; 254 ALR 328, Mahoney JA, with whom Priestley JA and Kirby P agreed, considered the application of relevant principles, in the context of the provisions of the Supreme Court Act 1970, in relation to the award of costs and whether or not costs should or should not be ordered in respect of particular issues upon which the appellant in that case had failed as plaintiff. The plaintiff recovered a judgment, together with interest. The trial judge, in that case (involving a construction dispute), declined to isolate what were “multitudinous issues” and make separate costs orders. In the course of his judgment, Mahoney JA referred to the notes to the Rules, Part 52.11.2 which were in the following terms:-

“Where the proceedings involve multiple issues, the application of the Rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.”

36 Mahoney JA then observed (at p.331):-

“Reference is made to cases, some of which I have considered. They appear generally to support the principle which is stated in the practice. I think that that was the principle to which his Honour had regard in the present case.”

37 I do not consider that, as a result of the plaintiff’s failure to recover on all heads of claim (in particular, the items of claim referred on in paragraph [10]), his entitlement to costs should be segmented so as to preclude recovery of costs. It is not uncommon in damages claims for a plaintiff to achieve success in relation to substantive claims, but not on all items of claim. The present is such a case. I do not consider that there are any special or exceptional circumstances that would warrant the making of a particular order so as to require the plaintiff to pay the first defendant’s costs of defending the particular heads of damages to which I have referred. No such circumstances have been suggested in the present case. It would not, in my assessment, be accurate to describe any of the issues identified by the first defendant upon which the plaintiff failed to recover damages or substantial damages in the case of the claim for economic loss, as clearly dominant or separable issues. Furthermore the amount of hearing time in relation to those heads of damage was not substantial. Accordingly, I am of the opinion that no other order should be made than the usual order which I propose to make, namely, that the first defendant pay the plaintiff’s costs in relation to the 1980 charge.

Costs of the proposal to amend in MFI 13

38 The reasons which I have set out above for rejecting the first defendant’s contention that it is entitled to costs in respect of the amendments to the 1980 charge apply equally in relation to this item. For the same reasons, I do not consider that the costs of 11 April 2006 should be awarded to the first defendant nor should the plaintiff be deprived of the costs of that day.

Set-off

39 The first defendant seeks an order that costs payable by the plaintiff to the first defendant including, in particular, with respect to the 1982 charges be set-off against any judgment for damages, interest and costs payable to the plaintiff by the first defendant with respect to the 1980 charge: First Defendant’s Written Submissions, paragraph 18.

40 It was submitted for the first defendant that the ability to set-off costs orders made in relation to proceedings against judgments for damages has been recognised and allowed and does not depend upon statutory warrant or the general equitable jurisdiction of the Court. The submissions referred in this respect to the decision in Australian Beverage Distributors Pty Limited v Evans & Tait Premium Wines Pty Limited [2006] NSWSC 560 at [68] to [70].

41 In reply, it was submitted for the plaintiff that the general rule relating to set-offs is that all costs in the same matter or proceedings and between the same parties can be set-off against the other with reference being made to Pringle v Gloag (1879) 10 Ch D 676 at 679. It was submitted that the same principles apply to costs orders and judgments being set-off against each other.

42 It was further submitted for the plaintiff that the right to set-off in equity operated in respect of contrary liabilities that are sufficiently closely connected such that it would be inequitable for the plaintiff to be permitted to proceed with his claim without making allowances for the defendant’s claim against it. The submission was that that principle did not apply in this case. Additionally, it was submitted that “the claims” must arise out of the “same transaction” and are “inseparably connected”: Henriksens Rederi A/S v THZ Rolimpex(The Brede) (1974) QB 233 and that was not the position that arose in the present case.

43 The further contention for the plaintiff was that the first defendant had no “right” to a set-off and that such an order is one requiring the exercise of a judicial discretion. It was submitted that the case law had not produced a test by which the relevant principles can be stated: Signature Resorts Pty Limited v DHD Constructions Pty Limited (1995) 18 ACSR 627 at 634.

44 In contending that the discretion should be exercised so as to refuse any set-off, it was submitted that the case involved claims for damages for malicious prosecution in respect of two quite separate charges arising from disparate circumstances. In this respect, it was observed that the proceedings arose from separate and independent events and that, although pleaded under the one plaint number, the claims were from the outset two quite distinct matters and could not, in any sense, be said to be “sufficiently closely connected” to each other or to “arise out of the same transaction”.

45 Reliance was also placed upon the fact that a judgment was to be entered against the first defendant for a certain sum and that thereafter there will be a need for a determination of the appropriate quantification of any costs order either by negotiation or assessment. A similar situation in relation to costs, it was said, will arise in relation to the 1982 charge matters. Accordingly, it was argued there is not, as yet, known amounts that can be set-off against each other. There was no evidence, it was argued, which would indicate that the costs of the claim in respect of the 1982 charges will exceed the cost of the proceedings on the 1980 charge.

46 Finally, in a general fashion, reliance was placed upon the principles that apply to stay of execution orders (paragraph 17 of the Plaintiff’s Written Submissions).

47 Finally, the plaintiff submitted that there was an onus on the first defendant to satisfy the Court that such an order should be made and that it had failed to discharge that onus.

48 The first defendant took issue with a number of matters raised by the plaintiff in relation to the question of set-off in its reply submissions dated 27 March 2009 (paragraphs 15 to 18).

49 The first defendant contended there was a sufficiently close connection so far as the issue of damages was concerned. In particular in this regard, attention was drawn to the claims for alleged reputation loss, economic loss and deprivation of liberty.

50 In Australian Beverage Distributors (supra), White J addressed the jurisdiction of the Court to make orders by way of set-off of judgments for costs in different actions and in different courts, noting that the same had been allowed as had the set-off of judgments for costs against judgments for debt or damages: at [68]. As his Honour there observed:-

“… Such set-offs do not depend upon the statutes of set-off or the general equitable jurisdiction, but on the control a court exercises over its own proceedings.”

51 His Honour referred to the jurisdiction as described by R Derham, The Law of Set-Off, 3rd ed, 2003 at paras 2.71 – 2.83 quoting the learned author at para 2.80 that:-

“The basis of the set-off is the general jurisdiction of the Court over the suitors in it.”

52 The authority cited in support was Mitchell v Oldfield (1791) 4 Term Rep 123; 100 ER 929.

53 There is, in my opinion, no basis in these proceedings for an order by way of set-off as sought by the first defendant. Unlike the situation in Australian Beverage Distributors (supra), the first defendant is not, in respect of any costs orders to be made in its favour, a creditor of a debt presently payable. In particular, there is presently no debt owing by the plaintiff to the first defendant on a costs certificate which has been filed as a judgment. Until that position arises, there is no enforceable debt that can be set-off as the first defendant has proposed. Accordingly, I do not consider that in the circumstances there has been established a basis for the making of such an order. Accordingly, I decline to do so.

Interest rates

54 The first defendant accepts that interest on the amount of $5,000 is to be calculated at the rates set out in Schedule 5 of the Uniform Civil Procedure Rules from 2 November 2001 and this accords with the plaintiff’s contention.

55 In relation to interest on the amounts of $35,000 and $30,000 referred to in paragraph [34] in relation to the 1980 charge, the first defendant contended that the interest rate should be awarded at a rate of two percent per annum from 2 November 2001.

56 In the proposed short minutes of order on behalf of the plaintiff, it is contended that the interest rate should be 4% per annum from 2 November 2001.

57 The power to award interest on damages involves a broad discretion and is intended, where a plaintiff is successful, to place the plaintiff in the position in which he would have been had the amount of the verdict been paid to him at the date of the commencement of the action: Ruby v Marsh (1975) 132 CLR 642, 652 to 653.

58 In other words, interest restricted to “detriments” already suffered is intended to compensate plaintiffs from being kept out of compensation for losses already suffered.

59 The question as to the appropriate rate of interest in this case involves a determination, as a sound exercise of discretion, as to whether the rate should be, as the first defendant contends, two percent per annum or, as the plaintiff contends, four percent per annum.

60 It is accepted by the parties and by authority that it is not appropriate for the rate of interest to be applied to be the subject of evidence: Wheeler v Page (1982) 31 SASR 1 at 7 per King CJ.

61 In Wheeler (supra), King CJ considered whether in that case it was appropriate for interest to be awarded at two percent or at four percent per annum and adopted the latter figure as applicable to that component of the award of damages representing pre-trial non-economic detriments (at p.7).

62 The High Court in MBP (SA) Pty Limited v Gogic (1991) 171 CLR 657 approved the South Australian practice of awarding interest at a rate of four percent on pre-trial non-economic loss.

63 Additionally, in the commentary on the Ritchies Uniform Civil Procedure, NSW at s.100.55, the observation is made that, in the absence of any statutory limit on the amount that may be recovered, damages are likely to be higher than if they were assessed at the date of injury. Commercial rates, accordingly, would provide double compensation. It is there suggested:-

“… An appropriate rate to allow in such cases is 4%, subject to the right of a trial judge to adopt a different rate in the circumstances of a particular case.”

64 The author of the above commentary referred to the High Court’s decision in Gogic (supra). The further observation is made at the above reference (s.100.55) “… this was accepted as generally appropriate in Doherty v Liverpool District Hospital (1991) 22 NSWLR 284 and Trans Tasman Investments Pty Limited v Donohue (NSWCA, Kirby P, Priestley and Handley JJA, 19 March 1991, unreported, BC9102203) …”.

65 In Doherty v Liverpool District Hospital (1991) 22 NSWLR 284, the trial judge decided to award interest on past general damages at the rate of five percent. Gleeson CJ observed (at 289) that the process of reasoning involved in Gogic (supra) supported the trial judge’s discretionary decision even though the rate he selected was five percent. The attack made upon the interest calculation in Doherty (supra) failed. That was by reason of the decision in Gogic (supra).

66 I do not consider in the present case that there is any particular circumstances requiring a departure from the application of the interest rate of four percent per annum as in other cases. Furthermore, on consideration of the nature of the damages awarded in the present case, I consider that it is appropriate to apply the same for the purpose of calculating the interest on the above two components ($30,000 and $35,000).

67 A calculation of interest schedule was sent by my associate to the legal representatives of the plaintiff and the first defendant. Subject to an adjustment as suggested on behalf of the first defendant to the total amount of interest payable on the amount of $5,000, there has been no other issue raised based upon the schedule setting out the calculation of interest rates on the amounts of $35,000 and $30,000 respectively.

Indemnity costs orders

68 The second and fourth defendants have applied, from specified dates upon which Calderbank offers were made on behalf of each of them, for an order for costs on an indemnity basis to operate from the dates of such offers.

69 The written submissions for the plaintiff have not advanced any contrary argument for the making of indemnity costs orders as sought nor in respect of the date upon which such indemnity costs orders should operate.

70 The relevant principles relating to the award of indemnity costs were considered in Commonwealth Bank of Australia v Gretton [2008] NSWCA 117 and in SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323, in particular, at [37] per Giles JA.

71 It is unnecessary for me to here set out those principles. I have concluded that it was not reasonable in all the circumstances for the plaintiff to, in effect, have rejected or not have accepted the compromise offer made by the second defendant. The second defendant is, in my opinion, entitled to an indemnity costs order as sought.

72 I have reached a similar conclusion in relation to the Calderbank offer made on behalf of the fourth defendant on 22 March 2006. Whilst the second defendant in its submissions relied upon its September 2004 offer, it alternatively relied upon its March 2006 offer. The March 2006 offer was expressed as a Calderbank offer and was made at a point in time when the legal costs incurred by the fourth defendant would have, by that date, have been substantial. The offer of compromise made in March 2006, accordingly, may be accepted as representing a valuable offer by way of compromise. I have concluded, for that reason, that the fourth defendant’s entitlement to indemnity costs should be based upon its offer made in March 2006 and not its earlier offer.

Leave to apply

73 The costs issues for determination in this judgment were dealt with by way of written submissions of the parties. On 13 May 2009, clarification was sought as to particular matters raised in the plaintiff’s written submissions. Responses were received by my associate on behalf of the first defendant on 15 May 2009. A further schedule relating to the calculation of interest was provided to the plaintiff and the first defendant for checking.

74 As all costs issues have been dealt with by written submissions and there has been no hearing, I consider it prudent to permit the parties limited leave to apply in respect of any matters of calculation or any residual issues arising in respect of the orders which I propose to make and which are set out below. In that respect, leave to apply in respect of any such matter is to operate for a period of 14 days after delivery of this judgment. The leave hereby provided is not granted for the purpose of re-arguing submissions or contentions in the parties’ written submissions but on the limited basis I have stated.

Orders

75 In respect of the first cause of action (malicious prosecution proceedings in respect of the 1980 charge), I make the following orders:-

(1) Verdict in favour of the plaintiff against the first defendant in the amount of $230,000 made up as follows:-

(a) Consequential economic loss (legal expenses) $5,000
(b) Injury to person and restriction on liberty $35,000
(c) Aggravated damages $30,000
(d) Exemplary damages $160,000
Total $230,000


(2) That the first defendant pay interest on the amount of $5,000 (being the amount referred to in paragraph [34](1) of this judgment) at the rates prescribed in Schedule 5 of the Uniform Civil Procedure Rules from 2 November 2001 to 20 May 2009 calculated at the rates prescribed for that period totalling $3,524.25.

(3) That the first defendant pay interest on the amount of $35,000 (being the amount referred to in paragraph [34](2) of this judgment) at the rate of four percent per annum from 2 November 2001 to 20 May 2009 totalling $10,574.79.

(4) Order that the first defendant pay interest on the amount of $30,000 (being the amount referred to in paragraph [34](3) of this judgment) at the rate of four percent per annum from 2 November 2001 to 20 May 2009 totalling $9,064.11.

(5) Judgment in favour of the plaintiff in the amount of $253,163.15, being the amount of the verdict of $230,000 together with interest calculated in accordance with paragraphs (2), (3) and (4) above.

(6) The first defendant to pay the plaintiff’s costs of and in relation to the malicious prosecution proceedings in respect of the 1980 charge.

76 In respect of the second cause of action (the malicious prosecution proceedings in respect of the 1982 charges), the Court makes the following orders:-

(1) Verdicts and judgments in favour of the first, second, fourth and fifth defendants.

(2) The plaintiff is to pay the first defendant’s costs of the said proceedings on the ordinary basis.

(3) The plaintiff is to pay the second defendant’s costs on the following bases:-

(a) on the ordinary basis up to 21 March 2006, and
(b) on an indemnity basis from 22 March 2006.

(4) The plaintiff is to pay the fourth defendant’s costs of the said proceedings on the following bases:-

(a) on the ordinary basis from 12 December 2005 to 22 March 2006, and
(b) on an indemnity basis from 23 March 2006.

(5) The plaintiff to pay the fifth defendant’s costs and expenses on the ordinary basis.

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