Paulson v State of New South Wales (No 2)

[2023] NSWDC 413

District Court

New South Wales

Medium Neutral Citation:	Paulson v State of New South Wales (No 2) [2023] NSWDC 413
Hearing dates:	31 May 2023
Date of orders:	06 October 2023
Decision date:	06 October 2023
Jurisdiction:	Civil
Before:	Ainslie-Wallace ADCJ
Decision:	The plaintiff pay the defendant the costs of and incidental to the Notice of Motion filed on 10 February 2023 on an indemnity basis as agreed or assessed.
Catchwords:	COSTS - costs of and incidental to Notice of Motion - indemnity costs
Cases Cited:	Fountain Selected Meats (Sale) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202
Category:	Consequential orders
Parties:	Craig Paulson (Plaintiff) State of New South Wales (Defendant)
Representation:	Counsel: Michael Whitbread (Defendant) Solicitors: John Peter Capsanis (Plaintiff) Karen Smith, Crown Solicitor (Defendant)
File Number(s):	2022/386075

Judgment

1. By a Statement of Claim filed on 3 January 2023 the plaintiff sought damages from the defendant for breach of the plaintiff’s contract of employment with the defendant. The plaintiff had been employed by the Department of Communities and Justice in various roles and worked as a Sheriff’s Officer in the Children’s Court from 2000 until his employment was terminated on 20 October 2014.

2. Following the termination of his employment, the plaintiff pursued a number of avenues of redress against the defendant before commencing proceedings in the District Court. The claim for damages for termination of employment rests solely on two clauses said to be implied into the contract of employment.

3. On 10 March 2023 the defendant filed a Notice of Motion in which it sought that the proceedings be summarily dismissed pursuant to s 13.4 Uniform Civil Procedure Rules, as, it was argued, it disclosed no reasonable cause of action.

4. In reasons delivered on 10 July 2023, rather than dismissing the proceedings, I ordered that the Statement of Claim be struck out and granted the plaintiff leave to file an amended Statement of Claim within 28 days of the making of the orders. In coming to that decision, I concluded that there was no demonstrated basis on which the terms as asserted could by implied into the plaintiff’s contract of employment and, further, in any event any claim by the plaintiff against the defendant arising from that contract of employment was statute barred.

5. Following the delivery of judgment, the defendant sought an order the plaintiff pay its costs of the Motion on an indemnity basis. The plaintiff resisted that order and sought an order that each party should bear its own costs. Both parties supported their various contentions in written submissions.

6. The defendant submitted that shortly after the statement of claim was filed, it wrote to the plaintiff on 10 February 2023 inviting the plaintiff to withdraw the proceedings and indicating that in the opinion of the defendant the claims in the Statement of Claim were flawed.

7. The letter further informed the plaintiff that if the proceedings were not withdrawn, it would move the court for summary dismissal and seek consequential costs orders.

8. On 10 February 2023 the plaintiff sent a letter to the defendant to the effect that if the plaintiff discontinued the proceedings, the defendant would agree to each party paying its own costs. The plaintiff responded by disputing the defendant’s assessment of its case.

9. Thus, the defendant filed and prosecuted the motion for summary dismissal.

10. The plaintiff, in written submissions, resisted any order for costs and argued that as the defendant sought summary dismissal which was not granted, it meant a rejection of the contention that the proceedings “could not possibly succeed” and since the Statement of Claim was struck out meant that the result “did not favour the defendant or in the alternative, did not fully favour the defendant in accordance with the Notice of Motion”.

11. Before moving to consider the competing positions as to costs, it is useful to refer to the findings in the judgment on the motion to give context to the arguments.

12. At [27] I concluded that there was no basis in law or fact for implying into the plaintiff’s contract of employment with the defendant, the terms sought to be relied on. At [32] I rejected the plaintiff’s contention that it was not until the NSW Industrial Relations Commission determined his challenge to his dismissal, that his right to commence action against the defendant accrued. At [33] I found that the plaintiff’s claim against the defendant was statute barred.

13. Turning then to whether the proceedings should be summarily dismissed, I said:

[35] It is accepted that the power to summarily dismiss proceedings should be used sparingly and reserved for cases where the cause of action is such that it “cannot possibly succeed”. The Defendant argued that the Statement of Claim revealed no arguable cause of action.

[36] There is considerable force in this submission based on the Statement of Claim as filed and the plaintiff’s solicitor’s response to the defendant’s request for clarification of the claims asserted in the Statement of Claim.

[37] However, in all of the circumstances, I am not prepared to summarily dismiss the proceedings but will strike out the Statement of Claim and give leave to the plaintiff to replead the cause of action.

14. While the plaintiff is correct in arguing that, as the proceedings were not summarily dismissed it does not follow that the proceedings could not possibly succeed, the judgment identified two fatal flaws in the proceedings which led to the statement of claim being struck out.

15. Rule 42.1 of the Uniform Civil Procedure Rules, allows for a general rule that costs “follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs”.

16. Here, the “event” was the striking out of the Statement of Claim because it was flawed and flawed on the very basis indicated by the defendant and notified to the plaintiff as early as February 2023. That the whole of the proceedings were not struck out does not, in my view, support the plaintiff’s contention that the result did not favour or did not fully favour the defendant.

17. In my view, the defendant was successful in its challenge to the foundation of the plaintiff’s case and an order for costs in the defendant’s favour should follow.

18. Here, the defendant argues that the plaintiff should be ordered to pay the defendant’s costs on an indemnity basis. I agree. The plaintiff persisted in the claim based entirely on implied contractual terms in circumstances where there was scant, if any, support in law or fact to support it and in circumstances where, on any view, the claim was statute barred. Further, the plaintiff chose to persist in the claim, in light of the defendant’s offer of compromise which ought to have been accepted and adopting the words of Woodward J in Fountain Selected Meats (Sale) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202 at [400] “… that the applicant properly advised, should have known that he had no chance of success.”

19. There should therefore be an order that the plaintiff pay the defendant the costs of an incidental to the Notice of Motion filed on 10 February 2023 on an indemnity basis as agreed or assessed.

Decision last updated: 06 October 2023