Peter Daniel Dzundza v Thomas Nielsen
[2014] ACTSC 19
•18 February 2014
PETER DANIEL DZUNDZA v THOMAS NIELSEN [2014] ACTSC 19
(18 February 2014)
COSTS – application by solicitor for costs of defending unsuccessful application by defendant under s 189(1) of the Civil Law (Wrongs) Act 2002 (ACT) (‘the interlocutory application) – application by defendant for a Bullock or Sanderson order in respect of the costs of the interlocutory application – circumstances in which a Bullock or Sanderson order will be granted – application by defendant for no order as to costs in respect of the interlocutory application due to the application being in the public interest
Civil Law (Wrongs) Act 2002 (ACT), ss 189, 190
Court Procedures Rules 2006 (ACT), rr 1739, 2802
Gould v Vaggelas (1985) 157 CLR 215
Johnson's Tyne Foundry Pty Ltd v Shire of Maffra (1948) 77 CLR 544
Lawyers for Forests Inc v Minister for Environment, Heritage and Arts (No 2) [2009] FCA 466
Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300
Oshlack v Richmond River Council (1998) 193 CLR 72
Save the Ridge Inc v Commonwealth (2006) 230 ALR 411
Steppke v National Capital Development Commission (1978) 21 ACTR 23
No. SC 631 of 2009
Judge: Cowdroy J
Supreme Court of the ACT
Date: 18 February 2014
IN THE SUPREME COURT OF THE )
) No. SC 631 of 2009
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:PETER DANIEL DZUNDZA
Plaintiff
AND:THOMAS NIELSEN
Defendant
ORDER
Judge: Cowdroy J
Date: 18 February 2014
Place: Canberra
THE COURT ORDERS THAT:
In respect of the application filed by the defendant on 27 August 2013, the defendant pay the costs of Mr Howes on a party/party basis for the period from 27 August 2013 until 2 September 2013 and on an indemnity basis thereafter.
THE COURT CERTIFIES THAT:
Mr Howes was justified in retaining Senior Counsel and Counsel in respect of the application filed by the defendant on 27 August 2013.
IN THE SUPREME COURT OF THE ) No. SC 631 of 2009
)
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:PETER DANIEL DZUNDZA
Plaintiff
AND:THOMAS NIELSEN
Defendant
Judge: Cowdroy J
Date: 18 February 2014
Place: Canberra
REASONS FOR JUDGMENT
This is the second judgment in these proceedings. Both judgments relate to costs. The first judgment, which was delivered on 6 November 2013, concerned an application for costs made by the defendant (‘Dr Nielsen’) against both the plaintiff (‘Mr Dzundza’) and Mr Dzundza’s former solicitor, Bruce Howes (‘Mr Howes’): see Peter Daniel Dzundza v Thomas Nielsen [2013] ACTSC 220. In the first judgment, the following orders were made:
1.The Defendant’s application for costs filed 27 August 2013 (‘the Application’) be allowed in part, insofar as:
a)The Plaintiff pay the costs of the Defendant on a party/party basis up to and including 24 August 2009; and
b)The Plaintiff pay the costs of the Defendant on an indemnity basis from 25 August 2009 to 26 August 2013 inclusive.
2.The Application be otherwise dismissed.
3.The costs of the Application be reserved.
This judgment concerns the costs of Dr Nielsen’s costs application against Mr Howes. Written submissions have been received from both Dr Nielsen and Mr Howes, and the Court is required to determine the application on the basis of those submissions.
SUBMISSIONS
The background to these proceedings is contained in the first judgment. By way of summary, Dr Nielsen filed an application seeking an order pursuant to s 189(1) of the Civil Law (Wrongs) Act 2002 (ACT) (‘the Act’) that Mr Howes pay to him all or such part of the costs ordered to be paid by Mr Dzundza to Dr Nielsen as the Court deemed appropriate in the circumstances. Such an order was refused. Mr Howes now seeks his costs of defending Dr Nielsen’s application.
Mr Howes submits that such costs should be awarded on an indemnity basis as the application was hopeless from the outset. This submission is predicated on the fact that the inconsistent and incomplete accounts of the accident provided by the various witnesses to Mr Howes amongst others meant that Mr Howes’ conduct could never constitute one of the ‘clear cases’ referred to in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 (‘Lemoto’) at [92] requiring legal practitioners to pay the costs of legal proceedings.
In the alternative, Mr Howes submits that Dr Nielsen should pay his costs on the usual basis up to 2 September 2013 and thereafter on an indemnity basis by reason of a Calderbank letter dated 3 September 2013 sent to Dr Nielsen’s solicitors (‘the Calderbank letter’).
In the event that both submissions are rejected, Mr Howes submits that he should receive his costs on a party/party basis in accordance with the usual rule that costs follow the event.
Dr Nielsen submits that there should be no orders as to costs as the application was, adopting the words of Senior Counsel for Mr Howes, one involving a ‘serious matter in the administration of justice in the Australian Capital Territory’. This is said to be so because it is the first decision which directly considers the operation of s 189(1) of the Act and the nature of a solicitor’s obligations under such section. Dr Nielsen claims that the decision was therefore of importance not only to the parties and the legal profession, but also to the public generally, it having an interest in the administration of justice affecting the scheme of compulsory insurance in the Australian Capital Territory.
Alternatively, Dr Nielsen submits that he should have the benefit of either a Sanderson or Bullock order. The former would require Mr Dzundza to pay Mr Howes’ costs. The latter would allow Dr Nielsen to add the costs he is ordered to pay to Mr Howes to his (i.e. Dr Nielsen’s) overall costs in the proceedings, thereby allowing Dr Nielsen to recover the whole of those costs from Mr Dzundza pursuant to the orders made with the first judgment. Both orders appear to be sought on the basis that it was Mr Dzundza’s unmeritorious claim for damages and his instructions to Mr Howes which caused Dr Nielsen’s application for costs to be made.
Dr Nielsen acknowledges that Mr Dzundza may wish to make his own submissions regarding any Sanderson or Bullock order, and Dr Nielsen’s solicitor is said to have taken all reasonable steps to ensure that his submissions on the present costs issue have been brought to Mr Dzundza’s attention. It is also noted that Mr Dzundza has previously indicated to the Court that he is now representing himself in these proceedings despite failing to have filed or served a notice that he is acting in person pursuant to r 2802 of the Court Procedures Rules 2006 (ACT) (‘the Rules’).
CONSIDERATION
It is convenient to consider first the orders sought by Dr Nielsen. He seeks no order as to costs on the basis that the consideration of s 189(1) of the Act was in the public interest. Whilst such a concept is ‘notoriously difficult to define’ (Lawyers for Forests Inc v Minister for Environment, Heritage and Arts (No 2) [2009] FCA 466 (‘Lawyers for Forests’) at [11]), it is well settled that the mere categorisation of proceedings as being in the public interest is not enough to deny a successful defendant costs: Oshlack v Richmond River Council (1998) 193 CLR 72 at [2], [30], [49] and [70]; Lawyers for Forests at [3]. As was stated by Tracey J in Lawyers for Forests at [8], ‘[i]t is necessary for an unsuccessful party who wishes to obtain a more beneficial costs order to point to particular aspects of the litigation which warrant the orders sought’. The only such aspect identified by Dr Nielsen in these proceedings is the fact that s 189(1) of the Act had not previously been judicially considered.
This does not constitute sufficient reason to depart from the usual rule that the successful party should recover its costs. There are two points to note in this regard. First, it is not enough for Dr Nielsen to posit without further justification that the concept of public interest in the present circumstances encompasses the scheme of compulsory insurance in the Australian Capital Territory. Secondly, although the application of s 189(1) of the Act was novel, the consideration of its subject matter was not. As was highlighted in the first judgment at [54]–[58], the issue of whether a legal practitioner should be ordered to pay the costs of proceedings in which they have represented a party was considered in detail by the New South Wales Court of Appeal in Lemoto. Furthermore, the mere exercise of statutory interpretation, even where it is difficult and of importance to many people, does not necessarily justify denying a successful party its costs. This point was usefully summarised by Black CJ, and Moore and Emmett JJ in Save the Ridge Inc v Commonwealth (2006) 230 ALR 411 where their Honours stated:
[13]… As in South Melbourne City Council v Hallam (No 2) (1994) 83 LGERA 307 (in which the Supreme Court of Victoria made an order for costs against an unsuccessful plaintiff), the case “involved a relatively conventional, though interesting and not altogether straightforward, exercise in statutory interpretation”: per Tadgell J at 308–9. As Heerey, Whitlam and North JJ observed in Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975 at [13]:
[13] In a common law jurisdiction decisions of the courts, in private as well as public law, often clarify the law or lay down new law for the benefit of citizens, taxpayers, traders, patentees, insurers and insureds, landlords and tenants, etc etc. To that extent, much litigation has a public interest going beyond the interests of the parties. But this feature is inherent in common law litigation and provides no ground for departure from the usual rule as to costs.
[14]In Construction, Forestry, Mining and Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd (2003) 132 FCR 516, Wilcox J acknowledged that the case raised important and difficult questions of law affecting many people; but he added (at [6]) that, “standing alone, that circumstance has not generally been considered a sufficient basis upon which to refrain from making the conventional costs order”.
[Additional reference omitted]
Dr Nielsen’s requests for either a Bullock or a Sanderson order must also be rejected. The circumstances in which such orders are usually made is where a plaintiff joins multiple defendants to an action due to doubt as to which defendant is liable for its loss. This was explained by Williams J in Johnson's Tyne Foundry Pty Ltd v Shire of Maffra (1948) 77 CLR 544, where his Honour said at 572:
[A Bullock order] is an order which is sometimes made where a plaintiff joins two defendants and claims that one or other is liable jointly or in the alternative for the amount or part of the amount claimed. If the plaintiff succeeds against one defendant and fails against the other, the order relieves the plaintiff from having to bear the costs of the successful defendant either by ordering the unsuccessful defendant to pay to the plaintiff the costs which the plaintiff is ordered to pay to the successful defendant or alternatively, and this is the modern form of order, by ordering the unsuccessful defendant to pay the costs of the plaintiff and of the successful defendant.
The present proceedings are quite different. Dr Nielsen did not seek costs from Mr Howes due to any doubt that Mr Dzundza would be liable to pay Dr Nielsen’s costs. Rather, the correspondence between Dr Nielsen’s solicitors and Mr Howes’ firm (then acting for Mr Dzundza) makes it clear that Dr Nielsen sought to have Mr Howes indemnify Mr Dzundza due to his belief that Mr Dzundza was impecunious: see the first judgment at [35] and [45]. The order sought against Mr Howes was a discrete matter. Even if it is accepted that Mr Dzundza knowingly brought an unmeritorious claim, it is not conduct such as to make it fair to impose some liability on him for the costs of Mr Howes defending Dr Nielsen’s application: Gould v Vaggelas (1985) 157 CLR 215 at 230, citing Steppke v National Capital Development Commission (1978) 21 ACTR 23 at 30–1.
It follows that Dr Nielsen should pay the costs of Mr Howes on the usual basis, subject to Mr Howes’ submissions regarding indemnity costs.
The Court is unable to conclude that Dr Nielsen’s claim against Mr Howes had no reasonable prospects of success such as to justify the whole of the costs being awarded against Dr Nielsen on an indemnity basis. This conclusion follows from the fact that Dr Nielsen, being unaware of both the communications between Mr Howes and Mr Dzundza and of the instructions received by Mr Howes, may have believed that Mr Howes was aware that Mr Dzundza’s claim was completely without merit.
However Mr Howes should receive his costs on the ordinary basis up to 2 September 2013 and thereafter on an indemnity basis due to the Calderbank letter. The relevant authorities concerning Calderbank offers were addressed in the first judgment at [42]–[43], and it is unnecessary to repeat them here. It suffices to note that the necessary requirements were met due to the following facts:
1.the letter was marked ‘without prejudice save as to costs’;
2.a clear offer was made to settle Dr Nielsen’s application on the basis that Dr Nielsen’s application as against Mr Howes be dismissed with no orders as to costs;
3.in the circumstances, the offer was made promptly and allowed reasonable time for Dr Nielsen to consider his position; and
4.it was emphasised that an application for indemnity costs would be made against Dr Nielsen should he reject the offer and be unsuccessful in his application against Mr Howes.
As a separate matter, the Court notes that Mr Howes seeks certification of the use of Senior Counsel and Counsel for the proceedings pursuant to r 1739 of the Rules. Such rule states:
(1) If the court certifies the use of counsel on an application in a proceeding, the registrar must allow counsel’s fees for the application.
(2) However, if the court does not certify the use of counsel on the application, the registrar must not draw any inference about allowing counsel’s fees.
[Note removed]
The Court is satisfied that the retention of Senior Counsel and Counsel by Mr Howes to defend Dr Nielsen’s costs application against him was justified, and so certifies their use.
The Court will order that, in respect of the application filed by the defendant on 27 August 2013, Dr Nielsen is to pay the costs of Mr Howes on a party/party basis for the period from 27 August 2013 until 2 September 2013 and on an indemnity basis thereafter.
As Mr Dzundza did not appear nor make any submissions in respect of the costs application filed by Dr Nielsen on 27 August 2013, no further order for costs will be made as between Mr Dzundza and Dr Nielsen.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Cowdroy.
Associate:
Date: 18 February 2014
Counsel for the Plaintiff: The Plaintiff did not appear
Counsel for the Defendant: Mr J Pappas
Solicitor for the Defendant: DLA Piper Australia
Counsel for Mr Howes: Mr D Higgs SC with Mr D Jenkins
Solicitor for Mr Howes: Howes Kaye Halpin
Date of Hearing: Heard on the papers
Date of Judgment: 18 February 2014
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