Racing NSW v NSW Self Insurance Corporation (a continuance of the NSW Insurance Ministerial Corporation), trading as Treasury Managed Fund No. 1

[2008] NSWSC 180

CITATION:	Racing NSW v NSW Self Insurance Corporation (a continuance of the NSW Insurance Ministerial Corporation), trading as Treasury Managed Fund No. 1 [2008] NSWSC 180
HEARING DATE(S):	Heard on the papers
JUDGMENT DATE :	6 March 2008
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Plaintiff to pay defendant's costs
CATCHWORDS:	Costs - Principles - Statutory Construction
LEGISLATION CITED:	Civil Procedure Rules 2005 (NSW) Workers Compensation Act 1987 (NSW)
CASES CITED:	Latoudis v Casey (1990) 170 CLR 534 Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460 Oshlack v Richmond River Council (1998) 193 CLR 72 Ruddock v Vadarlis (No 2) (2001) 188 ALR 143 Wentworth v Rogers [2003] NSWSC 944
PARTIES:	Racing NSW (Plaintiff) NSW Self Insurance Corporation (a continuance of the NSW Insurance Ministerial Corporation), trading as Treasury Managed Fund No. 1 (Defendant)
FILE NUMBER(S):	SC 50123/07
COUNSEL:	Mr N Hutley SC, Mr J Catsanos, Ms M Allars (Plaintiff) Mr GJ Parker, Mr P Khandhar (Defendant)
SOLICITORS:	Maurice Blackburn Cashman (Plaintiff) Turkslegal (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Thursday 6 March 2008

50123/07 Racing NSW v NSW Self Insurance Corporation (a continuance of the NSW Insurance Ministerial Corporation), trading as Treasury Managed Fund No. 1

JUDGMENT

Dealing with costs

1 The reserved judgment in these proceedings was delivered on 31 January 2008 [2008] NSWSC 6. The parties have both addressed on costs.

The principles

2 The “ordinary approach”, reflected in rule 42.1 of the Civil Procedure Rules 2005 (NSW), is that costs follow the event “unless it appears to the court that some other order should be made”.

3 The ordinary approach is consistent with the observation of the High Court of Australia in Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460 that, as “a general rule”, “a wholly successful defendant should receive his costs unless good reason is shown to the contrary”.

4 I accept that the ordinary approach is merely a “general rule” and should not be confused with the existence of an absolute entitlement or right on the part of the successful party – an order in respect of costs is discretionary (Wentworth v Rogers [2003] NSWSC 944 at [33], citing the decision of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at [35]).

5 Further, there are well-recognised exceptions to the ordinary approach in circumstances where the successful party has been guilty of some sort of “misconduct” in relation to the litigation or the circumstances leading up to the litigation. In particular, “the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation” (per McHugh J in Oshlack at [69]).

6 In Oshlack, his Honour further noted (at [80]) the view of the majority in Latoudis v Casey (1990) 170 CLR 534 that the court should start from the proposition that a successful party to litigation can usually expect to receive a costs award in its favour unless its own conduct disentitles it from the benefit of the discretion.

Basis for the ordinary approach

7 The basis for the ordinary approach of awarding costs to a successful party was considered in Latoudis. Relevantly, Mason CJ stated (at 543):

If one thing is clear in the realm of costs, it is that…costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.

8 Similarly, in Ruddock v Vadarlis (No 2) (2001) 188 ALR 143, Black CJ and French J (Beaumont J dissenting) said:

The award of costs to a successful party is principally by way of perceived restorative justice.

9 Their Honours went on to observe (at [13]) (emphasis added):

It has been argued, in academic commentary, that the general compensatory principle rests upon two alternative rationales. The first is that the successful party is entitled to be compensated for its costs because it has been wronged at the hands of the unsuccessful party. Costs under this rationale function as a species of damages. But that characterisation is not always tenable. Where, for example, declaratory relief is sought because of genuine uncertainty about the interpretation of a document or statute, it will not explain why the successful party should be reimbursed at the cost of its opponent where the legal issue is novel and has consequences extending beyond the particular litigation. The alternative rationale for the compensation principle is simply that the winner should not have to suffer financially for vindicating its rights. The criticism of this intuitively attractive approach is again that it does not necessarily follow that the obligation to compensate the winner should be imposed on the losing party. For the losing party may have had very good legal grounds for its position and have conducted itself in the litigation in an entirely reasonable way . Where the case is close or difficult and involves no obvious element of fault on the part of the loser the proposition that costs follow the event may work unfairness … These criticisms will not justify a global modification… of the usual rule that costs follow the event. They do however indicate the desirability of avoiding calcification of the discretion with rigid rules governing its exercise.

Turning to the present circumstances

10 The question for determination in the present matter then, is whether there exists any “good reason(s)” that justify the court exercising its discretion to depart from the usual course in which costs follow the event.

11 Notwithstanding the sustained attempt by the plaintiff to satisfy the Court that the circumstances concerning the instant litigation throw up good reasons that justify a departure from the ordinary approach to costs I am not satisfied that this is the case.

12 True it is that plaintiff sought relief in the form of a declaration to resolve a genuine uncertainty about the operation of ss. 158(3) and (5) of the Workers Compensation Act 1987 (NSW) (the 1987 Act). Ultimately the plaintiff’s consistent approach was held to be incorrect.

13 True it is that the issue confronting the plaintiff was novel in the sense that there was no guiding authority directly on point and that the issue involved had potential ramifications which went well beyond the instant litigation. However none of these considerations operate per se to furnish an appropriate base for the court departing from the usual order is to costs.

14 I am not satisfied that the defendant's conduct was in any fashion at any time unfair nor that it, at any time constituted delinquent conduct of any type. There could have been no doubt in the minds of the plaintiff as to the defendant's rejection of the plaintiff’s construction of the legislation. The defendant at all times maintained its position that it did not agree with the plaintiff's construction of section 158. I accept that the plaintiff was aware from at least 27 September 2006 of the defendant's attitude, whether or not it continued to withhold a full exposition of its ultimate position.

Conclusion

15 Albeit excepting entirely that consistent with the decisions in Latoudis, Milne and Oshlack (amongst others), a successful party does not have an automatic entitlement to costs, the principled exercise of the discretion is not to sanction a departure from the ordinary approach. This was significant litigation. The plaintiff elected to submit the question of construction to the Court. It failed.

Orders

16 The order is that the plaintiff pays the defendant’s costs of the proceedings.

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