Saadat v Commonwealth of Australia (No 2) - [2019] SASC 75

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SAADAT v COMMONWEALTH OF AUSTRALIA & ORS (No 2)
[2019] SASC 75
Reasons for the Order of The Honourable Justice Stanley
17 May 2019
PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS - ADJOURNMENT AND AMENDMENT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
The trial of this matter was listed to commence on 11 February 2019 for a period of 12 weeks. On 4 February 2019, the Court made orders granting permission to the plaintiff to amend his statement of claim and to rely at trial on a report of Dr Craig Raeside but refusing leave to rely at trial on a report of Dr Patrick Flynn. The Court made further orders vacating the trial date and reserved the question of costs.
The defendant and the third parties sought orders in relation to the costs of the applications to amend and for leave to rely upon the reports of Dr Raeside and Dr Flynn, the costs of the application for an adjournment of the trial and for the costs thrown away by the vacation of the trial date. The defendant further sought an order that these costs be payable by the plaintiff’s solicitors personally. The first and third third parties joined in this application. The second and fourth third parties did not.
The plaintiff opposed the Court determining the application for costs at this juncture. He submitted that the Court should not determine the question of costs of these matters until the conclusion of the trial.
On 29 April 2019, the Court ordered that the question of costs be reserved to the conclusion of the trial. These are its reasons for doing so.
Supreme Court (Civil) Rules 1987 (SA) Rule 101.06, referred to.
Filmlab Systems International Ltd & Anor v Pennington & Ors [1994] 4 All ER 673; Redowood Pty Ltd v Goldstein Technology Pty Ltd [2004] NSWSC 515; Ridehalgh v Horsefield [1994] Ch 205, applied.
Brown v Guss (No. 2) [2015] VSC 57; Interior Projects Pty Ltd v Players Pty Ltd (unreported, Lander J delivered 19 June 1997); Orchard v South Eastern Electricity Board [1987] 1 All ER 95; Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd (In Liq) [No. 7] [2018] WASC 355, discussed.
Flinn v Flinn [1999] VSCA 134; Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; Medcalf v Mardell & Ors [2003] 1 AC 120, considered.

SAADAT v COMMONWEALTH OF AUSTRALIA & ORS (No 2)
[2019] SASC 75
Civil.
STANLEY J:
Introduction

This is a claim for damages for psychiatric injuries alleged to be suffered by the plaintiff as a result of the conditions of his detention by the Commonwealth at the Baxter Immigration Detention Facility (the Facility). The Commonwealth has issued third party claims against the entities it contracted with to manage the Facility.
The trial of the matter was listed to commence on 11 February 2019. The trial was set down for a period of 12 weeks. On 4 February 2019 I made orders granting permission to the plaintiff to amend his statement of claim by filing and serving a fifth statement of claim and granted permission to the plaintiff to rely at trial on the report of Dr Craig Raeside dated 14 December 2018 but refusing leave to the plaintiff to rely at trial on the report of Dr Patrick Flynn dated 3 January 2019. I further made orders vacating the trial date and I reserved the question of costs. The defendant and the third parties have now sought orders in relation to the costs of the application to amend and for leave to rely upon the reports of Dr Raeside and Dr Flynn, the costs of the application for an adjournment of the trial and for the costs thrown away by the vacation of the trial date.
The Commonwealth further sought an order that these costs be payable by the plaintiff’s solicitors personally. The first and third third parties joined in this application. The second and fourth third parties did not.
The plaintiff opposed the Court determining the application for costs at this juncture. He submitted that the Court should not determine the question of costs of these matters until the conclusion of the trial.
Having heard argument on the respective applications on 29 April 2019, I ordered that the question of costs be reserved to the conclusion of the trial.
These are my reasons for doing so.
Relevant principles
Underpinning the exercise of my discretion to reserve the question of costs to the conclusion of the trial is the application by the Commonwealth and the first and third third parties that the costs of the application to amend, the amendment, the applications for leave to rely upon the reports of Dr Raeside and Dr Flynn and the costs thrown away by the vacation of the trial date be paid by the plaintiff’s solicitors personally. Such orders are sometimes referred to as “wasted costs orders”.
In Filmlab Systems International Ltd & Anor v Pennington & Ors[1] Aldous J held that an application for a wasted costs order should not, save in exceptional circumstances, be sought against a party’s legal representative until after trial, since it was only at that time that the question whether the legal representative had committed an error of judgment which no reasonable, well informed and competent member of the profession could have made, could be evaluated properly in the context of the case as a whole and on the basis of evidence, not inference. Further, applications for wasted costs orders should not be made at an interlocutory stage because of the danger that legal advisors may be prevented from continuing to act objectively for their clients, thus effectively depriving clients of the advisors of their choice, and the consequent danger of wasted costs applications being abused by one party in harassing the other side’s legal advisors in such a way as to affect the course of justice. Citing the judgment of Dillon LJ in Orchard v South Eastern Electricity Board,[2] Aldous J observed that it is unlikely that applications for wasted costs orders will succeed in civil litigation until after the case has been completed because of the difficulty of obtaining the necessary evidence. His Honour noted that it was only at the completion of the trial that the conduct of the legal representatives could be assessed in a correct context.
[1] [1994] 4 All ER 673.
[2] [1987] 1 All ER 95.
His Honour then went on to consider the further basis upon which applications for wasted costs orders should be made at the conclusion of a trial. His Honour said:[3]
Another reason why wasted costs orders should not be sought until after trial, except in exceptional circumstances, is illustrated by the facts of this case. Due to the claim against him, counsel for the defendants decided that he should not continue to represent the defendants. Thus the defendants have effectively been deprived of counsel of their choice by the plaintiff’s application. This problem was alluded to by Donaldson MR in Orchard’s case …:
“There is one final matter which cannot be ignored. Whilst there can be no objection to an application under RSC Ord 62, r 8 at the conclusion of a hearing, given appropriate facts, it is quite another matter where such an application is threatened during or prior to the hearing. Objectivity is a vital requirement of professional advisors. Hence, for example, the rejection of contingency fees and impropriety of a solicitor acting for co-defendants. Threats to apply on the basis that the proceedings must fail not only make the solicitors something in the nature of a co-defendant, but they may well, and rightly, make him all the more determined not to abandon his client, thereby losing a measure of objectivity.”
Dillon LJ contemplated the claims for wasted costs orders could be attempts to harass the other side’s legal advisors which might amount to a contempt of court …
… Although the right to seek and obtain wasted costs orders is not limited under the statute, I envisage that it would rarely be wise or right to seek to obtain such an order until after trial. Further, I do not envisage that the right to seek and obtain such an order could or should be affected by waiting until after trial before making a claim; although on rare occasions it might be desirable to inform the legal representative that such an order might be sought.
[3] [1994] 4 All ER 673 at 678-679.
That approach was adopted with approval by the English Court of Appeal in Ridehalgh v Horsefield & Anor.[4]
[4] [1994] Ch 205.
In Ridehalgh, the Master of the Rolls delivering the judgment of the Court, citing Filmlabs Systems, said the reasons of the Court in that case highlighted a number of dangers if applications for wasted costs orders were made at an interlocutory stage, among them the risk that a party’s advisors might feel they could no longer act, so that the party would in effect be deprived of the advisors of his choice. The Master of the Rolls said:
It is impossible to lay down rules of universal application, and sometimes an interlocutory battle resolves the real dispute between the parties. But speaking generally, we agree that in the ordinary way applications for wasted costs are best left until after the end of the trial.
Ridehalgh was subsequently followed by the House of Lords in Medcalf v Mardell & Ors.[5]
[5] [2002] UKHL 27, [2003] 1 AC 120.
Recently in Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd (In Liq) [No. 7][6] Kenneth Martin J, citing Ridehalgh and Medcalf v Mardell, identified the principles applicable to the making of a wasted costs order. Relevantly, his Honour considered that the ultimate jurisdiction of a court to issue an adverse wasted costs order remains discretionary and that unless the circumstances are exceptional, the judicial officer who determined the underlying litigation ought to be the judicial officer who determines a subsequent wasted costs application brought against an opposition lawyer arising out of that concluded litigation (emphasis added). While that latter observation might assume that the conclusion of the litigation was when the application for a wasted costs order was brought and is directed to nothing more than the identity of the judicial officer who should be deciding the application, nonetheless, it provides some support for the proposition that absent exceptional circumstances, an application for a wasted costs order should await the conclusion of the trial.
[6] [2018] WASC 355.
In Brown v Guss (No. 2)[7] McMillan J, in addressing the approach to hearing an application for a wasted costs order, said that the usual procedure is for the application to be made after the hearing.[8] Her Honour followed the reasoning of the Court of Appeal of Victoria in Flinn v Flinn.[9]
[7] [2015] VSC 57.
[8] [2015] VSC 57 at [115].
[9] [1999] VSCA 134 at [139]-[143], (1999] 3 VR 712 at 755-756.
In Lemoto v Able Technical Pty Ltd[10] McColl JA, with whom Hodgson and Ipp JJA agreed, said that wasted costs applications should realistically be made immediately after proceedings have concluded.[11]
[10] [2005] NSWCA 153, (2005) 63 NSWLR 300.
[11] [2005] NSWCA 153 at [193], (2005) 63 NSWLR 300 at 345.
I consider it significant that there is no Australian authority to the contrary.
The Commonwealth and the first and third third parties sought to rely upon a decision of Interior Projects Pty Ltd v Players Pty Ltd[12] where Lander J made an order pursuant to r 101.06 of the Supreme Court (Civil) Rules 1987 (SA) that the solicitors for a third party pay the costs thrown away of an amendment to its pleading and the resulting adjournment to the other parties to an action on an indemnity basis. Rule 101.06 provided that where costs were incurred improperly or arose because of undue delay, the court was empowered to make an order directing a solicitor personally to indemnify any other party against costs payable by the party. Lander J made the costs order on the first day of trial after granting the application to amend and adjourning the trial as a result.
[12] Unreported, Lander J delivered 19 June 1997.
I accept that the rules and the body of law that has developed in relation to the making of wasted costs orders do not preclude the making of such orders before the finalisation of a trial. However, in the absence of exceptional circumstances the preferred course where an application of this kind is made is for it to be decided at the conclusion of the trial for the reasons identified in the authorities set out above. Interior Projects does not stand as an authority contrary to this principle. It is important to understand that in Interior Projects the solicitors against whom the wasted costs order was sought consented to the making of the order.
Consideration
I reserved the costs of the applications to amend the statement of claim, to rely on further expert reports, to adjourn the trial and the costs thrown away, until the conclusion of the trial to avoid the disruption to the trial that would result from placing the plaintiff and his solicitors in a potential conflict of interest if I was now to hear and determine the application that the plaintiff’s solicitors pay those costs. If the solicitors opposed an order that they be held liable to pay those costs, or the plaintiff was to support an application that they be liable for the costs or liable to indemnify him if he was found liable for those costs, a conflict would arise between the plaintiff and his solicitors resulting in the real risk that the solicitors would cease to act for the plaintiff at this juncture. That consequence would be disastrous at this stage of the proceedings.
The solicitors have acted for the plaintiff since the proceedings were instituted. To have permitted the Commonwealth and the first and third third parties now to pursue a claim for costs against the plaintiff’s solicitors exposed the risk that the plaintiff’s solicitors would look to their own interests in relation to that application in a way which had the real potential to conflict with the interests of the plaintiff and thereby risk a loss of trust and confidence on the part of the plaintiff in his solicitors before the trial of the action has concluded or, in fact, commenced. It may also have resulted in the plaintiff being deprived of the representation of his solicitors who have had the conduct of the claim on his behalf until now. The plaintiff could have been placed in a position of potentially having to find new solicitors to act for him.
I also accept the submission of the plaintiff that questions of default which may inform the exercise of the costs discretion might be clearer at the conclusion of the trial than they are now.
On the other hand, there is no pressing necessity for the application for costs in relation to these matters to be heard and determined at this stage. The Commonwealth and the third parties cannot point to any real prejudice from the reservation of their applications to the conclusion of the trial. There is no question of impecuniosity on the part of the Commonwealth or the third parties. Of course, there is no real challenge to the Commonwealth’s submission that the plaintiff is impecunious. There is no suggestion the solicitors are impecunious. That is the present position.
The Commonwealth submitted that the basis to defer the hearing and determination of the application for costs to the end of the trial had not yet arisen as the potential for conflict had not been realised to the extent of counsel representing the solicitors seeking to appear and be heard on the costs applications.
I do not accept that submission. It is not necessary for that point to be reached for the conflict to be sufficiently realised so as to justify the order I made in the exercise of my discretion. As was observed in Redowood Pty Ltd v Goldstein Technology Pty Ltd[13] by Austin J, the mere making of a claim for a wasted costs order against the plaintiff’s solicitors places them in a potentially compromised position, creating an immediate conflict of interest between the vigorous prosecution of the plaintiff’s claim and the solicitors’ own position. The real potential for conflict between the plaintiff and his solicitors, if the application for the payment of costs against the solicitors had been pursued before the conclusion of the trial, had arisen. If the Court had embarked on the hearing and determination of the applications now, the conflict would have crystallised. The plaintiff would have had to decide whether to submit that any costs order should be made against his solicitors and the solicitors would have had to decide whether to oppose the orders sought against them. Both the plaintiff and his solicitors would have had to decide whether to retain new solicitors and counsel to act for them in relation to the applications. The reservation of the question of these costs until the conclusion of the trial avoided the potential for conflict which could have resulted in the undesirable undermining of the plaintiff’s trust and confidence in his solicitors at this stage of the proceedings or, worse, the solicitors ceasing to act for the plaintiff. Given the lack of any real detriment to the Commonwealth and the third parties from the reservation of the hearing and determination of the applications for costs until the conclusion of the trial, the balance of convenience favoured the order I made.
[13] [2004] NSWSC 515 at [35].
The second and fourth third parties submitted that I should hear their application for costs orders as they were not seeking a wasted costs order against the plaintiff’s solicitors. I did not accept their submission because I considered it impractical to determine their costs application at this stage while reserving the Commonwealth and the other third parties’ costs applications until the conclusion of the trial. The adoption of that course would also have run the risk of inconsistent findings and orders. Obviously that was to be avoided.