Smith v Trustees of the Christian Brothers (Costs ruling)

[2023] VSC 215

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

INSTITUTIONAL LIABILITY LIST

S ECI 2021 00868

JAMES SMITH	Plaintiff
v
TRUSTEES OF THE CHRISTIAN BROTHERS	Defendant
and
CATHOLIC CHURCH INSURANCE LIMITED	Non-party/Appellant

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JUDGE:	John Dixon J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers (submissions received 21 April 2023)
DATE OF JUDGMENT:	27 April 2023
CASE MAY BE CITED AS:	Smith v Trustees of the Christian Brothers (Costs ruling)
MEDIUM NEUTRAL CITATION:	[2023] VSC 215

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PRACTICE AND PROCEDURE – Appeal from associate judge – Subpoena objection – Costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Respondent	Mr J Gordon	Rightside Legal
For the Defendant /Second Respondent	Mr J Ruskin KC with Mr J Hooper	Barry Nilsson Lawyers
For the non-party/Appellant	Mr A Strahan KC with Ms G Berlic	Gilchrist Connell

HIS HONOUR:

1. Following my ruling allowing the appeal from the order of the associate judge in respect of  CCI’s challenge to the subpoena served on it,[1] the parties filed submissions on costs, which I have considered. Neither party sought to address me orally.

   [1]Smith v Trustees of the Christian Brothers [2023] VSC 171, (appeal reasons); Smith v Trustees of the Christian Brothers; Pearce v The Corporation of the Society of the Missionaries of the Sacred Heart [2022] VSC 343 (primary reasons).

1. The issuing party, the plaintiff, contended that as the successful party he should receive from CCI his costs, assessed on a standard basis of both the initial hearing before the associate judge and the appeal. The responding party, CCI submitted that the court should make no order as to costs in respect of either the primary hearing or the appeal.

1. Section 24(1) of the Supreme Court Act1986 (Vic) gives the court a broad and unfettered power, to be exercised judicially, to determine by whom and to what extent costs are to be paid. Commonly, that power is exercised on the basis that costs follow the event and in general, costs are awarded to the successful party, but it does not follow that success in the relevant event is identified from the fact that I allowed the appeal. Sections 8, 9, and 22 – 24 of the Civil Procedure Act 2010 (Vic) are also relevant to the manner in which the court exercises its discretion.

1. On 21 June 2022, the primary judge rejected CCI’s objections to the subpoena and required that it be answered. His Honour indicated that he would hear further from the parties on the issue of costs, but it appears that no submissions were received nor any costs order made and the court’s order was authenticated, three days after it was announced. I presume the matter of the costs was overtaken by the appeal filed on 8 July 2022.

1. As I explained in the appeal reasons, there was a significant change in circumstances from the primary decision to the appeal hearing. Negotiations between the parties after the primary decision also narrowed the issues.

1. Each party has drawn on the relationship between these negotiations and the appeal reasons to contend that in substance he or it was the successful party on the appeal. The Rashomon effect identifies how witnesses will describe an event in a different and contradictory manner that reflects their subjective interpretation and self-interested advocacy, rather than an objective truth.[2] The Rashomon effect is often evident when the event is the outcome of litigation and parties claim to have won.[3] The law, however, seeks an objective truth when it comes to awarding costs. 

   [2]Derived from Akira Kurosawa’s 1950 film Rashomon, and developed in the field of psychology.

   [3]Zalutsky v Kleinman 747 F. Supp. 457 at 458 (N.D. Ill. 1990); In the matter of ACN 005 408 462 Pty Ltd (formerly TEAC Australia Pty Ltd) (No 2) [2008] FCA 1184, [3]; Queensland Construction Materials P/L v Redland City Council & Ors [2010] QCA 248, [14]; Tsamis v Victoria (No 8) (Costs) [2020] VSC 67.

1. In my appeal reasons I explained that the subpoena as it was considered by the primary judge was an impermissible fishing expedition, but CCI did not succeed for that reason on the appeal. That feature of the original subpoena was overtaken by the changed circumstances. As the appeal reasons explain, the impermissible breadth of the initial requirement that CCI search for and disclose the ‘riding instructions’ category of documents was moderated by further negotiations.[4]

   [4]Appeal reasons (n 1) [52].

1. The discharge by the parties of their duties to the proper administration of justice required that the negotiations that followed the primary ruling ought to have preceded it and could, quite possibly, have achieved the overarching purpose in the subpoena dispute without any court hearing. We will never know.

1. The proper exercise of the costs discretion in relation to the costs of the primary hearing is to order that there be no order as to the costs of the application to determine CCI’s objections to the subpoena resolved by the order of the primary judge on 24 June 2022.

1. While CCI maintained the impermissible fishing expedition objection on the appeal, it objected that the issuing party could not show a legitimate forensic purpose and that it was on the cards that production by the subpoena would identify documents that would materially assist his case. On this latter issue it was not successful. The issuing party did have a legitimate forensic purpose but the subpoena was only accepted as valid because the parties had, by their negotiations narrowed its scope. Yet those negotiations were incomplete and did not fully grapple with how the documents sought would materially assist the plaintiff’s case.

1. The negotiations following the primary ruling are relevant to understanding the outcome of the appeal in terms of identifying success in the event. The plaintiff has done better than the best offer that CCI made, having persuaded it to move from its initial position that the subpoena was not valid. The appeal was allowed because, as I explained, the overarching purpose was best achieved by directing CCI to comply with the subpoena as if it were drafted in the terms that I fashioned having regard to CCI’s open offer to respond to a redrafted subpoena. In order to make such an order it was necessary to allow the appeal and set aside the primary order.

1. However, CCI’s negotiations did not go far enough to qualify as success in the event. On the hearing of the appeal, CCI failed to persuade me on the real ground where the dispute remained unresolved, namely its contention that the plaintiff did not show that it was ‘on the cards’ that the subpoenaed documents would assist his case. While it is correct that the plaintiff did not get all that he wanted, he was obliged to defend the appeal in order to get a sufficient response to the subpoena beyond the CCI offer. That was the relevant event and in it the plaintiff was successful.

1. The proper exercise of the costs discretion in relation to the costs of the appeal hearing is to order that CCI pay the plaintiff’s costs of the appeal limited to the costs of preparing the affidavits, the appeal books, submissions, and the costs of the hearing of the appeal (including reasonable preparation). The costs of the negotiations between the parties remain each parties’ costs in the proceeding.

1. The order of the court will be:

(a)   There is no order for the costs of and incidental to CCI’s objection made on 11 April 2022 to the plaintiff’s subpoena dated 1 April 2022 up to and including the order of the primary judge made on 24 June 2022.

(b)  CCI pay the plaintiff’s costs of the appeal limited to the costs of preparing the affidavits, the appeal books, submissions, and the costs of the hearing of the appeal.