State of New South Wales v Wheatley (No 2)

[2018] NSWSC 324

Supreme Court

New South Wales

Medium Neutral Citation:	State of New South Wales v Wheatley (No 2) [2018] NSWSC 324
Hearing dates:	On the papers
Decision date:	15 March 2018
Jurisdiction:	Common Law
Before:	Adamson J
Decision:	(1) Order the defendants to pay the plaintiff’s costs of the proceedings. (2) Order, pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), that the costs ordered to be paid in order (1) above be paid in the gross sum of $45,000.
Catchwords:	COSTS – whether costs ought follow the event – whether plaintiff has had substantial success – whether proceedings ought be regarded as public interest litigation – general rule that costs follow the event   COSTS – application for costs to be paid in a gross sum – appropriate procedure – costs sought reasonable – desirable to avoid the cost and delay of assessment
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98(4) Election Funding and Disclosures Amendment Act 2010 (NSW) Election Funding, Expenditure and Disclosures Act 1981 (NSW) Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Category:	Costs
Parties:	State of New South Wales (Plaintiff) Peter Wheatley (First Defendant) Liberal Party of Australia New South Wales Division (ABN 68 324 857 904) (Second Defendant)
Representation:	Counsel: NJ Williams SC/JS Emmett (Plaintiff) A Moses SC/P Sharp (Defendants)   Solicitors: Crown Solicitor’s Office (Plaintiff) Harpur Phillips (Defendants)
File Number(s):	2017/67594

Judgment

Introduction

1. On 23 February 2018 I made orders and published reasons for my decision to order judgment for the plaintiff against the first defendant and to make declarations against the first and second defendants: State of New South Wales v Wheatley [2018] NSWSC 178 (the principal judgment). At the defendants’ request I reserved the question of costs. I have since received written submissions on costs. The plaintiff submitted that costs ought follow the event and that costs should be ordered to be paid in a gross sum of $45,000 pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW). The defendants submitted that there should be no order as to costs. The defendants did not make submissions opposing an order that costs be paid in a gross sum, if an order that the defendants pay the plaintiff’s costs were made.

2. I am persuaded that the defendants ought be ordered to pay the plaintiff’s costs of the proceedings and that the costs should be paid in the gross sum of $45,000. My reasons for these orders are as follows.

Consideration

The appropriate order for costs

3. The defendants argued that the appropriate order was that each party pay its own costs on the basis that the proceedings were brought to determine matters of statutory interpretation which had not previously been required to be considered. The points arose from amendments made to the Election Funding, Expenditure and Disclosures Act 1981 (NSW) (the Act) in 2010 by the Election Funding and Disclosures Amendment Act 2010 (NSW) (the 2010 Amendment Act). They submitted that, in these circumstances, the defendants ought not be required to bear the cost of what was, in effect, litigation brought in the public interest and in which they, as defendants, were the vehicles by which the points could be determined.

4. The evidence in the proceedings showed that the plaintiff brought the proceedings because the defendants did not accept that the $200,000 paid to the 7155 account, which I found to be the second defendant’s (the Party’s) campaign account, was an unlawful political donation. Thus, it was necessary for the plaintiff to bring the proceedings to obtain judgment for that sum, together with pre-judgment interest. The Electoral Commission made its interpretation of the Act clear in its correspondence with the defendants which preceded the commencement of the proceedings. I accepted the interpretation put on the relevant provisions by the Electoral Commission. Accordingly, the Electoral Commission succeeded on a basis which had been foreshadowed to the defendants prior to the commencement of the proceedings.

5. Although the declarations may have an educative effect, they were made in the context of the facts of the present case and were crafted by reference only to facts germane to the current proceedings. The proceedings, though listed for two days, were heard in a day. The whole of the evidence was relevant to whether judgment ought be ordered. This issue occupied the bulk of the written submissions and oral argument in the course of the hearing. Whether declarations ought be made, and in what form, were subsidiary questions which did not occupy any material portion of the total hearing time.

6. Further, this is not a case where the Party belongs to a class which has numerous members, as occurs, for example, when an individual brings litigation concerning the interpretation of social security or revenue legislation which might affect a large number of people in the same position as the individual. The relevant prohibition in the present case related to the acceptance of political donations. The Party is one of the two major political parties in New South Wales. The evidence adduced in the proceedings, for the reasons given in the principal judgment, indicated that the Party’s procedures did not comply with the Act, on whatever interpretation was advanced. Indeed, it appeared that the Party had not addressed the requirements of the Act in any coherent way. In particular, neither the Party, nor those candidates to whom the evidence related, had a separate campaign account as required by the Act.

7. In these circumstances, I am not satisfied that it would be just to require the Electoral Commission, which brought the proceedings in the name of the State of New South Wales, to bear its own costs. I am not persuaded that the usual rule, that costs ought follow the event, ought not apply: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

Whether costs should be ordered to be paid in a gross sum

8. The plaintiff relied on the affidavit of Christopher Butler affirmed 1 March 2018 which established that the plaintiff’s solicitor-client costs were $63,846.23. I accept that it was appropriate for senior and junior counsel to be briefed in this matter because of its complexity and importance. Further, the break-up of the time spent by junior counsel, Mr Emmett, and senior counsel, Mr Williams SC, showed that Mr Emmett prepared the matter with the solicitors and drafted affidavit evidence and submissions. Mr Williams’ role was largely confined to advising, settling documents and oral advocacy. This approach was both orthodox and cost-effective. The rates charged by the plaintiff’s counsel and solicitors were, in my view, reasonable. They appeared to be less than market rates, which is usual for those appearing for the Crown or a State instrumentality. I note that the defendants neither challenged this evidence nor submitted that the gross sum sought was other than reasonable.

9. The amount claimed by way of a gross sum was in the order of 70% of solicitor- client costs. I consider the claim for 70% to be a reasonable, if conservative, assessment of what would be likely to be awarded at a costs assessment. The figure sought was not challenged by the defendants. It is desirable that the cost of a costs assessment be avoided and that the litigation, at least at first instance, be brought to an end. The matter was relatively straightforward in terms of costs and does not, in my view, warrant a full assessment where the successful party, as here, is prepared to accept a greater discount on costs in return for the speed and certainty of a gross sum costs order.

Orders

10. I make the following orders:

1. Order the defendants to pay the plaintiff’s costs of the proceedings.

2. Order, pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), that the costs ordered to be paid in order (1) above be paid in the gross sum of $45,000.

**********

Decision last updated: 16 March 2018