Marrickville Municipal Council v Moustafa (No 2) [2002] NSWCA 179 (6 June 2002)

Last Updated: 21 June 2002

NEW SOUTH WALES COURT OF APPEAL

CITATION: Marrickville Municipal Council v Moustafa (No 2) [2002] NSWCA 179

FILE NUMBER(S):

40526/99

HEARING DATE(S): 6 June 2002

JUDGMENT DATE: 06/06/2002

PARTIES:

Marrickville Municipal Council (Appellant)

Yousef Moustafa (Respondent)

JUDGMENT OF: Mason P Heydon JA Foster AJA

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr D B McGovern (Appellant)

Mr P A Regattieri (Respondent)

SOLICITORS:

Phillips Fox (Appellant)

Jones Staff & Co (Respondent)

CATCHWORDS:

Courts - appellate courts - NSW Court of Appeal - powers - leave to appeal given on condition - appeal from interlocutory orders

Courts - appellate courts - NSW Court of Appeal - powers - condition that appellant pay respondent's costs in any event - where leave sought to run 'test case' - appropriate conditions in circumstances - where 'test case' of interest to appellant only - appellant frequent litigant - respondent litigant for first and last time

Practice - counsel - duties of - duty to put court in position where able to dispose of costs matters finally when judgment reserved - D

LEGISLATION CITED:

DECISION:

See paragraph 28

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40526/99

MASON P

HEYDON JA

FOSTER AJA

6 June 2002

MARRICKVILLE MUNICIPAL COUNCIL v MOUSTAFA

Judgment

1 HEYDON JA: On 26 June 2000 Priestley JA and Clarke AJA extended the time for filing a Summons seeking leave to appeal and granted that leave on condition that the Council "bear the costs of the appeal in any event".

2 On 11 July 2001 the appeal was heard. It was argued by senior counsel on each side.

3 On 24 October 2001 the Court of Appeal gave judgment allowing the appeal. Order 4 was:

"The plaintiff should bear the defendant's costs of the trial and the appeal."

4 On 25 October 2001 the plaintiff's solicitors wrote to the Council's solicitors seeking their consent to an alteration in the orders made by the Court of Appeal so as to compel the Council to pay the plaintiff's costs of the appeal conformably with the terms of the leave.

5 On 3 December 2001 a telephone conversation took place between the solicitors.

6 On 4 December 2001 the Council's solicitors wrote a letter indicating that it would oppose the plaintiff's application but without giving reasons.

7 On 4 December 2001 the plaintiff filed a Notice of Motion seeking an amendment to the court's orders.

8 The Court which allowed the appeal comprised Priestley JA, Powell JA and myself. Priestley JA has retired. Powell JA is on long leave. Accordingly, it has been necessary to reconstitute the Court to hear the plaintiff's motion.

9 In its original undated Outline of Submissions, the Council argued that:

(a) the slip rule did not apply;

(b) the Court of Appeal had no power to grant leave on terms;

(c) the condition attaching to the grant of leave should be set aside because the plaintiff's basis for resisting the leave application was that the trial judge's reasoning was factual in character, but the reasons for judgment of the Court of Appeal showed that there were errors of law so that "the basis for resisting the leave application has been shown to be untenable".

10 At a directions hearing on 18 February 2002, the Council indicated that it adhered to propositions (a) and (c), but it appeared to indicate some uneasiness about proposition (b) in view of the Court's inherent power.

11 The Council then filed an undated Amended Outline of Submissions containing numerous concessions. They were:

"It is conceded that had the order as to costs made on the leave application (Priestley and Clarke JJA) been brought to the attention of the Court on appeal, the Court would not have made the orders which it made in favour of the appellant Council.

The Council further accepts that this Court has power to vary or rescind a judgment insofar as it relates to the making of an order for costs in favour of the Council (cf Part 40 Rule 9(1) if Part 20 Rule 10 or otherwise inapplicable).

It is further conceded that although there is no longer any equivalent to Part 51AA Rule 3(9) this Court has power under section 21 of the Supreme Court Act 1970 (`the Act') to make a costs order as a condition of the grant of leave to appeal. Moreover, under section 23 of the Act the Court has inherent jurisdiction to award costs. The Court's powers probably also derive from section 76 of the Act.

Therefore it is conceded there is power to set aside the costs order in favour [of] the Council and the making of orders consistent with the orders made on the leave application. However, for the following reasons the Court should grant an application by the Council under Part 40 rule 9 for leave to set aside the costs orders made on the leave application and to require Moustafa to pay the Council's costs on the appeal in any event."

The Council abandoned propositions (a) and (b). The Council adhered to proposition (c).

12 The Council appeared to advance three submissions. The first, advanced in writing, was proposition (c) above. The second, advanced orally, was that the position of the Council on the appeal was that the trial judge had failed to apply well-settled principles of law to the facts, and that it had never treated the proceedings as a "test case" or as a case having any significance beyond the immediate issues between the parties. The third, advanced orally, was that though the Council was a public authority, it was in the position of any ordinary litigant before the court; its application for leave had been resisted by the plaintiff on the basis that the trial judge's reasoning turned entirely on factual questions; on the appeal it was wholly successful in every point; and it would experience "a sense of injustice" if the costs order in its favour made when the appeal was allowed was now changed.

13 To concentrate, as the Council does, on the difference between the basis on which the plaintiff resisted leave and the bases on which the Court of Appeal decided the appeal is to concentrate on the wrong question.

14 Terms of the type which the Court of Appeal imposed on the grant of leave are commonly imposed by appellate courts where litigation involving a penniless, or even a not penniless, citizen, engaged for the first and last time in litigation, raises some point of general importance which the citizen's opponent, who is frequently engaged in litigation or conduct which may lead to litigation - the Commonwealth, the State, a council, some other organ of government, some public institution or some large corporation - wishes to have clarified. It is thought that the citizen should not have to bear the financial burden of having the point of principle which is of interest to others, but not to the citizen, determined at the expense of the citizen. That is why the Court of Appeal granted leave in this case.

15 Thus Priestley JA said at the start of the oral argument:

"The facts as described in the judgment reveal a case which, at first glance at any rate, seems to fall into that area which might be called the shadowy area of factual categories of case for liability for negligence and it may be therefore an error that deserves to be examined at an appeal simply for the sake of being able to look at it thoroughly and consider how the current state of the law, which can hardly be said to be fully settled, would apply to a case such as this."

16 In the course of the argument in relation to leave, the Council identified three general questions it wishes to raise. First, it said:

"One of the critical matters that the applicant wishes to have agitated in the Court is the question of reasonable foreseeability of damage in the breach sense, Hughes v The Lord Advocate type point, the kind of damage. That's recently been passed upon by the House of Lords, I found on the internet this morning, in a case called Jolly v Southern Londonborough (?) Council. I have got copies if the Court wishes to have them.

PRIESTLEY JA: If you could pass those up.

[Counsel for the Council]: It's called Sutton and Londonborough Council but it's Southern Londonborough Council, I hand them up."

Counsel for the Council then debated what was said in that case with Priestley JA for some little time.

17 A second "leave point" raised by the Council was:

"Well, your Honour, it is because the way in which the trial judge went about his fact-finding isn't entirely clear, but a leave point is the question of whether or not the process of inference through which he went was appropriate."

Counsel then referred to two recent cases in this Court and the High Court.

18 The third matter arose thus:

"PRIESTLEY JA: I wouldn't pursue this, except there seems to be an element in your application for leave of concern on the part of the council in respect of its potential liability for this class of case.

[Counsel for the Council]: Yes, your Honour, I don't run away from that and I understand what's exercising your Honour's mind."

19 That was the line the Council took when it was arguing for leave. But when Priestley JA asked about its attitude to the question whether the leave should be subject to a condition that the Council pay the plaintiff's costs of the appeal in any event, it took a quite different approach:

"We would submit that that's really a matter that ought to be left to the Court of Appeal who hears the case for the reason that it is only then that one can assess whether or not resistance to the application for leave to appeal and resistance to the appeal can properly be assessed.

...

[W]hatever might be the concerns of the council in terms of the wide picture, it's only when the facts of the case are examined and the strengths or weaknesses of the positions adopted by the parties are fully laid out that one can really determine whether or not a special order for costs should be made. When the Court of Appeal hears the matter and examines it all carefully, they may come to the conclusion that it was unreasonable for the plaintiff to resist the appeal, as in any litigation. I say no more than that, your Honour, it really has got to be examined carefully at the hearing of the appeal."

20 The senior counsel who appeared for the Council on the leave application and on the hearing of the appeal did not appear before this Court in relation to the present Notice of Motion. It is not intended to suggest by anything said in these reasons for judgment that he advanced any submission to this Court at any stage which was not a legitimate and entirely appropriate submission.

21 The Court of Appeal was evidently impressed by the first three points raised by the Council on the leave application and not by the last point. Priestley JA and Clarke AJA appeared to adhere at the end to the view Priestley JA had expressed at the beginning. That is why they imposed the costs condition. There was also, incidentally, independent justification at least for an order that the Council pay the costs of the application for leave to extend the time for filing the Summons, that being a matter in relation to which the Council was seeking an indulgence.

22 Both sets of written submissions filed for the Council concede that the Court of Appeal's reasoning in allowing the appeal turned on errors of law made at trial. The reasons for judgment discussed eleven authorities, most of them High Court authorities. Reference was made to the copious discussion of duty of care problems in the United States. The judgment cannot be described as turning on the facts. The errors of the trial judge were legal errors, and indeed they were far from being as obvious and clear cut as the Council now suggests. It would be absurd to suggest that it was unreasonable for the plaintiff to resist the appeal.

23 The basis on which the appeal was decided corresponded with the basis on which leave was granted - the case was seen as one turning on the application of obscure and controversial general principles of tort law to particular facts at a time when the outer boundaries of the tort of negligence, and the reasons why duties of care are imposed and when, are under hot debate.

24 It must be remembered that in attacking the decision of Priestley JA and Clarke AJA to impose the costs condition, the Council is attacking an interlocutory decision. The Council has not shown any error of law or fact, nor demonstrated that any factor which should have been considered was not considered, or that any factor which was considered should not have been considered; or pointed to any injustice in the decision.

25 The Council is wrong in submitting that the fact that the plaintiff resisted leave because he said that the case turned on questions of fact reveals error: however the trial judge expressed himself, his reasoning raised difficult questions of law. The Council is also wrong in submitting that it had never treated the proceedings as a "test case": it naturally embraced suggestions from the court that it was, and gave further reasons of its own for that view. And the Council is also wrong in submitting that the level of its success made it right for the Court of Appeal to depart from the costs condition. That possibility was present when the question of leave being granted, and the conditions on which it might be granted, were under consideration.

26 For those reasons I would reject the Council's application to amend the condition on which leave was granted and would alter the costs order made after the appeal was heard in the general manner desired by the plaintiff.

27 Even if there were any technical or other merit in the arguments of the Council just considered, which there is not, the plaintiff's interests should be protected as he desires for two reasons. First, in resisting leave counsel for the plaintiff realistically pointed to the "emotional stress of having to face up to the possible risk that he may lose his verdict, and not only that, be potentially liable to a crippling costs order". It must be remembered that the plaintiff is aged only about twenty. Between the time when leave was granted and the time when the appeal was decided, the plaintiff could enjoy peace of mind at least to the extent that though he might lose his verdict, he would not be exposed to any costs order in relation to the appeal and would not be under any risk of having to pay the fees of his own legal team. The Council's present attitude will have taken away even that limited consolation. To accede to the Council's argument would be to stimulate a sense of wholly justified grievance in the plaintiff. Any "sense of injustice" which the Council may experience would pale into insignificance beside the plaintiff's sense of grievance. Secondly, the behaviour of the Council in seeking leave, receiving it subject to a condition, acting on the grant of leave to the point of pursuing the appeal to success, and then resiling from the condition, is unacceptable in any litigant, let alone an organ of government.

28 Before the matter was called on for the second time today late in the afternoon, it was my strong provisional view that it should pay the plaintiff's costs from 25 October 2001 on an indemnity basis, and that the following orders should be made:

1. Paragraph 4 of the orders made on 24 October 2001 is amended by deleting "and the appeal".

2. The following orders are added to the orders made on 24 October 2001:

4A. Subject to paragraph 4B, the appellant/defendant is to pay the respondent/plaintiff's costs of the appeal, including the costs of the application for an extension of the time within which to file the Summons seeking leave to appeal, and the costs of hearing that Summons.

4B. The costs of the respondent/plaintiff incurred since 24 October 2001 are to be paid by the appellant/defendant on an indemnity basis.

29 When this matter was called on for the second time today late this afternoon, counsel for the Council indicated that the Council consented to the orders just indicated. Were it not for that fact, it would have been necessary to hear any argument the Council wished to put in relation to the indemnity costs order but since the Council has indicated its position of consent to the orders, that is not necessary.

30 MASON P: I agree. I just want to add two matters. First, I note that the condition imposed as the condition of the grant of leave had an additional function, namely to secure a proper contradictor in a matter of importance.

31 The second matter concerns the role of counsel arguing an appeal in which unusual or special costs orders are involved. It is unfortunate that the Court was not reminded by anyone present at the hearing of the original appeal about the condition that had been imposed. It is incumbent on counsel, with the exception of matters going to Calderbank type issues, to advance submissions and to put the Court in a position to be able to deal conclusively with all costs matters when judgment is reserved. By that means repeated applications are avoided.

32 I agree with the orders proposed.

33 FOSTER AJA: I agree with what has fallen from my brethren. I also agree with the orders proposed. I have nothing to add.

34 MASON P: The orders proposed will be made by the Court.

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LAST UPDATED: 20/06/2002