Decision Date: September 14, 2012
Link: Case Summary Document
Citation: [2012] NSWSC 1098 (Supreme Court of New South Wales, White J)

Summary:

On 20 July 2012, White J gave judgement against the Commonwealth in NSW Rifle Association Inc. v The Commonwealth of Australia [2012] NSWSC 818 (see casenote 2.10.10 below). His Honour ordered that the Commonwealth pay the costs of that case. This was an application to alter the costs decision arising from that judgement.

This application arose because on 27 July 2012 the Commonwealth sought to have the costs order of 20 July set aside, seeking instead, an order that the NSW Rifle Association Inc. (NSWRA) pay the Commonwealth’s costs of those proceedings on a full indemnity basis including all consultants’ fees incurred by the Commonwealth.

The Commonwealth submitted that pursuant to clause 12.10(b)(iii) of the licence agreement which governed the use of the rifle range in question, the NSWRA was contractually liable to pay its costs and expenses of the proceedings, notwithstanding that the Commonwealth had failed in its defence of the NSWRA’s claims and failed in its cross-claim.

The submission was put on two bases. First, the Commonwealth submitted that the NSWRA was required to pay all reasonable costs and expenses of the Commonwealth in relation to the NSWRA’s enforcement or protection, or attempted enforcement or protection, of NSWRA’s rights under the licence. Secondly, the Commonwealth stated that the NSWRA was liable to pay the Commonwealth’s reasonable costs and expenses of the Commonwealth’s attempted enforcement of its asserted rights under the licence.

Clause 12.10(b) of the licence provided:

12.10 Costs and expenses

(b) The User [in this case the NSWRA] must pay all reasonable costs and expenses of the Owner [the Commonwealth] in relation to:

(i) any variation [of] this document;

(ii) the termination of this document;

(iii) the enforcement or protection, attempted enforcement or protection or waiver of any right under this document; and

(iv) the consideration or giving of any consent by the Owner under this document,

including legal costs and expenses on a full indemnity basis, and consultants’ fees.

The Commonwealth further contended that if it were not entitled to the orders sought under clause 12.10, it was nonetheless entitled to orders requiring the plaintiff to pay part of the fees of consultants engaged by the Commonwealth whose reports were referred to in the remedy notices. This was because of clause 9.7(b) and (f) of the licence agreement, which read

9.7 Indemnity

The User indemnifies the Owner against any claim, action, damage, loss, liability, cost or expense which the Owner incurs or is liable for in connection with:

(a) any damage, loss, injury or death, caused or contributed to by the User or User’s Agents;

(b) any default by the User under this document;

(c) the use of the Licensed Area, the Licensed Range and the Caravan Park by the User or User’s Agents;

(d) any service or the misuse of any service to the Licensed Area or the Caravan Park, unless caused by the act or negligence of the Owner;

(e) any ammunition, firearms or related items or equipment located or used on the Licensed Area, the Licensed Range, the Caravan Park or any other part of the Range if brought onto the Range by the User or the User’s Agents;

(f) the failure of the User to comply with the requirements of the Environmental Management Plan or the Fire Safety Management Plan,

except to the extent that any such claim, action, damage, loss, liability, cost or expense is caused by the negligence of the Owner or its agents.

The Commonwealth submitted that in accordance with clause 9.7(b), the NSWRA should be ordered to pay its costs of and in connection with the defaults identified in paragraphs [147]–[154] and [214] of the reasons for judgment in the decision of 20 July. It submitted that pursuant to clause 9.7(f), the NSWRA should be ordered to pay its costs or expenses in connection with the NSWRA’s failure to comply with the Fire Safety Management Plan discussed in that decision. However, these contentions were raised in this application without seeking the court’s leave to amend the Commonwealth’s pleadings.

His Honour first considered whether the Commonwealth was entitled to raise the arguments at a late stage. The NSWRA submitted that the sole reason the court did not originally consider the operation of clauses 12.10 and 9.7 and their effect on the Commonwealth’s asserted entitlement to costs and expenses was that the Commonwealth failed to plead those clauses and to raise its contentions as it should have done at the original hearing.

His Honour agreed that the Commonwealth should not be permitted to reopen the costs issue at this stage. The matters it was raising in this application should have been raised at the original hearing. No reasons were advanced as to why they were not raised. His Honour held that the costs order should not be varied. He said at [18]:

In my view it would not be a just outcome if the NSWRA were required to pay the Commonwealth’s costs even though it was compelled to bring this litigation by the Commonwealth’s purported termination of the licence on three months’ notice, that was subsequently withdrawn, and to assert the invalidity of the remedy notices that I have found were invalid. Moreover, even if the Commonwealth has a contractual right under clause 12.10 to recover its costs, I do not see why the Commonwealth should not be required in the exercise of the discretion conferred by s 98 [of the Civil Procedure Act 2005 (NSW)] to pay the NSWRA’s costs in circumstances where those costs were incurred as a result of conduct of the Commonwealth that I have found had no valid basis.

His Honour said that the clauses of the licence relied on by the Commonwealth were not ‘plain and unambiguous’ (at [21] and [26]). Clause 12.10 did not apply because its possible application was so unclear, and clause 9.7 could not apply because the Commonwealth did not apply for leave to amend its pleadings to add this argument to its submissions.

Therefore, the Commonwealth’s application was dismissed.

The case may be viewed at: http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/1098.html

Implications of this case

At the conclusion of the original hearing, neither party in this case made any submissions as to costs. White J held that prima facie the NSWRA was entitled to its costs of both proceedings, and accordingly ordered that the Commonwealth pay the costs of both proceedings. The costs order was made pursuant to section 98 of the Civil Procedure Act 2005 (NSW), and in accordance with rule 42.1 of the Uniform Civil Procedure Rules that prima facie costs should follow the event. The Commonwealth’s application to vary this costs order was comprehensively dismissed in this application.

it is also interesting to note the Court’s comments about clauses 12.10 and 9.7 that were relied on by the Commonwealth: because the application of one was unclear, and the other could not be relied on without specific pleadings, the Court’s discretion to order costs under the Civil Procedure Act overrode them.