Court costs – when do they not “follow the event”?

Posted on July 20th, 2016

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by Tony Cavanagh

Tony Cavanagh is a Director at Mullane & Lindsay in Newcastle and specialises in commercial dispute resolution & litigation, and employment law.

Most of us are familiar with the expression “costs follow the event”; that is, in a litigated claim the loser usually is ordered to pay the winner’s costs. In some circumstances that rule can be varied. The NSW Civil and Administrative Tribunal (NCAT) recently dealt with an application to vary, based on two specific grounds.

A dentist was charged with, but acquitted of (under mental health legislation) indecent assaults against a patient. However the same facts resulted in disciplinary proceedings against him by the Health Care Complaints Commission. There was a finding of professional misconduct; and a declaration that, had the dentist not otherwise ceased to be registered, his registration would have been cancelled for a period of 18 months. The HCCC had sought a cancellation for 2 – 3 years.

The dentist submitted that each party should pay their own costs of the disciplinary proceedings or alternatively that he should pay only a fraction of the HCCC’s costs. There were two bases to that application. The first was that, because he did not ‘actively contest’ many of the allegations against him, the HCCC had avoided the expense of a full defended hearing. The second related to his inability to comment on the allegations against him due to his mental condition.

NCAT noted that whilst some allegations were not actively opposed, they were still not formally admitted, so the HCCC still had the cost of proving them by evidence. Further, the dentist himself also obtained a benefit from any cost reduction due to not ‘actively opposing’ the allegations.

As to his mental condition, NCAT said this did not entitle the dentist to any cost discount because costs were intended to be compensatory, not punitive. That is, although not expressly articulated, costs generally do not punish someone for how they defend a case (such that a person with a mental disability may be less ‘culpable’); rather they compensate the victor for the reasonable costs actually incurred in running the case.

Ultimately there was a modest reduction of 20% on the basis that the HCCC did not prove one of its grounds of complaints; and because NCAT thought the appropriate period of cancellation was less than submitted by the HCCC. That is consistent with the compensatory basis of costs – the reduction was associated with issues on which the HCCC did not succeed, so it could be said the costs of those parts of the case were not reasonable and did not require compensating.

The case does not establish any new law, but does highlight the compensatory basis for costs orders; shows that merely ‘not opposing’, rather than ‘positively admitting’ allegations that are upheld, is unlikely to result in a cost reductions; and also shows that the subjective circumstances of an unsuccessful litigant are not of particular weight, relative to compensating a successful litigant for the reasonable cost if incurred in proceedings: Health Care Complaints Commission v Spruce(2)[2015] NSWCATOD 153.

Tony Cavanagh is a Director at Mullane & Lindsay, and practises extensively in Commercial and other Litigation and Employment Law. If you require any assistance in these areas please contact Tony Cavanagh or contact our Newcastle office. 

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