Costs orders in cases of historical child abuse

In brief - The NSW Supreme Court has ordered a plaintiff to pay the defendant's costs in BTM1 v Scout Association of Australia New South Wales Branch (No.2) [2023] NSWSC, a case predicated on a claim of historical child abuse.

Key takeaways

• In BTM1 v Scout Association of Australia NSW Branch [2023] NSWSC 431 the Court ordered that the plaintiff's claims of direct liability and vicarious liability be permanently stayed and that the plaintiff should pay the defendant's costs
• BTM1 v Scout Association of Australia NSW Branch (No. 2) [2023] NSWSC 806 saw the plaintiff unsuccessfully seek to vary the court's order that costs should follow the event
• This case demonstrates the important role and function of discretionary costs orders and how they ought to weigh on any litigant's mind. 

Costs orders in NSW

Pursuant to section 98 of the Civil Procedure Act 2005 (NSW), the court has discretion to make orders regarding costs. Rule 42.1 of the Uniform Civil Procedure Rules 2005 establishes the general rule that the court is to order that the costs follow the event (i.e. the unsuccessful party is to pay the successful party's costs) unless it appears to the court that some other order should be made as to the whole or any part of the costs.

The purpose of a costs order is to compensate the person in whose favour it is made, not to punish the person against whom the order is made (Allplastics Engineering Pty Ltd v Dornoch Ltd [2006] NSWCA 33). 

Permanent stay - BTM1 v Scout Association of Australia New South Wales Branch [2023] NSWSC 431

The plaintiff, under the pseudonym BTM1, brought a claim against the defendant alleging that he was sexually abused by the perpetrator who held the role of Assistant Scout Leader and later Scout Leader within the organisation between 1979 and 1982. The plaintiff claimed that the defendant was both directly and vicariously liable for the alleged abuse, of which the defendant did not admit either and denied that any harm to the plaintiff resulted from any breach by their organisation. 

By Notice of Motion, the defendant sought an order that the proceeding be permanently stayed pursuant to section 67 of the Civil Procedure Act 2005 (NSW) and Rule 2.1 of the Uniform Civil Procedure Rules 2005 (NSW). An order was also sought that the plaintiff pay the defendant's costs of the proceedings.

The defendant brought the motion submitting that the alleged abuse had occurred over 40 years prior and it was prejudiced due to the unavailability of relevant witnesses and documentary evidence. Additionally, the defendant submitted that "to the extent any evidence has been discovered, that evidence is confused, confusing and contradictory" which his Honour noted was "unsurprising given the age of the matter".

Similar arguments for exceptional circumstances can be observed in the outcomes of other NSW cases, such as the Diocese of Lismore v GLJ [2022] NSWCA 78 (currently on appeal to the High Court of Australia), Fields v Trustees of the Marist Brothers [2022] NSWSC 739 and Smith v The Council of Trinity Grammar School [2022] NSWCA 93 where the Court stayed proceedings due to the consequences of the passage of time; meaning the impossibility of the defendants being able to engage critical witnesses and acquire and consider meaningful evidence. 

The Court ordered the proceeding be permanently stayed, and ordered the plaintiff to pay the defendant's defence costs of the proceeding, or make a written application to the Court within 14 days opposing this costs order.

Costs order - BTM1 v Scout Association of Australia New South Wales (No 2)

The plaintiff sought an order that, in lieu of the original costs order, each party pay their own costs of the proceeding. The defendant opposed the variation of the order.

The plaintiff submitted that he had the right, under s 6A of the Limitation Act 1969 (NSW) to commence proceedings in order to seek compensation for the alleged abuse, he only realised the matter was an abuse of process after commencing proceedings and not from the outset and could not have known that the proceedings would be permanently stayed, he had already allegedly sustained "significant financial loss and psychological damage as a consequence of the abuse" and the order for him to pay costs (including senior and junior counsel) would bring him "to financial ruin". 

The defendant submitted that the plaintiff's reasoning was insufficient for the Court to vary its costs order, and cited that the Notice of Motion and associated evidence that the defendant was to rely upon were made available to the plaintiff "many months before the hearing occurred" and that the financial position of the plaintiff and the financial consequences of these costs orders on the plaintiff were entirely irrelevant to any considerations the Court was to make in its discretionary power to order costs. 

The Court agreed with the defendant on the irrelevance of a party's financial position and cited Board of Examiners v XY [2006] VSCA 190; "the successful party, whether rich or poor, did not ask to be subjected to the expense of unmeritorious litigation". The statutory power granted to the Court to make costs orders is a measure to ensure protection against parties who have been the subject of unmeritorious claims, and therefore the financial position of the unsuccessful party is irrelevant when a Court is determining costs orders in the event of a claim being found unmeritorious.

On the point of the plaintiff having the opportunity to withdraw from the proceeding and instead choosing to continue his claim, the Court found that whilst the plaintiff may not have known about the evidence that the defendant was to rely upon during the proceeding from the outset; he and his solicitor were in possession of all the evidence and submissions of the defendant, and therefore had "sufficient time" to make a decision with respect to continuing the litigation and fully understanding the associated risks of doing so. 

The Court therefore refused the plaintiff's application and the previous costs order remained. 

Conclusion and implications

This decision highlights an important function of the discretionary power of costs orders, and how this power can apply to cases involving allegations of historical child abuse. It is not only another indicator of the importance of defendants considering the availability of witnesses and evidence in the early stages of claims, noting recent trends in caselaw and permanent stays in this area, but also provides an insight into the purpose and justification of costs orders through the prism of a claim of historical child abuse.

With the recent developments on the law around permanent stays in cases of historic child abuse, it will be important for both plaintiffs and defendants to consider and understand the purpose of costs orders and how they function in relation to these proceedings.