The application of the fourth defendant had very little to do with the assessment of damages hearing fixed for hearing that Monday and Tuesday - other than possibly displaying a belief from the fourth defendant that it could lead to a setting aside of the judgment obtained against her.
Once I had pronounced in ex tempore reasons rejecting the fourth defendant's application at 3.44 pm on 7 May 2018, the defendants' counsel then withdrew any suggestion the court had been misled (see ts 293). But the retraction did not, as I assessed it, then, amount to a withdrawal of what had always been a misguided attack strongly directed against a legal practitioner throughout the course of 7 May 2018. That had unfolded in spite of my efforts to deflect counsel from advancing it any further: see ts 209, 210, 214, 254, 286.
Add for completeness that Ms Somerville attended court at the time that judgment was being delivered at the assessment of damages reserved decision in July 2018. At that time she was seeking leave to remove herself as the lawyer of record for the second, third and fourth defendants. But she also put on the record at that time her personal withdrawal of any suggestion that the legal practitioner concerned had misled the court by passages in an earlier affidavit the fourth defendant had challenged as being misleading. That was proper, albeit at a late stage.
In the end, upon the fourth grievance, I am of the view that this was again a situation in which, due to the heavy involvement of more experienced and independent counsel, the responsibility for what was a misconceived application on behalf of the fourth defendant, should not be laid at the doorstep of Ms Somerville. It is clear from the materials filed and from the way in which argument proceeded before me across most of Monday, 7 May 2018 that counsel was fully committed to advance that application for the fourth defendant at that time and did so with considerable determination.
In such circumstances, and particularly where the defendant clients did not waive their privilege, I assess that it would be unfair to attribute responsibility by a costs exposure solely against such an inexperienced legal practitioner. Again, she was entitled to receive better guidance upon a very serious application such as this. It is clear to me she did not receive the proper level of guidance namely, that such application was always misconceived. That would have been the proper advice that should have been given from counsel in these circumstances. It would be unrealistic to expect an inexperienced legal practitioner like Ms Somerville to overrule her client and junior counsel on a considered point of challenge such as this.
The temporal ramifications of this argument were such that it effectively consumed most of the first day of the assessment of damages hearing. To the extent a third day was then consumed by the receiving, hearing and cross-examination of the expert evidence, that time consequence was, I assess, always going to result from the lengthy advancement of this application on behalf of the fourth defendant. The expert evidence, as I said earlier, most likely would have needed an extra day, in any event. But this fourth grievance was itself another cause of an extra day in hearing time being needed.
Returning briefly to the third matter, its causative waste consequence in the end was, in my view, only a wastage associated with the chambers hearing across the afternoon of Friday, 4 May 2018. That waste should be the extent of the personal responsibility of Ms Somerville under the third matter. But that is the extent of the liability of ABMS Lawyers in all the circumstances. The other aspects of the plaintiff's grievances have not been made out.
[2]
Consequently, the appropriate order prima facie, would seem to be that ABMS Lawyers should pay to the plaintiff on an indemnity basis (and concurrently with the defendants but on the basis of costs being recovered only once) the solicitor/client costs occasioned to the plaintiff by reason of the preparation for and attendances at the urgent chambers hearing convened on the afternoon of Friday, 4 May 2018, to be taxed, if not agreed and paid within 30 days of their ascertainment either by agreement or by taxation.
As regards the costs of the present application, my prima facie view in light of a mixed end result, that all participants should bear their own costs.
These reasons will now be provided to the parties for their consideration as to a making of final orders. They will then be publicly available and accessible on the court's website 48 hours after publication to the parties - unless there is an application made seeking to the contrary in that 48hour period.
[3]
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
[4]
RESEARCH ASSOCIATE/ORDERLY TO KENNETH MARTIN & CORBOY JJ
Parties
Applicant/Plaintiff:
1. The Pier (WA) Pty Ltd as trustee for Isandi Trust
Respondent/Defendant:
Jean Maurice Pty Ltd litigation is something of a saga: see Pier
Cases Cited (12)
The Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd litigation is something of a saga: see Pier (WA) as trustee for Isandi Trust v Jean Maurice Pty Ltd [2018] WASC 22; Pier (WA) as trustee for Isandi Trust v Jean Maurice Pty Ltd [No 2] [2018] WASC 23; Pier (WA) as trustee for Isandi Trust v Jean Maurice Pty Ltd [No 3] [2018] WASC 24; Pier (WA) as trustee for Isandi Trust v Jean Maurice Pty Ltd (in liq) [No 4] [2018] WASC 202; Pier (WA) as trustee for Isandi Trust v Jean Maurice Pty Ltd (in liq) [No 5] [2018] WASC 203; and Pier (WA) as trustee for Isandi Trust v Jean Maurice Pty Ltd (in liq) [No 6] [2018] WASC 204.
I published those six sets of reasons in the interval between 7 September 2017 and 2 July 2018, when I delivered a final judgment favouring the plaintiff after an assessment of damages trial conducted before me during May 2018.
That day, 2 July 2018, the plaintiff obtained judgment against all defendants in the amount of AUD$1,208,970.32. As part of the final orders, I then issued special costs orders: see [6], [7] and [8] of the final orders. In summary, the defendants were, at the end, ordered to pay the plaintiff's costs, including all reserved costs, on an ordinary party and party basis up to 17 August 2017 (with some exceptions), and then, for the period after that, costs on a complete indemnity basis.
The present costs application is related to the now resolved proceedings but is different in character. It is an application by the plaintiff seeking indemnity costs against the defendants' former lawyers of record, ABMS Lawyers, the principal of whom is Ms Mwenda Juliettie Somerville.
There are four discrete components in respect of which these costs orders are sought against Ms Somerville by the plaintiff. Under the plaintiff's minute of proposed costs orders of 12 July 2018 it seeks the court:
In evaluating the plaintiff's present application I have sought to apply the following essential principles which I assess as pertinent to a personal costs application of this exceptional character.
First, this court holds a clear jurisdiction to issue an adverse costs order against the opposing parties' lawyers - under its inherent (disciplinary) jurisdiction over legal practitioners. As to that proposition, see Michael v Freehill Hollingdale & Page (1990) 3 WAR 223, 233 (Seaman J); Ridehalgh v Horsefield [1994] Ch 205, 239; and then Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120 [13].
Second, the exercise of this jurisdiction is not to be lightly invoked and calls for an exercise of great care in its application: see Reid v Hubbard [No 2] [2004] FCA 180 [18] (Heerey J).
Third, the Rules of the Supreme Court 1971 (WA) (RSC) by O 66 r 5 display circumstances in which an inherent power of the court vested under s 16(1)(a) of the Supreme Court Act1935 (WA) is exercised: Michael v Freehill Hollingdale & Page, 233 (Seaman J), see lines 39 to 41. The relief by the exercise of this jurisdiction is both punitive and compensatory in character: see Myers v Elman [1940] AC 282, 302 - 303 (Lord Atkin) and 318 - 319 (Lord Wright).
Fourth, the evidentiary onus to provide a proper basis for making an adverse costs order of this character rests on the moving party at the civil standard.
Fifth, the terms 'Improper', 'Unreasonable' or 'Negligent' as seen used in the RSC and in the cases as against opposing lawyers' acts or omissions complained about, invoke terminology with well settled meanings: see Ridehalgh v Horsefield, 232 as regards the terms 'Improper', 'Unreasonable' and 'Negligent'. For example, the word 'Negligent' is to be understood in a nontechnical way - to denote a failure to act with the competence to be reasonably expected of ordinary members of the legal profession.
Twelfth, the procedure to be adopted upon such a costs application must be as fair and as simple as fairness permits. Fairness requires that a respondent legal representative who is sought to be made the subject of such an order be very clearly told what they have done wrong and what is claimed against them: see Toulson J in General Mediterranean Holdings SA v Patel [1999] EWHC 832; [2000] 1 WLR 272.
Thirteenth, unless the circumstances are exceptional, the judicial officer who determined the underlying litigation ought to be the judicial officer who determines a subsequent wasted costs application brought against an opposition lawyer arising out of that concluded litigation.
Fourteenth, the making of a wasted costs order is a jurisdiction that should be reserved for only those cases where the unjustifiable conduct can be proved without recourse to using disproportionately costly procedures: see Medcalf v Mardell at [57] citing Harley v McDonald [2001] UKPC 18; [2001] 2 AC 678.
Fifteenth, the legitimate interest of an applicant in seeking a wasted costs order is financial - by reference to a reduction in their legal costs otherwise to be borne by that party. The application must be merit based and be clearly established. An application must not raise any suspicion of it being brought only as an abuse of process: Medcalf v Mardell [58].
The first area in respect of which adverse indemnity costs orders are sought against ABMS Lawyers concerns its clients' (the defendants') failed application to set aside the judgments obtained against them - under the terms of the selfexecuting springing orders which, by then, had sprung. Reasons for decision dismissing that unsuccessful application are the subject of Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd [No 3], first delivered ex tempore on 16 January 2018, but subsequently revised and published on 25 January 2018.
That was an amended application on behalf of all the defendants advanced in the circumstances I explain in those revised reasons. Such an application by the defendants had been the subject of discussion at two prior directions hearings on 31 October 2017, and then on 11 December 2017. At both of those directions hearings, the defendants had been represented by an independent junior barrister briefed by ABMS Lawyers (Mr Williamson).
When the substantive application came to be argued on 16 January 2018 the defendants were then represented by both senior and junior counsel - as the record indicates (Mr McIntyre SC and Mr Williamson).
In dismissing that application, after referring to the leading decision in the area FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 and to relevant rules of this court, see RSC O 3 r 5(1) and (2), I said this in Pier v Jean Maurice [No 3]:
The third and fourth aspects of the plaintiff's costs grievances both relate to the assessment of damages hearing which was heard across four days, namely, 7, 8, 23 and 28 May 2018 and culminated in my reserved reasons finding in the plaintiff's favour under Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd (in liq) [No 6] [2018] WASC 204, delivered 2 July 2018.
The personal costs order application against ABMS Lawyers via the third grievance is essentially the subject of my reasons in Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd (in liq) [No 4] [2018] WASC 202. Those reasons were first delivered ex tempore on 4 May 2018, then subsequently revised and published on 2 July 2018.
The grievance, in essence, relates to the defendants' urgent last minute application I heard on Friday afternoon, 4 May 2018. This was on the last working day before the commencement of the two days fixed for the assessment of damages hearing. The defendants' application sought to vacate those hearing dates - on the basis of their late filing of a report from an expert accountant, Mr Monaghan, who had been engaged by the second, third and fourth defendants.
In the end, I did not accede to that adjournment application. But I nevertheless accommodated a receipt of Mr Monaghan's late expert report by rescheduling the rival expert accountants to have them give concurrent evidence, once all the lay evidence was heard. Both expert accountants' evidence was then programmed by me to be heard concurrently, on Wednesday, 23 May 2018.
That rescheduling was enabled in circumstances where 23 May 2018 had, fortuitously, just become available in my list - by a resolution of another matter previously fixed for hearing on that date.
The orders I issued on 4 May 2018 can be found under [19] of my Pier v Jean Maurice [No 4] reasons. In particular, I refer to orders 4 and 6 of those reasons. Under order 6, I granted leave for an application by the plaintiff foreshadowed that day to concurrently seek costs orders as against the lawyers of record for the second, third and fourth defendants.
The fourth and last aspect of the plaintiff's costs grievances against Ms Somerville, relates to another application that was advanced only on behalf of the fourth defendant at the assessment of damages hearing. This became the subject of my reasons under Pier (WA) Pty Ltd as trustee for Isandi Trust v Jean Maurice Pty Ltd (in liq) [No 5] Again, the application was refused. I again delivered reasons at the time on an ex tempore basis. That was on the first day of the assessment hearing on 7 May 2018. I subsequently revised, edited and published those reasons, on 2 July 2018.
(1999) 87 FCR 134
(1988) 165 CLR 268
(1991) 4 WAR 202
(1990) 3 WAR 223
(1998) 156 ALR 169
(2012) 205 FCR 445
(2012) 291 ALR 443
Sixth, it is necessary to remember a legal practitioner is well capable of making a wrong decision without thereby being negligent as that term is understood in the nontechnical way. Hindsight should not be used in any evaluation of the legal practitioner's conduct.
Seventh, a solicitor may not avoid personal responsibility by sheltering behind the advice given by counsel - if the prevailing circumstances dictate that the solicitor should have personally turned his or her own mind to the subject matter of the advice provided and reasonably reached a contrary position: see White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) [1998] FCA 806; (1998) 156 ALR 169, 249, affirmed in Flower & Hart (A Firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134, 148 (Lee, Hill & Sundberg JJ); Modra v State of Victoria [2012] FCA 240; (2012) 205 FCR 445 [37] (Gray J), and then refusing leave to appeal from that decision Re Kuek [2012] FCA 494; (2012) 291 ALR 443 [15], [16] and [23] (Jessup J).
Eighth, in confronting a costs application of this nature, a legal representative could suffer prejudice in answering a case put against them, when confronted by a refusal by their own client to waive their legal professional privilege: see Ridehalgh v Horsefield (237) and Medcalf v Mardell [23] - [24].
Ninth, the implications of a client's refusal to waive privilege needs to be evaluated practically, as distinct from on a purely theoretical basis: Re Kuek [27] (Jessup J).
Tenth, a 'docket' judge holding a regular interlocutory familiarity and understanding of the developing dynamics of a proceeding over a period of time may be better placed or advantaged to make a reliable evaluation upon the more likely source of rival potential responsibility as between the relative roles of a solicitor and counsel who are on the same side in a proceeding: see Re Kuek [23] and [27] (Jessup J).
Eleventh, the ultimate jurisdiction of a court to issue an adverse wasted costs order remains discretionary. That is so even if the existence of improper, unreasonable or negligent conduct as well as the causation of loss is established: see Ridehalgh v Horsefield, 239. In Ridehalgh the Master of the Rolls, Sir Thomas Bingham, said this:
The reasons in Pier v Jean Maurice [No 5] are selfexplanatory. An application was advanced on the first day of the hearing by counsel for the fourth defendant. It was a lengthy application. It saw the fourth defendant, Mrs Durolek, cross-examined on an affidavit she had filed on her own behalf. Crossexamination saw Mrs Durolek's express a position that was then exposed as one of her misunderstanding over what had previously occurred. It revealed her concern over a trivial point of no real forensic relevance - that ought properly to have been explained earlier to her by her lawyers, as being meritless. But obviously, that did not happen.
The consequence was a loss of most of the first day allocated for the assessment of damages hearing by hearing and pursuing this distracting application. Fortunately, the balance of the lay evidence, including crossexamination, adduced at that hearing was able to be completed across the second day of the hearing. Later, the parties' expert evidence was received concurrently from both expert accounting witnesses - across an extra day of the hearing, on 23 May 2018. There then followed a fiveday hiatus after that for the parties to prepare and exchange written closing submissions concerning the assessment of damages hearing. Those written submissions were then briefly spoken to by respective counsel at the assessment hearing's conclusion, on the morning of 28 May 2018.
Having once again reviewed all the materials submitted for the hearings on 4 May 2018 concerning the fourth defendant's application heard on 7 May 2018, on the third grievance complained of by the plaintiff, I am satisfied that in this aspect of the plaintiff's grievances, there should be a personal costs order against ABMS Lawyers. That is appropriate upon what I assess was causatively wasteful and clearly unreasonable conduct of Ms Somerville - in the way by which she went about the engaging of Mr Monaghan as the defendants' accounting expert for the assessment of damages hearing.
In short, as her own affidavit of 22 August 2018 candidly reveals, Ms Somerville had, on instructions from Mr Durolek, contacted Mr Monaghan on 10 April 2018. That was in circumstances where it was then known the defendants' responsive materials (including their expert evidence) to be used at the assessment of damages hearing were due to be filed and exchanged some six days later, ie, on 16 April 2018. However, Mr Monaghan, as Ms Somerville relates, had told her on 10 April 2018, that it would not be possible for him to provide his expert accounting report within that time frame. He had told Ms Somerville then that he would need three to four weeks. Nevertheless, Ms Somerville engaged him for the defendants to provide his expert accounting report - in an unsatisfactory way as I explain below.
Inexplicably, Ms Somerville wrote a letter to Mr Monaghan on 10 April 2018, wrongly telling him that his 'report [would be] required to be filed a couple of days before the hearing of 7 and 8 May 2018'.
Mr Monaghan's expert report was not received until Thursday, 3 May 2018. It was filed at court by Ms Somerville's firm that afternoon via the court's electronic filing system. The plaintiff's lawyers were only informed about that report on the morning of Friday, 4 May 2018. It was the first they had heard of such an expert report being used by the defendants.
The circumstances in which Mr Monaghan was engaged were unacceptable, even for a junior practitioner of limited litigation experience such as Ms Somerville. Her affidavit sworn and filed on 22 August 2018 says she now appreciates her error. She says at par 50: