Applicants v Respondent

2 I have now received the party's submissions and will rule on the question of costs on the papers, there being no objection raised to that course.

3 The applicants submitted that it was appropriate that there be no order as to costs.

4 The respondent submitted that the applicants should, jointly and severally, pay his costs of and incidental to the proceeding up to and including 25 November 2020 on a standard basis, and from 26 November 2020 on an indemnity basis; alternatively on a standard basis. He contended that costs should follow the event, as there was no sound reason to depart from that approach evident from my findings,[2] and indemnity costs should follow on a Calderbank letter sent by the respondent on that date.

5 As is clear from my reasons for dismissing the application, the charges of contempt - a side dispute arising out of extant commercial litigation in this court - was sparked by an error of judgment that the respondent conceded was ill‑considered, imprudent and regrettable. That concession was appropriate.

6 While I was not persuaded to the requisite standard that the respondent 'crossed the line', I concluded that he stopped 'just short' of it.[3] For the purpose of exercising my discretion in respect of costs, I will clarify that position. The point at which the respondent stopped just short of having committed contempt was on the criminal standard of proof beyond reasonable doubt. Had the proceeding been tried on the balance of probabilities, the respondent may well have overshot the line by some distance.

7 I was not persuaded that the emails could properly be characterised as evidencing a tendency to interfere with the course of justice by subjecting the first applicant ('Crewes') to improper pressure to resolve the extant commercial court proceedings on terms favourable to the respondent and contrary to his own interests. That said, I reject the respondent's present submission that it was the applicants who were engaging in tactical processes by bringing this contempt application. While that statement may also be true, the evidence at trial revealed a strategy of brinkmanship by the respondent in his correspondence with Crewes. In sending the emails that were the subject of the contempt charges, it is probable that the respondent was playing some sort of tactical game. He has never offered any explanation for his error of judgment.

8 It is unnecessary to set out the extensive submissions I have received from the parties on the question of costs.

9 I am satisfied that the applicants had a proper basis to initiate and maintain this application, which caused the parties to incur legal expense. Given the outcome at trial, the applicants are not entitled to recover those expenses by the application of the usual rule.

10 At trial, the respondent relied on an 'apology of sorts', having been made on 23 November 2020 as an invitation to the applicants to withdraw the charges.[4] The respondent seeks to recover his costs prior to his apology. Had the respondent promptly proffered an apology on the commencement of the application, his submission might have been more persuasive. I am satisfied that his conduct (or lack thereof) in the aftermath of the impugned emails having been sent was likely to, and did, draw a response from the applicants that could have been avoided by a direct and immediate frank and honest explanation, and a true expression of contrition. That did not occur. In contrast, when the wish to apologise was raised, relatively late in the proceeding, the applicants had already incurred the costs associated with the preparation and filing of evidence and an outline of contention. All that remained in substance was the half-day trial of the application.

11 Circumstances changed for the applicants when the respondent finally accepted that his conduct, while not admitted to amount to contempt, was an error of judgment. I commented on the limited and somewhat unsatisfactory nature of the respondent's apology in my reasons.[5] The limited nature of that apology - in the context of the tone of the earlier communications - indicated that the respondent appeared to lack a genuine interest in co-operating with the applicants in resolving this proceeding. I will return to the applicant's submission that the apology did not constitute an expression of remorse or contrition.

12 On the same day as the apology was made, a Calderbank letter was sent by the respondent. In substance, the offer was that, in the interests of commerciality and in the light of the apology, the applicants discontinue the proceeding and the respondent would not seek his costs. The Calderbank letter did not offer to pay or otherwise make a contribution towards the applicants' cost. The offer substantially required the applicants to capitulate. Significantly, the Calderbank letter drew the applicants' attention to the need to carefully consider whether the applicable criminal standard of proof could be met, without providing any reasonable explanation of the respondent's conduct that resulted in the conceded error of judgment.

13 In the result at trial, the criminal standard of proof was not met. The respondent contended that the applicants acted unreasonably by rejecting the offer and pressing on to judgment. That decision, the respondent effectively submitted (but not in these words), was an error of judgment that was unreasonable, not only to the extent that the applicants should pay the respondent's costs, but further that those costs be paid on an indemnity basis.

14 In all the circumstances, I am not persuaded that the applicants' decision to proceed with the application, having regard to the requisite standard of proof, is comparable with the respondent's unexplained conduct and his own error of judgment.

15 As I explained in my reasons, notwithstanding that the litigation was well underway with communications between the parties conducted through their solicitors, the relevant communications examined on this application as a contempt allegation were directly between the parties. In those circumstances, any proper apology for the respondent's error of judgment - whether or not it be a contempt - should also have been an apology directly between the parties. A statement by a solicitor that he holds instruction that his client wishes to apologise is not only a 'hollow apology', as the applicants rightfully contended, but further could be seen as inflammatory, when direct and frank communication between Gaudry and Crewes may have avoided this distraction and refocused the parties on the real dispute.

16 On the question of costs, each party has filed substantial submissions, running to many pages and encrusted with detailed reference to authorities. Notwithstanding those contentions, s 24 of the Supreme Court Act 1986 (Vic) provides that the costs of and incidental to all matters in the court are in the discretion of the court, and that the court has full power to determine by whom and to what extent those costs are to be paid. The terms of the section do not positively indicate the considerations on which the court is to determine costs, save that the power conferred by the section is to be exercised judicially.[6]

17 As Gummow and Hayne JJ observed in Oshlack v Richmond River Council:

There is no absolute rule with respect to the exercise of the power conferred by a provision such as [an equivalent provision to Supreme Court Act 1986 (Vic) s 24] that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party.[7]

18 Having carefully considered the written submissions, the terms of the Calderbank letter and the conduct of the applicants in rejecting the offer that it communicated and all of the circumstances set out in these reasons and in my principal reasons, I remain of the view that ultimately the interests of justice are best served in relation to this application if there is no order as to costs.

[1] The Queen v Gaudry [2021] VSC 113, [88] ('Reasons').

[2] Donald Campbell & Co Pty Ltd v Pollak [1927] AC 732, 811; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 120-3 [134] ('Oshlack').