ASIC v Sigalla

Judgment 1HIS HONOUR : This judgment concerns questions of costs. 2By its further amended interlocutory process ASIC charged Mr Sigalla with 45 counts of contempt. It elected not to proceed with two charges. Following my rejection of evidence pursuant to s 138 of the Evidence Act 1995 ( ASIC v Sigalla (No. 2) [2010] NSWSC 792) ASIC accepted that there was no evidence to support six further charges in relation to alleged payments to the TAB ( ASIC v Sigalla (No. 3) [2010] NSWSC 1076 at [3]-[4]). I found that there was no case to answer in relation to a further 25 charges relating to the use of credit cards ( ASIC v Sigalla (No. 3) ). I later dismissed a further three charges ( ASIC v Sigalla (No. 4) [2011] NSWSC 62). Mr Sigalla was found guilty of contempt in relation to the remaining nine charges ( ASIC v Sigalla (No. 4) and ASIC v Sigalla (No. 5) [2012] NSWSC 82). Thus 80 per cent of the charges brought by ASIC were dismissed or not pursued. 3Counsel for Mr Sigalla correctly submitted that the charges for which Mr Sigalla was found guilty occupied substantially less than 20 per cent of the hearing time and substantially less than 20 per cent of the volume of affidavit or other evidence. Mr Sigalla submits that ASIC should be ordered to pay 80 per cent of his costs. 4The principal question is whether there is power to order costs. If there is such power, Mr Sigalla is entitled to have a proportion of his costs paid by ASIC, having regard to the extent of his success in the litigation. That proportion would not be based simply upon the proportion which the charges that were dismissed bore to the total number of charges laid. 5If there is a general discretionary power to order costs, the appropriate costs order would have to take account of the fact that whilst prima facie Mr Sigalla was entitled to an order for costs in his favour in respect of the charges that were dismissed or not pursued, he would be liable to pay costs in respect of the charges of which he was found guilty. I would order the costs of the charges of which he was found guilty to be assessed on the indemnity basis. Moreover, there were discrete parts of the trial that occupied a substantial time on issues on which Mr Sigalla failed. Thus, a considerable part of the first day of the hearing was occupied in dealing with an initial application that the credit card charges be struck out that was unsuccessful ( ASIC v Sigalla [2010] NSWSC 606). Whilst Mr Sigalla was successful in having some evidence excluded pursuant to s 138 of the Evidence Act , he was unsuccessful in relation to a number of issues also ventilated on that application ( ASIC v Sigalla (No. 2) ). 6Taking these matters into account, if there is jurisdiction to make a costs order, the appropriate order would be that ASIC pay three quarters of Mr Sigalla's costs of the proceedings on the ordinary basis. 7In ASIC v Sigalla (No. 4) I held that ASIC's interlocutory process was a " criminal proceeding " within the meaning of s 4 of the Civil Procedure Act 2005 and hence, not a " civil proceeding ". Accordingly, I held that r 29.10 of the Uniform Civil Procedure Rules did not apply. For the same reasons s 98 of the Civil Procedure Act (contained in Division 2 of Part 7 of that Act) does not apply to the proceedings (s 4(1)). 8The questions are whether there is any other statutory power to make a costs order, and if not, whether there is inherent power to do so. In this latter respect I noted in ASIC v Sigalla (No. 4) (at [48]) that the courts of common law had no inherent jurisdiction to order costs. I deal below with the inherent jurisdiction of the Court of Chancery. 9Part 55 r 6 of the Supreme Court Rules 1970 provided that the application that Mr Sigalla be punished for contempt be made by motion on notice in the substantive proceeding commenced by ASIC for orders under s 1323 of the Corporations Act 2001 (Cth). Nothing turns on the fact that the proceedings were commenced by interlocutory process rather than by notice of motion. Nothing in Pt 55 of the Supreme Court Rules deals with costs. Mr Robb QC, who appeared with Mr Botsman for Mr Sigalla, submitted that as Pt 55 r 6 required contempt proceedings, whether for a civil or criminal contempt, to be commenced by notice of motion in the existing proceeding, it was intended that such parts of the provisions of the Civil Procedure Act or the Uniform Civil Procedure Rules should apply as are necessary for the just determination of the proceeding, including the power to order costs. 10I do not accept this argument. I do not accept that Pt 55, r 6 contains any implication as to what other rules or statutory provisions should be applied by implication to applications for punishment for contempt. The rule was in force in the same terms prior to the repeal of s 76 of the Supreme Court Act 1970 and the introduction of the Civil Procedure Act . Prior to 2005 there was power to make costs orders in contempt applications, whether the proceedings were characterised as civil or criminal. The power came directly from s 76 of the Supreme Court Act . There was no question of any implied statutory power arising from the terms of Pt 55, r 6. The problem arose from the repeal of s 76 and the enactment that the substantive provisions of the Civil Procedure Act , including s 98, applied only to civil proceedings. When those amendments were made, Pt 55, r 6 was unchanged. In my view, Pt 55, r 6 did not then become, through implication, a statutory source of a power to make costs orders. 11If, as I have found, the application to punish for a criminal contempt is a separate proceeding from the proceeding out of which the application arises, and is itself a criminal proceeding, the fact that the application is required to be brought by notice of motion in the existing civil proceeding contains no implication about the power to make a costs order. The power under s 98 is simply not available because the relevant proceeding is not a civil proceeding. Part 55, r 6 cannot change s 4 of the Civil Procedure Act that provides that parts 3 to 9 of that Act apply to the Supreme Court in relation to all civil proceedings. 12The second potential source of statutory power to make a costs order is in Div 4 of Pt 4 of Ch 4 of the Criminal Procedure Act 1986. That Part applies to proceedings for summary offences before the Supreme Court (s 170(3)). 13Counsel for Mr Sigalla relied on s 214 of the Criminal Procedure Act. It provides: " 214 Limit on award of professional costs to accused person against prosecutor acting in public capacity (1) Professional costs are not to be awarded in favour of an accused person in summary proceedings unless the court is satisfied as to any one or more of the following: (a) that the investigation into the alleged offence was conducted in an unreasonable or improper manner, (b) that the proceedings were initiated without reasonable cause or in bad faith or were conducted by the prosecutor in an improper manner, (c) that the prosecutor unreasonably failed to investigate (or to investigate properly) any relevant matter of which it was aware or ought reasonably to have been aware and which suggested either that the accused person might not be guilty or that, for any other reason, the proceedings should not have been brought, (d) that, because of other exceptional circumstances relating to the conduct of the proceedings by the prosecutor, it is just and reasonable to award professional costs. (2) This section does not apply to the awarding of costs against a prosecutor acting in a private capacity. (3) An officer of an approved charitable organisation under the Prevention of Cruelty to Animals Act 1979 is taken not to be acting in a private capacity if the officer acts as the prosecutor in any proceedings under that Act or section 9 (1) of the Veterinary Practice Act 2003. " 14Section 214 is in Pt 2 of Ch 4 of the Criminal Procedure Act . That Part applies only to proceedings before the Local Court or before an Industrial Magistrate, or as may be prescribed by regulations. It does not apply to proceedings before the Supreme Court (s 170(2)). Division 4 of Pt 5 of Ch 4 deals with the circumstances in which costs can be awarded to a prosecutor or to an accused person in proceedings in the Supreme Court. 15Section 257C provides: " 257C When professional costs may be awarded to accused person (1) A court may at the end of proceedings under this Part order that the prosecutor pay professional costs to the registrar of the court, for payment to the accused person, if the matter is dismissed or withdrawn. (2) The amount of professional costs is to be such professional costs as the court specifies or, if the order directs, as may be determined under section 257G. (3) Without limiting the operation of subsection (1), a court may order that the prosecutor in proceedings under this Part pay professional costs if: (a) the accused person is discharged as to the offence the subject of the proceedings, or (b) the matter is dismissed because the prosecutor fails to appear, or (c) the matter is withdrawn or the proceedings are for any reason invalid." 16The reference to " proceedings under this Part " is a reference to s 245. It provides: " 245 Summary jurisdiction of Supreme Court (1) If, under any Act, proceedings may be taken before the Supreme Court in its summary jurisdiction, the Court has jurisdiction to hear and determine those proceedings in a summary manner. (2) The summary jurisdiction conferred on the Supreme Court by subsection (1), or under any other Act on any other court to which this Part applies, is to be exercised by a Judge sitting alone, and not otherwise. Note. Section 170 sets out the courts to which this Part applies." 17In Director of Public Prosecutions (Commonwealth) v Sexton [2008] NSWSC 352 Howie J held that a prosecution for criminal contempt, although dealt with summarily, did not fall within the summary jurisdiction of the Supreme Court to which Chapter 4 of the Criminal Procedure Act applied (at [11]-[20]). I would follow this conclusion as a matter of comity unless satisfied it was clearly wrong. In ASIC v Sigalla (No. 4) I described his Honour's analysis as compelling. I certainly do not think it clearly wrong. It was based upon an historical analysis of the introduction of legislative provisions to confer summary jurisdiction on the Supreme Court in criminal matters generally. The summary jurisdiction to deal with contempt is part of the inherent jurisdiction of the court and has a separate history. Applying the decision in Sexton , s 257C is not an available power to make an order for costs. 18If the Criminal Procedure Act were an available source of power, there would be a question as to whether subs 257D(1) was satisfied. That subsection provides: " 257D Limit on award of professional costs against a prosecutor acting in a public capacity (1) Professional costs are not to be awarded in favour of an accused person in proceedings under this Part unless the court is satisfied as to one or more of the following: (a) that the investigation into the alleged offence was conducted in an unreasonable or improper manner, (b) that the proceedings were initiated without reasonable cause or in bad faith or were conducted by the prosecutor in an improper manner, (c) that the prosecutor unreasonably failed to investigate (or to investigate properly) any relevant matter of which it was aware or ought reasonably to have been aware and which suggested either that the accused person might not be guilty or that, for any other reason, the proceedings should not have been brought, (d) that, because of other exceptional circumstances relating to the conduct of the proceedings by the prosecutor, it is just and reasonable to award professional costs." 19Had the issue arisen, I would have been satisfied that a costs order could be made as both paragraphs (a) and (b) were satisfied. The investigation into the alleged credit card and TAB offences was conducted in an unreasonable and improper manner in that some of the notices issued to obtain documents were invalid for not truly stating the matters to which the request for production of documents related ( ASIC v Sigalla (No. 2) ). ASIC admitted that its procedures were careless and I found that Mr Brennan acted recklessly in the sense of issuing notices not caring whether they accurately stated the matter to which the request for documents related or not ( ASIC v Sigalla (No. 2) at [123]). 20I also consider that the credit card charges were initiated without reasonable cause. Had proper attention been given to the formulation of the charges, it ought to have been appreciated that Mr Sigalla did not breach the orders of the court by incurring liabilities on his credit card, although he may have breached the orders if he made payments off his credit cards for liabilities that were not permitted expenses. I do not know whether ASIC investigated what payments were made, and by whom payments were made, to discharge or reduce Mr Sigalla's liabilities to the providers of credit cards. But it ought to have appreciated the difficulties of proceeding with the charges as they were framed. Similarly, ASIC ought not to have been distracted by the inconsistent statements made by Mr Sigalla in relation to the charge concerning the payment of school fees from assessing whether the two payments totalling $52,500 made on 9 September 2009 were within the proviso for paying reasonable ordinary living or operating expenses. Finally, in relation to the first and most serious charge, whilst I do not think that ASIC acted unreasonably in bringing the charge, I do not think that it acted as a prosecutor ought to have acted in the conduct of the litigation ( ASIC v Sigalla (No. 4) at [116] and [153]). 21In these respects I am satisfied that: a) the investigation was conducted in an improper manner; b) the proceedings in respect of some of the charges were brought without reasonable cause; and c) in the respects indicated, the proceedings were conducted by ASIC in an improper manner. 22Accordingly, had the Criminal Procedure Act applied, I would have made the costs order indicated. However, applying the decision in Sexton , in so far as it relates to the application of the Criminal Procedure Act , s 257C is not an available source of power to make a costs order. 23In Sexton , Howie J made an order for costs purportedly pursuant to the Supreme Court Act and Rules. In ASIC v Sigalla (No. 4) I said the relevant section empowering the court to make an order for costs had been repealed (at [48]). I then assumed that Howie J was referring to the power to order costs under s 76 of the Supreme Court Act . On further consideration, I think his Honour may have been referring to s 23 of the Supreme Court Act . For the reasons below, I accept that s 23 was an available source of power. 24The next question then is whether there is an inherent jurisdiction to order costs in the circumstances of this case. 25It was settled that costs could only be awarded in courts of common law under statute ( Garnett v Bradley (1878) 3 App Cas 944 at 953-962). The position was different in the Court of Chancery. Although statute (17 Richard II, Chapter 6 (1393)) gave power to the Court of Chancery to award costs (then called damages) against a plaintiff that made untrue claims, the Lord Chancellor asserted an inherent and general discretion to award costs independently of any statutory provision ( Corporation of Burford v Lenthall (1743) 2 Atk 551 at 552; 26 ER 731 at 732; Jones v Coxeter (1742) 2 Atk 400; 26 ER 642). In Andrews v Barnes (1888) 39 Ch D 133 Fry LJ said (at 138): "The jurisdiction of the Lord Chancellor in costs was essentially different from that at common law. ' The giving of costs in equity, ' said Lord Hardwicke in Jones v. Coxeter ' i s entirely discretionary, and is not at all conformable to the rule at law. 'Courts of Equity,' said the same great Judge in another case, ' have in all cases done it ' (i.e., dealt with costs) ' not from any authority' (i.e., as we understand, from any statutory or delegated authority) ' but from conscience and arbitrio boni viri , as to the satisfaction on one side or other on account of vexation: ' Corporation, of Burford v. Lenthall . An examination of the older General Orders of the Court made, not under any statutory authority, but from the general and inherent authority of the Lord Chancellor, will shew that the Court exercised a most wide discretion not only as to the circumstances under which costs were to be awarded, but apparently as to the measure and fullness of the costs." 26In Rajski v Computer Manufacture and Design Pty Ltd [1982] 2 NSWLR 443 Holland J said (at 447) that " ... certainly as to the power to award costs, it is in my view to be taken as having been established that the power was partly the inherent jurisdiction of the court notwithstanding the existence of ancient statutes on the subject. " His Honour reasoned that the inherent jurisdiction of the court also extended by analogy to ordering a natural plaintiff to provide security for costs, in cases outside those provided by statute or rules of court. 27Where, as formerly by s 76 of the Supreme Court Act , there was a general statutory power to order costs, there would be no scope for the exercise of the inherent jurisdiction to award costs ( Knight v FP Special Assets Limited (1992) 174 CLR 178 at 193). I do not accept the submission of Mr Stack for ASIC that the inherent jurisdiction was thereby abrogated. The inherent jurisdiction is an independent and separate source of jurisdiction which may be exercised even in respect of matters regulated by a statute or rule of court provided that the jurisdiction can be exercised without contravening a statutory provision (Jacob, The Inherent Jurisdiction of the Court (1970) 23 Current Legal Problems 23 at 25; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 at [25]). 28The Court of Chancery exercised its inherent jurisdiction with respect to costs in cases of contempt. The usual rule was that after a party was committed to prison for contempt, upon purging his contempt he could obtain his discharge, but as a condition of the discharge the court could order payment of the costs of the contempt proceedings. The postponement of an order as to costs where a party was committed was " merely a rule of convenience ". Costs were ordered in the court's inherent jurisdiction ( Ex parte Van Sandau (1846) 1 Ph 605 at 609-610; 41 ER 763 at 764-765). There is no reason why the jurisdiction would not extend to the ordering of costs in cases which would now be characterised as criminal contempts. 29The principal proceedings out of which the present charges of contempt arose were for orders under s 1323 of the Corporations Act . That is a wholly new statutory jurisdiction. In other words, the orders alleged to have been breached were not made in the exercise of a jurisdiction formerly exercised by the Court of Chancery. 30Nonetheless, s 23 of the Supreme Court Act provides: " 23 Jurisdiction generally The Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales." 31It is necessary for the administration of justice that the court have power to make orders for costs in cases such as the present where, possibly because of legislative inadvertence, there is a lacuna. In my view, s 23 provides the necessary power to order costs by analogy to the Court of Chancery's inherent jurisdiction to order costs, including in contempt cases, in matters within that court's jurisdiction. 32As noted at para [23] above, I should correct what I said in ASIC v Sigalla (No. 4) at [48]. On further consideration I would accept that in Sexton , the court had inherent jurisdiction pursuant to s 23 of the Supreme Court Act to make the order for costs that was made in that case, notwithstanding that it was not a jurisdiction that would have been exercisable in the Court of Chancery and notwithstanding that the courts of common law did not have such inherent jurisdiction. (The allegation in Sexton was contempt of court by interfering in the administration of justice by publicity that might tend to prejudice the conduct of a criminal trial.) 33For the reasons I have given I consider the appropriate order is that ASIC pay three quarters of Mr Sigalla's costs. I conclude that there is power to do so pursuant to s 23 of the Supreme Court Act . 34If I had found that there was no jurisdiction to order costs, Mr Sigalla sought a certificate pursuant to s 2 of the Costs in Criminal Cases Act 1967. As I have concluded that Mr Sigalla is entitled to receive what I consider to be the appropriate proportion of his costs from ASIC, there is no occasion to consider granting a certificate under that Act. 35Mr Sigalla's former solicitor, Mr Calabria of Bridges Lawyers, sought to be heard in relation to the enforcement of a costs order. He indicated that he would seek to claim a lien over any amount that I found was payable by ASIC on account of Mr Sigalla's costs. Mr Sigalla is now bankrupt. There may be an issue between Mr Sigalla's trustee in bankruptcy and his existing and former legal representatives as to who should be entitled to receive payment from ASIC. Once the costs have been agreed or assessed ASIC should give not less than 21 days' notice to Mr Sigalla's trustee in bankruptcy, and to Mr Calabria of Bridges Lawyers, and to Mr Sigalla's present legal representatives, of its intention to make the payment, so that if there is disagreement as to who is entitled to receive the payment, steps can be taken to secure the position whilst that issue is resolved. If there is a dispute, the amount payable under the costs order can be paid into court. 36For these reasons I order that the plaintiff pay 75 per cent of the first defendant's costs as agreed or assessed. 37I further order that ASIC not pay the amount for which it is liable under the preceding costs order without first having given 21 days' notice in writing to Mr Calabria of Bridges Lawyers, to Mr Sigalla's trustee in bankruptcy, and to Mr Sigalla's present lawyers, of its intention to do so. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 February 2012