HER HONOUR: This is an application by the defendants for costs on an indemnity basis following my dismissal of the plaintiff's notice of motion filed on 14 October 2016, which sought a series of orders for the defendants to be denied access to what was effectively the whole of the documents produced under subpoena to which he had had first access.
The orders the plaintiff had sought were as follows:
1. Directions as to Access made on 5 and 10 October 2016 as to General Access to the Defendants for satchels marked 1 to 9 after 7 days First Access to the Plaintiff from 5 October 2016 be vacated.
2. Order pursuant to UCPR 1.9(3) that the Defendants be denied access to the following satchels on grounds of Legal Professional Privilege:
1. Satchel marked '5' - Concerned Citizens of Canberra Inc.
2. Satchel marked '6' - Hoxton Park Residents Action Group Inc.
3. Satchel marked '7' - Colin Broadbridge.
4. Satchel marked '9' - Protect Penrith Action Group Inc.
1. Order pursuant to UCPR 1.9(3) that the Defendants be denied access to the following satchels on grounds of Parliamentary Privilege: satchel marked '3' to the Hon David Clarke MLC.
2. Directions as to General Access made on 5 and 10 October 2016 for satchels marked 10 to 14 be vacated.
3. Order granting First Access to produced items marked satchels 10 to 14 be granted by this Court for 7 days from date of this order.
These proceedings are listed for hearing on 21 November 2016 and will go to mediation on 3 November 2016. There was thus a degree of urgency in dealing with this application.
The plaintiff complains of being taken by surprise after an "excessive" number of "more than twenty" subpoenae were issued, allegedly without his being properly notified. Whether or not that was the case, it can be seen that effectively what the plaintiff sought in his notice of motion, little over a month prior to the hearing, was an order denying access to all these documents sought by the defendants, in circumstances where there was no complaint as to their legitimate forensic purpose, solely on the basis of legal professional privilege, parliamentary privilege and a Hearne v Street claim (Hearne v Street (2008) 235 CLR 125; this was made in relation to documents produced by Penrith City Council).
The application was supported by written submissions filed on 19 October 2016, in which the plaintiff identified his claim for legal professional privilege as the solicitor, or alternatively as the co-client, based on the Chorley principle (London Scottish Benefit Society v Chorley, Crawford and Chester (1884) 13 QBD 872). Those submissions were abandoned during the hearing, as were the claim for parliamentary privilege and the Hearne v Street claim.
As noted in my earlier judgment, no claim of client professional privilege (s 118 Evidence Act 1995 (NSW)) was made by any producing party. When the subpoena was returnable on 5 October 2016 before the registrar (see Mr Beattie's affidavit, at paragraphs 20 to 22), Mr Beattie and a Ms Angela Penklis (a producing party) were present. Ms Penklis told the registrar that she had two sets of documents to produce, one for herself and one for her husband, Mr Sutherland. She was asked by the registrar if she had any objection to general access being granted, and she said no.
My attention is also drawn to a letter dated 28 September 2016, (annexure C to Mr Beattie's affidavit) from a Mr Ross, on behalf of Concerned Citizens of Canberra Inc, in which he refers to having blocked out the names of some persons. He goes on to say:
"I had sought legal advice in this regard, not only in this matter, but also in our own case."
All of this indicates that these parties to whom subpoenae were sent (see paragraph 25 of the affidavit of Mr Beattie) must have diligently read the contents of the subpoena form, and answered the subpoena accordingly. It is not in dispute that all of those persons produced documents to the Court, and that, despite this, what was being sought by the plaintiff was an order restricting access to the defendants.
The defendants, both in correspondence and more recently in their written submissions, comprehensively answered the claim for legal professional privilege from the very first. Mr Rasmussen has acknowledged that his client's claims for legal professional privilege were, to use his word, "misconceived", and that the defendants' submissions on these issues were correct. However, he relies upon the fact that, shortly before the hearing (Ms Barnett says that it was ten minutes before the hearing) last Thursday, Mr Balzola made inquiries of the Hon. David Clarke MLC (a Member of Parliament), the Concerned Citizens of Canberra Inc, the Hoxton Park Residents Action Group Inc, Mr Colin Broadbridge, and the Protect Penrith Action Group Inc; following this, the plaintiff advised the Court that all of these persons or organisations indicated to him they intended to bring a claim for legal professional privilege, in relation to all of their documents.
I pause to note that, as it happened, since one of the bases of the claims by Mr Balzola was that his memoranda of fees and costs agreements would be protected by legal professional privilege, I did have occasion to look at files 5, 6, 7, and 9, and the documents in question were taken out by me. I did not look at the rest of the file, so I cannot comment on the degree to which there was in fact a claim for legal professional privilege. Nevertheless, I am satisfied that there was sufficient potentially privileged matter there.
Mr Balzola's application resulted in my preparing a judgment on an urgent basis for the assistance of those persons and for the Court to provide a copy of that judgment to those persons, whose email addresses were obtained from Mr Balzola for that purpose, and also for the listing of the application part-heard today, so that the relevant producing parties could come to court to bring their applications.
Ms Barnett complains that, as early 5 October 2016, the plaintiff had been put on notice his application was hopeless, by correspondence and written submissions. Ultimately, he capitulated, and all of the documents in question have been produced without any objection. Mr Rasmussen's answer to this is that, as of last Thursday, a real basis existed for the claiming of legal professional privilege, in that parties foreshadowed this claim. This morning, nobody has come to court to make such objections (in fact, in the course of Thursday, two of the persons contacted my associate to say they did not propose to bring such a claim) but he submits that it was a valid basis. One of the reasons why Mr Rasmussen submits that no costs order should be made is that this was the basis for standing over the matter part heard.
The trouble that I have with the rest of Mr Rasmussen's submissions is that prior to Thursday, no such basis existed. The plaintiff's notice of motion was misconceived and this had been drawn to the plaintiff's attention more than once by the defendants' legal representatives.
The next basis upon which Mr Rasmussen submits no order for costs should be made is that at 6.17pm on Friday, Mr Balzola wrote to the defendants indicating that none of the parties intended to press claims, adding that:
"It would appear there is nothing upon which the Court is required to adjudicate on Monday."
However, that is not entirely correct. The issue of costs remained to be dealt with, as did the issue of uplift access by the defendants to the remaining document, as they had not yet been given access to the packets. I have now granted them access this morning.
I am satisfied that a costs order must be made, and that an order for no costs to be paid is not appropriate in these circumstances.
The defendants' application is for costs on an indemnity basis. I have had regard to the principles as summarised in Ritchie's Uniform Civil Procedure NSW, as set out under r 42.5 Uniform Civil Procedure Rules 2005 (NSW).
I note the submissions of the parties. First, Mr Rasmussen submits that there must be prior notification: Huntsman Chemical Co Australia Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242. However, absence of notice is not fatal: Horseshoe Pastoral Co Pty Ltd v Smith [1995] NSWCA 200. Second, he submits that there must be misconduct or malfeasance for an indemnity costs order to be made, as opposed to bringing a case which is simply hopeless: Oshlack v Richmond River Council (1998) 193 CLR 72.
There is some support for Mr Rasmussen's submissions in the footnotes to r 42.5 UCPR. The examples given include:
1. misleading the Court;
2. maintaining proceedings when they should have known they had no real prospects of success, in circumstances where the examples appear to indicate such matters as wilful disregard of known facts;
3. abandoned claims;
4. claims brought for an ulterior purpose;
5. unreasonable delay and expense, especially where it is to obtain a tactical advantage.
Ms Barnett relies upon the observations of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] 46 FCR 225 and submits that persisting with a hopeless claim is sufficient.
Looking at the facts in this case, the key issue, as Ms Barnett has correctly identified, is the maintaining of an application where a party should know there is no real prospect of success. This application was brought and maintained up until last Thursday in circumstances where there was absolutely no basis for the orders sought. As Ms Barnett points out, if Mr Balzola had made inquiries of the persons who had answered the subpoenas and learned that they had no objection to inspection of the documents they had already produced, it is very probable that this application would never have proceeded further.
The hopelessness of the plaintiff's submissions, in relation to his own claim for legal professional privilege (which were not abandoned until partway through argument), is a significant issue in this application. This is not a case where the producing parties were thinking of bringing an application and decided not to. Had that been the case, that would have been a very strong basis for making a costs order on the usual basis or, very probably, a no order for costs at all.
The plaintiff's persistence in an application which he should have known had no real prospect of success and included bringing convoluted claims based upon parliamentary privilege, Hearne v Street immunity and legal professional privilege, unnecessarily complicated arguments which essentially had no basis. I also note that the lateness of the abandonment of these claims by those producing parties because they had been contacted only the day before the plaintiff's application was stood over part heard.
This application has taken up a great deal of court time on an urgent basis, both this morning and last Thursday. It is urgent for two reasons: the parties are going to mediation on 3 November 2016 and the hearing is set to commence on 21 November 2016. It has been a difficult application for the Court to find time to determine, as no trial judge has been appointed. I have had to hear it out of court hours today, and defer the commencement of another trial listed before me today for hearing. Ordinarily, those matters might not be taken into account in an urgent application. However, one of the issues that is consistently viewed as relevant as to the exercise of the discretion of this Court when determining costs (see s 61 Civil Procedure Act 2005 (NSW)) is that court resources are valuable and that court time should not be taken up unduly.
It is most unfortunate that this application was first brought, and then persisted with, in circumstances where there really was no basis for the application, in that the parties in question had already answered the subpoenae and, in at least one of those cases, had also sought legal advice.
I have avoided referring to the conversation one of the producing parties (a Ms Liana Allan) had with Mr Beattie, in which certain statements were made which have been objected to, but I can note the following. While I disregard the affidavit in question, which I have placed in a sealed envelope, it is fair to say that one of the persons identified as likely to claim legal professional privilege made it clear in no uncertain terms to the plaintiff that this was not the case.
The Court should be reluctant to impose orders for indemnity costs. They are frequently sought but rarely granted, especially at an interlocutory stage of the proceedings. They should not be used to punish a party. They should not be used as a form of unduly strict case management. However, this is genuinely a case where the plaintiff's arguments in support of his application that were, frankly, silly, and were persisted with until the last moment, where, if proper enquiries had been made, the application would most probably not have been proceeded with at all.
Accordingly, the order I propose to make is one for indemnity costs. I specifically carve out the costs which are payable in relation to the defendants' application for orders in relation to the service of the subpoena on Reverend Nile. However, the quantification of those costs is a matter for the costs assessor. I am sure that my noting in this judgment of this exception will be of sufficient assistance to the costs assessor to ensure those costs are not included.
The parties gave estimates as to the time this application took. Estimates for the time involved will be a matter for the costs assessment and I do not propose to comment on this.
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Orders
Accordingly, the orders I make are:
1. Grant uplift access to the plaintiff to subpoena packets 8, 10, 11, 12, 13, 14, 15 and 17, to be returned to the court by 4:30pm today.
2. Grant uplift access to the defendants to subpoena packets 1, 3, 4, 5, 6, 7, 9, 16 and 18, to be returned to the court by 4:30pm today.
3. Note that in accordance with Gibson DCJ's request, the solicitors for the defendants have provided an affidavit of Mr Beattie sworn 24 October 2016, deposing to his conversation with Ms Liana Allan, which will be placed in a sealed envelope at the request of the plaintiff at the end of this application.
4. The plaintiff's notice of motion of 14 October 2016 dismissed.
5. The plaintiff is to pay the defendants' costs of the notice of motion, including the hearing today and the relevant portions of the hearing on Thursday 20 October 2016, on an indemnity basis.
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Decision last updated: 18 May 2018