Defendants v Plaintiff by Counterclaim

Defendants v Plaintiff by Counterclaim - [2013] VSC 86 - VSC 2013 case summary — Zoe

[41]

(a) at no time, either in affidavit material filed with the Court in support of the summons or in correspondence, did the plaintiff produce any evidence to support its trespass argument;

(b) under s 125 of the Evidence Act, the onus of proof is on the party seeking to persuade the Court that the privilege has been lost: Kang v Kwan;[13]

(c) that s 125(1)(a) of the Evidence Act did not apply because there was no allegation of any offence that rendered SPI liable for a civil penalty, nor any allegation of fraud or any other offence. (There was no serious argument to the contrary from counsel for MBL);

(d) that s 125(1)(b) of the Evidence Act, which requires not only that there has been an abuse of a power conferred by or under an Australian law, but that this abuse of power was deliberate, in the sense that the relevant actor knew or intended his or her actions to be an abuse of power, was likewise not capable of being satisfied in this case. SPI pointed to the decision of Einstein J in Idoport Pty Ltd v National Australia Bank Ltd[14] and Kang v Kwan,[15] amongst other cases, to support the proposition that the expression in s 125(1)(b) "a communication or the contents of a document that the client or lawyer (or both), ... knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power" required that the client or lawyer (or both) intended his or her actions to be an abuse of power;

(e) that for the privilege in a particular document or communication to be lost, it is necessary for that document or communication to have been prepared or made in furtherance of the deliberate abuse of power. It is not sufficient, SPI contended, to allege fraud or abuse of power at large. It must be connected to the document or communication in question;

(f) Section 29 is a new source of statutory power to order costs against a person, including a legal practitioner, who contravenes an overarching obligation. The only statutory conditions for the exercise of the power are that:

(i) the Court is satisfied that, on the balance of probabilities, the person has contravened the overarching obligation;

(ii) the Court considers the order to be appropriate in the interests of justice;

(iii) the order must relate to the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;

(g) MBL could not reasonably have believed the steps that it took to request SPI to produce the permissions to enter the land, and to threaten to challenge the privilege on the grounds of unlawful entry onto the land, were necessary to facilitate the resolution or determination of the proceeding. The Court can be satisfied, on the balance of probabilities, that MBL thereby contravened its overarching obligation under section 19 of the Civil Procedure Act;

(h) that it is appropriate, in the interests of justice, to order that MBL pay the legal costs and other costs or expenses of SPI arising from the contravention of the overarching obligation. Those are the costs incurred by SPI to prepare its factual and legal defence of the allegation that it had engaged in unlawful conduct and that privilege was thereby lost in the disputed documents;

(i) for substantially the same reasons, MBL were liable to pay the costs thrown away under the Supreme Court (General Civil Procedure) Rules ("Supreme Court Rules") (r 63.23(1)) and the inherent jurisdiction of the Court because the conduct was a serious dereliction of duty, as-

[98]

(a) having regard to my observations concerning the source of the power of SPI to enter the land for the purposes of the test, it is not possible to conclude that MBL and the plaintiff did not have any merit in raising the issue of consent. This is not a case of maintaining a claim in a proceeding on behalf of the plaintiff which has no or substantially no prospect of success; [65]

(b) that consideration also substantially meets the contention that there was no proper basis for the trespass argument for the purpose of s 18 of the Civil Procedure Act;

(c) SPI did not establish an ulterior purpose, an abuse of process or an unreasonable continuation of proceedings which have little or no prospects of success;[66]

(d) SPI did not establish some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceeding for an ulterior purpose or with a disregard of any proper consideration of the prospects of success;[67]

(e) the advancing of the trespass argument in the correspondence, and the request for evidence of the consents, in the circumstances I have described, did not constitute the taking of a step in connection with a claim in the proceeding[68] where MBL or the plaintiff did not reasonably believe the step to be necessary to facilitate the resolution or determination of the proceeding, for the purposes of s 19 of the Civil Procedure Act;

(f) there was no unreasonableness on the part of MBL or the plaintiff that related to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the trespass argument;

(g) to expose MBL to personal liability for the costs of SPI thrown away is likely to inhibit the way MBL acts in conducting the litigation;[69]

(h) if the statements made by HSF, on instructions, that SPI had the relevant consents is properly to be seen as a sufficient response to MBL's requests, this is a case where MBL, or the plaintiff on advise from MBL, did not recognise that its case was without merit. In that circumstance, I am disinclined to make any special costs order;[70]

(i) in measuring the plaintiff's conduct against the facts known to her, or which ought to have been known, and the inquiries that the plaintiff did make, or ought reasonably to have made, and the legal advice which she ought reasonably to have obtained, it is not a case where properly advised the plaintiff should have known she had no prospects of success in pursuing the trespass argument, at least up to the point where it was clear that HSF and SPI would not cooperate and produce the consents requested;[71]

(j) this seems to me to be a case where MBL have made judgments as to which of a number of bases of challenge to the privilege claimed by SPI is the optimum one to follow. Bearing in mind MBL's duty to advance its client's interests by all proper means and its duty to the court to conduct the litigation in proper fashion, in all the circumstances I have referred to, the raising and dropping of the trespass argument was justified;[72]

(k) the awarding of costs against MBL is likely to introduce 'a third consideration' into the conduct of this litigation. That is, one that requires MBL to keep in mind the need to minimise the chances of a costs order being made against it personally, which would raise a conflict between MBL's duties to its client and to the court, on the one hand, and its own interests, on the other;[73] and

(l) having regard to my assessment of the basis for MBL's contention that entry on the land for the purpose of the tests was unlawful, this is not a case where a party has persisted, for whatever reason, in what should on proper consideration have been seen to be a hopeless case. Indeed, upon getting no cooperation from HSF in the production of the consents or permissions, MBL advised that it would proceed on the waiver issue alone.

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