Edsonic Pty Ltd v Cassidy

JUDGE: JAGOT J DATE: 24 AUGUST 2011 PLACE: SYDNEY

background 1 This is the second day of the hearing of a notice of motion for contempt against the third cross-respondent, Robin Patrick Lick. The motion for contempt was filed on 23 February 2011 and is supported by an amended statement of charge dated 14 April 2011. In consequence of orders I made yesterday summarily dismissing charges 1, 2, and 3 in that amended statement of charge, the charges which remain to be dealt with are charges 4, 5, and 6.

Variation of 12 November orders 2 Charge 4 of the amended statement of charge is as follows: In breach of paragraph 7 of the Orders made by Justice Moore on 12 November 2010 in this matter, the cross respondents have failed to deliver up any documents in any format of the Cassidy Material and Schedule A material within 14 days of the Order or at all. 3 Order 7 of the orders made by Moore J on 12 November 2010 (the 12 November orders) is in these terms: The cross-respondents (and each of them) deliver up all copies of [sic] (in all formats) of the Cassidy Material and the Schedule A Material, and any other materials which have been developed subsequently, and reproduce content (whether in whole of in part) from the Cassidy Material and the Schedule A Material, in their possession, custody or control to the legal representatives of Cassidy within 14 days of the date of this order. 4 During the hearing yesterday Mr Brennan of counsel, who appears on behalf of the applicant on the motion, Barbara Cassidy, referred to an affidavit sworn by Mr Lick on 25 November 2010 (the Lick affidavit). The Lick affidavit refers to order 7 of the 12 November orders. Paragraphs 4 to 8 are in these terms: 4. I confirm by way of this affidavit that save for the exceptions outlined in paragraphs 5, 6, 7 and 8 the first Cross-respondent, the second Cross-respondent and the third Cross-respondent does not [sic] have in their possession, custody or control any copies in any format that has [sic] been developed in whole or in part from the Cassidy Material or the Schedule A material. 5. The first exception to the above confirmation is Schedule A materials provided by the Cross-claimant as supporting evidence of a sworn affidavit (Reference BMC-11) of 12 May 2010 and partial materials of Cassidy material provided by the Cross-claimant as supporting evidence of a sworn affidavit (Reference BMC-12) of 12 May 2010. 6. The second exception is a copy of a CD provided to the first, second or third Cross-respondents by a NSW high school and used as supporting evidence in a sworn affidavit of the first, second or third Cross-respondents filed in Federal Court on 6 October 2010 referred to in paragraphs 63 through to and including 68 of this sworn affidavit. 7. The third exception are [sic] any copies retained as supporting evidence to a filed sworn affidavit of the first, second or third Cross-respondents filed in Federal Court on 6 October 2010 referred to as contained on a CD labelled 'Exhibit "L"", behind Tab 13 of Folder 5. 8. The four[th] exception are [sic] copies retained required to satisfy various 'Categories of Documents for Discovery' as per Order 9, 12 and 13 of his Honour's Justice Moore [sic] orders of 12 November 2010. 5 It emerged yesterday that, in support of charge 4, the applicant contends that paras 5-8 of the Lick affidavit proved that he had not delivered up all copies of the Cassidy Material and Schedule A Material (as defined), at least insofar as referred to in those paragraphs. I note that the applicant's case is not confined to those paragraphs, because the applicant seeks to allege that order 7 of the 12 November orders has otherwise been breached. However, for present purposes I am dealing only with the fact that the Lick affidavit discloses that Mr Lick still has in his possession, custody, or control the parts of the Cassidy Material and Schedule A Material referred to in those paragraphs, namely: - (i) in para 5, parts of affidavits served on him by the applicant, (ii) in para 6, parts of affidavits served by Mr Lick on the applicant, (iii) in para 7, parts of affidavits served on him by the cross-respondents, and (iv) in para 8, copies retained to satisfy orders in relation to discovery. 6 By the notice of motion filed today, Mr Lick seeks that order 7 be set outside nunc pro tunc or, in the alternative, that order 7 be varied nunc pro tunc as follows: Subject to the proviso and undertaking, [t]he cross-respondents (and each of them) deliver up all copies of [sic] (in all formats) of the Cassidy Material and the Schedule A Material, and any other materials which have been developed subsequently, and reproduce content (whether in whole or in part) from the Cassidy Material and the Schedule A material (the "Restrained Works"), in their possession, custody or control to the legal representatives of Cassidy within 14 days of the date of this order provided that the third cross-respondent may retain copies of the Restrained Works that form part of any material upon which he relies in his application or in defence of the cross-claimant's cross[-]application or is otherwise using in the proceedings or upon which [sic] the cross-claimant has served upon him in the proceedings until such time as those proceedings are disposed of by final orders of the Court and a further period allowed for the filing of a notice of appeal under Order 52 rule 5 of the Federal Court Rules 1979 has expired. Undertaking As at the date that this amended order is made the third [cross-]respondent undertakes not to use copies of the Restrained Works for any purpose other than the proper conduct of the proceedings. 7 Mr Mitchell of counsel submits on behalf of Mr Lick that, if order 7 were read literally, it would require Mr Lick to hand over copies of evidence which has been served on or by him in the proceeding as well as material necessary to comply with the outstanding discovery order, thereby depriving Mr Lick of procedural fairness. As such, Mr Mitchell contends that order 7 is either invalid or does not reflect the intention of the Court at the time the order was made. 8 This submission is supported on two factual bases. The first is that the order in its own terms requires delivery-up of the materials within 14 days of the date of the order. However, the appeal period in respect of the order is 21 days. Accordingly, the fact that the order in terms would have required Mr Lick to yield up material potentially relevant to any appeal within a period of 14 days is said to demonstrate the denial of procedural fairness entailed in the order and/or the fact that the order could not have reflected the true intention of the Court. 9 The second basis is that, after the order was made, a claim in damages was still proceeding against each of the cross-respondents (including Mr Lick). When Moore J came to deal with the damages claim, he made orders on 31 May 2011 for the payment of damages by the cross-respondents to the applicant; however, he also ordered that leave be given to continue this proceeding as against the third cross-respondent. In other words, the damages claim as against the third cross-respondent, Mr Lick, is continuing as at today's date. Indeed, this (presumably) is the reason the applicant continues with (for example) charge 5 in the amended statement of charge, which alleges a failure to serve verified lists of documents. Thus, as Mr Mitchell puts it, given that the damages claim against Mr Lick is continuing, order 7 of the 12 November orders either entails a denial of procedural fairness or does not reflect the Court's true intention to the extent that it requires Mr Lick to yield to the applicant evidence which has been filed and served in the proceeding and Mr Lick's own copy of the discovery material. 10 Counsel for the applicant, Mr Brennan, opposes the notice of motion for variation of order 7. The following four grounds of opposition have been identified: - (i) the only remaining issue as between the applicant and Mr Lick, apart from those raised by the contempt motion itself, is the assessment of damages, (ii) no explanation has been given on behalf of Mr Lick as to why the material referred to in paras 5-8 of the Lick affidavit is relevant to his defence of the claim for damages against him, (iii) today is the second day of the hearing of the notice of motion for contempt in circumstances where that motion was filed in February 2011 and the amended statement of charge in April 2011; at this late stage, it is inappropriate for Mr Lick to seek to set aside or vary the order which is the very basis of the contempt charges against him, thereby undermining the whole basis of the present proceeding, and (iv) although Mr Lick proffers the undertaking proposed in para 2 of the notice of motion, the history of this proceeding shows that such an undertaking by Mr Lick would be of no value. 11 Dealing with each of these matters, my conclusions are as follows. 12 As to the submission that only the question of damages is outstanding in this proceeding, it is not a matter for the applicant to seek to confine her own damages claim by reference to material she might think is relevant. Evidence has been filed and served in this proceeding by both the applicant and the cross-respondents. That evidence happens to contain references to, and/or to annex, parts or the whole of the Schedule A Material and the Cassidy Material as referred to in order 7 of the 12 November orders. It cannot be the case that a party who is a continuing respondent to a claim, albeit a claim for damages, would be required to yield up the very material which founds the claim against him. As such, I am not satisfied that Mr Lick was bound to explain precisely why he required the identified material in order to defend the applicant's claim for damages. It is sufficient that the material referred to is material that was part of an affidavit filed and served by Mr Lick, one of the other cross-respondents or the applicant, or was otherwise material required to be identified as part of the discovery which was to occur pursuant to order 12 of the 12 November orders. 13 In terms of it being too late for Mr Lick to seek to amend the 12 November orders, it is obvious that it is late in the day in the sense that it is the second day of the hearing of the contempt motion. However, charge 4 (as set out above) does not allege anything other than a general failure to deliver up documents. It does not specify, whether by way of particulars or in the charge itself, that the failure is based (at least in part) on the Lick affidavit. It will be recalled that this affidavit was filed in direct response to order 7 of the 12 November orders in order to confirm that Mr Lick did not have in his possession, custody or control the whole or part of the Cassidy Material or Schedule A Material other than the material he acknowledge having retained (being the evidence served on or by him and material for the purposes of discovery). In that sense, I accept Mr Mitchell's submission that he was taken by surprise when reference was made to the Lick affidavit in support of charge 4. I do not consider that it could be said that any person in Mr Mitchell's or Mr Lick's position would or should have anticipated that the applicant's submission was that Mr Lick should be found to be in contempt of court by reason only of the fact that he had this material in his possession in circumstances where the proceeding against him is continuing. That is not to say, of course, that charge 4 - unspecific and ungeneralised as it is - might not encompass other material held by Mr Lick. Such an allegation may or may not be able to be proved by the applicant in this proceeding. To that extent, the amendment to the 12 November orders sought in para 2 of the notice of motion would not affect any part of the applicant's case. 14 In terms of Mr Lick's undertaking, while the applicant may well hold her own view as to its value, this undertaking is proffered to the Court itself and, accordingly, would be enforceable as an order of the Court. In short, I accept Mr Mitchell's submissions in relation to this matter. 15 It appears that the 12 November orders have been entered and, accordingly, Rule 39.05 of the Federal Court Rules 2011 is relevant to the application to vary them. Rule 39.05 provides that the Court may vary or set aside an order after it has been entered in the nominated circumstances. However, there is also ample authority to support the proposition that a court has inherent jurisdiction to set aside an order which has been entered, including on the recognised ground that the order has the effect of denying natural justice: see Cameron v Cole (1943) 68 CLR 571 at 589. In this case, I am satisfied that order 7 of the 12 November orders does not reflect the intention of the Court to the extent that it requires any of the cross-respondents to yield and deliver up copies of the Cassidy Material and the Schedule A Material which exist and are held by the cross-respondents for the sole purpose of continuing to defend the proceeding. As noted, at the date of order 7 Mr Lick and the other cross-respondents would have had the capacity to appeal against the 12 November orders and, as at today's date, the claim for damages remains extant against Mr Lick. I also note that, while I am not required to rely on the Court's inherent jurisdiction to vary order 7, I would have done so if it had been necessary. 16 It follows that I am satisfied that there is jurisdiction to vary the 12 November orders, and that order 7 should be varied nunc pro tunc as per paragraph 2 of the notice of motion filed in Court today. The effect of this variation is that Mr Lick is able to retain the described material until such time as this proceeding is disposed of by final orders of the Court and the relevant appeal period has expired, although of course subject to Mr Lick's undertaking to the Court that he will not use copies of this material for any purpose other than the proper conduct of the proceeding. Once the appeal period has expired the proviso in the varied order 7 will be exhausted and Mr Lick will be bound to deliver up the material in accordance with the terms of the order as originally in force. 17 I note in conclusion, although it is not directly relevant to the notice of motion, that it would have been very difficult - even impossible - for the applicant to establish that any finding of contempt could have been made on the basis of paras 5-8 of the Lick affidavit as set out above. As noted, those paragraphs clearly explain that Mr Lick has retained evidence and documents in the very proceeding which continues against him. How this could have constituted a contempt of court, notwithstanding the literal terms of order 7 of the 12 November orders, is not apparent to me. However, this is not to say that it is not open to the applicant to sustain charge 4 by reference to other material (as indeed the applicant has sought to do). I therefore turn to the question whether the applicant has made out charge 4 of the amended statement of charge.

Charge 4 generally 18 I accept the submission put by Mr Mitchell of counsel that charge 4 is bad on its face in that it does not allege that Mr Lick had copies of the defined material either as at 12 November 2010 or, more relevantly, 14 days thereafter, other than the material set out in the proviso to order 7 as varied. Accordingly, the charge does not in terms identify any matter which could constitute a breach of that order. 19 Furthermore, insofar as the applicant has adduced evidence relevant to this charge, the Lick affidavit deposes to the fact that none of the cross-respondents has in its or his possession, custody or control any copies in any format that have been developed in whole or in part from the Cassidy Material or the Schedule A Material other than those specified in paras 5-8 of the Lick affidavit (which was the basis for the variation of order 7). This statement operates as at 25 November 2010. The applicant has not adduced any evidence to demonstrate that the statement has since become untrue, and there is no reason in any of the material before me to doubt its veracity. The Lick affidavit, moreover, was tendered as part of the applicant's own evidence in the proceeding. Insofar as there is evidence about Mr Lick having had possession of the Schedule A Material and the Cassidy Material, and having destroyed it by a process of overwriting the hard drive on a computer system, the difficulty is that the evidence does not establish that, 14 days after the 12 November orders were made, Mr Lick was still in possession of any such material (excluding that referred to in paras 5-8 of the Lick affidavit). The applicant, moreover, has not otherwise proved (either to the civil or the criminal standard) that there is any such material in existence which has not been delivered up as required. Thus, there is simply no evidence capable of supporting charge 4. 20 Accordingly, charge 4 must be dismissed.

Charge 5 21 Charge 5 of the amended statement of charge is as follows: In breach of paragraph 12 of the Directions made by Justice Moore on 12 November 2010 in this matter the cross respondents have failed to serve verified lists of documents to [sic] undisputed categories of documents on or before 20 December 2010, or at all. 22 Order 12 of the 12 November orders is as follows: The parties are to serve verified Lists of Documents by reference to undisputed categories of documents on or before 20 December 2010. 23 It appears that subsequent to the making of the 12 November orders the parties engaged in mediation in order to agree what documents would be required to be produced. This led to the making of certain orders by a Registrar in Canberra, which have become Exhibit 1 in this proceeding. Be that as it may, Mr Lick has conceded in his oral evidence that he has not complied with order 12 and that it remains outstanding as at today's date. Order 12 remains relevant because, as noted, although Moore J made orders for the payment of damages on 31 May 2011 his Honour granted leave to the applicant to continue the proceeding as against Mr Lick. 24 Mr Lick has sworn an affidavit of 23 August 2011 in which he states that he attended the mediation on 17 December 2010 in Canberra. At that time, Mr Lick was unrepresented. He says that he was also under extreme financial pressure. It is his evidence that, although he could have complied with order 12, he did not appreciate or really understand what was involved in the preparation of a verified list of documents and was in a state of mind that made it very difficult for him to comply as required. As such, it is submitted on his behalf that his failure to comply with order 12 could not be seen as wilful or contumacious disobedience. Furthermore, through his counsel, Mr Lick has proffered an undertaking to the Court in these terms: Robin Patrick Lick undertakes to the Court that he will comply with direction 12 of the Court's directions of 12 November 2010 on or before 5 p.m. on 7 September 2011. 25 Mr Mitchell has indicated that he is willing to assist Mr Lick to ensure compliance with order 12. To that end, I have taken in as Exhibit 1 the orders detailing the categories of documents which are required to be the subject of the verified list of documents referred to in the order. Mr Mitchell has indicated to me that he has explained to Mr Lick the significance of the giving of an undertaking to the Court and the fact that, as it constitutes an order of the Court, failure to comply may expose Mr Lick to further contempt proceedings. 26 It is appropriate to note that the undertaking reproduced above correctly identifies that order 12 of the 12 November orders is in fact a direction of the Court. Although a direction is an order of the Court, this direction was procedural rather than substantive in nature (requiring as it did the filing and service of a verified list of documents). That said, it had the force of an order of the Court and Mr Lick was required to comply with it. He failed to do so over a very extended period of time, leading to the bringing against him of (at least) charge 5 of the amended statement of charge. 27 I am satisfied on the evidence before me that, although Mr Lick has conceded that he has not complied with order 12, this non-compliance was a consequence not of wilful or contumacious disobedience of the Court's orders but, rather, of a failure to understand the significance of those orders, their legal status, and the requirement that he comply. I am satisfied that with the assistance of Mr Mitchell of counsel, Mr Lick now understands the seriousness of non-compliance with Court orders (even if they be directions as to procedural requirements); the fact that failure to comply can, as in this case, lead to the bringing of a motion for contempt of court; and the fact that, if a finding of contempt be made, the party held to be in contempt may be punished accordingly (either by fine or by sentence of imprisonment). 28 In this case, I am not prepared to make any finding at this stage that Mr Lick is in contempt of court. For the reasons given above, his breach of order 12 was not wilful or contumacious; he has also proffered an undertaking to comply with the order. Rather than making any finding of contempt, I am prepared to make an order which gives Mr Lick the opportunity (in accordance with his undertaking) to comply with order 12 and to defer making any further order in respect of charge 5 until after 7 September 2011. By that time, it will be apparent whether Mr Lick has brought himself into compliance with the 12 November oders.

Charge 6 29 Charge 6 of the amended statement of charge is as follows: In breach of paragraph 16 of the Directions made by Justice Moore on 12 November 2010 in this matter the cross respondents have failed to file and serve the affidavits upon which they rely on or before 5 April 2011 or at all. 30 Order 16 of the 12 November orders is as follows: The cross-respondents are to file and serve the affidavits upon which they propose to rely in answer on or before 5 April 2011. 31 The applicant has made no submissions in support of charge 6. 32 It is apparent that order 16 required only that Mr Lick, amongst others, file and serve affidavits upon which he proposed to rely in answer to the applicant's cross-claim on or before the specified date. However, as counsel for Mr Lick has pointed out, Mr Lick was not served with affidavits by Ms Cassidy prior to 7 March 2011; as such, he cannot be found to be in breach of order 16. 33 Accordingly, charge 6 should also be dismissed.

Costs 34 The only issue remaining is that of costs. 35 For his part, counsel for the applicant says it would be grotesque if Ms Cassidy were ordered to pay Mr Lick's costs. The reason for this is that, from the applicant's perspective, there has been a very lengthy set of proceedings with outstanding costs orders against Mr Lick and, as Mr Lick is now bankrupt, there is no real prospect of Ms Cassidy recovering these costs. Furthermore, Mr Lick conceded that he is in longstanding breach of order 12 of the 12 November orders. 36 I would have been prepared to give significant weight to a submission to this effect if the notice of motion for contempt against Mr Lick had been limited to charge 5. Had it been so, this matter would not have consumed anywhere near the amount of time it has. The reason for this is that, as noted above, Mr Lick effectively conceded from the outset that he has not complied with order 12. However, the notice of motion for contempt was accompanied by an amended statement of charge which included a total of six charges. Of those, three were summarily dismissed: see Edsonic Pty Ltd v Cassidy (No 3) [2011] FCA 995. Charge 4 I have dismissed after hearing but, for the reasons given above, the applicant's failure on this charge was complete. Charge 6, again as noted above, has not been supported by any submissions. In other words, apart from in respect of charge 5, Mr Lick has been wholly successful. However, this does not alter the fact that the applicant has had a finding in her favour (albeit based on Mr Lick's immediate concession) and, in that sense at least, has been successful. 37 Thus, the relevant discretionary considerations in this matter include the fact that Mr Lick has been successful on five out of the six charges while the applicant, to the extent of the finding I made that Mr Lick is in breach of order 12 of the 12 November orders, has been successful in relation to charge 5. If the usual approach to costs were taken, the applicant would therefore be entitled to her costs in respect of charge 5 and Mr Lick would be entitled to his costs in respect of the balance of the charges. This would then raise the question whether a generalised percentage approach or an issue by issue (charge by charge) approach should be taken to the form of costs order to be made. 38 As noted, if the notice of motion for contempt had been limited to charge 5, this would have been a case where I would have made the usual order for costs in favour of the applicant. However, the notice of motion is not so limited and includes all of the other charges, which have taken up by far the bulk of this hearing and in respect of which the applicant has failed to prove each and every charge. While the applicant submits that this contempt motion was taken in the public interest, it is not in the public interest for the resources of the Court to be taken up by charges (such as charges 1-3 in this case) which are bad on their face and do not withstand summary challenge. Furthermore, in respect of charge 4, while the applicant had no notice of the motion for variation of order 7 of the 12 November orders, the notion that a person would be held in contempt of court merely because he or she retained evidence and documents filed and served or otherwise required for discovery in a proceeding which continued against him or her does not, for the reasons given above, commend itself. Finally, as noted, no submissions have been made in support of charge 6. 39 In these circumstances, I do not accept the applicant's submission that it would be somehow grotesque for Ms Cassidy to be subject to a costs order. Nor do I accept that I can somehow distinguish between Ms Cassidy's legal representative and Ms Cassidy herself. Ms Cassidy is responsible for the instructions she provides to her legal representative, and presumably those instructions were to proceed with each of the six charges against Mr Lick. 40 Mathematical precision is not appropriate or desirable in a case such as this, where there has been predominant success on the part of Mr Lick and a small amount of success, at least in one sense, on the part of the applicant. Recognising that the purpose of the usual order as to costs is to compensate a successful party for the costs incurred in coming to Court, I consider that, leaving aside Part 4 Rule 19 of the Federal Court Rules (which deals with professional fees to a pro bono lawyer), the appropriate costs order would be that Ms Cassidy pay 80% of Mr Lick's costs of and in connection with the notice of motion filed 23 February 2011, including costs of and in connection with the notice of motion filed in Court today, as agreed or taxed. 41 In addition, Mr Mitchell of counsel has sought an order that costs be paid directly to him as Mr Lick's pro bono lawyer, instead of to Mr Lick as the assisted party, pursuant to Part 4 Rule 4.19(3). I am also satisfied that such an order should be made. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.