Hannaford v The Royal Society for the Prevention of Cruelty to Animals, NSW

Judgment 1Judgment was given on 21 November 2013 in relation to a motion filed by the plaintiffs in February 2013, by which the plaintiffs sought access to documents over which the RSPCA claimed privilege under s 118 and s 119 of the Evidence Act 1995 (see Hannaford v The Royal Society for the Prevention of Cruelty to Animals, NSW [2013] NSWSC 1708). There is a dispute between the parties as to the costs of that motion. 2The dispute has arisen in circumstances where it became apparent only at the hearing of the motion that there was a factual dispute between the parties as to what had transpired in Local Court proceedings in 2006, in relation to production of the defendant's solicitors' file to the plaintiffs, during the course of his cross-examination (see November judgment at [7] - [13]). He had been called by the defendant to give evidence in the Local Court, in order to resist the plaintiffs' application for an order for costs, after it had withdrawn the prosecution it had brought against the plaintiffs. During his cross-examination, the plaintiffs sought access to his file. What access was then given was not apparent from the transcript, which had been tendered. 3The dispute over the costs of the motion must be resolved in light of the applicable principles, which must be approached in the context of the provisions of ss 56 - 60 of the Civil Procedure Act 2005. They include what was discussed in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397 at pp 400 - 401, by Woodward J, in the case of an action commenced or continued in circumstances where "the applicant, properly advised, should have known that he had no chance of success". His Honour said at p 401: "In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law." 4What was discussed by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 at pp 233 - 234 is also relevant: "... it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis." 5For the plaintiffs' part it was submitted that the circumstances were such as to bring the parties' dispute within the matters discussed by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190 at pp 191-194: "It has long been the practice, for tactical reasons, for lawyers to draft pleadings in such a form as to put the opposing party to proof of allegations, and even to deny allegations, notwithstanding that their factual instructions might not justify such failures to admit or denials. In my view, the circumstances under which litigation is conducted have changed to such a degree that this practice should no longer be tolerated. I do not intend, by saying this, to indicate that there should be any obligation on lawyers to exercise some credibility judgment as to the merits of their factual instructions. But, in my view, where a denial or putting to the proof would be inconsistent with the facts with which the pleader is instructed, the pleader should admit the allegation in question. Traditionally, lawyers owe a duty of honesty and candour to the court. It is the general duty of lawyers not to mislead the court by stating facts which are untrue, or mislead the judge as to the true facts, or conceal from the court facts which ought to be drawn to the judge's attention, or knowingly permit a client to deceive the court: Rondel v Worsley [1969] 1 AC 191 at 227. A trend towards a stringent duty of disclosure has become discernible: Vernon v Bosley (No 2) [1997] 1 All ER 614. Further, in modern times, there is an overriding duty on lawyers to assist in the prompt and economical disposal of litigation: Giannerelli v Wraith (1988) 165 CLR 543 at 556; Ashmore v Corporation of Lloyds [1992] 1 WLR 446 at 453. In my view, the traditional requirement of honesty and candour on the part of lawyers and the modern duty to reduce unnecessary issues and costs, are inimical to the practice of denying or putting parties to the proof of facts which, according to the instructions in the lawyers' possession, should be admitted." 6The plaintiffs seek an indemnity costs order, or in the alternative, an order for costs on an indemnity basis from 23 July 2013, when I reserved judgment, expecting a note from the parties as to what access had been given to the defendant's solicitor's file. The defendant resisted that application, submitting that it is entitled to an order in its favour in relation to orders 1 and 2 of the motion, which were not pressed and that otherwise, there would be no departure from the usual order that costs follow the event, which in this case would be an order in favour of the plaintiffs. 7I can see no basis for any departure from the usual order in favour of the plaintiffs, notwithstanding that orders 1 and 2 of the motion were not pressed after 15 May. Nor can I see a basis for an indemnity costs order against the defendant. 8The onus to establish that the documents in issue were privileged fell on the defendant. It relied on evidence led from Chief Inspector O'Shannessy to establish the privilege claimed. The evidence as to Mr Wozniak and Mr O'Donnell's role on the Board of the defendant and its role in the prosecution it brought in the Local Court was limited. Evidence which had been given by Mr Wozniak in the Local Court was also relied on. 9I concluded amongst other things, that this evidence did not satisfy the onus which fell on the defendant to establish that Mr Wozniak and Mr O'Donnell had the necessary independence to permit the view to be reached that the documents in issue were privileged, or that they were all confidential, given how Chief Inspector O'Shannessy had described some of them in his affidavit. 10The defendant clearly failed to establish the privilege it claimed on that evidence, but that the defendant, properly advised, should have known that it had no chance of success in establishing such privilege and that its claim was hopeless, or pursued 'in wilful disregard of known facts' as was submitted for the plaintiffs, has not been established. 11That the defendant simply had no chance at all of establishing the privilege claimed, cannot be accepted. That the independence of Mr O'Donnell and Mr Wozniak was not established by the evidence led, of itself does not establish that the claim was hopeless. 12Further evidence from Chief Inspector O'Shannessy could conceivably have addressed the problem with how various documents were described in his affidavit. The plaintiffs' argument that because many of the communications in issue were between Mr Wozniak and Mr O'Donnell, it could 'never' have been established in what capacity they had communicated with each other, that is, as the plaintiffs' lawyers or as its Board members, cannot be accepted. An examination of the communications themselves is likely to have established the nature of their communications, had the evidence established that they had the necessary independence. 13As to what transpired in relation to the factual dispute over Mr Wozniak's file, in my assessment, no criticism can be directed at either party as to the way in which the factual dispute first came to be appreciated. 14The onus fell on the plaintiffs to establish waiver. The transcript it relied on did not reveal what access they had been given to Mr Wozniak's file at the hearing, nor did the submissions initially served make it clear that it was being claimed that access had been given to the entire file. Had that been earlier made clear, the plaintiffs could have led the evidence which they and their solicitor later gave. That this what was being claimed was not appreciated until towards the end of the hearing. I then asked the parties to send me a note about that matter, because, as I said in the November judgment at [10] - [11]: "10 At the hearing it became apparent that the transcript did not fully reveal what had happened in the Local Court, particularly as to what access the plaintiffs had been given to Mr Wozniak's file. The parties were unable to agree about whether there had been a claim for privilege in relation to only one document, or to the documents generally in Mr Wozniak's file. This was an issue which had clearly not been appreciated prior to the hearing and could not then be resolved by the parties, because the RSPCA had no-one present in Court who could give the relevant instructions. 11 The factual issue lying between the parties appeared to be an important one for the resolution of the issues lying between the parties as to the privilege claim. I reserved my decision, subject to receiving a note from the parties as to this question. It then seemed a matter capable of fairly simple resolution, particularly having in mind the parties' obligations under the Civil Procedure Act 2005. While it was common ground that Inspector O'Shannessy, who had given affidavit evidence about the prosecution in these proceedings, had not been present at the Local Court hearing, the parties had all then been represented by solicitors and counsel." 15It was not disputed that an agreement on the facts did not emerge even though the defendant's solicitor then promptly consulted both Mr O'Donnell and Mr Wozniak as to what had transpired in the Local Court. The result of that enquiry was that the defendant could only concede that one document had been produced to the plaintiffs in the Local Court. When the matter was relisted on 2 August, the parties were given an opportunity to make further submissions as to the factual dispute. None emerged. It was only when the matter was listed again on 4 September that the plaintiffs made an application to re-open their case, which was granted. 16It was once the affidavits on which the plaintiffs relied to establish that they had been given access to the entire file were served, that the defendant accepted that the evidence should not be challenged. The obvious inference is that the defendant then received different information, once it investigated what was asserted in those affidavits. That alteration is not a matter for which the defendant can properly be held responsible, given the enquiries it had made beforehand. The evidence did not establish that the defendant acted in wrongful disregard of known information or wrongly put the plaintiffs to proof of known factual matters for improper reasons. 17Once it had different information, the defendant plainly acted in accordance with its obligations under the Civil Procedure Act, with the result an acceptance of the accuracy of the evidence which the plaintiffs led on the matter on which they bore the evidentiary onus. Without the leave obtained to re-open the case and the evidence then led, the onus which lay on the plaintiffs to establish the waiver they relied on, could not have been met. 18In those circumstances, it is apparent that this case does not fall within the matters discussed by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2). Nor was it established that it was the defendant who acted in wilful disregard of known facts, or made allegations which ought never to have been made, or unduly prolonged the case by groundless contentions. 19Both parties bear some responsibility for the procedural course which the motion took. The dispute over the factual issue ought to have been capable of quicker resolution. The difficulty has not, however, been established to have lain in the defendant's wrongful conduct. 20In the result, I am not satisfied that a proper basis has been established for any departure from the usual order.