The Court
1 Mr Harmer is a solicitor who acted for Ms Rebecca Richardson in proceedings before this Court entitled Richardson v Oracle Corporation Australia Pty Limited NSD 669 of 2010. In those proceedings, Ms Richardson sought redress for having been sexually harassed by a fellow employee of Oracle Corporation Australia Pty Limited ('Oracle'). These proceedings were heard and determined by a judge of this Court who concluded that the harassment had occurred and that Ms Richardson was entitled to $18,000 by way of damages together with declarations that the fellow employee, a Mr Randol Tucker, had sexually harassed her and another declaration that Oracle was vicariously liable for Mr Tucker's behaviour: see Richardson v Oracle Corporation Australia Pty Limited [2013] FCA 102.
2 Mr Harmer's present application to this Court for leave to appeal arises from the costs orders which were eventually made in Ms Richardson's proceedings which he says treated him unfairly. At the request of the parties, the trial judge did not deal with the question of costs in his primary judgment which was, instead, dealt with by the parties in subsequent written submissions: see Richardson v Oracle Corporation Australia Pty Limited (No 2) [2013] FCA 359.
3 The principle issue before the trial judge on the question of costs was the effect of three offers of compromise which had been made in the course of the proceedings. Oracle (and Mr Tucker) had made an offer of compromise early in the proceedings' history on 3 September 2010 which invoked Order 23 of the former Federal Court Rules 1979 (Cth). This was an offer to compromise the whole of the proceedings for $55,000 plus interest and also to pay Ms Richardson's costs as agreed, or failing agreement, as taxed. The effect of making an offer under the former Order 23 (or the present Part 25) is, putting it perhaps somewhat loosely, to create an entitlement in the offeror to indemnity costs if the offer is not accepted and if the applicant thereafter receives less than that which had been offered. The entitlement to indemnity costs is prospective from the day after the offer.
4 The offer of 3 September 2010 was rejected promptly by Ms Richardson who, through her solicitors, made a counter-offer on 20 September 2010 to settle for $106,500 plus interest and costs as taxed or agreed. Ultimately, his Honour concluded that Oracle's letter of 23 September 2010 entitled it and, subject to a minor irrelevant exception, Mr Tucker to indemnity costs from 11.00 am on 4 September 2010 (being the day after the offer).
5 Oracle had also relied on two other offers of compromise, one dated 21 December 2011 and the other 11 July 2011. The offer of 11 July 2011 has no relevance to the issues which arise on the present application. Although his Honour examined these offers his conclusion on the offer dated 3 September 2010 rendered them unnecessary because they post-dated it.
6 Mr Harmer's complaint relates to his Honour's (strictly unnecessary) treatment of the offer of compromise contained in the letter of 21 December 2011. By that letter Oracle offered to settle for $85,000 exclusive of costs. This offer was rejected by Ms Richardson on 24 January 2012. In her submissions to the trial judge, Ms Richardson's primary position was that this offer was not made in accordance with the rules because it was expressed to be exclusive of costs relying upon a line of authority to that effect in the New South Wales Court of Appeal culminating in Old v McInnes [2011] NSWCA 410. In the event that this argument succeeded, however, there remained nevertheless a possibility that the offer might be characterised as a Calderbank offer (see: Calderbank v Calderbank [1975] 3 All ER 333). One of the arguments advanced on Ms Richardson's behalf to parry that possibility was an argument that it was not unreasonable for Ms Richardson to reject the offer because it had been made very late in the proceedings and, to quote from counsel's written submissions in reply at the time, acceptance of it 'would have left Ms Richardson in debt'. A footnote to that submission directed the reader to some of the evidence which supported that proposition. This was contained in the affidavit of a solicitor from Harmers Workplace Lawyers ('Harmers'), Ms Rania Jones, sworn on 13 March 2013 which was relevantly in these terms:
18. The Applicant's legal costs and disbursements up to 21 December 2011 in relation to the Federal Court Claim were $224,475.80 (inclusive of GST). This figure does not include the Applicant's legal costs in relation to the AHRC Complaint.
…
20. On the basis of the following assumptions:
(a) that the Applicant is not able to recover her costs for the AHRC process as that is not part of these proceeding; and
(b) that the Applicant could only recover 60 percent of her legal costs and disbursements on taxation;
then, had the Applicant accepted the Respondents' Second Offer to Compromise, she would not have received any money in her hand; in fact, the Applicant would have still owed Harmers a further approximately $22,287.75 (inclusive of GST) in legal fees and disbursements.
(emphasis added)
7 For completeness, it might be noted that Ms Richardson gave similar affidavit evidence herself (to the effect that acceptance of the offer 'would have left me in debt to my solicitors.')
8 It is important then to be clear about what was being put by Ms Jones (a member of Mr Harmer's firm) and counsel instructed by Harmers: it was that the offer of 21 December 2011, if accepted, would have left Ms Richardson in debt to her solicitors because the offered sum was less than the recoverable component of Harmers' legal fees. If in fact it was possible that Harmers' fees might not have been enforced against Ms Richardson in part, then this was a significant qualification to the argument which was being advanced. No such qualification appeared in either the submissions or the evidence put to the trial judge.
9 The trial judge dealt with this argument as follows:
20 Ms Richardson's assessment (or that of her solicitors) of the adequacy of the amount offered by the respondents on 21 December 2011 appears to have been significantly affected by the exposure which by that time Ms Richardson had to the legal costs due to her own solicitors. A similar conclusion arises from the affidavit of Ms Rania Jones. By 21 December 2011, Ms Richardson's costs in relation to the proceedings in this Court were said to have been $224,475.80 (inclusive of GST). The result, so it was said, of accepting the offer then made would have been that if Ms Richardson recovered 60% of her costs on taxation she would still owe her solicitors $22,287.75 (inclusive of GST) and have nothing for herself. That picture is a very disturbing one. At this point, whatever the merits of Ms Richardson's claims, the proceedings would have been conducted solely for the financial benefit of her lawyers.
21 However, this disturbing state of affairs does not appear to me to provide a reason to introduce any element concerning the obligation Ms Richardson may have had to her own solicitors into my own assessment of the reasonableness of the offer dated 21 December 2011, or earlier offers. Nor is it my task to form even a preliminary view about the apparent justification for legal costs of the order disclosed by Ms Jones' affidavit. The present task is to assess the consequences of the offer made when compared with the final outcome secured by Ms Richardson in the proceedings. There are a number of offers of compromise to consider. I propose to work backwards through them.
(emphasis added)
10 Mr Harmer's complaint principally relates to the emphasised portion of the last sentence of paragraph [20] although he also draws upon the sentences on either side and their use of the word 'disturbing' which was submitted to have a colouring impact. He says that the trial judge has, in effect, accused Harmers of conducting the litigation only for its own benefit after 21 December 2011. Further, by using the word 'disturbing' his Honour has suggested misconduct on Mr Harmer's part (or that of his firm) which could well have professional consequences for both. Mr Harmer says that the trial judge should have heard from him before making such a serious finding; that if that step had been taken his Honour would have been informed that the evidence before him in relation to Harmers' fee arrangements was incomplete; and that it was 'common practice for solicitors to establish an enforceable fee arrangement with a client, which permits the solicitors to enforce recovery of their professional costs via Court orders.' He would also have told the Court that it was 'common practice for solicitors to elect, in certain circumstances, to exercise a discretion in relation to the recovery of their professional fees, having regard to the best interest of the client, which permits the solicitors to elect not to enforce payment of all or part of their professional fees in the exercise of that discretion.'
11 There are, we think, a number of problems with the present application. The first is that properly read we do not think that the trial judge's conclusory statement that '[a]t this point, whatever the merits of Ms Richardson's claims, the proceeding would have been conducted solely for the financial benefit of her lawyers' is in anyway incorrect on the evidence before the trial judge. The sentence is not a statement of fact - it is a statement about the state of affairs which would have existed if the offer of 21 December 2011 had been, contrary to the fact, accepted.
12 That the sentence is such a conditional statement is borne out by a number of matters.
13 To begin with, the submission of Ms Richardson, which engendered paragraphs [20] and [21] of the judgment, called for an analysis of the reasonableness of the offer of 21 December 2011, were it to be accepted, in light of the fact that it would still leave Ms Richardson owing Harmers $22,287.75 - that is, perhaps to put the matter more clearly - it explicitly called on his Honour to assess a hypothetical state of affairs. Further, the language of paragraph [21] is consistent with the hypothetical structure of the submission which had engendered it ('[t]he result, so it was said, of accepting the offer … would have been that … Ms Richardson recovered 60% of her costs …' - emphasis added). Finally, the last sentence of [20], about which complaint is made, is expressed in the same conditional language: 'At this point, whatever the merits of Ms Richardson's claims, the proceedings would have been conducted solely for the financial benefit of her lawyers.' It is to be especially noted that both sentences use the conditional form 'would'.
14 Read with care, it is plain that his Honour did not say that Harmers were conducting the litigation on Ms Richardson's behalf solely for their own financial benefit. What his Honour observed in the last sentence of [21] was the incontrovertibly correct proposition on the evidence before him that if the offer of $85,000 exclusive of costs had been accepted and if Ms Richardson had recovered her taxed costs from Oracle then her outstanding costs obligation to Harmers, to pay so much of her costs as were not recovered from Oracle on a taxation, would consume all of the $85,000 and still leave her owing Harmers $22,287.75. It is correct to say, as the trial judge did, that on this hypothetical scenario, the litigation would have been conducted for Harmer's benefit to that point, i.e., 21 December 2011. This is the inescapable consequence of the arithmetic. It is also precisely the submission which was made to the trial judge and the exact form of the evidence which was put before him.
15 The origin of this aspect of the present application appears to be a view on Mr Harmer's part that what the trial judge had in fact found was that from December 2011 the proceedings were being conducted solely for the benefit of Harmers. Indeed, this is precisely what Mr Harmer swore in his affidavit in support of the present application. There Mr Harmer swore that the trial judge had said:
24. The finding made by the primary judge at paragraph 20 of the Costs Decision - that "from a certain point in December 2011 the proceedings were being conducted solely for the financial benefit of Ms Richardson's lawyers" - has the ability to cause enormous damage to Harmers.
16 If the trial judge had said such a thing we might be inclined to agree. But he did not. He did not say 'from a certain point' - he said 'At this point'; and he did not say 'were being conducted' - he said 'would have been conducted'.
17 The difference is critical. When the actual words used by the trial judge are examined, rather than Mr Harmer's inaccurate quotation of them, his Honour's conclusion is a correct statement of the evidence before him that if the offer had been accepted the litigation to that point would have been conducted solely for Harmers' benefit. Read the way Mr Harmer has (presumably accidentally) misquoted his Honour it reads as if after the date of the acceptance of the offer, had it been accepted, (assuming that is what was intended by 'from a certain point in December 2011') the litigation was being conducted for Harmers' benefit alone. But his Honour had no occasion to consider how the litigation was, in fact, being conducted after the offer was rejected. He was discussing a submission, made on the instructions of Mr Harmer's firm, that it was reasonable of Ms Richardson to reject the $85,000 offer because if she had accepted it she would have received no benefit from the litigation and indeed would still have owed Harmers $22,287.75.
18 This does not dispose, however, of all of Mr Harmer's complaint. He also contends that the trial judge's statement in [20] that the picture was 'a very disturbing one' and the similar statement in [21] that there was a 'disturbing state of affairs' were apt to reflect most negatively upon his professional reputation. The gist of his argument was that it is unfair to assess the quantum of the fees charged up to and including 21 December 2011 ($224,475.80) without knowing also that: (a) the purpose of the cost arrangements was to facilitate payment of costs by the opposing party; and (b) that sometimes, as against the client, the actual costs were not always fully enforced. Had the trial judge known these facts, so it was said, he might not have attached the appellation 'disturbing' to the events before him.
19 It is true, as the Court pointed out during argument, that in [21] the trial judge did say that it was not his task 'to form even a preliminary view about the apparent justification for legal costs of the order disclosed by Ms Jones' affidavit.' If one reads [21] as paramount to [20] then one would not necessarily read 'disturbing' as referring to Mr Harmer. Although this is an available reading, however, it is not the only reading. Another reading is that paragraphs [20] and [21] are an example of apophasis, that is, the act of saying something whilst denying one is saying it. On this view, paragraph [20] condemns Mr Harmer and then paragraph [21] denies that this has occurred.
20 We would not necessarily embrace an apophastic reading of [20] - [21] but we would accept that it is open to being read in that fashion and that more than a trivial number of people would have understood the trial judge's remarks as involving a criticism of Harmers.
21 The difficulty which confronts this aspect of Mr Harmer's application is procedural. There is no doubt that appeals lie only from orders made by a trial judge rather than from the reasons given for those orders. This follows from:
(i) the terms of the grant of appellate jurisdiction to this Court in s 24(1)(a) of the Federal Court of Australia Act 1976 (Cth) ('the Act') to hear 'appeals from judgments of the Court constituted by a single Judge exercising the original jurisdiction of the Court';
(ii) the definition of 'judgment' in s 4 of the Act as meaning:
(a) a judgment, decree or order, whether final or interlocutory; or
(b) a sentence;
…
and;
(iii) the fact that 'judgment' in s 4 of the Act has been interpreted as not including the reasons given for a judgment: Ah Toy v Registrar of Companies (1985) 10 FCR 280 at 286; [1985] FCA 237. As the authorities collected in Ah Toy show, this conclusion is not in the least heterodox.
22 The ultimate and only point of appellate litigation is the correction of orders which should not have been made. Although the reasons proferred for the making of an order will ordinarily provide the basis for concluding they should not have been made, an appellate court does not rewrite the reasons which were given, it merely instead changes the result. Accordingly, Mr Harmer may not appeal paragraphs [20] and [21]; he must instead appeal some dispositive order which was made.
23 In his draft notice of appeal Mr Harmer, no doubt recognising this requirement, seeks orders setting aside the indemnity costs order made against Ms Richardson. At first blush, it is difficult to see why Mr Harmer has any personal interest in that question for he does not have to pay them and is not financially affected by them. Senior Counsel for Mr Harmer submitted that he did have an interest in having the indemnity costs orders set aside because whilst they remained in force there was a possibility that Oracle might seek a personal costs order against him or that he might be faced with professional misconduct proceedings.
24 The difficulty with this submission is that the indemnity costs which were ordered had nothing to do with the remarks made in paragraphs [20] or [21]. They were instead the result of his Honour's conclusion that the letter of 3 September 2010 and the letter of 21 December 2011 were offers of compromise within the rules. As we have already noted, the discussion at paragraph [21] was concerned with the assessment of the merits of the letter of 21 December 2011 as a Calderbank letter were it not (as his Honour held that it was) an offer of compromise under the rules.
25 Quite apart from that problem, his Honour's actual conclusion was that regardless of whether Ms Richardson would have owed $22,287.75 to Harmers in the event she had accepted the offer, this was not a relevant matter to the issue of the offer's reasonableness as a Calderbank letter. It was not, to paraphrase his Honour's language in [21], a permissible element in assessing the reasonableness of the offer. It follows that even if error were to be identified in paragraphs [20] or [21], the effect of his Honour's reasoning process was that it was irrelevant to his actual conclusion which was that the letter of 21 December 2011 was an offer to which the rules applied. The proposed appeal - at least insofar as it seeks to disturb the indemnity costs orders - therefore lacks utility. There is no rational way that showing that (a) the litigation would not have been conducted solely for the benefit of Harmers if the offer had been accepted or (b) that $224,475.80 in costs did not suggest a state of affairs which was disturbing could impact on the question which actually arose which was whether the offer of 21 December 2011 was made in accordance with the rules. The arguments are ships in the night.
26 Indeed, the question of whether Ms Richardson would have had to have paid Harmers $22,287.75 if she had accepted the offer (as the evidence before the trial judge demonstrated) or whether the fees or part of them might have been waived (as Mr Harmer's evidence in this Court equivocally suggested) could only arise if each of the following had first occurred:
(a) the trial judge's conclusion that the 21 December 2011 letter was an offer to which the rules applied were set aside;
(b) it was concluded that the offer was, however, a Calderbank letter; and
(c) it was found, contrary to his Honour's conclusion, that the amount which would be owed by Ms Richardson to Harmers if the offer were accepted was relevant to an assessment of the reasonableness of Ms Richardson's rejection of Oracle's offer.
27 At that point, however, a contradiction would come into view. Ms Richardson would be contending that the fact that she was left out of pocket by $22,287.75 was relevant to the reasonableness of Oracle's offer of $85,000 with the result that there should be no indemnity costs orders, but Mr Harmer would be contending that she might not have been liable for the $22,287.75 at all because his firm would probably, or might, waive the outstanding fee (Mr Harmer's case in this Court skirted the issue of whether his firm would rather than might waive some part of the fees). At this point, Mr Harmer would be arguing against Ms Richardson's interests. In particular, acceptance of Mr Harmer's position would undermine her case that her rejection of the offer was reasonable.
28 This may bring into relief the question of how Harmers permitted the unqualified statement that Ms Richardson would be left owing Harmers $22,287.75 to be put before the trial judge if, as now appears to be the case, quite possibly she might not have had to have paid that amount at all. During argument this difficulty was explored. If Mr Harmer had been given the opportunity to address the trial judge on the question of whether the charges were 'disturbing' the first step for his firm would have been a retraction of the affidavits and written submissions put before his Honour by Harmers which suggested, in a wholly unqualified way, that the professional fees to 21 December 2011 were $224,475.80 and that Ms Richardson would have owed $22,287.75 to Harmers if the offer had been accepted. This would have necessitated the abandonment of the argument being advanced on Ms Richardson's behalf that the fact that she would have been left owing Harmers $22,287.75 was relevant to whether the offer was reasonable.
29 This may suggest that it was not possible for Harmers to advance an argument on Ms Richardson's behalf that she reasonably declined the offer because it would have left her out of pocket as a result of Harmers' fees and, at the same time, to put forward a contention that the fees were not so high as they seemed because they might not have been enforced. Unlike the ships in the night in [25] above, these are ships on a collision course.
30 The situation then was one involving an uneasy relationship between Ms Richardson's interest in proving the burden to her of Harmers' fees and Harmers' interest in showing the opposite. Placed in this unenviable position Harmers chose to prefer the interests of their client over their own by putting before the trial judge a limited and allegedly incomplete account of its fee arrangements. His Honour found that half story disturbing - so would we.
31 It seems to us that the trial judge was entitled to assume that the full story had been placed before him; that Ms Richardson's and Ms Jones' sworn evidence that Harmers' fees were $224,475.80 was correct, as was sworn to be the case; and that Ms Richardson's evidence that she would be left owing Harmers $22,287.75 was also correct, as was sworn to be true as well. Why should his Honour have had reason to think that the evidence before him was materially deficient and why should Harmers have been given an opportunity to say that their own evidence was wrong?
32 The difficulty which arises on this issue for Harmers is reflected in the problems associated with the relief claimed. Mr Harmer's proposed appeal against the indemnity costs orders makes no sense for the argument he seeks to advance on the appeal if leave be granted. Instead, it could only support the making of those orders rather than providing any reason to set them aside. This is a sufficient reason in itself to refuse leave to pursue the appeal against those orders. We would in any event be disinclined to grant leave, in effect, to allow Mr Harmer's firm to correct the incomplete statements made to the trial judge. It was Harmers who put the evidence about its fees before the trial judge in an attempt to persuade his Honour that those fees would be charged and Ms Richardson left owing money. It was Harmers who sought to argue that this made it reasonable for Ms Richardson to refuse Oracle's offer of 21 December 2011. It is Harmers (and Mr Harmer) who must live with the consequences of those forensic decisions. One cannot have it both ways.
33 Apart from Mr Harmer's attack on the indemnity costs orders he also proposes to seek declarations as to the correctness, in effect, of paragraph [21]. It would be fair to say that this proposition was not at the forefront of the oral submissions made on his behalf. It is beset with difficulty. It undermines the principle discussed above that appeals are brought from judgments and orders rather than reasons. Further, the two declarations are not put as orders which the trial judge should have made (as may, from time to time, occur in the exercise of appellate jurisdiction). Rather, and in contradistinction, they are declarations about the trial process itself. It may be that such declarations involve an exercise, not of appellate jurisdiction, but of original jurisdiction. If that be so, then there are procedural consequences and difficulties. One is that there would need to be a trial in this Court about whether such declarations should be made. Another is that declarations of this corrective kind, if made against one of the Court's own number, may well offend the same principle (or a similar one) that prevents the Court from granting prerogative relief against itself (Cf. Re Jarman; Ex parte Cook [No 1] (1997) 188 CLR 595 at 603-604, 609-610, 637-639 and 647; [1997] HCA 13).
34 We turn then to the question of whether leave to appeal should be granted. Mr Harmer, of course, is a non-party. It was not in dispute that a person who is not a party to a proceeding but who is either bound by an order or aggrieved or prejudicially affected by it or is otherwise sufficiently interested in it may appeal but only with leave: Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2011) 281 ALR 38 at 45 [32]; [2011] FCAFC 89.
35 We would accept that reputational damage arising from a judgment or orders could, in some circumstances, provide sufficient standing to seek leave to appeal. That is not this case; and it is not the claim made by Mr Harmer: see [24]-[25] above. Even if Mr Harmer could establish his own standing, he must still show that the case is an appropriate one for a grant of leave; that is, he must show that in all the circumstances the decision is attended with sufficient doubt to warrant reconsideration and that substantial injustice would result if the decision was left to stand assuming it to be wrong: Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399; [1991] FCA 655. We do not think that Mr Harmer's application would show that the decision in the manner criticised by him in argument is attended by sufficient doubt or indeed any (we say nothing of Ms Richardson's pending appeal). Part of Mr Harmer's application proceeds on a plain misreading of the judgment. Further, insofar as any attempt to set aside the indemnity costs orders is concerned Mr Harmer's argument has no prospects of leading to the setting aside of those orders. Its only forensic consequence is to buttress Oracle's argument that Ms Richardson's rejection of the offer was not reasonable because, contrary to her case below, she might not have been left in debt to Harmers. In those circumstances, leave should be refused.
36 During the course of argument it was suggested that it might also be necessary for Mr Harmer to seek to be joined as a party to Ms Richardson's appeal and such an oral application was duly made. In the circumstances, Mr Harmer is not seeking to be joined as a necessary or proper party to her appeal but to appeal (by leave) in his own right. For the same reasons, that oral application should be refused.
37 Finally, we should observe that in various parts of the written submissions made on Mr Harmer's behalf, a contention was advanced that the trial judge had engaged in a species of judicial misconduct in making the findings in [20] and [21]. Our reasons above are sufficient to make clear that we reject the submission and that there is no basis for it.
38 It was for these reasons that the Court dismissed both applications with costs at the conclusion of the hearing on 6 June 2013.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop and the Honourable Justices Kenny and Perram.