Harry Day v John Smidmore and others

Costs - Appeal - Decision at first instance granting permanent stay to respondents overturned on appeal - Respondents claimed costs at first instance and on appeal on the grounds of the appellant's reprehensible and scandalous behaviour - Purpose of costs - Disentitling conduct - Appellant given costs on his successful appeal - No order as to costs at first instance CATCHWORDS: Appeal - Costs - Decision at first instance granting permanent stay to respondents overturned on appeal - Respondents claimed costs at first instance and on appeal on the grounds of the appellant's reprehensible and scandalous behaviour - Purpose of costs - Disentitling conduct - Appellant given costs on his successful appeal - No order as to costs at first instance

LEGISLATION CITED: Industrial Relations Act 1996

Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Bredel v Moore Business Systems Australia Limited [2003] NSWCA 117 Cilli v Abbott (1981) 53 FLR 108 CASES CITED: Day v Smidmore & Ors [2004] NSWIRComm 287 Fast Buck$ v Dudley Pastoral Co Pty Ltd [2003] NSWCA 126 Harry Day v John Smidmore and others [2005] NSWIRComm 320 Latoudis v Casey (1990) 170 CLR 534 Oshlack v Richmond River Council (1998) 193 CLR 72

APPELLANT Mr J N West, QC with Mr A Joseph of counsel Solicitor: Mr S Walker Steve Walker & Associates LEGAL REPRESENTATIVES:

RESPONDENTS Mr M J Kimber, SC with Mr T J Dixon of counsel Solicitor: Mr W Beilby Beilby Poulden & Costello

CORAM: Walton J, Vice President Boland J Backman J

HARRY MARK DAY v JOHN MICHAEL SMIDMORE & ORS (No 3)

Application by Harry Mark Day for leave to appeal and appeal against a decision and order of Justice Marks given on 18 November 2004 in matter no IRC 3177 of 2001 - Costs

1 In Harry Day v John Smidmore and others [2005] NSWIRComm 320 the Full Bench considered an appeal from a judgment of Marks J in which his Honour granted the respondents a permanent stay of proceedings brought by the appellant under s 106 of the Industrial Relations Act 1996: Day v Smidmore & Ors [2004] NSWIRComm 287. 2 The Full Bench granted leave to appeal and upheld the appeal. The decision and order of Marks J permanently staying the proceedings were set aside and the proceedings were remitted for trial to a Member of the Commission in Court Session as allocated by the President. As to the costs at first instance and costs of the appeal we ordered: 6 The respondents are to provide any submissions in writing in relation to costs at first instance and the costs of the appeal within 14 days of the date of this judgment. The appellant is to reply in writing within a further seven days. The question of costs will be dealt with on the papers and the parties advised accordingly.

This judgment deals with the question of costs. Background 3 The decision of Marks J to permanently stay the proceedings followed a motion by the respondents seeking such an order and other orders. The motion was prompted by conduct of the appellant designed to bring pressure on the respondents to settle his claim without the matter going to trial. 4 Marks J considered that the appellant's conduct had compromised a fair trial. His Honour arrived at this conclusion after considering the impact of the appellant's conduct on Ms "X", a female solicitor who had worked in the same firm as the appellant and who was to give evidence for the respondents in the unfair contract proceedings. At [37]-[38] of his decision Marks J made the following findings: 37 In my opinion the uncontradicted evidence of this female employee, a solicitor, is indicative of her real concerns about giving evidence against the applicant in these proceedings. Those concerns are based upon apprehension for her own safety and fear of harm at the hands of the applicant. Viewed objectively, having regard to the subjective concerns of this female witness and accepting those concerns I am of the opinion that a fair trial of these proceedings has been compromised by the conduct of the applicant. I cannot discern any mechanism which will allow a fair trial to be conducted in terms of the amelioration of the concerns and fears of this female witness. The applicant has offered an undertaking to the Court that he will not approach or in any way communicate with this witness. In my opinion, in all the circumstances, this is insufficient and, on the part of the applicant, represents an offer of too little too late. As I have previously indicated, the medical evidence is to the effect that the applicant had insight into his conduct and into the likely impact on the recipients of his communications. 38 The subject matter of the applicant's communications to this female employee was described in brief terms in paragraphs [13] and [14] of these reasons for judgment. I have not set out all of the details contained within the applicant's affidavit filed in the Compensation Court proceedings which were referred to by him when communicating with this female employee. Suffice to say that some sense of the material covered may be gained from what I have summarised in those paragraphs. A closer reading would reveal details to the same effect which include allegations of conduct which is clearly of a criminal nature. I regard the material included within the applicant's Compensation Court affidavit, to which reference was made for the purpose of intimidating the female employee with respect to her evidence to be given in these proceedings, as bizarre, scurrilous, scandalous and utterly offensive. I uphold the submissions made on behalf of the respondents that these communications have seriously impacted upon the ability of this female witness to give her evidence freely and without fear of retribution. The applicant is a solicitor well-versed in the conduct of litigation and must be taken to have known and be aware of the necessary protocols which attach to the litigation process and the conduct expected of litigants. 5 On appeal the Full Bench considered the appellant's conduct to be "utterly reprehensible and scandalous behaviour by an officer of the Court": [63]. The Full Bench observed at [68], however: This case ... is not about the punishment of the appellant for his conduct; these are not contempt proceedings, although nothing we have said in this judgment should be taken as precluding a charge of contempt being brought or initiated. This case is about whether or not Marks J was correct in permanently staying the proceedings on the grounds of an abuse of process in that "a fair trial of these proceedings has been compromised by the conduct of the [appellant]" and whether his Honour erred, as contended for in the respondents' notice of contention, in not finding the appellant's conduct was so oppressive, improper and a misuse of the forensic process as to warrant a conclusion that he had perpetrated such injustice or unfairness that he should be denied a hearing of the merits of his claim. 6 The Full Bench found that Marks J had erred in staying the proceedings. After analysing the affidavit evidence of Ms "X" and the relevant circumstances in which the affidavits were sworn, we concluded a fair trial had not been compromised by the conduct of the appellant and that Mr Day's communications with Ms "X" had not seriously impacted upon her ability to give her evidence freely and without fear of retribution. 7 The respondents had put on a notice of contention in the appeal to the effect that his Honour erred in not upholding their motion on other grounds that were put to him at first instance. The Full Bench noted at [109] that in support of the notice of contention the respondents were not relying principally on the ground that the appellant's conduct jeopardised the prospect of a fair trial but rather the submissions were more to the effect of the appellant, having misused the forensic process so as to perpetrate injustice and having brought the administration of justice into disrepute, he thereby forfeited his prima facie right to a hearing. Further, that the appellant's conduct was "oppressive, unwarranted, improper, and designed to apply improper pressure to achieve a settlement and to create an uneven playing field" thereby warranting the Court's intervention. 8 The Full Bench at [111] accepted that when the whole of Mr Day's conduct was considered it was difficult to avoid the conclusion that it was "oppressive, unwarranted and improper" and a misuse of the forensic process by a solicitor who knew better. The Full Bench stated: Given that the power of a court "to control its own process and proceedings is such that its exercise is not restricted to defined or closed categories, but may be exercised as and when the administration of justice demands", it is a fine matter of judgment as to whether or not this appellate Court should intervene and overturn the judgment at first instance. 9 We concluded, however, that: 112 The test we have applied here ... and the one we consider should be the determinant test in this case, is whether a continuation of proceedings would involve an unacceptable risk of injustice or unfairness: Walton v Gardiner . Further, we note the injunction in Jago at 76 that the power to grant a permanent stay is one that is to be exercised only in exceptional cases or "sparingly and with the utmost caution". 113 We have concluded, after considering the appellant's conduct as a whole and its impact on the respondents, the respondents' solicitors and the respondents' witnesses, that the risk of injustice or unfairness if the proceedings were to continue to trial is not an unacceptable risk. That means this Full Bench should intervene and permit the trial to proceed by setting aside the permanent stay ordered by Marks J. As we have found, we consider Marks J erred in holding Ms "X" would be unable give her evidence freely and without fear of retribution, especially in light of the undertakings proffered by the appellant. As for the respondents themselves, the respondents' solicitors and Ms "Y", there was no proper basis upon which it could be concluded that the appellant's conduct had so adversely affected or inhibited any of them to the point that it constituted an unacceptable risk of injustice or unfairness if the trial were to proceed.

Submissions for the respondents 10 The respondents contended the appellant was unsuccessful in relation to many of the grounds of appeal; that the matter ultimately turned on the evidence of Ms "X"; and, the respondents were forced to respond at length to many of the other issues raised by the appellant on the appeal. Accordingly, it was submitted the respondents should be awarded costs. 11 As to the respondents' notice of motion at first instance, it was contended that it could have been avoided but for the appellant's conduct; that the appellant was warned on a number of occasions not to persist with his intimidatory conduct but he, nevertheless, continued. It was submitted the action by the respondents in filing the motion was reasonable and necessary to protect, inter alia, the integrity of the Court's processes. 12 In the alternative, the respondents submitted the appellant's conduct disentitled him to any award of costs. Senior counsel for the respondents referred to Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874 where Devlin J stated: No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct. 13 Reference was also made to the judgment of McHugh J in Oshlack at [69] where his Honour provided examples of the type of misconduct disentitling a successful party to costs: "Misconduct" in this context means misconduct relating to the litigation: King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812 or the circumstances leading up to the litigation: Bostock v Ramsey Urban District Council [1900] 2 QB 616. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation: Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627; unnecessarily protracts the proceedings: Forbes v Samuel [1913] 3 KB 706; succeeds on a point not argued before a lower court: Armstrong v Boulton [1990] VR 215 at 223; prosecutes the matter solely for the purpose of increasing the costs recoverable: Hobbs v Marlowe [1978] AC 16; or obtains relief which the unsuccessful party had already offered in settlement of the dispute: Jenkins v Hope [1896] 1 Ch 278. 14 The respondents submitted these examples were not exhaustive, citing Fast Buck$ v Dudley Pastoral Co Pty Ltd [2003] NSWCA 126 (21 May 2003) at [96] per Santow JA; and see Latoudis v Casey (1990) 170 CLR 534 at 565 per Toohey J. Reference was made to Bredel v Moore Business Systems Australia Limited [2003] NSWCA 117 (15 May 2003) wherein the Court of Appeal (by majority) held that: [W]here there has been sharp and deceitful conduct on the part of the successful Respondent, justice requires that the appeal be dismissed without any order as to costs. 15 The respondents referred to the criticisms of the appellant's conduct by the Full Bench ("utterly reprehensible and scandalous behaviour by an officer of the Court") and the improper pressure the appellant brought to bear on the respondent's witnesses. 16 The respondents submitted the appropriate orders were as follows: (a) The Appellant pay the Respondents Costs on the Motion and the Appeal forthwith, or a substantial proportion thereof; or alternatively (b) There be no order as to costs on the Motion or on the Appeal; or alternatively (c) Costs of the Motion and on Appeal be costs in the cause of the substantive Application. Submissions for the appellant

17 As senior counsel for the appellant submitted, a successful party in litigation is ordinarily entitled to an award of costs in its favour. This principle operates whether the successful party is the plaintiff or the defendant. The primary purpose of such an award of costs is to indemnify the successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [67]-[68] per McHugh J; Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 542-543; Cilli v Abbott (1981) 53 FLR 108 at 111. 18 In relation to the costs of the appeal, the appellant contended he was substantially successful and that there was no proper basis for denying his costs. 19 As to the costs of the notice of motion, senior counsel for the appellant submitted: Whilst it may be said that the criticised conduct of the Appellant led to the filing of the Notice of Motion by the Respondents on the appeal it cannot be said that Notice of Motion had to be filed in order to deal with the said conduct or that it was a fair or appropriate response to the said conduct. The Appellant submits this for the following reasons: (i) The filing of the Notice of Motion on 6 April 2004 was the first time that the Respondents had complained to the Court about the Appellant's conduct. (ii) Even taking the Respondents' evidence at its highest and in particular the evidence of [Ms "X"] it was clear that the evidence did not support the proposition that a fair trial was not possible. (iii) The Appellant contended that the proceedings which the Respondents had brought against him were inappropriate and had resulted in a misapplication of legal principle by Marks J. Essentially what the Respondents were seeking, was to have the Appellant punished - but not in proceedings charging contempt. The Full Bench observed that the conduct of the Appellant was in many respects disgraceful and although it "may have provided or may provide the basis for various individuals initiating criminal and/or civil proceedings" yet was not such as led to the conclusion that the prospects of a fair trial had been jeopardised... In effect, the proceedings brought by the Respondents' motion were misconceived from the very beginning. 20 The appellant sought leave to tender a letter sent by the appellant's solicitor to the respondents' solicitors dated 14 May 2004 (after the notice of motion had been filed) in which the appellant offered certain undertakings designed to head off the respondents' application for a permanent stay. The respondents declined to accept the undertakings. The letter was "without prejudice save as to costs". We have not heard any objection from the respondents to the tender of the letter. Accordingly, leave is granted. 21 The appellant also referred to his written submissions filed in Court on 19 May 2004 where undertakings were offered in the same terms by the Appellant going to the main aspects of the Respondent's concerns. In further written submissions filed on 1 September 2004 the appellant made the final and full offer of undertakings that were not regarded as acceptable by the respondents or Marks J at first instance. The Full Bench, however, regarded these undertakings as having been sufficient. At [102]-[103] the Full Bench stated: 102 Given that the central concern of Ms "X" about giving evidence was that she was worried about giving evidence "in front of Harry" and that "being in the same room with Harry while I am giving evidence will upset me", we consider that Marks J gave insufficient weight to the undertakings proffered by the appellant. If Ms "X"'s state of mind was that she was worried about giving evidence "only" because of Mr Day's presence, it seems to us that an undertaking that the appellant would not be present in the Court whilst Ms "X"'s evidence was being taken could hardly be regarded as an undertaking offered "too little too late". 103 The undertakings are a material consideration in considering whether a fair trial can proceed. In light of our conclusions in this appeal and the orders we propose to make, undertakings of the nature offered by the appellant would still have some utility and it is our expectation they would be maintained.

22 In light of the above circumstances and the undertakings offered by the appellant during the first stage of the proceedings and the failure of the respondents to accept these undertakings, the appellant submitted he ought be compensated for his costs in the proceedings at first instance. Consideration

23 The appellant should have his costs of the appeal. His obvious objective in appealing the decision of Marks J was to have the permanent stay set aside. In that endeavour the appellant succeeded. The appellant may not have made out each ground of appeal but, in this case, the awarding of costs is not to be determined according to how many appeal grounds were lost or won. The appellant was successful in his action to appeal. Moreover, the respondents were unsuccessful on their notice of contention. 24 It would usually follow a successful appeal that the appellant should have his costs paid by the respondents in relation to the notice of motion. Our hesitation, however, in awarding the appellant his costs of both the appeal and of the proceedings before Marks J, derives from the appellant's conduct leading to the filing of the notice of motion by the respondents. 25 The respondents communicated with the appellant on at least three occasions prior to the filing of their notice of motion and it would have been apparent to the appellant that the respondents found his conduct - understandably - objectionable. He was asked to desist but did not do so. 26 After the notice of motion was filed the appellant offered certain undertakings. These offers were repeated during the course of the proceedings before Marks J. The respondents declined to accept the undertakings, having apparently determined to press their application for a permanent stay. 27 It may have been open to the respondents to accept the undertakings offered by the appellant and avoid the proceedings before Marks J. Equally, however, it was open to the appellant to refrain from his intimidatory conduct before the respondents felt bound to take action. It may also have been the case that, for the respondents, other courses of action would have been more appropriate than seeking a permanent stay. Nevertheless, the course they chose was open to them. 28 We stated in the substantive appeal judgment that "it is a fine matter of judgment as to whether or not this appellate Court should intervene and overturn the judgment at first instance": [111]. We expressed that view on the basis that we found it difficult to avoid the conclusion that Mr Day's conduct was "oppressive, unwarranted and improper" and a misuse of the forensic process by a solicitor who knew better. 29 Whilst we ultimately determined that the relevant test to be applied was whether a continuation of proceedings would involve an unacceptable risk of injustice or unfairness, in the context of determining costs we are unable to overlook the causative role the appellant's misconduct played in what would otherwise have been avoidable litigation. The appellant should not have his costs of the notice of motion. 30 There is no rigid mathematical formula to be applied in the awarding of costs. Costs lie entirely within the discretion of the Court, although the discretion must be exercised judicially. We consider a just outcome in this case is that there be no order as to costs in respect of the notice of motion proceedings and the respondents shall pay the appellant's costs of the appeal. Orders

31 We make the following orders: (1) The respondents shall pay the appellant's costs of the appeal. (2) No order as to costs on the notice of motion. ________________________________

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