In February this year, I delivered judgment on three related ancillary applications in this matter: Johnston v Allen [2024] NSWSC 187 ("J1"). This judgment deals with residual questions of costs.
The factual background and the procedural history are set out in detail at J1 [3]-[55]. For present purposes it may be summarised as follows.
The applications concerned a complaint to the Office of the Legal Services Commission ("OLSC") concerning the professional conduct of Bede Augustine Webster, who briefly acted as a solicitor in the principal proceedings. The complaint was supported by documents produced to the Court in the proceedings. The proceedings had been settled, and the documents had never been received into evidence. Mr Webster alleged that using the documents for the purposes of the complaint was a breach of confidentiality obligations owed by the parties to the Court.
The principal proceedings arose out of a family dispute concerning the management of the affairs of the family matriarch, Phyllis Ruth Johnston ("Mrs Johnston"), and in particular a transaction involving the family house. The plaintiff in the proceedings was one of Mrs Johnston's sons, Mr Bruce Johnston. The solicitor for Mr Johnston in the proceedings was Ms Lauren Gidley. Ms Gidley retained Ms Sharna Clemmett to act as counsel for Mr Johnston.
At the beginning of the proceedings Mr Webster acted for Mrs Jillian Allen, Mrs Johnston's daughter, who held an enduring power of attorney from her. Mr Webster also purported to act for Mrs Johnston herself. There was some uncertainty over whether he had authority to act for her which did not ultimately need to be resolved because he ceased acting in the proceedings almost immediately.
During the short time for which he acted in the proceedings, Mr Webster produced documents on Mrs Allen's behalf pursuant to an order for production made by the Court on the application of Ms Clemmett, instructed by Ms Gidley, on behalf of Mr Bruce Johnston. Mr Webster also filed, purportedly on behalf of Mrs Johnston, an affidavit concerning the transaction which had led to the bringing of the proceedings.
The complaint against Mr Webster was lodged by Ms Amber Johnston, who is the daughter of Mr Bruce Johnston, and thus the grand-daughter of Mrs Johnston. Ms Johnston was not herself a party to the proceedings. She became involved in them because her father was in ill health. She acted as a channel of communication between her father and the lawyers acting for him in the proceedings (Ms Gidley and Ms Clemmett). Indeed, it seems that over time she may have been giving instructions to the lawyers herself.
The proceedings were commenced on 13 August 2021 and agreement was reached to settle them only about six weeks later, on 23 September. Orders formally disposing of the proceedings were made in November.
The settlement resulted in the transaction which had prompted the bringing of the proceedings being set aside. Nevertheless, work was undertaken in February and March 2022 on preparing a complaint against Mr Webster. Ms Gidley instructed Ms Clemmett to draft the complaint and Ms Clemmett did so, relying upon, among other things, the affidavit filed by Mr Webster and some of the documents produced by him on behalf of Ms Allen. The instructions for the complaint came through Ms Johnston, who apparently, as a result, was given a copy of the draft complaint and the supporting documents.
At that time, it was contemplated that the complaint would be made in the name of Mr Johnston. That did not however occur. By this stage he was gravely ill. He died in June 2022. Ms Johnston and her brother, Mr Jake Johnston, were appointed in his will as his executors. I will refer to them as the "Johnston children" or "the Johnstons".
Ms Johnston filed the complaint in August 2022. She did so in her personal capacity, not as her father's executor. Using the draft, she completed and filed the application herself. Neither Ms Gidley nor Ms Clemmett was involved; their retainers had apparently ceased when the decision was made not to proceed with filing the complaint in Mr Johnston's name.
Mr Webster did not become aware of the complaint until September last year, about thirteen months after it had been filed. The discovery led to correspondence with Ms Gidley in which Mr Webster made an allegation of breach of confidentiality obligations owed to the Court. The applications which were the subject of my judgment then followed.
The first application filed was from Ms Clemmett. Her notice of motion named Mr Webster, Ms Gidley and Ms Amber Johnston as respondents. Ms Clemmett's first contention was that the obligations of confidentiality did not prevent the use of the documents for the purpose of the complaint. Against the possibility that that contention should prove unsuccessful, Ms Clemmett sought an order, nunc pro tunc, granting leave to herself, Ms Gidley and Ms Johnston to use the documents for that purpose.
Ms Clemmett's application was followed by an application from Mr Webster. His notice of motion initially named Ms Clemmett, Ms Johnston and Ms Gidley as respondents. He sought orders to enforce the obligations against the respondents, in particular by requiring the parties to deliver up or destroy all copies of the documents held by them and requiring Ms Johnston to withdraw the complaint. Mr Webster also alleged that he had suffered damage to his professional reputation, and loss of income, as a result of the complaint, and sought compensation.
In the course of the hearing, I observed that, when Ms Gidley and Ms Clemmett received the subject documents in 2021, and when they used the documents to prepare the draft complaint in 2022, they were acting for Mr Bruce Johnston. If there had been a breach of the obligation, Mr Johnston, strictly speaking, had been the party in breach. Furthermore, to the extent that the documents were still retained by the Johnston children, Ms Gidley or Ms Clemmett, those documents were held in the interests of Mr Johnston's estate.
This resulted in Mr Webster amending his notice of motion so as to join Mr Jake Johnston as an additional respondent. An application was also filed on behalf of the Johnston children seeking relief nunc pro tunc if there had been a breach of the confidentiality obligations owed to the Court.
As I recorded in my February judgment, there was no dispute that the documents the subject of the applications attracted the implied obligation of confidentiality referred to by the House of Lords in Harman v Secretary of State for the Home Department [1983] 1 AC 280 and later by the High Court in Hearne v Street (2008) 235 CLR 125. It was also accepted that this obligation was binding, not only on the relevant party (Mr Bruce Johnston), but also (at least) on Ms Amber Johnston as his agent and Ms Gidley as his solicitor (see J1 [83]-[85]). There has also been an express confidentiality order made over the documents produced by Mrs Allen (J1 [34]). That order was addressed to the lawyers for Mr Bruce Johnston, and therefore directly bound Ms Gidley and Ms Clemmett.
The implied obligation prevents a party from making use of documents produced in proceedings except for the purposes of those proceedings. The express confidentiality order made in these proceedings was in similar terms.
It was argued on behalf of each of Ms Clemmett, Ms Gidley and Ms Johnston that the making of a complaint about Mr Webster's conduct in the proceedings was permissible, and the same position was taken on behalf of Mr Jake Johnston when he became party to the applications. But I rejected this argument (J1 [94]). This meant that there had been breaches of the confidentiality undertakings by Ms Amber Johnston, Ms Gidley and Ms Clemmett (J1 [94]-[95]), as well as by Mr Bruce Johnston.
Nevertheless, I considered that leave should be granted to permit the complaint to go forward (J1 [110]). I also decided to make the order nunc pro tunc, so that the conduct of Ms Johnston, Ms Gidley and Ms Clemmett, with respect to the draft complaint, would be retrospectively validated (J1 [133]).
This of course left the possibility that there were still copies of the documents in the hands of Ms Clemmett, Ms Gidley, or Mr Jake Johnston (as executor). On the face of it, there was no need for those copy documents to be retained. But I considered not to make a formal order for their delivery up or destruction of the documents, although I expressed the view that unless there was a specific need to retain them they should be returned or destroyed (J1 [140]).
I also dismissed Mr Webster's claim for compensation (J1 [144]). Among other things, I was no satisfied that Mr Webster had suffered any compensable loss (J1 [141]-[143]).
In the course of the hearing, counsel for Ms Clemmett indicated that she did not seek any order for costs of the proceedings. Mr Webster was self-represented and, even if a costs order was made in his favour, there would be few if any costs that could be recovered under such an order. The judgment left it to the parties to agree on costs orders if they could, with any remaining costs argument to take place on the papers.
Ms Clemmett's costs position has now been formally resolved. All parties to Ms Clemmett's motion agreed that there should be no order as to costs between any of them on that motion, and I have made a consent order to that effect. Mr Webster seeks no costs of his motion against the other parties to his motion, namely Ms Clemmett, Ms Gidley, and the Johnston children. But, Ms Gidley and the Johnston children seek costs against Mr Webster.
Counsel for Ms Gidley submitted that Mr Webster should pay Ms Gidley's costs of his application. Counsel relied on the general rule that costs follow the event (Uniform Civil Procedure Rules 2005, r 42.1). Counsel pointed out that Mr Webster's application ultimately failed. In counsel's submission, there was no disentitling conduct or other reason to deprive Ms Gidley of her prima facie entitlement to costs (Oshlack v Richmond River Council (1998) 193 CLR 72 at [69]-[70]).
Counsel acknowledged my finding of breach against Ms Gidley. But counsel submitted that this did not amount to disentitling conduct. Counsel pointed to the order I had made, nunc pro tunc, authorising Ms Gidley's conduct. Counsel submitted that the effect of the order was that Ms Gidley "has not, and has never, breached the implied obligation of confidentiality".
Counsel made some additional points about relief sought in the Webster motion. In particular, counsel submitted that the application for injunctive relief had not succeeded (and, according to counsel, had probably been unnecessary). Counsel also pointed to Mr Webster's unsuccessful application for compensation.
Counsel for the Johnston children argued largely to the same effect. Counsel similarly sought an order that Mr Webster pay the Johnstons' costs of defending his application. Counsel also sought an order that Mr Webster pay 25% of the costs of the Johnstons' motion, and the costs of the argument on costs.
Counsel for the Johnstons argued, as counsel for Ms Gidley had argued, that Mr Webster had failed in his application against the Johnstons and costs should follow the event, given that there was no disentitling conduct. Counsel also pointed out that Mr Webster had taken issue with the content of the complaint, and questioned Ms Johnston's motivation in bringing it, but had not sought to cross-examine her on that issue, so that in the end I proceeded on the basis that her good faith was not in issue (J1 [108]).
As to the Johnstons' own motion, counsel acknowledged that they were seeking an indulgence. But counsel relied on the decision in EB v GB [2020] NSWSC 1291 (see J1 [102]-[104]). That case was also a case involving relief from a confidentiality order. The Court awarded costs in favour of the applicant for the period after the first return date, on the ground that the respondent's opposition from that point had been unreasonable.
Counsel submitted that Mr Webster's conduct in opposing the Johnstons' application had been similarly unreasonable. Counsel referred again to the issues Mr Webster had raised about the merits of the application. Counsel also pointed to some written submissions Mr Webster made concerning the standing of Mr Jake Johnston. Those submissions were made after the hearing and were occasioned by Mr Jake Johnston's joinder (see J1 [72]).
Mr Webster opposed the costs orders sought on behalf of Ms Gidley and the Johnston children, contending that there should be no order as to costs between the parties. Mr Webster submitted that most of the issues dealt with by the Court had arisen on Ms Clemmett's application. He characterised that application as an application for an indulgence, and noted that, even if the parties had consented, the Court would still have had to decide whether the obligation of confidentiality was to be released.
Mr Webster also pointed out that I had found a prima facie breach of the confidentiality obligations. He submitted that the Johnston children's application was filed late in the proceedings, and that this had resulted in an unnecessary delay in the resolution of the proceedings.
In reply, counsel for Ms Gidley took issue with Mr Webster's submission that most of the costs were attributable to Ms Clemmett's application. Counsel submitted that there was "considerable overlap" between the issues of Ms Clemmett's application and the issues on Mr Webster's application, and that Ms Gidley had to be represented to deal with both of them. Counsel also submitted that the degree of overlap between the applications was not a relevant consideration for the Court. Counsel submitted that it was "the role of a costs assessor, not the Court, to determine costs attributable to each Motion at the hearing".
Counsel for Ms Gidley also rejected Mr Webster's reliance on my finding that there had been a prima facie breach of the confidentiality undertaking. Apart from repeating the submission that the effect of the nunc pro tunc order was to obliterate any such breach, counsel submitted that any "disentitling conduct" for costs purposes had to be conduct within the relevant proceedings (for present purposes, the applications) and the conduct of Ms Gidley in breaching the obligations of confidentiality did not answer that description.
In Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15], the Court of Appeal stated that, for the purpose of applying the general rule that costs follow the event, the "event" may be equated with the "practical result" of the claim in question. In identifying the claim or claims, the court should also take a practical approach, rather than one limited by strict pleading concepts (Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20, at 22).
In identifying the "event" or "events" in the present case as between Ms Gidley and Mr Webster, I think it would be unrealistic to focus exclusively on Mr Webster's application. Ms Gidley did not make her own application for nunc pro tunc relief, but in substance Ms Clemmett's application was made on her behalf. I think that practicality requires that the course and outcome of both motions should be considered together.
Two significant points I think emerge from this. One is that Ms Gidley was not successful in the contention (advanced primarily on behalf of Ms Clemmett, but supported by counsel for Ms Gidley) that the confidentiality obligations did not extend to use of the documents in question for the purposes of the complaint. The second, and related, point is that, as a result, it was necessary to apply for orders authorising the use of the documents for this purpose. That application was indeed an application for an indulgence; it was not something to which Ms Gidley was entitled as of right.
It also follows, in answer to a point raised by counsel for the Johnstons, that there is no significance to the fact that Mr Webster's notice of motion was not filed until after Ms Clemmett's. Clearly Ms Clemmett's motion was aimed at heading off any motion by Mr Webster. But, more importantly, it was entirely proper for Ms Clemmett, where non-compliance with obligations owed to the Court had been raised as an issue, to make an application to resolve the issue immediately. I think that what the point does is underline that, in a real sense, Ms Clemmett was a moving party in the matter. In substance the same was so for Ms Gidley.
I think a practical approach requires me to ask myself why, in reality, the matter came before the Court. The answer is that that it did so because of allegations of breach of confidentiality obligations owed to the Court, relevantly, by Ms Gidley.
My judgment did not exonerate Ms Gidley. As Mr Webster pointed out in his submissions, I found that Ms Gidley had, prima facie, breached her obligation of confidentiality and that the evidence given to explain the breach was incomplete. My decision to grant authorisation nunc pro tunc was essentially a matter of expediency. I would not have made that order if there had been any possibility of it retrospectively heading off a contempt application (J1 [132]-[133]).
In these circumstances, I do not think that the making of the nunc pro tunc order requires the Court to ignore the facts of what actually happened. That would hardly be taking a practical approach to the resolution of the costs dispute. Similarly, if, contrary to my view, the prima facie breach has to be assessed as a matter of "disentitling conduct", then it would be unrealistic to put that breach aside on the ground that it happened before the proceedings were begun.
So far as the relief sought in Mr Webster's motion is concerned, my decision not to grant any injunctions against the respondents was likewise based on practical considerations. I did not affirmatively find that there was any reason for the documents to be retained by any of the respondents (apart from retainer by Ms Johnston, in her capacity as a complainant in the OLSC proceedings). It was simply that making formal orders would have required further consideration and appeared to be unnecessary.
For these reasons, I do not accept that Ms Gidley is entitled to costs on the basis that she was the successful party in the proceedings before me. To my mind, it is not a question of disentitling conduct, but simply a matter of saying that she has not established an entitlement to costs on the basis of costs following the event.
It is true that for the purposes of his application, Mr Webster presented submissions, and claims for compensation, which were not successful. But given my conclusion on where the merits of the proceedings lay, that would only justify making some sort of order in Ms Gidley's favour if Mr Webster's unsuccessful claims and submissions resulted in "clearly severable" additional costs (Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338). There was no cross-examination, and the factual issues were addressed by way of submission on both sides. Any increase in the length of the hearing would have been marginal. It seems unlikely that it would have resulted in any additional costs, and I did not understand counsel for Ms Gidley to suggest that it did.
In passing, I should say that I do not accept the submission from counsel for Ms Gidley that the apportionment of costs between proceedings of multiple motions, as in this case, is purely a matter of assessment. I think that the authorities are against a proposition so widely expressed.
In Dimos v Willetts (2000) 2 VR 170, the plaintiff sued two defendants, settled against one before trial, and obtained judgment and a costs order against the other. The question was whether the plaintiff could recover the whole of the general costs of the proceedings (that is, the costs other than those solely referable to suing the defendant against whom the plaintiff had settled) from the unsuccessful defendant. Earlier, in Medway Oil & Storage Co Ltd v Continental Contractors Ltd [1929] AC 88, the House of Lords had to consider where, in circumstances where both the plaintiff's claim and the defendant's cross-claim failed, liability for the general costs of the proceedings lay.
In Dimos, the Victorian Court of Appeal concluded that the order for costs made by the trial judge against the unsuccessful defendant carried with it the general costs of the proceedings. In Medway Oil, the House of Lords concluded that the general costs should follow the event of the claim, so that the costs order against the unsuccessful defendant covered only the additional costs of the proceedings referable to the cross-claim.
In each case, the issue was treated as one of construction of the costs order which had been made in the court below, rather than as a matter of assessment. Moreover, in each case the Court accepted that it would have been open at first instance to have made an order expressly allocating the general costs to one or other of the proceedings, or partitioning the costs between the two proceedings: see, in particular, Medway Oil at 95, 98.
In the present case, I am concerned with costs incurred by a party who was made a respondent to two separate motions by two different, separately represented, applicant parties. Whether the general rule applied in Dimos in favour of a single plaintiff against two separate defendants would work the same way in the opposite direction (that is, in favour of a party sued by two separately represented plaintiff/cross-claimants) might be debateable. In view of my other conclusions I do not need to consider it. To my mind, it only reinforces my decision to treat all of the applications in the present case as part of the same proceedings for the purposes of determining the "event".
Similar comments apply to the arguments presented by counsel for the Johnstons. Ms Johnston is in no better position, in my view, than Ms Gidley is. It is true that Mr Jake Johnston only belatedly came into the application and was not involved in the complaint to the OLSC. But that consideration cuts both ways.
At most, the Court might make an order for the additional costs associated with Mr Jake Johnston's joinder as an additional respondent, and the supplementary affidavit evidence and written submission consequent upon that. But I do not think that even that would be justified.
On my findings, there was a breach of the obligation by the Johnstons' father. Mr Jake Johnston joined with his sister in pursuing an application for an indulgence, in the form of a nunc pro tunc order, by way of relief against that breach. He may not have sought the order in his own favour, but I do not see how I can treat him differently from her so far as the costs of their joint application are concerned.
In the circumstances, I do not think that the late joinder of Mr Jake Johnston as a respondent to Mr Webster's application makes any difference. On the approach I take, that application did not, as against Mr Jake Johnston, give rise to a separate event, any more than it did as against Ms Amber Johnston or Ms Gidley.
For these reasons, I conclude that the applications on behalf of both Ms Gidley and the Johnstons should be refused. The parties should bear their own costs. I have already made orders dealing with the principal relief claimed in the applications and, accordingly, no further order is required.
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Decision last updated: 29 April 2024