K Sheridan v Colin Biggers & Paisley

Supreme Court of NSW|2019-05-17|Before: Black J

Solicitors: K L Sheridan (self-represented) Colin Biggers & Paisley (Defendants) File Number(s): 2018/344655

Background and several requests by the Plaintiff

By my judgment delivered on 10 May 2019 ([2019] NSWSC 528) ("Principal Judgment") I made orders that a Statement of Claim filed by the Plaintiff on 9 November 2018 be struck out and the proceedings be dismissed. I also observed (at [61]) that: "I will allow the parties the opportunity to be heard as to the costs of these proceedings, and whether an order should be made restraining the Plaintiff from commencing or continuing any other proceedings (as he has foreshadowed) in respect of the matters raised in these proceedings until those costs have been paid."
I also directed that: "The parties submit their agreed short minutes of order to give effect to this judgment, including as to the matters noted in paragraph 61 above, or otherwise their respective short minutes of order and short submissions as to any differences between them, by 4pm on 17 May 2019."

A preliminary issue

I should address a preliminary question, whether I should disqualify myself from hearing the questions as to costs and the further relief sought by the Defendants and addressed in this judgment. That question arises because, in his submissions in the earlier hearing, the Plaintiff asserted the existence of a "commercial lien" in the amount of $300 million against the Defendants, the Supreme Court of New South Wales and several other persons, including me as trial judge, and also tendered a document described as an "International Public Notice" of a "Common Law Commercial Lien" extending not only to the Defendants but also the Court and others. The Plaintiff also referred at the hearing and in the email to my Associate quoted above to the commencement of proceedings in "Her Majestys Federal Court".
The Plaintiff did not make any submission that I was disqualified from hearing the question of costs or dealing with ancillary relief by reason of any actual or apparent bias arising from these matters where, as I noted above, he made no further submissions in respect of this application. I am satisfied that no actual bias arises from these matters. First, I have regard to the principle of judicial immunity, which has been recognised at least since R v Skinner (1772) 98 ER 529 at 530, where Lord Mansfield observed that "neither party, witness, counsel, jury, or Judge, can be put to answer, civilly or criminally, for words spoken in office"; see also Scott v Stansfield (1868) LR 3 Exch 220 at 223 per Kelly CB and Rajski v Powell (1987) 11 NSWLR 522 at 534, where Kirby P observed that judicial immunity is "a principle which appears to be fundamental to all the jurisdictions of the common law." In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1, the majority of the High Court of Australia treated that principle as reflecting the finality of litigation and observed (at [40]) that: "… while action might lie at common law for acts done in an inferior court in excess of jurisdiction, the decisions of supreme courts were final. And there was an immunity from suit for any judicial act done within jurisdiction. What is important to notice for present purposes is not the history of development of this immunity, but that both judicial immunity and the immunity of witnesses were, and are, ultimately, although not solely, founded in considerations of the finality of judgments." [citation omitted] In Donaldson v State of New South Wales [2018] NSWSC 1562, Hamill J also referred to the Judicial Officers Act 1986 (NSW) as providing immunity to both Supreme Court Judges and Registrars in the performance of their duties. It seems to me that s 44A of that Act takes the general law as its starting point and extends the operation of the immunity that is available at general law.
Second, a unilateral attempt to create a liability of $300 million owed by the Court or a trial judge to the Plaintiff, where their only dealing with him is the performance of the Court's functions, has no prospects of success, inter alia, for the reasons noted by the Court of Queen's Bench of Alberta, Canada, in Meads v Meads [2012] ABQB 571 at [447], to which I referred in the Principal Judgment (at [30]). The assertion of a financial liability against the Court or a trial judge which has no proper basis, or a threat of any consequential proceedings which would likely also be struck out, does not create actual bias.
I also do not consider that these matters give rise to any question of apprehended bias. The test for apprehended bias is whether a fair minded lay observer might reasonably apprehend that a Judge might not bring an impartial and unprejudiced mind to the resolution of the question the Judge is required to decide. In Dovade Pty Ltd v Westpac Banking Corporation (1999) 46 NSWLR 168 at [93], the Court of Appeal observed that: "A claim of apprehended bias should be considered in the context of the judicial function and the public perception of it. There is a presumption that public officers have acted with honesty and discretion: Broom's Legal Maxims, 10th ed at 642). In the case of a judicial officer, this is no empty form. It is reinforced by the accountability necessarily inherent in the public processes of litigation and the disappointed litigant's right of appeal. Every judge swears to "do right to all manner of people according to law without fear or favour, affection or ill-will". This public oath is not a talisman against error, but it forms the constant back-drop to the way in which each judge functions on and off the bench. The history and reach of the oath were discussed by Sir Gerard Brennan on his swearing in as Chief Justice of the High Court of Australia see 183 CLR at ix-x. The level of public confidence in the judiciary is based upon experience and a general perception of the rule of law."
In Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, the plurality of the High Court of Australia pointed to the two-step process that would ordinarily require the identification, first, of facts and circumstances which might lead a Judge to decide a case other than on its legal and factual merits, and then the identification of a link between those matters and the risk that the case will not be decided on its merits. A hypothetical fair minded lay observer would be attributed with appropriate knowledge of relevant matters so as to be in a position to make a reasonably informed assessment of the likelihood of apprehended bias. The Court there also emphasised that Judges have a duty to exercise judicial functions within their jurisdiction when they are assigned a case according to the Court's practice, and do not select the cases that they hear, and are not at liberty to decline to hear cases without good cause. In Michael Wilson & Partners Ltd v NicholIs [2011] HCA 48; (2011) 244 CLR 427, the High Court in turn observed that the question of apprehended bias turned on whether a fair minded lay observer might reasonably apprehend that the Judge might not bring an impartial and unprejudiced mind to the resolution of the question that the Judge was required to decide, and referred to Ebner v Official Trustee in Bankruptcy above.
It seems to me that a reasonable bystander would understand that a trial judge's decision will not be influenced by the threat of a unilateral lien imposed by a litigant on the Court or the trial judge or of proceedings against him or her in another Court. A reasonable bystander would also understand that, if the position were to the contrary, any litigant could exclude any judge who was not to his or her taste, by threatening such a lien or such proceedings. For these reasons, I consider that I should not disqualify myself from determining the remaining issues in the proceedings.

Whether costs should be ordered against the Plaintiff on an indemnity basis

Turning now to those remaining issues, the Defendants rely on the affidavit of Mr McKenzie dated 15 April 2019, which was read in the primary proceedings. I have regard to, but do not repeat, matters addressed in Mr McKenzie's affidavit, as set out in the Principal Judgment. The Defendants also rely on Mr Hedge's affidavit dated 17 May 2019 read in this application. Mr Hedge there sets out his professional background, which indicates his long experience as a solicitor with specialist expertise in commercial litigation, restructuring and insolvency. He refers to the liquidation of Courtenay House Pty Limited (in liq) and Courtenay House Capital Trading Group Pty Limited (in liq) ("Companies") and the appointment of Messrs Jahani and McInerney as liquidators of the Companies, and to several other proceedings commenced by the Plaintiff in respect of that matter, some of which I referred in the Principal Judgment. Mr Hedge sets out the history of the hearing of these proceedings, and refers to the relisting of the matter on 6 May 2019, in the circumstances set out in the Principal Judgment. I will refer to other aspects of his evidence, applicable to the particular relief sought, below. The Defendants also made submissions in the time that I directed in the Principal Judgment.
The Plaintiff did not rely on any further affidavit evidence or make any submissions, possibly because of his observation at the earlier hearing that he was not continuing in this "corporate court" and was "retiring" me from this Court. The Plaintiff has been afforded procedural fairness, by way of an opportunity to make submissions, and he is not obliged to take advantage of that opportunity.
First, the Defendants seek an order, pursuant to r 42.5 of the Uniform Civil Procedure Rules 2005 (NSW), that the Plaintiff pay their costs of the proceedings on an indemnity basis.
Section 98(1)(c) of the Civil Procedure Act 2005 (NSW) permits the Court to order costs on an ordinary or an indemnity basis. Rule 42.2 of the Uniform Civil Procedure Rules provides that, unless the Court orders otherwise or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 deals with an order for costs on an indemnity basis. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v State of New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20]. Whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 89; Westpac Banking Corporation v Ollis [2007] NSWSC 1008 at [6]. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6], where the Court observed that an order for indemnity costs may be made where a party's conduct in proceedings is plainly unreasonable or involves an element of delinquency.
The Defendants submit that an order for indemnity costs should be made against the Plaintiff on the basis that the proceedings had no real prospects of success; serious allegations of criminality and fraud were made against the Defendants without foundation; and the Plaintiff's conduct of the proceedings caused unreasonable expense and delay to the Defendants. The Defendants point out, and I accept, that the Court may make an order for indemnity costs against a party who maintains proceedings in wilful disregard of known facts or clearly established law or where, properly advised, the Plaintiff should have known that he or she had no prospects of success: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234.
I recognise that the Plaintiff could rightly have felt aggrieved that he and members of the "Oceanic Sun Group" were exposed to loss by the conduct of the Companies, although there is no obvious reason why he should have blamed the liquidators for loss that resulted from the Companies' conduct prior to their appointment, and brought about the need for that appointment. Irrespective of any justification for that concern, his allegations that the Defendants had committed "theft" and "trespass" in the performance of the liquidation, undertaken pursuant to orders made by the Court and in accordance with the relevant provisions of the Corporations Act 2001 (Cth), had no real prospects of success, including because the requisite elements to establish claims for theft and trespass could not be satisfied for the reasons I noted in the Principal Judgment. The Defendants also rightly point out that the Plaintiff had no reasonable basis to assert a claim for $75 million in damages arising from the matters on which he relied. In these circumstances, it seems to me that an order for indemnity costs is justified. I need not address the other bases on which that claim is put, and I recognise that self-represented litigants will not always conduct proceedings with the same efficiency as litigants who are well represented.

Whether a gross sum costs order should be made

The Defendants seek an order, under s 98(4)(c) of the Civil Procedure Act that the Plaintiff pay their costs fixed in the gross sum of $60,520. In submissions, the Defendants refer to the Court's jurisdiction to make an order for a specified gross sum to be paid by way of costs, under s 98(4)(c) of the Civil Procedure Act and to the fact that such an order may be made where the Court is satisfied that the assessment of costs would likely be protracted and expensive: Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [21]; Kostov v Nationwide News Pty Ltd (No 1) [2018] NSWSC 1822 at [99]-[100]. I also summarised the relevant principles in Saba v Plumb [2017] NSWSC 955 at [23] as follows: "Section 98(4) of the Civil Procedure Act relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. That power is commonly exercised where costs have been incurred in a lengthy or complex case although it is not in its terms limited to such a case: Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 at [8]. The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW [s 98.65]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23. In Hamod v State of New South Wales [2011] NSWCA 375 at [816]-[817], Beazley JA (with whom Giles and Whealy JJA agreed) summarised factors relevant to the making of a gross sum costs order as follows: 'The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp [[2002] NSWCA 213; (2002) 54 NSWLR 738]); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie's Uniform Civil Procedure NSW at [s 98.45]. The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]-[195]; Hadid v Lenfest Communications Inc [2000] FCA 628.'"
Mr Hedge also gives evidence in support of the Defendants' application for a gross sum costs order. Dealing first with the question whether such an order should be made, Mr Hedge's evidence in his affidavit dated 17 May 2019 plainly raises the probability that the Plaintiff would not participate in a costs assessment process in any orthodox manner, given his attitude to the Court's jurisdiction and the forms prescribed for conduct of proceedings in the Court. Mr Hedge also points out that the Plaintiff takes the view, recorded in the Principal Judgment, that at least some Australian legislation (such as the Corporations Act) does not apply to him and that the Court has no jurisdiction over him. There is real reason to think that the Plaintiff may take the same view in respect of a costs assessment, at least if that costs assessor appears to be disposed to quantify the costs to be awarded against him in a manner that is adverse to his interests. Mr Hedge also expresses a concern, based on his experience of earlier applications brought by the Plaintiff in the liquidation, that the Plaintiff may well not accept any determination made by a costs assessor, and further appeals or objections from such a determination may then be brought, other than in accordance with the usual processes of the Court. The Plaintiff is, of course, entitled to appeal from any determination as to costs. However, a gross sum costs order made by the Court will likely expedite that process, since the Plaintiff may then bring any appeal from a judgment finally resolving all issues of costs.
The Defendants submit, and I accept, that there is reason for them to be concerned that the Plaintiff will not constructively participate in any costs assessment process, having regard to his attitude to Court processes and the Court's jurisdiction demonstrated in the earlier hearing. I am satisfied that a gross sum costs order should be made.
Turning now to the quantum of such an order, Mr Hedge quantifies legal costs incurred by the Defendants in the defence of the proceedings as $60,520.34, excluding any GST payable on solicitors' fees, that amount being comprised of solicitors' fees of $53,768; Counsel's fees of $5,445; and disbursements such as transcript and filing fees of $1,307.34. He refers to itemised memoranda setting out the costs and disbursements and also referring to Counsel's fees. He notes those fees have been calculated at the normal commercial rates charged by his firm, Colin Biggers & Paisley. I note that the Plaintiff did not raise any question of Colin Biggers & Paisley's entitlement to recover its own costs of the proceedings. Little may turn on that question here, since the joinder of Colin Biggers & Paisley in the proceedings would not have increased the costs that would have been incurred by Grant Thornton Australia in defending the proceedings for itself.
Mr Hedge expresses the view that those costs are reasonable in the circumstances, where the proceedings arose from the circumstances of a complex litigation; serious allegations, including variously theft, trespass and fraud were made against the Defendants; additional costs were incurred because the proceedings were originally commenced in the General List of the Common Law Division, before being transferred to the Corporations List over the Plaintiff's opposition and resolved in this List; and that process involved several attendances before the Court.
In submissions, the Defendants refer to well-established principles applicable to quantification of a gross sum costs order, including that the Court does not itself seek to undertake a costs assessment and may adopt a "broad brush approach" by reference to the information before it. The Defendants submit that Mr Hedge's evidence indicates that the Defendants' costs of the proceedings, calculated on a solicitor/client basis, were reasonable. There does not seem to me to be any reason to doubt that those fees were reasonable, having regard to the nature of the proceedings and the rates generally charged by firms with experience in complex commercial litigation.
The Defendants submit that the Court should make a gross sum costs order in favour of the Defendants in the sum of $60,520 or, alternatively, apply a modest discount of 10-15% to those costs, with the sum fixed in the range between $51,442 and $54,468. I consider that I should discount the solicitor/client costs claimed, which is the ordinary practice in a gross sum costs order, reflecting the fact that a full assessment of costs is not undertaken. I am satisfied that a discount of 10% is sufficient in the relevant circumstances, and that discount should only be applied to solicitor/client costs and not Counsel's fees or disbursements. The gross sum awarded should be $54,468 (the higher figure noted above) which is a little less than the amount I would have calculated of $55,143, discounting solicitors' fees but not Counsel fees or disbursements. I will not make an order for any GST payable on that amount where, in the ordinary course, the Defendants should have an input tax credit for any GST paid.

Restraint from further proceedings until costs are paid

The Defendants also seek an order under r 12.10 of the Uniform Civil Procedure Rules and s 67 of the Civil Procedure Act (and presumably also in the Court's inherent jurisdiction) restraining the Plaintiff from commencing (and presumably also continuing) any proceedings in any Court or Tribunal against either of the Defendants (other than by a claim in the nature of a defence, cross-claim or cross-summons) which arise from the same or similar facts as these proceedings without the leave of a Judge of this Court, unless and until the Plaintiff has paid in full their costs of these proceedings.
The Defendants submit that the Court has jurisdiction to make such an order under s 67 of the Civil Procedure Act and r 12.10 of the Uniform Civil Procedure Rules: Webster v Super Smart Strategies Pty Ltd [2017] NSWSC 531 at [57]-[61]; Kostov v Nationwide News Pty Ltd (No 1) at [104]-[114]. Section 67 of the Civil Procedure Act relevantly provides that, subject to rules of Court, the Court may at any time and from time to time, by order, stay the proceedings before it, either permanently or until a specified day. Rule 12.10 of the Uniform Civil Procedure Rules provides that: "If: (a) as a consequence of the dismissal of proceedings, a party is liable to pay the costs of another party in relation to those proceedings, and (b) before payment of the costs, the party commences further proceedings against that other party on the same or substantially the same cause of action, or for the same or substantially the same relief, as that on or for which the former proceedings were commenced, the court may stay the further proceedings until those costs are paid and make such consequential orders as it thinks fit."
It seems to me that s 67 of the Civil Procedure Act and r 12.10 of the Uniform Civil Procedure Rules likely do not extend beyond the conduct of proceedings in this Court. However, it seems to me the Court has an inherent jurisdiction to make the order sought by the Defendants, extending to the commencement or continuance of proceedings in any Court. An order made at first instance that had the effect of an injunction preventing a party from bringing such proceedings until costs had been paid, and which was not limited to proceedings in this Court, was treated as within the Court's inherent jurisdiction to prevent abuse of its processes in Idoport v National Australia Bank Ltd [2006] NSWCA 202 at [29]. The Court of Appeal there noted that such an order did not constitute shutting a party out of access to the Court, where that party's entitlement to engage the resources of the Court and the other parties to the proceedings only existed within the construct of the Court's processes.
A stay of proceedings in this Court was granted on a similar basis by Gleeson JA, sitting as a single Judge in the Court of Appeal in Pi v Zhou [2016] NSWCA 148; see especially at [23]. An order restraining the commencement of proceedings in this Court based on the same or similar facts unless the other party's costs were paid, without leave, was made in Webster v Super Smart Strategies Pty Ltd above, where a cross-claim had been dismissed with costs by reason of defaults in compliance with Court directions and a failure to prosecute it. Adamson J observed (at [61]) that: "In the circumstances of the present case, I am persuaded that an order imposing some restraint on the defendants is appropriate, having regard to the defendants' conduct …. For the same reasons, I consider that such an order ought be made, not only to protect the cross-defendants, but also to protect the Court's processes. The order must, accordingly, be proportional and be directed to the prejudice which would be occasioned if the restriction were not included. In my view, it is appropriate to order that the defendants not be permitted to file proceedings in this Court, without leave, which are based on the same or similar facts as the first cross-claim, unless the costs of the cross-defendants have been paid. The provision for leave would allow for the chance that there is some delay in the assessment of costs or for some other matter which could work to the prejudice of the defendants." An order was made on the same basis by Davies J in Kostov v Nationwide News Pty Ltd (No 1) above.
Mr Hedge also gives evidence in support of this aspect of the application in his affidavit dated 17 May 2019. He observes that the Plaintiff previously brought several applications of the same nature in the liquidation of the Companies, and, as I noted above, has already foreshadowed commencing proceedings in "Her Majestys Federal Court" in these proceedings before me, and appeared to confirm his intention to do so in the email to my Associate to which I referred above. Mr Hedge points to the risk that the Defendants will be left to respond to those other proceedings at the same time as their costs of these proceedings are left unpaid.
In submissions, the Defendants point to the Plaintiff's express indication of his intent to commence proceedings in "Her Majestys Federal Court" as indicating the likelihood that he will commence proceedings in respect of the same or similar facts, without paying the costs of these proceedings, unless restrained from doing so. They point to several successive applications brought by the Plaintiff, seeking the same or similar relief, in respect of the liquidation of the Companies, as reinforcing that risk. I am satisfied that there is a substantial risk that the Plaintiff would commence further proceedings, as he foreshadowed, against the Defendants in respect of the same or similar facts as these proceedings, and would do so without first meeting an order for costs, given that he does not, or does not necessarily, recognise that he is bound by Australian law or by orders of this Court. For these reasons, I will make the restraining order sought, which does not prevent the Plaintiff commencing further proceedings, subject to any questions of issue estoppel, res judicata or abuse of process, once he has paid the Defendants' costs of these proceedings, or with leave of a Judge in an appropriate case.

Orders

For these reasons, I make the following orders, substantially in the form sought by the Defendants:
Pursuant to rule 42.5 of the Uniform Civil Procedure Rules 2005 (NSW), the Plaintiff pay the Defendants costs of the proceedings on an indemnity basis.
Pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW), the Plaintiff pay the Defendants' costs of the proceedings fixed in the gross sum of $54,468.
The Plaintiff is restrained from commencing or continuing in any Court or Tribunal any proceedings against either the First Defendant or Second Defendant (other than by a claim in the nature of a defence, cross-claim or cross-summons) which arise from the same or similar facts as these proceedings without the leave of a Judge of the Supreme Court of New South Wales, unless and until the Plaintiff has paid in full the costs ordered in order 2 above.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 May 2019

Civil Procedure Act 2005(NSW)ss 67, 98(1)(c), 98(4)(c)

Uniform Civil Procedure Rules 2005(NSW)rr 12.10, 42.2, 42.5

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