Malik v ANZ Banking Group Limited [2010] ACTCA 11

Court of Appeal (ACT)|2010-05-21|Before: Penfold J, Higgins CJ

1. The application for leave to appeal out of time be dismissed.

1. Mr Malik had an unregistered mortgage over a block of land in Gungahlin. The ANZ Bank subsequently took a mortgage of the same land. Mr Malik's interest was not registered immediately before the settlement of the transaction giving rise to the later mortgage. By the time ANZ sought to register its mortgage, Mr Malik had put a caveat on the title.

2. Mr Malik applied to the court for an order that his mortgage be registered in priority to ANZ's mortgage. It was common ground that if ANZ had conducted a pre-settlement title check, then its mortgage would have had priority over Mr Malik's mortgage, but that if no check had been conducted, Mr Malik's mortgage would have had priority as the earlier in time.

3. Within the time limits set for the filing of affidavits, ANZ filed an affidavit from one of its settlement clerks, Janette Gerlach, deposing that her usual practice in dealing with settlements included a pre-settlement title check. There was no affidavit from Sally Davis, who had done the settlement concerned.

4. Ms Davis and her affidavit turned up on the morning of the hearing. Ms Davis gave evidence, and was cross-examined about her claim to have remembered the specific settlement. She was not cross-examined about why her affidavit had not been provided earlier.

5. Higgins CJ found that the pre-settlement check had been conducted and made orders in favour of ANZ. Counsel for Mr Malik sought an order that each party pay its own costs; the Chief Justice said, somewhat ambiguously, that this was not a case for exemplary costs, but ordered Mr Malik to pay ANZ's costs.

6. A few days later, ANZ's lawyers notified Mr Malik's lawyers of their costs estimate. Mr Malik's lawyers wrote to ANZ's lawyers indicating that an appeal against the costs order was being considered, and suggesting an agreement that each side should pay its own costs.

7. Several days after the appeal period expired, Mr Malik's lawyers filed an application for leave to appeal out of time. The hearing of that application came before me on 19 May 2010.

8. The matters to be considered on an application for leave to appeal out of time are whether the appeal has merit, and whether there has been a proper explanation for the delay.

9. The award of costs is a discretionary decision. An appeal from a discretionary decision of a judge is not at large, and in particular does not permit an appeal court to substitute its own decision simply because it would have made a different decision at first instance. Rather, such an appeal must be based on error by the judge, being error falling into one or more of a well-established set of categories, for which House v The King [1936] HCA 40; (1936) 55 CLR 499 is commonly cited as authority. Those grounds include:

errors of law,
errors of fact,
taking account of irrelevant or extraneous considerations, and
failing to take account of relevant or material considerations.

10. As well, a decision that is plainly unreasonable or unjust may be assumed to be the result of error.

11. In Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120, Meagher JA commented on the scope for appealing discretionary judgments. His comments were made in the context of interlocutory orders made by trial judges, but also have some relevance to costs orders, which in this context appear to be neither interlocutory nor substantive. He said (at 122):

An order made by a trial judge in these circumstances is usually immune from appeal and any attempt to appeal is hopeless. This is because the trial judge is exercising a discretionary judgment, which will be set aside only in the most extraordinary circumstances: House v The King [1936] HCA 40; (1936) 55 CLR 499. Not only that; he is exercising his discretion not on a matter which determines substantive rights, but on a point of practice and procedure.

12. The grounds of appeal identified in the draft Notice of Appeal are as follows:

His Honour's exercise of the discretion miscarried in that His Honour failed to take into account the failure of the respondent to adduce evidence of the making of a final search until the day of the hearing.
Further or alternatively, His Honour's exercise of discretion miscarried in that His Honour found, without evidence on which to base the finding that the appellant ought to have known, prior to service on him of the affidavit of Sally Davis, that the respondent had made a final search.

13. Against the House v The King test, the errors identified amount to:

first, a failure to take account of a material consideration, being ANZ's approach to the production of Ms Davis's evidence; and
second, mistaking the facts, constituted by finding that "the appellant ought to have known, prior to service on him of the affidavit of Sally Davis, that the respondent had made a final search".

14. The argument is in general terms that in determining costs, the Chief Justice misunderstood the significance of the late production of Ms Davis and her affidavit.

Proposed appeal ground 1: failure to take account of absence of evidence

15. At the hearing, the following exchange took place between counsel for Mr Malik and the Chief Justice.

MR ARTHUR: ... It will be clear to your Honour that we were always clear about the view that if it was established that the bank had done a search, then we had no case. As of this morning and up until 11 o'clock this morning, we were of the belief that the bank put its case on the basis that ... the person who was to give or who could've given evidence, as to her usual practice was available, but did not give that evidence. That evidence was only brought today for the first time, and in the circumstances, we are entitled to put the bank to proof, given that the proper way of proving it had not been taken and the inference that we drew from that was that there was something unusual and some particular reason why Sally Davis had not been called.

But for those circumstances, we would not be here today, we would not have contested the matter ... Certainly, we would've not sought to trouble the bank. So it's on that basis that we would say that there should be no order for costs.

HIS HONOUR: Well I think it was always blindingly obvious, with respect, that a search would have been done for settlement, irrespective of whether Ms Davis was to be called or not. I don't think it's a case for exemplary costs or anything of that kind, but because of the factors you've mentioned, you may have thought you had some chance of getting around it.

But in any event, I think that the proper order is that the plaintiff pay the third defendant's costs of, and incidental to, the application.

16. I note in passing that a more arguable submission in the circumstances would have been that the parties pay their own costs from the point when Ms Davis's affidavit could reasonably have been expected to be produced.

17. In any event, the transcript shows that the issue was raised with the Chief Justice, and that he responded directly to counsel's submissions. The language he used in rejecting the submission was colourful, and might be found to have slightly exaggerated the strength of ANZ's case, but I cannot say that his Honour had completely misunderstood the strength of that case or the significance of the absence of Ms Davis's evidence.

18. On the material before me, it is not at all clear that ANZ could not have succeeded in the absence of Ms Davis's evidence. That is, his Honour might have been willing to infer a pre-settlement check had taken place from Ms Gerlach's evidence of the usual practice in the settlements unit.

19. For Mr Malik, it is submitted that this evidence, in the absence of Ms Davis's evidence, would not have permitted an inference in favour of the pre-settlement check. If this is correct, then that evidence must still have been irrelevant as having no probative value once Ms Davis's evidence was available. In that case, it is hard to see why counsel at the hearing before the Chief Justice bothered to seek the exclusion of a small but specific portion of that evidence. A more rational approach to evidence regarded as having no probative value would have been either to object to the whole of the evidence, or to ignore it on the basis that its admission was harmless and a time-consuming objection would therefore have been pointless.

20. On the basis that a win for Mr Malik was not a foregone conclusion, even in the absence of Ms Davis's evidence, the error identified on behalf of Mr Malik would be difficult to make out. Given his Honour's direct response to counsel's submission about the late arrival of Ms Davis's evidence, it would be hard for Mr Malik to make out the claim that his Honour failed to take account of that matter.

Proposed appeal ground 2: erroneous finding about what Mr Malik ought to have known

21. If the Chief Justice had made the finding attributed to him by counsel for Mr Malik, that "the appellant ought to have known, prior to service on him of the affidavit of Sally Davis, that the respondent had made a final search", there might have been a basis for identifying this as an error by his Honour. However, he made no finding in those terms (see his Honour's remarks quoted at [15] above). His Honour's comment about what was "blindingly obvious" was immediately qualified by his reference to exemplary costs and to the possibility that Mr Malik "may have thought [he] had some chance of getting around it", which I take to be a reference to a hope on Mr Malik's part that he might succeed in the substantive claim.

22. It is not clear to me that his Honour meant any more than that ANZ's failure to produce evidence from Ms Davis might have given Mr Malik some reason for optimism. Furthermore, I cannot see that his Honour's comments should be taken as any kind of finding of fact. He had already, for the purposes of the substantive claim, made a finding of fact about whether the settlement search had been done, and it seems unlikely that he would have intended to make a finding of fact about Mr Malik's beliefs, or about how the matter would have proceeded if ANZ had produced Ms Davis earlier, purely based on counsel's submissions.

23. The claim made by counsel was repeated in the letter from Mr Malik's lawyers dated 10 September. Since then, Mr Barker, Mr Malik's Canberra solicitor, has sworn an affidavit, dated 18 March 2010, about the grounds of appeal. He canvasses the legal arguments in the original application, ANZ's provision of evidence, and the outcome of the application, and identifies matters that would be argued on appeal. He does not, however, claim that any advice was given to Mr Malik, or that any decision was ever made, about whether to continue with the application by reference to the significance of the apparent gap in ANZ's evidence.

24. Finally, even if the Chief Justice's statement about what Mr Malik should have known were found to be an incorrect finding of fact, I consider that, in the broader circumstances of this case, it would be difficult to persuade a court of appeal that a different costs order should be made.

25. Thus, the appeal seems to be of little merit. Whether the appeal can properly be described as hopeless or bound to fail, is a more difficult question. There is no doubt that ANZ's approach to Ms Davis's evidence, or at least the failure to explain its late arrival, was very odd, but Mr Malik's scope for making anything out of that oddity might have been lost when his counsel failed to cross-examine Ms Davis about why she had not made an affidavit some months earlier than she did.

26. Counsel for Mr Malik mentioned the cases of Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (Oshlack) and Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 (Beoco).

27. In Oshlack, McHugh J at [69] lists circumstances in which a winning party might appropriately be deprived of "the usual order as to costs". One of those circumstances is where the winning party has unnecessarily protracted proceedings. However, the likely significance of this test is problematic having regard to the failure to cross-examine Ms Davis about the lateness of her affidavit, and the absence of any support, either from affidavit evidence or from an analysis of the course of the original proceedings, for counsel's claim that Mr Malik's approach to the proceedings was influenced by the evidence that ANZ had failed to provide.

28. Beoco was a case involving a grant of leave to make a late amendment of the statement of claim, without which the action would have failed. The England and Wales Court of Appeal (Civil Division) upheld an order that the successful plaintiff pay the defendant's costs, saying at 154:

As a general rule, where a plaintiff makes a late amendment..., which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment.

29. However, in the current case, I am dealing not with a late amendment changing the case being heard, but the late provision of evidence in an action where the claim and the defence were clearly understood all along. Furthermore, as already discussed, I am not convinced that ANZ's defence would necessarily have failed without Ms Davis's evidence, or that Mr Malik and his advisers were influenced by an assumption to that effect.

30. In any case, the existence of authority for the general proposition that a winning party may sometimes be ordered to pay the losing party's costs does not seem to advance Mr Malik's case, given that it seeks to challenge the exercise of a discretion by a judge who, as already discussed, has clearly turned his mind to the significance of the winning party's handling of its evidence. The fact that a discretion could as a matter of law have been exercised differently does not require it to be exercised differently in any particular case.

Explanation for failure to lodge appeal within time

31. In the event, the weakness of the applicant's case is not the only ground for dismissing this application. The applicant has also failed to satisfy me that there is an acceptable explanation for the failure to lodge the appeal within time.

32. First it must be noted that the delay in this case was very brief, namely, four days.

33. On the other hand, I note the comments of Brennan CJ and McHugh J in Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 (Jackamarra) at [4] that, in an application for an extension of time to lodge an appeal, "the respondent in the application has a vested right to retain the judgment, the subject of the appeal. To grant the application for an extension of time is to put at risk a vested right of the respondent."

34. The chronology of the events leading to the failure to lodge the appeal within time seems to be as follows:

The Chief Justice's costs order was made on Friday 28 August 2009. The time for lodging an appeal therefore expired on Friday 25 September 2009.
On 2 September ANZ's lawyers faxed to Mr Malik's lawyers a letter seeking costs pursuant to the Chief Justice's order in the amount of just over $63,000.
On 14 September ANZ's lawyers received a letter from Mr Malik's lawyers, dated 10 September, suggesting that the costs order was wrong, foreshadowing an appeal against that order, and proposing that each party pay its own costs.
On 29 September 2009 Mr Malik lodged an application for leave to appeal out of time from the Chief Justice's costs order.

35. It is apparent that by 10 September, that is, 15 days before the appeal period expired on 25 September, Mr Malik was considering an appeal against the costs order. Notice of appeal was not, however, lodged by that 25 September deadline. Instead, it seems that on the following Monday, 28 September, Mr Malik's lawyers, realising that the deadline had been missed, began the necessary steps to obtain leave to appeal out of time.

36. Since Mr Barker's first affidavit, an affidavit has been sworn by Mr Malik's Sydney solicitor, Mr Christopher Henaghan, referring to the matters mentioned by Mr Barker and adding more claims intended to explain the failure to lodge the notice of appeal in time.

37. The relevant paragraphs of Mr Henaghan's affidavit are as follows:

To enable a decision to be made whether to Appeal or not on the question of costs, all documents that were before His Honour on the 28th August were required to assist our client in making a decision and also to assist us, our agents and Counsel retained to provide good advice to our client so that he could make an informed decision.
Our client required advice concerning the extra costs of an Appeal and the likelihood of success and the cost of running an Appeal. Our client also required advice as to the estimate of extra costs he would or could be liable for at the conclusion of the Appeal.
Unfortunately there was some delay in communications as our Canberra Agent was conferring with a Sydney costing consultant together with a Canberra Litigation solicitor and Counsel retained in this matter to provide the appropriate advice. The advice then had to be collated and referred to us. There was also a further difficulty in that our Agent solicitor was out of the country for approximately one week during this period.
Our client's wife had at the same time been involved in Supreme Court proceedings in Sydney due to a collapse by a developing company who had contracted to sell to my client's wife an investment property ("off the plan") and that developing company had gone into liquidation.
I had some difficulty in obtaining instructions from my client. My client at that time also had respiratory and heart complications. He was unable to drive and was being treated by doctors regularly and attending Penrith Hospital for tests. His wife had to drive him to his appointments as he was unable to drive himself. It was difficult for him to attend to give instructions and or make himself available to obtain instructions.
Proceedings have been very stressful for our client partly due to the stress of the Supreme Court proceedings in Sydney and also due to his health and the proceedings in the ACT.
It took some considerable time to fully advise our client and assure myself that he was appraised of the procedure and the ramifications of costs involved in conducting [the] Appeal and also the costs he could pay in the event of losing the Appeal. Due to the aforementioned matters and to our client's ill health at the time our final instructions, costs agreement and funding for the appeal were only finalised by Monday 28th September 2009.

38. I note first that Mr Henaghan's affidavit was sworn on 16 March this year, but provides no dates for any of the events identified as contributing to delay. The only events that clearly took place before the appeal period expired are those also mentioned in Mr Barker's affidavit, sworn three days after that expiry, namely the consultations involving people located in Canberra and Sydney, and Mr Barker's absence for a week.

39. Mr Henaghan's affidavit refers to three kinds of matters by way of explanation.

40. First, there are references to the need to gather appropriate information on which to base a decision whether to appeal, and otherwise to lay the groundwork for the appeal. These claims are entirely unconvincing.

41. I cannot see why the documents mentioned in paragraph 4 were not immediately available to Mr Malik and his lawyers at the end of the hearing on 28 August. I cannot see that the need to be advised about the costs of the appeal and its likely success distinguishes Mr Malik from any other litigant. The need for such advice presumably explains why appeals are not required to be lodged immediately after a decision is given.

42. Nor can I see that communications between Sydney and Canberra need to be any more difficult or time-consuming than communications within one or other city. Certainly the affidavit does not suggest, let alone explain, that the relevant communications needed to take place face-to-face, and telephone, fax and email contact are just as easy between cities as within them.

43. Finally, the fact that the costs agreement (presumably between Mr Malik and his solicitors) and funding for the appeal (whatever that means) were not finalised until 28 September does not seem to add anything to the other information about preparations for lodging the notice of appeal, although it does invite speculation about whether the costs agreement made it clear that the appeal was already out of time and that the first step would be to seek leave to institute a late appeal.

44. At the hearing of this application, I raised with counsel for Mr Malik why a notice of appeal should not have been lodged within time in order to preserve Mr Malik's rights while a final decision was made whether to pursue the appeal. Counsel's explanation that this would have involved a "sunk cost" if the appeal had not then proceeded was clearly correct, but did not address why a deliberate choice to avoid the risk of a sunk cost, if such a decision were made, should engage the court's sympathy in respect of the consequences of that decision.

45. Secondly, there are claims about Mr Malik's health and the personal circumstances of him and his wife, and that he has been under stress. It is not explained why Mrs Malik's apparently unrelated legal matter would be at all relevant in this case. Mr Malik's health problems might well have been relevant, although there is no claim that they rendered him incapable of giving instructions, only that they made it difficult for him to give instructions in person (I do not understand, and accordingly ignore, the reference to Mr Malik obtaining instructions). However, there is no evidence of the real nature or seriousness of Mr Malik's health problems, or their impact during the crucial period between late August and late September. There is no affidavit from Mr Malik detailing his problems and nothing by way of medical certificates, hospital attendance records or the like.

46. Thirdly, there is the assertion of problems caused by Mr Barker's absence from Australia for a week "during this period". No information is given in the affidavits about whether the week concerned fell at a crucial point during the appeal period, or whether it was a planned or unplanned absence.

47. Accordingly, I am not satisfied that there has been an acceptable explanation for the delay in lodging the notice of appeal.

48. I note that in Jackamarra Kirby J (at [64]), in discussing the matters that should be addressed in providing an explanation for delay, referred to the question whether the delay was that of the litigant or was delay by the litigant's lawyers "with which the litigant should not be saddled". This question is not answerable by reference to the affidavits provided by Mr Malik's solicitors. In these circumstances, it seems appropriate that any allocation of blame between Mr Malik and his legal advisers should be resolved between themselves and without involving any other parties to the original proceedings.

Desirability of finalising proceedings once substantive matters resolved

49. Finally, it seem to me that once a case has ceased to be about substantive matters and concerns only arguments about costs, a court should in the absence of any glaring injustice prefer an approach that brings the proceedings to an early end over an approach that permits further and possibly even more substantial costs to be incurred, to the ultimate benefit of no one but the legal profession.

50. In summary, I am not satisfied that there has been an acceptable explanation for the failure to lodge Mr Malik's appeal within time, and I have found that the grounds of appeal are weak, possibly even to the point of being clearly hopeless or bound to fail.

51. In those circumstances, and reminding myself again of the fact that the delay was only four days, I nevertheless do not see that any injustice would result from refusing leave to appeal out of time.

52. Accordingly, I refuse the application for leave to appeal out of time from the Chief Justice's decision of 28 August 2009. The applicant will pay the respondent's costs.

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of her Honour, Justice Penfold.

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