Indemnity costs?
7 With reference to the factors identified in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5], the respondents submit that indemnity costs are justified in this case on account of the following:
(1) MWP was required to demonstrate a House v The King [1936] HCA 40; 55 CLR 499 error, but failed to identify any such error.
(2) MWP made allegations regarding the "apparent collusion and improper sharing, use and possession of documents", the respondents' alleged breach of the Harman undertaking and other breaches, and a deliberate attempt to "mislead" the Court, none of which allegations were made out and all of which were improper. MWP also sought to rely on affidavit material containing allegations of impropriety on the part of the respondents' lawyers that were struck out as being "scandalous and vexatious".
(3) The hearing of the application was unduly prolonged by MWP, including as a result of availability issues raised by it, repeated adjournment requests, including throughout the hearing of the application, arguments against orders that had already been made, references to irrelevant and inapplicable authorities, and submissions about evidence that was not read.
(4) The bringing of and persisting in the application constituted the propounding of a hopeless case.
8 The factors identified in Melbourne City Investments at [5] are expressed there as follows (authorities omitted):
In broad terms an order for indemnity costs requires that some special or unusual feature arises… Indemnity costs are not punitive but are designed for "compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs"… Such circumstances may include where allegations are made "which ought never to have been made", where the case is "unduly prolonged by groundless contentions" … and where "the applicant, properly advised, should have known that he had no chance of success" … or "persists in what should on proper consideration be seen to be a hopeless case" …
9 It must be borne in mind that in substance MWP's interlocutory application was very limited, despite its approach to the matter. All that was sought to be reconsidered and set aside or varied were the orders made pursuant to MWP No 1 that the costs of the application for leave to appeal be assessed on a lump-sum basis and that those costs include the costs of the respondents' application for security for costs which was rendered moot by leave to appeal having been refused. Moreover, as I explained in MWP No 2 (at [49]), "what is at stake turns out to be a relatively trivial amount of costs on an interlocutory application - the respondents' costs summary for the whole proceeding claims $50,000 of which only a part is in respect of the security for costs application". The only relevant evidence, beyond what was before me on 1 April 2022 (almost all of which was itself irrelevant), was the transcript of the hearing on that day.
10 In my assessment the following are relevant circumstances to the question of indemnity costs in the present case. I identify only circumstances arising after the 1 April 2022 orders because events prior to that date are captured by the costs orders that I made on that day. It will be apparent that those circumstances include the conclusion that much of what MWP sought to rely on and what was submitted on its behalf was irrelevant. It is just as well to explain why that is so. Much of MWP's case in relation to the security for costs application was based on the contention that in that application the respondents relied on documents in contravention of their implied undertakings to the High Court of Justice of England and Wales and the Supreme Court of the ACT not to use documents obtained under compulsory process in proceedings in those courts for any purpose other than that for which they were obtained. However, as the security for costs application was never heard, none of the material in question was relied on by the respondents so MWP's case about breach of the implied undertakings never arose. See MWP No 2 at [30]-[31].
11 Turning now to the identified circumstances, first, the interlocutory application was shockingly poorly prepared and run which had the result that the respondents were unreasonably subjected to the expenditure of costs which they should not have had to face. In that regard:
(1) The judgment which MWP by its interlocutory application sought to reopen was delivered on 1 April 2022, whereas the interlocutory application was not filed until 6 May 2022. In the meanwhile, the respondents had already acted on one of the orders, namely order 6 which required them to file and serve a costs summary affidavit by 21 April 2022, which action would have been wasted had MWP's application to reopen and rescind the order that the costs be determined on a lump-sum basis been successful. In short, MWP substantially delayed bringing the application, leading to inevitable expense.
(2) Compounding the delay, MWP did not file its affidavit supporting the application until 16 May 2022. That affidavit is 16 pages and is referred to as the fifth affidavit of Michael Wilson. Mr Wilson is a NSW solicitor - albeit based not in Australia but in Kazakhstan, a principal of MWP, represented MWP in the proceeding and appeared remotely for MWP at all case management hearings and at the hearing of the interlocutory application.
(3) The fifth affidavit of Michael Wilson consisted entirely of irrelevant material. Paragraphs 1-7 are introductory and attest to no relevant fact. Paragraph 8 is submission. Paragraph 9 is irrelevant background. Paragraphs 10-12 refer to a parallel although irrelevant proceeding brought by MWP in the High Court of Australia (which, incidentally, was dismissed by an unreported judgment of Keane J on 17 August 2022). Paragraph 13 is submission. Paragraphs 14-29 deal with historical matters preceding the 1 April orders, including proceedings in the Eastern Caribbean Supreme Court and the High Court of England and Wales, which are entirely irrelevant. Paragraphs 30-51 deal with proceedings in the Supreme Court of the ACT which are wholly irrelevant to the interlocutory application. Paragraphs 52-56 are submissions. Paragraphs 57-60 are irrelevant. Paragraphs 61-71 are submission.
(4) The fifth affidavit of Michael Wilson referred to Exhibit MEW-5, but the exhibit was not filed with the affidavit.
(5) On 3 June 2022, there was a case management hearing on the interlocutory application. At the case management hearing, I proposed that the application be heard a week later, but Mr Wilson for MWP said that that was not possible because he was going to instruct "leading counsel" - which, if that was intended, should already have been done - and because he (Mr Wilson) was "not able to work normally until after 30 June" on account of unidentified and obscurely referred to medical issues. By indulgence to MWP, orders were made for the matter to be heard in mid-July with a timetable for submissions. I drew to Mr Wilson's attention that "the biggest hurdle" that MWP was going to face in its interlocutory application was "the principle of finality" and that "the focus of the submissions" should be on that.
(6) On 3 June 2022, after the case management hearing, MWP again filed the fifth affidavit of Michael Wilson, this time with the 164-page Exhibit MEW-5 attached - presumably because it was pointed out in the case management hearing that the exhibit had not been filed, despite Mr Wilson's insistence to the contrary. The only part of that exhibit relevant to the interlocutory application is the 30-page transcript of the hearing on 1 April 2022.
(7) On 6 July 2022, MWP filed the sixth affidavit of Michael Wilson. Like the fifth affidavit, it contained only irrelevant material. Paragraphs 1-10 are introductory and attest to no relevant fact. Paragraph 11 deals with MWP's case in the High Court of Australia, which is irrelevant. Paragraphs 12-17 deal with a judgment in the High Court of England and Wales on 17 June 2022, ie, long after the 1 April orders, which is irrelevant. Paragraphs 18-19 are submission.
(8) The sixth affidavit of Michael Wilson refers to Exhibit MEW-6. It is 50 pages and is wholly irrelevant.
(9) On 8 July 2022, two days later than it was required to have done pursuant to the orders of 3 June 2022, MWP filed its submissions on the interlocutory application. The submissions failed to identify the basis on which it was said that the orders of 1 April 2022 should be reconsidered, failed to address the principle of finality and canvassed a number of irrelevant matters. As I said in MPW No 2 (at [18]), "in form, style and substance they have no hallmarks of having been prepared by a barrister" despite having been told that MWP intended briefing "leading counsel". The submissions were of essentially no value and merely burdened the Court and the respondents.
(I mention as an aside that, in its submissions on costs, MWP says that its submissions on the interlocutory application were prepared by Mr A Tokley QC and that I had been wrong to "jump to the conclusion" that they were not prepared by counsel. MWP submits that they "were clearly in the style, layout and format and had all of the hallmarks of having been" prepared by counsel. Aside from noting that the submissions were signed by Mr Wilson and not by counsel and that in answer to a direct question from me after I had dismissed MWP's application for an adjournment on 15 July 2022, Mr Wilson said, in conflict with what he now says, that MWP's submissions had been prepared by Mr R Thomas of counsel (T8:9-11), I find it quite unbelievable that senior counsel prepared the embarrassingly rambling, irrelevant and hopeless submissions that were filed by MWP on the interlocutory application. If indeed the submissions were prepared by counsel, it is no wonder that counsel did not sign them - no self-respecting counsel, let alone senior counsel, would have.)
(10) At the hearing, MWP also relied on the fourth affidavit of Michael Wilson which had been filed in the security for costs application. It is 522 pages including its exhibit and wholly irrelevant to the issues on the interlocutory application. In it, Mr Wilson makes many scathing and irrelevant personal attacks on the respondents' solicitor. The result was that significant time was taken up in the hearing having to deal with objections to that material, much of which was struck out, on the basis that it was scandalous and vexatious.
(11) In oral submissions, Mr Wilson for MWP canvassed irrelevant material and presented a truly scatter-gun, or, perhaps, kitchen-sink, argument. He repeatedly applied for an adjournment even after his application for an adjournment had been (repeatedly) dismissed. He also referred to many irrelevant authorities, in particular English authorities when the issue at hand was one of practice and procedure of this Court, a matter on which the English authorities said nothing relevant. Mr Wilson even referred to the European Convention on Human Rights, without explaining how it could possibly have applied or been relevant on the interlocutory application. That conduct wasted time in the hearing.
12 Also relevant to the poor conduct of the interlocutory application is MWP's submissions on costs. Those submissions seek to re-argue points that Mr Wilson argued and which I rejected in the interlocutory application. They take issue with my findings and conclusions in the interlocutory application and again seek to argue the irrelevant point about the respondents allegedly having relied on evidence contrary to implied undertakings made by them to other courts.
13 Secondly, MWP made scandalous allegations that ought never to have been made, which were irrelevant to the issues on the interlocutory application and for which there was no apparent foundation. To identify those allegations in these reasons would serve merely to make the allegations public and thereby defeat the reason they were struck out. I will therefore say no more about them. It suffices to observe that MWP's Mr Wilson casts allegations around like confetti at a wedding without the least regard for their relevance to the issues at hand or whether they can be substantiated.
14 Also relevant to the scandalous allegations made by MWP are MWP's submissions on costs. Those submissions include the following:
(1) It is apparent from MWP No 2, "and indeed the prior judgments of Stewart J, unfortunately, it has become clear that His Honour is apparently and actually biased against MWP and has lost all sense of justice, even handedness" (sic).
(2) "The Court and His Honour have entirely lost sight of the reality of this matter".
(3) "The Court's conduct losing the sight of all these matters is bringing and has brought the administration of justice into disrepute."
15 It is to be noted that despite those allegations, MWP has made no application that I disqualify myself. Beyond bald statements of conclusion, it has also not identified any basis upon which it is said that I am both apparently and actually biased in the matter. Considering all the circumstances on the fiction that MWP's submissions constitute an application that I disqualify myself from continuing to deal with the matter, I am satisfied that a fair‑minded lay observer would not reasonably apprehend that I might not bring an impartial mind to the resolution of the question I am required to decide: see Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 at [6]; Charisteas v Charisteas [2021] HCA 29; 393 ALR 389 at [11]. Rather, MWP's allegations ironically serve only to demonstrate the extent to which Mr Wilson has entirely lost sight of the reality of the matter and how, if anything, it is MWP's approach to the litigation that brings the administration of justice into disrepute.
16 Thirdly, MWP's interlocutory application was hopeless and should never have been brought. Despite the very considerable amount of material filed by MWP in the application, and the broad ranging and scandalous submissions, the application ultimately boiled down to only two issues.
17 The one issue was whether there was any basis to reconsider the order that the costs be determined on a lump-sum basis and, if the order was reconsidered, whether it should be rescinded or varied. No reasonably arguable basis was advanced in support of MWP's position on either of those matters: MWP No 2 at [42]. It was plainly just and proper to order that the costs be assessed on a lump-sum basis, and in any event there could be no possible prejudice to MWP arising from such an order. It is scandalous that MWP sought to revisit that order.
18 The second issue was whether there was any basis to reconsider the order that the costs of the application for leave to appeal include the costs of the security for costs application and, if the order were reconsidered, whether it should be rescinded or varied. As ultimately clarified in the supplementary submissions MWP filed on 25 July 2022, which by their nature do appear (helpfully) to have been prepared, although not signed, by counsel, the only basis advanced for reconsidering that order was that MWP had not been given a reasonable opportunity to be heard on that question. As demonstrated in MWP No 2 at [33]-[41] and [44]-[47], there was no basis for such a contention. MWP was represented by very experienced senior counsel (Mr DMJ Bennett AC QC) who did not once complain that MWP had not been given an opportunity to be heard on the point in issue.
19 Fourthly, as mentioned, the interlocutory application sought to reconsider and rescind or vary orders the consequences of which caused MWP limited prejudice - the lump-sum costs order caused no prejudice and the costs of the security for costs application amount to considerably less than $50,000. In short, there was very little at stake in the interlocutory application. To have brought the interlocutory application, and in particular in such a delayed and burdensome way and with so little foundation, was contrary to the obligations of MWP to conduct the proceeding consistent with the overarching purpose of the civil practice and procedure provisions, namely as quickly, inexpensively and efficiently as possible - as required by s 37N(1) of the Federal Court of Australia Act 1976 (Cth).
20 For those reasons, the respondents should be fully indemnified for their costs on the interlocutory application - costs to which they should never have been put. There should be an order for indemnity costs.