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[2015] ACTSC 349
General information, not legal advice.
Supreme Court of the ACT
2015-11-13
Refshauge J
Original judgment source is linked above.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
CIVIL - Jurisdiction, practice and procedure - damages - personal injury
COSTS - Jurisdiction, practice and procedure - impecunious party - application for costs against a non-party - non-party as an officer of the court - proceedings were not an abuse of process - power to order costs - notice of intention to make an application given to the non-party - notice did not lead to an imposition of liability - conduct of proceedings - interest in the proceedings
JURISDICTION - Functus officio - orders previously made - ancillary or supplementary orders
LEGAL PROFESSIONAL PRIVILEGE - Internal correspondence between lawyers - privilege waived - information in the documents known at the time of the previous hearing - information in the documents expressly referred to during previous hearing - communication between a lawyer and client - communication between parties - settlement negotiations
Civil Law (Wrongs) Act 2002 (ACT), s 221
Evidence Act 2011 (ACT), s 131(2)(f)
Law Reform (Miscellaneous Provisions) Act 1955 (ACT), s 68
Supreme Court Act 1933 (ACT), s 9(2)(a)
Court Procedures Rules 2006 (ACT), rr 6, 21, 1703, 1703(2)(g), 1721
Rules of the Supreme Court of Queensland (Qld), O 91 r 1
Asciak v Australian Secured and Managed Mortgages Pty Ltd [2008] FCA 753; (2008) 66 ACSR 298
Ashmore v British Coal Corporation [1990] 2 QB 338
Australian Securities and investments Commission v Hellicar (2012) 247 CLR 346
Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571
Chappell v Coyle (1985) 2 NSWLR 73
Commissioner for Corporate Affairs v Harvey [1980] VicRp 64; [1980] VR 669
Condliffe v Hislop [1996] 1 WLR 753
Cowell v Taylor (1885) 31 Ch D 34
Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522
DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226
FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340
Garnett v Bradley (1878) LR 3 App Cas 944
Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478
Giannarelli v Wraith (1988) 165 CLR 543
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561
Knight v FP Special Assets Ltd (1992) 174 CLR 178
KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189
Lazar v Taito (Australia) Pty Ltd [1985] FCA 35; (1985) 5 FCR 395
McMeckan v Aitken [1895] VicLawRp 8; (1895) 21 VLR 65
Metropolitan Bank Ltd v Pooley (1885) LR 10 App Cas 210
Muscat v Haider [2014] ACTSC 152
National Employers' Mutual General Insurance Association Ltd v Waind [1978] 1 NSWLR 372
Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038
Penning v Steel Tube Supplies Pty Ltd (1988) 18 FCR 568
Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209
Re Ansett Australia Ltd [2001] FCA 1439
Re Hurt (1988) 80 ALR 236
Re VGM Holdings Ltd [1941] 3 All ER 417
R v Forbes; Ex parte Bevan [1972] HCA 34; (1972) 127 CLR 1
SP Hay Pty Ltd v Allcorp Pty Ltd [2004] WASC 77
Survival & Industrial Equipment (Newcastle) Pty Ltd (t/as SIE Liferaft Servicing) v Owners of the Vessel "Ally Cat" [1992] FCA 242; (1992) 36 FCR 129 at 138
Sykes v Sacerdoti (1885) 15 QBD 423
Taylor v Pace Developments Ltd [1991] BCC 406
Visco v Minter [1969] P 82
G E Dal Pont, Law of Costs (LexisNexis Butterworths: 2013, Sydney) 3rd ed
Sir Jack Jacob in "The Inherent Jurisdiction of the Court" (1970) 23 Current Legal Problems 23
1. On 26 November 2006, Steven Paul Muscat fought Nicholas Haider at the social club known as the Hellenic Club, Woden, in the Australian Capital Territory.
2. He suffered injuries as a result and, on 27 July 2007, commenced proceedings against Mr Haider for recovery of damages for the injuries he had suffered.
3. On 27 June 2014, Master Harper, entered judgment for Mr Muscat in the sum of $106,360 with costs, though the costs order was stayed "in case either party wishes to make application for a different order for costs". See Muscat v Haider [2014] ACTSC 152.
4. On 17 July 2014, Mr Haider appealed to the Court of Appeal from the decision of the learned Master, the decision being a final order. That appeal has not yet been heard and there is no prospect of it being heard in the near future. I do not need to go into detail.
5. In accordance with the comment made by Master Harper in relation to the costs order, the plaintiff applied for further consideration. In the first place, he applied for indemnity costs, which was probably what was in contemplation by the learned Master when he stayed the costs order.
6. That application was heard by the learned Master on 18 July 2014. His Honour dismissed the application and ordered that the defendant pay the plaintiff's costs on a party and party basis. He suggested that it may not be necessary to deliver detailed reasons, other than those to be gleaned from the argument and a brief explanation of why he had decided as he did. The plaintiff's counsel did not demur nor seek detailed reasons.
7. Nevertheless, on 5 August 2014, the plaintiff commenced an appeal against Master Harper's dismissal of the application.
8. At the time, s 9(2)(a) of the Supreme Court Act 1933 (ACT), provided that an appeal from an interlocutory decision of the Master was to be heard by a single judge.
9. Accordingly, an application was made to a single judge of this Court, being an appeal from the decision of the Master.
10. When the matter came before me for callover on 22 August 2014, I expressed the view that, in the circumstances where an appeal had been commenced to the Court of Appeal, the appeal from the costs order part of the final orders made should also be made to the Court of Appeal. See Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478.
11. As a result, I directed the plaintiff to cross appeal in the Court of Appeal proceedings, which he did.
12. Again, it appears that the cross appeal will follow the fate of the appeal, as noted above (at [4]).
13. The plaintiff had, however, also foreshadowed to Master Harper a further application by which he proposed to seek an order that Dr Iqtidar Tedo Haider, the defendant's father, should pay the plaintiff's costs.
14. The learned Master had, at this time, retired, but sat to finalise the costs issue in these proceedings (and for other reasons not presently relevant). His Honour heard preliminary argument about the matter but expressed some concern about the proposed application which had, at that stage, not even been filed, much less served.
HIS HONOUR: Yes. Well, Mr Pappas, there is another issue I should raise with you and that is that, as you know, I have retired and I need to continue in office for the purpose of completing part-heard matters and delivering judgment in matters that I have heard, and as I see it, that extends to such things as dealing with the more usual costs applications that follow judgments. I am not sure whether it is going to extend to something like this, if it goes on for a long time into the future.
MR PAPPAS: That is an interesting debate, your Honour. It may be that it has got to pass to another judicial officer.
HIS HONOUR: I think it might. My present thinking is that I probably should deal with the application for indemnity costs against the defendant, which is before the court already.
MR PAPPAS: Yes.
HIS HONOUR: But I indicate that I would not regard myself as bound to deal with, or even indeed to continue in office for the purpose of dealing with the application.
16. As a result, the proceedings were subsequently docketed to me and I took responsibility for them.
17. By the time the matter came into my callover list on 22 August 2014 (as mentioned above (at [10])), an application for Dr Haider to pay the plaintiff's costs had been filed, on 4 August 2014.
18. Dr Haider was served with the application and, on 1 September 2014, filed a Notice of Intention to Respond.
19. Ultimately, the application came on for hearing on 10 November 2014 and I reserved my decision.
20. The plaintiff sought a number of orders in the alternative as follows:
21. As noted above (at [1]), the proceedings arose out of a fight between the plaintiff and the defendant at the Hellenic Club on 26 November 2006.
22. There were, in fact, two incidents between the plaintiff and the defendant that day, one in the Club itself and one in the car park outside. The plaintiff claimed that, in both cases, he had been attacked by the defendant and claimed damages for injuries he said he suffered in both incidents.
23. The plaintiff claimed the damages from the defendant by Originating Claim dated 27 July 2007. It stated the nature of the claim to be "other death or personal injury" and the Statement of Claim, rather curiously, pleaded a claim in negligence.
24. The learned Master commented in Muscat v Haider at [212]:
Although pleaded as a claim for damages for negligence, the action was conducted entirely as a claim for damages for battery. The misleading nature of the pleading seems to have arisen from the reference in rule 50 of the Court Procedures Rules 2006, which requires that a statement of claim be attached to an originating claim consistently with a series of approved forms. Form 2.5 is prescribed in relation to claims for death or personal injury other than motor-vehicle or employment-related. The plaintiff's claim in the present action is undoubtedly within that category, but unfortunately the drafter of the prescribed form seems to have assumed that the cause of action for such claims would be in negligence. No doubt this will be so in the majority of such claims, but there are still significant differences between the causes of action in trespass to the person and in negligence. Section 255(4) of the Legislation Act 2001 (ACT) provides that substantial compliance with the approved forms is sufficient. It would be preferable for practitioners drawing or settling a statement of claim for personal injury on a cause of action other than negligence to adapt the form to identify the correct cause of action, rather than achieve a misleading result by following precisely the wording of the form.
25. The defendant admitted the facts alleged by the plaintiff, but said that he was acting in self-defence.
26. He then claimed by counter-claim against the plaintiff, alleging that the plaintiff had assaulted him both in the club and in the car park and seeking damages for the injuries said then to have been suffered.
27. In July 2011, the defendant's lawyers wrote to the plaintiff's lawyers seeking to settle the proceedings. I do not need to consider the details of the proposed settlement. Attached to the letter of offer was a statutory declaration made by the defendant, in which he stated that he had no assets, he had debts and that:
[s]ince approximately July 2007, I have been a party to a personal injury claim proceeding in the ACT Supreme Court. My father has been paying the legal fees related to that dispute as I have been unable to afford them myself.
28. There is no doubt that Dr Haider did pay at least some of the fees incurred by his son in those proceedings.
29. Despite this admission of impecuniosity (which, marked "Without Prejudice Save as to Costs", may or may not have been available in an application for security for costs), no application for security for costs was made.
30. Generally, defendants will not be required to provide security for costs, as they are "forced to litigate": KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; (1995) 56 FCR 189 at 198. Nevertheless, under certain circumstances, a counter-claimant, who, so far as the counter-claim is concerned, is the moving party in those proceedings, may be required to provide security: Sykes v Sacerdoti (1885) 15 QBD 423 at 425.
31. In this case, however, such an application would have been unlikely to succeed as:
(a) the defendant's impecuniosity alone would not ordinarily justify an order for security of costs: Cowell v Taylor (1885) 31 Ch D 34 at 38;
(b) the counter-claim was, in reality, what would be regarded as a defensive measure, relying on the same facts as grounded the claim and therefore unlikely to be amenable to a claim for security for costs: Visco v Minter [1969] P 82 of 85; SP Hay Pty Ltd v Allcorp Pty Ltd [2004] WASC 77 at [29].
32. A number of issues, which arose in the principal proceedings, were relied on by the plaintiff in this application. I need briefly to address them.
33. The defendant denied grabbing the plaintiff around his neck and choking him. That was suggested in cross-examination of the plaintiff and denied several times by him.
34. The plaintiff relied on photographs of his injuries, including of the injuries to his neck, alleged to have been caused by the choking. Some of the photographs came from the police who had taken them when the plaintiff complained of being assaulted. Others were taken by his wife.
35. An issue arose about the photos taken by the plaintiff's wife who, it was claimed, had "doctored" the photographs. Expert evidence was called on that issue.
36. The photographs were said to be quite inconsistent with the defendant's version of events.
37. It was also asserted that there was no evidence, other than orally from the defendant, of him sustaining any injuries on that day. On the other hand, the plaintiff had various medical reports, as well as the photographs, which showed the injuries suffered by the plaintiff. See Muscat v Haider at [133]-[136].
38. The hearing commenced before Master Harper on 4 October 2011. The plaintiff gave evidence and was cross-examined.
39. On 5 October 2011, the plaintiff's lawyers wrote to Dr Haider. They referred to the plaintiff's evidence and his rejection, under cross-examination, of the defendant's version of events. They referred to the photographs, which they said "graphically" depicted the bruising on the plaintiff's neck and showed also bruising to his face, as well as swelling and other injuries "only consistent with the version given by [the plaintiff], and totally inconsistent with the version of events put to [the plaintiff] by senior counsel [for the defendant]".
40. Other matters were then mentioned and the letter continued:
This letter is to put you on notice that at the successful conclusion of Mr Muscat's claim for damages it is the plaintiff's intention to seek an order against you, albeit a non-party, requiring you to pay the costs incurred by the plaintiff in the proceedings.
41. Over future months, the plaintiff's lawyers sent to Dr Haider three further letters said to have been sent "to place [Dr Haider] on notice" about the increasing costs and the plaintiff's intention to seek the costs of the proceedings from him. Some of those letters enclosed evidential material and some commented on the evidence, obviously designed to show the weakness of the defendant's position and the strength of the plaintiff's case.
42. The hearing was completed on 6 November 2012. As noted above (at [3]), judgment was entered for the plaintiff on some of his claim and the defendant's counter-claim was dismissed.
43. Among the relevant findings of the learned Master were, by reference to paragraph numbers in Muscat v Haider:
(a) The expert evidence accepted that it was possible to have used make-up to create an appearance of bruising as shown in the photographs: [202], though ultimately it was considered the bruises were genuine: [203]
(b) The possibility of additional trauma to the plaintiff could not be excluded: [207]
(c) The learned Master did not find the defendant a credible witness: [234]
(d) The incident in the car park was a fight in which both plaintiff and defendant voluntarily engaged and so consented to the injuries sustained in the course of it: [247]
44. Since then, the solicitors who acted for the defendant in the proceedings commenced proceedings in the Magistrates Court against the defendant and Dr Haider for the costs of acting for the defendant in the proceedings.
45. In the Magistrates Court proceedings, the defendant is sued as primarily liable for the costs. Dr Haider is sued as allegedly having guaranteed the payment of the costs. Those proceedings, however, were discontinued on 26 February 2014.
46. The plaintiff submitted that the Court had jurisdiction to order that a non-party to proceedings pay the costs of a successful party, in an appropriate case. This was, it was submitted, an appropriate case.
47. The plaintiff referred to the seminal decision of the High Court in Knight v FP Special Assets Ltd (1992) 174 CLR 178. In particular, Mason CJ and Deane J said at 192-3:
The conclusion that the wide words of O.91 r.1 [of the Rules of the Supreme Court of Queensland] should not be read down so as to preclude jurisdiction to make an order for costs against a non-party does not, of course, mean that a judge has an unfettered discretion to make any order that he or she chooses. The wide jurisdiction conferred by the rule 'must be exercised judicially and in accordance with general legal principles pertaining to the law of costs' ....
Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation. As our discussion of the earlier authorities indicates, there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party. ....
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party ... to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.
48. In this jurisdiction, rules have been made for this purpose and r 1703 of the Court Procedures Rules 2006 (ACT) provides:
Costs - order against non-party
(1) Unless these rules otherwise provide, the court must not make an order for costs in a proceeding against a person who is not a party to the proceeding except in accordance with subrule (2).
Note For provisions of these rules that otherwise provide, see r 745 (Freezing orders - costs) and r 755 (Search orders - costs).
(2) The court may make an order -
(a) for payment by a relator in a proceeding of all or part of the costs of a party to the proceeding; or
Note A relator is a person who starts and carries on a proceeding in the Attorney-General's name. A person may bring a proceeding as relator with the Attorney-General's permission (or fiat) where the proceeding involves the public interest and the person would otherwise not have standing to bring the proceeding.
(b) for payment by a person of all or part of the costs of a party to a proceeding that were caused by -
(i) the person's contravention of an order made by the court in the proceeding that is binding on the person; or
(ii) the person's breach of an undertaking given to the court by the person in the proceeding; or
(c) for payment, by a person who has committed contempt of court or an abuse of the court's process, of all or part of the costs of a party to a proceeding that were caused by the contempt or abuse of process; or
(d) for costs against a person who purports, without authority, to conduct a proceeding in the name of someone else; or
(e) for costs against a person who starts or carries on a proceeding, or purports to do so, as an authorised director of a corporation; or
(f) of the kind mentioned in rule 1704; or
(g) for costs against a person in the exercise of its supervisory jurisdiction over its own proceedings and its own officers, including, for example, an order for costs against legal practitioners and court-appointed liquidators and receivers.
Note 1 The court may order a legal practitioner to pay all or part of a party's costs if the costs are incurred because of the practitioner's conduct (see r 1753 (Costs - legal practitioner's delay etc).
49. The provisions of r 1703 of the Court Procedures Rules are "more restricted than elsewhere": G E Dal Pont, Law of Costs (LexisNexis Butterworths: 2013, Sydney) 3rd ed 748; [22.8].
50. The only category that was suggested to be applicable in this case was under r 1703(2)(g) of the Court Procedures Rules.
51. It is clear to me that Dr Haider is not an "officer of the court". Such a category is clear from the examples given. Lawyers are officers of the court traditionally and expressly under this rule. See Rondel v Worsley [1969] 1 AC 191 at 227; Giannarelli v Wraith (1988) 165 CLR 543 at 555. Those decisions referred to counsel, but there is no doubt that a solicitor is also an officer of the court: Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038 at 12,046.
52. Other persons, appointed by the court, are officers of the court, such as a trustee in bankruptcy (Re Hurt (1988) 80 ALR 236 at 240), a receiver appointed by the court (McMeckan v Aitken [1895] VicLawRp 8; (1895) 21 VLR 65 at 69), a court appointed liquidator (Commissioner for Corporate Affairs v Harvey [1980] VicRp 64; [1980] VR 669 at 695; Re Ansett Australia Ltd [2001] FCA 1439 at [65]- [68]) and a trustee appointed by the court (Penning v Steel Tube Supplies Pty Ltd (1988) 18 FCR 568 at 580).
53. Accountants have been held not to be officers of the court and not subject to its supervisory jurisdiction. See Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 at 574; [49].
54. There is, however, no suggestion that a mere litigant is an officer of the court, much less the relatives of a litigant, whether funding the proceedings or not.
55. The plaintiff put emphasis on the words of the rule, "supervisory jurisdiction over its own proceedings", and submitted, as best I understand it, that this permitted the court to consider Dr Haider's conduct in, effectively, permitting his "allegedly impecunious son ... having incurred all of these costs over a long period of time, simply, as it were, [to] walk away".
56. Clearly, a court has jurisdiction to ensure that its proceedings are conducted, not only justly, speedily and costs effectively, in accordance with r 21 of the Court Procedures Rules, but also without abuse of process or other oppression. Apart from the means to address abuse or oppression, as given by the inherent jurisdiction of the court, it is appropriate that a court may be able to award costs, including against a non-party, where such a person causes or contributes to such significant breach of the proper conduct of proceedings.
57. It is not entirely clear to me that this is the point of the reference to the court's "supervisory jurisdiction over its own proceedings". I am, however, prepared to accept that this is a reasonable construction of the rule for present purposes.
58. In this case, there can be no suggestion that these proceedings were an abuse of process. Indeed, it was not suggested by the plaintiff's counsel that they were.
59. That Dr Haider was funding the defendant in the proceedings is, without more, not an abuse of process, even without an indemnity by Dr Haider for any costs order payable by the defendant. The High Court expressly decided this in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75 at 96; [35].
60. Indeed, in Condliffe v Hislop [1996] 1 WLR 753 at 759, the UK Court of Appeal held that a close relative is lawfully justified and not guilty of maintenance in any sense by giving direct financial assistance to a party to proceedings. The Court went on at 761 to accept that it was not necessary for the legality of such an arrangement for the funder to accept liability for a successful adverse party's costs, especially were the funder a member of the party's family.
61. For the proceedings to be an abuse of process, it has to be shown that the court processes are being abused without reasonable grounds so as to be vexatious and harassing. See Metropolitan Bank Ltd v Pooley (1885) LR 10 App Cas 210 at 220-1 per Lord Blackburn.
62. As Menzies J pointed out in R v Forbes; Ex parte Bevan [1972] HCA 34; (1972) 127 CLR 1 at 7, the Courts of Common Law have an inherent jurisdiction to prevent abuse of their process.
63. While the UK Court of Appeal in Ashmore v British Coal Corporation [1990] 2 QB 338 at 348, has stated that an abuse of process will vary according to the circumstances as "the categories are not closed" that distinguished jurist, Sir Jack Jacob in "The Inherent Jurisdiction of the Court" (1970) 23 Current Legal Problems 23 at 43, has attempted to distil the categories of civil proceedings which may constitute an abuse of process into a helpful list as follows:
(a) proceedings which involve a deception on the court, or are fictitious or constitute a mere sham;
(b) proceedings where the process of the court is not being fairly or honesty used but is employed for some ulterior or improper purpose or in an improper way;
(c) proceedings which are manifestly groundless or without foundation or which serve no useful purpose;
(d) multiple or successive proceedings which cause or are likely to cause improper vexation or oppression.
In my view, these proceedings cannot be said to fall into any of these categories and the decision and reasons of the learned Master give no suggestion that it is so.
64. The reasons of the learned Master shows that the claim by the defendant was undermined by his credibility, but that is often a matter unable to be assessed ultimately until the hearing. The learned Master did not find that the defendant perjured himself.
65. Further, the defendant was successful, in that the claim by the plaintiff for damages for injuries said to arise from the fight in the car park was dismissed. This alone shows that the defendant's defence of the proceedings cannot be dismissed as an abuse of process.
66. While, ultimately, the challenge to the photographs was unsuccessful, expert evidence showed that there was a basis for such a challenge, even though not upheld in this case.
67. I was not convinced that I had jurisdiction to hear this application, for the order for costs had been made by the learned Master on 18 July 2014. That order having been made, this application seemed as if it sought to re-open the discretion which had been exercised. That would make the court functus officio.
68. In Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571 at 590, Rich J explained the principle as follows:
a court which, after a real trial, has given a valid decision determinative of right, liability or status, has no jurisdiction to recall it whatever mistakes may have been made in facts or law.
69. See also Re VGM Holdings Ltd [1941] 3 All ER 417 at 418; DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226.
70. In this case, the learned Master had exercised the jurisdiction as to costs and made an order.
71. There were two responses to this. In the first place, it might be said that the orders sought were ancillary or supplementary to the order made. See, for example, Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 at [22]- [23].
72. Secondly, it was noted that the learned Master was aware that the application was being made and expressly declined to hear it, not because his Honour was dismissing it, but because he considered his retirement meant that he should not do so.
73. It may be argued that his Honour's decision as to costs was, in that sense, left conditional or subject to the determination of the plaintiff's application against Dr Haider. The defendant would be, and would remain, primarily responsible for the costs of the hearing but Dr Haider, if found liable, would also be responsible, probably jointly or jointly and severally.
74. Despite the need to be assured of jurisdiction before a court embarks on the consideration of a matter, I am prepared, in the light of my ultimate finding, not to determine this issue of jurisdiction to finality, given the uncertainty of the issue.
75. The power to award costs is a statutory one: Garnett v Bradley (1878) LR 3 App Cas 944 at 953-4, 962; Knight v FP Special Assets Ltd at 182-3.
76. It appears to me that r 1703 of the Court Procedures Rules is the only statutory basis for the application and, as already indicated, there is no other express basis in the statute for an order as the plaintiff seeks.
77. Nevertheless, the plaintiff seeks to have me exercise a power under r 6 of the Court Procedures Rules to dispense with r 1703. Such a power is, it has been held, a wide, plenary power. See Lazar v Taito (Australia) Pty Ltd [1985] FCA 35; (1985) 5 FCR 395 at 414.
78. Such dispensation would leave the statutory source of power to make a costs order of the kind sought by the plaintiff in r 1721 of the Court Procedures Rules which provides only a general power. It was this power that was construed by the High Court in Knight v FP Special Assets Ltd to permit an order to be made that a non-party may be ordered to pay the successful adverse party's costs. The power there considered was O 91 r 1 of the Rules of the Supreme Court of Queensland which provided a similar general power as provided for by r 1721.
79. It seems to me, however, that this raises two problems. The first is that there needs to be some justification or reason to use the power under r 6 of the Court Procedures Rules to dispense with r 1703.
80. Further, the power, it seems, should not be used to achieve a purpose that is not permitted by the relevant rule or contrary to its obvious purpose or intendment as explained in Chappell v Coyle (1985) 2 NSWLR 73 at 85-6. That is, of course, what the plaintiff seeks.
81. Indeed, Sheppard J further held in Survival & Industrial Equipment (Newcastle) Pty Ltd (t/as SIE Liferaft Servicing) v Owners of the Vessel "Ally Cat" [1992] FCA 242; (1992) 36 FCR 129 at 138 of the equivalent O 1 R 8 of the Federal Court Rules 1979 (Cth) as follows:
The power to dispense with compliance with the Rules is provided for in O 1, r 8 of the Rules where it is said that the court may dispense with compliance with any of the requirements of the Rules either before or after the occasion for compliance arises. I do not regard this rule as providing any answer to the plaintiff's problems. One would need in some way to use it for the purpose of amending the rule for the purposes of this particular case so as to confer a power in the court which it otherwise would not have had. That is not the purpose of a provision such as O 1, r 8. Its purpose is simply to enable the court in a proper case to relieve a party of an obligation to comply with particular provisions of the Rules, for instance, as to time or the filing of pleadings and suchlike.
82. It might be argued that since r 1721 of the Court Procedures Rules, as interpreted by Knight v FP Special Assets Ltd, gave a power to make costs orders against non-parties and so was not contrary to r 1703 but merely relieved from a limitation that was submitted not, in this case, to be in the interests of justice to maintain.
83. I have a grave doubt about that, but, assuming in the plaintiff's favour that this was so, it seems to me that the plaintiff faced the second problem, namely that this construction of the power required the plaintiff to show that the conditions for such an exercise of the power had been met.
84. The plaintiff did refer me to the comment of Lloyd LJ in Taylor v Pace Developments Ltd [1991] BCC 406 at 408 where his Lordship said, "There is only one immutable rule in relation to costs and that is that there are no immutable rules". That, however, does not suggest that the court is not required to provide a clear application of that law, but may exercise its discretion in a capricious manner.
85. Indeed, in that case, Lloyd LJ went on to point out at 409 of a director of a "one man [sic] company" where the sole director and beneficial owner of a company funded its defence to a winding up application
it could not be right that in every case he should be made personally liable for costs, even if he knows that the company will not be able to meet the plaintiff's costs, should the company prove successful. That would be far too great an inroad on the principle of limited liability. I do not say that there may not be cases where a director may not properly be liable for costs. Thus he might be made liable if the company's defence is not bona fide, as, for example, where the company has been advised that there is no defence, and the proceedings are defended out of spite, or for the sole purpose of causing the plaintiffs to incur irrevocable costs. No doubt there will be other cases. But such cases much necessarily be rare. In the great majority of cases the directors of an insolvent company which defends proceedings brought against it should not be at personal risk of costs.
86. Thus, the conditions expressed in Knight v F P Special Assets Ltd must be at least an important guide and there must be a clear basis or rationale to depart from them.
87. The circumstances or conditions as explained in the extract from that decision cited above (at [47]) are:
• the non-party has played an active part in the conduct of the litigation; and
• the non-party has an interest in the subject of the litigation.
88. Nevertheless, as Basten JA pointed out in FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 at [210], these principles cannot be limited to the specific circumstances of that case but that "the category of case which may attract the exercise of the power are by no means closed nor should they be". His Honour continued:
[w]hat is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria:
(a) the unsuccessful party to the proceedings was the moving party and not the defendant;
(b) the source of funds for the litigation was the non-party or its principal;
(c) the conduct of the litigation was unreasonable or improper;
(d) the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest, and
(e) the unsuccessful party was insolvent or could otherwise be described as a person of straw.
89. Despite this, his Honour went on to point out at [214]:
The criteria identified in Knight v FP Special Assets should not ultimately be treated as separate and independent factors. Each requires an evaluative assessment of factors which will clearly tend to interact. Nor should it be forgotten that the power is only to be exercised in exceptional cases. In many cases involving individuals in the superior courts the parties may lack the resources to meet the costs of the litigation if unsuccessful. Similarly, there will frequently be a non-party, be it a company officer or solicitor, who will be active in the conduct of the litigation and who will obtain some direct or indirect financial benefit from its success. The fact that it is entirely proper for legal practitioners to runs cases on a speculative basis, so long as satisfied that they have reasonable prospects of success, demonstrates that care must be taken not to apply the criteria mechanically. Careful attention is required to the conduct of the party said to be involved in the litigation and the nature of the 'interest' in its outcome or subject-matter.
90. Insofar as the factors referred to by Basten JA above (at [88]) are concerned, Dr Haider pointed out that there was no case where a non-party had been ordered to pay costs where only factors (b) and (e) above were proved. Indeed, to do so in such a case seems to be inconsistent with the approach the authorities take to the issue.
91. I turn then to consider the basis on which the plaintiff says that Dr Haider should be liable for the costs of the proceedings.
92. The plaintiff put much store on the fact that he gave notice to Dr Haider of the intention to make this application.
93. Thus, it was submitted that "[i]mmediately the plaintiff's solicitors were warned of the defendant's impecuniosity and the involvement of his father in maintaining his defence of the claim", they put him on notice that they would make an application of the kind now being made.
94. There is some rhetorical exaggeration in this. The letter "warning" of the defendant's impecuniosity was sent in July 2011, but the first letter to Dr Haider, on which the plaintiff relies, was sent on the second day of the trial, namely on 5 October 2011. I do not regard that as "immediately" and it was significant that the trial had commenced before the letter was sent.
95. In any event, the plaintiff also relies on further notice that was given to Dr Haider foreshadowing the application.
96. By itself, notice can lead to an imposition of liability in an appropriate situation. In my view, this is not one of them. Notice may be an indispensible pre-condition to the liability of a non-party for the costs of proceedings, but it is not a sufficient condition to render the party liable, such as alleged here.
97. The plaintiff further submits that it was not mere notice, but that he gave Dr Haider details of some of the evidence with copies, for example, of medical reports. It was suggested that "[a]s a medical doctor ... [he] will be in a position ... to fully understand them".
98. That he may do so does not seem to me to be the point. That the reports showed injury to the plaintiff was consistent with there having been a fight, but says nothing about who was responsible for the fight and who was the aggressor which, of course, was a critical issue in the proceedings. There does not seem to me to be a duty on Dr Haider to take any action on receipt of these reports, such that the notice obliged him to do anything. No such duty, or its source, was alleged.
99. The plaintiff's solicitors also provided copies of the photographs and a copy of their expert's report on them to Dr Haider, too. Again, that does not seem to me to be the point. The defendant had an expert who took a somewhat different approach to the photographs and, to the timing of them being taken, what that expert said was consistent with the evidence that the plaintiff gave in chief. The learned Master, in Muscat v Haider at [224], noted that that evidence in chief, which he ultimately rejected, was adduced by leading questions and which may have been unhelpful because of the possibility that counsel "was under the misapprehension that the photographs had been taken in ... [the] order [as stated in the evidence in chief]".
100. While the learned Master ultimately rejected the defendant's case as to the photographs, I cannot find that, on the evidence available to the defendant (and, on the very generous assumption in the plaintiff's favour, to his father, Dr Haider) there was an inevitable conclusion that it was entirely lacking in merit for the defendant to challenge the appearance of the plaintiff in the photographs taken by his wife.
101. I note also that the context of the proceedings was that the defendant had been prosecuted by the Director of Public Prosecutions over the incidents and had been acquitted. That, of course, depended on different evidence and a different standard of proof, but cannot be ignored as to the context available to Dr Haider.
102. Although not articulated in this way, I do not find that the provision of the evidentiary material to Dr Haider would have inevitably led him to conclude that his son's case was not merely weak but so hopeless as to be some kind of vexatious defence or an abuse of process. Indeed, as pointed out earlier (at [65]), the defendant succeeded in defending the plaintiff's claim as to the second incident in the car park of the Club.
103. Insofar, then, as the plaintiff submits that giving notice to Dr Haider of his intention to seek costs from him and also in providing some evidentiary material meant that somehow Dr Haider knew that he was funding a hopeless case which has no prospects of success meant that he was thereupon liable for the costs of the adverse successful party, I reject the submission as not supported in law or by the facts.
104. A strong theme through the cases on the payment by a non-party of the costs of the successful party adverse to the party funded by the non-party is that the non-party has some direct and effective involvement in or, indeed, control of the conduct of the proceedings.
105. There was no evidence of this adduced by the plaintiff. There were, at best, two issues raised here by the plaintiff.
106. The first was that, in the correspondence between the plaintiff's solicitors and Dr Haider, he was advised to seek independent legal advice. It is not clear what precise relevance this had to any of the circumstances that might have made him liable to the plaintiff's costs.
107. It was submitted that it could be inferred that he did not seek such advice. The point of that is not clear. In any event, my view is that there was no basis for drawing such an inference.
108. Some suggestion was that, as Dr Haider gave no evidence, this permitted the inference to be drawn that he did not seek such advice. See Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
109. In my view, the principles in Jones v Dunkel would not permit such an inference to be drawn. As Menzies J explained in Jones v Dunkel, at 313, the principles cannot "fill gaps in the evidence or consent conjecture into inference". There simply was no evidence on which such an inference could be drawn.
110. There was no evidence from which it could be inferred whether Dr Haider had or had not sought independent legal advice, and, if he had, whether the advice suggested he should or should not take any particular action. On that issue, the evidence was entirely neutral. Thus, Dr Haider's absence as a witness was not able to support any inference being drawn, for none could be drawn from the evidence.
111. As Heydon J explained in Australian Securities and investments Commission v Hellicar (2012) 247 CLR 346 at 432; [232], "Jones v Dunkel does not enable a trier of fact to infer that the evidence of an absent witness would have been positively adverse to that party".
112. The second issue suggested was that Dr Haider, as father of the defendant and meeting his legal costs, would have been privy to compromise negotiations.
113. Again, this seems to me to be entirely conjecture. Dr Haider practised, and, presumably, lived in Batlow. Thus, he was not readily accessible to discussions with lawyers, all of whom were in Canberra. There is no evidence at all to show what communications there were between him and his son who, if his credibility was as found by the learned Master, cannot be assumed to have been any more accurate in what he was telling his father. That, at least, is as equally available an inference from the evidence and there is no basis for preferring one inference over another such that one could "more confidently" be drawn.
114. In any event, I do not find either of these issues constituted the kind of conduct that is meant when considering whether a non-party has, by his or her conduct, had direct or effective involvement in or control over the conduct of the proceedings. What is meant is some directing involvement in the way the lawyers prosecute the case, the steps they take, the evidence being accumulated and so on.
115. That Dr Haider might, by refusing to pay any further costs, bring the defendant's representation to a halt is not the kind of control that is referred to in the cases. No authority cited to me stated such a principle or anything from which such a principle could be found.
116. There is, accordingly, no evidence of any such involvement or control that would justify an order that Dr Haider pay the plaintiff's costs.
117. Another criterion that may indicate that a non-party should pay the costs of a successful adverse party is that the non-party has an interest in the proceedings or its outcome.
118. For the purpose of this application, I shall consider this issue in those terms, which is more favourable than the formulation of Basten JA above (at [88]), which requires the interest to be "equal or greater than that of the party or, if financial, ... a substantial interest".
119. The plaintiff submitted that Dr Haider had "a number of interests" and identified two: a "filial interest in assisting his son to avoid liability" and that his "only real prospect of recovering the costs outlaid by him" was in an award of costs to his son or damages.
120. As to the first, it seems to me that the family interest is not sufficient: Condliffe v Hislop is authority directly against this proposition. No attempt was made by the plaintiff to distinguish that decision, other than to note that it was a case involved with maintenance and champerty offences abolished in the Territory by s 68 of the Law Reform (Miscellaneous Provisions) Act 1955 (ACT) (and as torts by s 146A (now s 221) of the Civil Law (Wrongs) Act 2002 (ACT)). That does not seem to me to be relevant as the court in that case directly addressed the issue of payment by a non-party of the costs of a successful adverse party. That case, it seems to me, is persuasive and relevantly in point.
121. Further, there were some sound policy reasons why a defendant, as was Dr Haider's son, should not be deprived of family financial assistance because of fear of an adverse costs order. As Mr D Lloyd, counsel for Dr Haider, put his submissions:
The result of the exercise of the power in respect of a defendant would be that an impecunious party brought to court against his will might be deprived of financial assistance from family members with the result that he would not be legally represented. That plainly is an injustice. At the very least it is difference to the situation where the moving party is funded by a non-party.
122. As to the second issue, this would apply to every non-party funder and the law is not that this is a sufficient interest. As noted by Basten JA in FPM Constructions v Council of the City of Blue Mountains at [214], this is not a sufficient interest to, of itself, require that the non-party pay the costs of a successful adverse party. Were that so, then every legally aided funded client and every solicitor providing services on a "no win, no fee" basis would be at risk of an adverse costs order.
123. As Mr Lloyd again submitted, this would have "a chilling effect on the way that many cases are quite property conducted".
124. In my opinion, Dr Haider had no relevant interest in the proceedings that would justify the order sought by the plaintiff.
125. The plaintiff issued two subpoenas, one to the solicitors who acted for the defendant and one to Dr Haider. Certain documents were produced in response to those subpoenas but privilege was claimed by Dr Haider over a number of them.
126. As required by the procedure mandated in National Employers' Mutual General Insurance Association Ltd v Waind [1978] 1 NSWLR 372, I inspected the documents to determine whether the claims for privilege could be maintained.
127. The document produced by the lawyers was described as "internal correspondence between" three lawyers in the firm.
128. The challenge was that Dr Haider was not the client in respect of whose litigation the document related. I accept that this is so. That means that the documents should be made available.
129. Having looked at it, however, the information in it was known at the date of the hearing before me and was expressly referred to in the hearing. In any event, it was not relevant to any issue in the proceedings, at least so far as the plaintiff was concerned. It simply referred to "Maria Haider is paying Nic's account today (approx $10K). She is wondering if she could get an update on things". Thus, although it should be accessible to the plaintiff's lawyers and the claim for privilege rejected, it did not seem to me that I should delay the proceedings any further to allow the plaintiff to rely on it.
130. As to the documents produced by Dr Haider and over which privilege was claimed, they were described as "letters and emails constituting confidential communications between a lawyer (Nicholl & Co) and a client (Dr Haider) made for the dominant purpose of legal advice on litigation".
131. The challenge was that privilege had been waived by the delivery of the statutory declaration made by the defendant as referred to above (at [27]).
132. I have again inspected the documents. They are accurately described and privilege is properly claimed. It has not been waived. They did not relate to the statements made in the statutory declaration. To describe the position further may amount to disclosing information that is the subject of privilege but I am satisfied that the application for inspection should be rejected.
133. The third claim for privilege relates to documents described in "letters and emails constituting confidential communications between Colquhoun Murphy and Nicholl & Co in connection with attempts to settle a dispute between Dr Haider and Nicholl & Co". That dispute related to the proceedings to which I have referred above (at [44] and [45]).
134. Ordinarily this privilege for settlement negotiations, sometimes called "without prejudice privilege", will apply to records of all settlement negotiations. There are, however, exceptions and the plaintiff relied on the exception in s 131(2)(f) of the Evidence Act 2011 (ACT) which disapplied the privilege if
(f) the proceeding in which it is sought to present the evidence is a proceeding to enforce an agreement between the people in dispute to settle the dispute, or a proceeding in which the making of the agreement is in issue.
135. In my view, the challenge to the claim for privilege under this provision is misconceived. The agreement referred to in the paragraph is not an agreement between Nicholl & Co and Dr Haider to fund the defendant's defence against the plaintiff. That agreement, if it existed, was not, in any event, in issue in these proceedings for there was no submission that made the plaintiff's claim that Dr Haider pay the plaintiff's costs stronger if there was an agreement or weaker if there was none. Indeed, there was no reference in either the written or oral submissions made on behalf of the plaintiff to any such agreement.
136. In any event, it does not seem to me that this agreement (if it existed) is the agreement to which that paragraph applies. It relates to the enforcement of the agreement to settle the dispute - that is the agreement reached if the settlement negotiations are successfully concluded. That is the plain meaning of the words.
137. That, of course, makes sense for, if the agreement reached when the dispute is settled needs to be enforced, then there is no policy reason for the negotiations leading up to that agreement being privileged in such proceedings. That would also apply were that agreement by which the dispute is settled to be in issue.
138. This construction of the provision is consistent with what Goldberg J said in Asciak v Australian Secured and Managed Mortgages Pty Ltd [2008] FCA 753; (2008) 66 ACSR 298 at 304; [31]. See also Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209 at 229-30; [120]- [125].
139. In the result, the application for inspection of the documents produced by Dr Haider must be rejected.
140. The plaintiff has not been able to persuade me that he is entitled to the relief sought. He is not entitled to an order that Dr Haider pay his costs of the proceedings.
141. The application should be dismissed with costs and I shall make appropriate orders.
I certify that the preceding one hundred and forty-one [141] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Refshauge.
Muscat
Haider
(2012) 247 CLR 346
(1944) 68 CLR 571
(1985) 2 NSWLR 73
(2000) 201 CLR 226
(2002) 209 CLR 478
(1988) 165 CLR 543
(2009) 239 CLR 75
(1959) 101 CLR 298
(2005) 64 NSWLR 561
(1992) 174 CLR 178
(1995) 56 FCR 189
(1985) 5 FCR 395
(1988) 18 FCR 568
(2011) 278 ALR 209
(1988) 80 ALR 236
(1972) 127 CLR 1
(1992) 36 FCR 129
Note 2 Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
Note 3 An example is part of these rules, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).
(3) The court may make an order under subrule (2)(g) on its own initiative if justice requires it.