Solicitors:
Fraser Clancy (Plaintiff)
John de Mestre & Co (Defendants)
File Number(s): 2021/365919
[2]
Summary
By its judgment delivered on 8 September 2023, the Court dismissed the plaintiff's motion charging the defendants with criminal contempt (Novelly v Tamqia Pty Ltd (No 2) [2023] NSWSC 1091 (the Contempt Judgment)). These reasons should be read, and assume familiarity, with the Contempt Judgment. Defined terms in the Contempt Judgment have the same meaning in these reasons.
At the conclusion of the Contempt Judgment, the Court ordered the plaintiff (Mr Novelly) to pay the defendants' costs of the contempt motion, but reserved liberty to any party who wished to do so to make an application for a different costs order. Such an application was made by Mr Novelly. The Court ordered the exchange of written submissions, with the application to be determined on the papers.
Mr Novelly submits that in the exercise of the Court's discretion he should have 60% of his costs of the contempt motion, or such other percentage of his costs as the Court deems fit. He further submits, in the alternative, that there should be no order as to costs.
For the reasons which follow, the Court will not alter the costs order made at the conclusion of Contempt Judgment, other than to excise from that order the costs incurred by the defendants in relation to affidavits that they served, but did not read at the hearing. In summary, this is because the Court accepts the defendants' submission that where the Court has dismissed the contempt motion because it solely particularised criminal contempts that were not made out, it would be unjust and inconsistent with that outcome for the Court to award costs on the basis that some civil contempts had been established when that was not the case which the defendants had been required to meet.
The submissions on behalf of Mr Novelly were prepared by Mr P Barham of Counsel. The submissions for the defendants were prepared by Mr D Lloyd of Senior Counsel with Ms LJ Moussa of Counsel.
It was common ground that the starting point was that costs should follow the event. The matters upon which Mr Novelly relied for his submission that the Court depart from that position and either order a percentage of costs in his favour or make no order as to costs were:
1. The defendants had engaged in a relevant form of misconduct. They were found to have committed civil contempts. Had they not behaved as they had, no contempt motion would have been filed in the first place. While the Court had identified a degree of triviality concerning the matters complained of, what had occurred was part of more substantial disputes between the parties, some of which had been resolved by the undertakings that were the subject of the contempt motion.
2. There was a public interest in the bringing of the contempt motion. Such motions should not be discouraged by the risk of an adverse costs order even where the motion was unsuccessful.
3. Mr Novelly had achieved a degree of practical success, succeeding on the interpretation arguments that had been raised and on all of the matters to establish a civil contempt, failing only in relation to the question of contumacy. This last aspect was severable and Mr Novelly's success on the other issues should be reflected in a percentage costs order in his favour or, given the parties' mixed success, there being no order as to costs.
The defendants' submissions may be summarised as:
1. Having failed to make out the criminal contempts that had been charged, it was not open to Mr Novelly to seek to relitigate the merits of the various disputes in which the parties were engaged.
2. Mr Novelly should be held to the case which he had brought and which the defendants had successfully defeated, being a case for criminal contempts. It was the dismissal of that case that constituted the event which costs should follow. In particular, it would be unfair and inconsistent for the costs outcome to be determined by reference to Mr Novelly having established some civil contempts, which were not matters with which the defendants had been charged.
3. The various arguments in the proceedings were not severable in the way for which Mr Novelly contended.
Insofar as Mr Novelly invited the Court to look at the entire history of the dispute between the parties, I accept the defendants' submission that to do so would constitute an impermissible relitigation of that history.
Nor is the Court persuaded that the issues were sufficiently distinct so as to allow an apportionment of the costs in favour of Mr Novelly. The issues raised concerning interpretation of the defendants' undertakings, while important, were legal arguments unsuccessfully raised by the defendants that required no evidence and were not the focus of the proceedings. The real debate was as to the nature of the defendants' conduct, with the issue of contumacy inextricably caught up in the facts which the Court had to consider in some detail. As such, it is not possible to extract consideration of contumacy from the Court's consideration of all of the facts so as to support any apportionment.
The potentially dispositive consideration in favour of the plaintiff's argument is the combination of the public interest in drawing attention to contempts with the circumstance that, in this case, civil contempts (albeit not charged) had been established. In support of that argument, Mr Novelly drew to attention the decision of Sir Robert Megarry VC in EMI Records Ltd v Ian Cameron Wallis Ltd [1983] 1 Ch 59, in which his Lordship said in relation to contempt motions (at 76) "Nothing should be done to deter a person from bringing a contempt to the notice of the court; and the risk of having to bear any of the costs will often be a real deterrent".
However, it is important to understand the context in which his Lordship made that observation. In short, that context was a discussion about the basis upon which the successful prosecutor of a contempt motion could recover their costs, in particular the potential difference between an order made on a solicitor and own client basis and an indemnity basis. So much is apparent from the entire paragraph in which the quotation appears:
"That leads me to the second point. I understand that revisions to Order 62, perhaps on a substantial scale, have for some while been under active consideration. Costs are complicated, and these things take time. It seems to me that without waiting for any general revision of Order 62,some amendment should be made to the present Order 62 which would put the position of inter partes orders for costs on an indemnity basis and on a solicitor and own client basis beyond doubt. As I have indicated, I would welcome the disappearance of the solicitor and own client basis as between opposing litigants, keeping it only for what it is designed for, namely, taxation between a solicitor and his own client. But I say this on the footing that the rules will properly define the indemnity basis, and confirm it as being available inter partes. ln particular, it is needed in cases of contempt. In such cases, nothing should be done to deter a person from bringing a contempt to the notice of the court; and the risk of having to bear any of the costs will often be a real deterrent; see Morgan v.Carmarthen Corporation [1957] Ch. 455, particularly at p. 474. Accordingly, I would express the hope that Order 62 will soon be amended on this point, in advance of any general revision: for orders for costs in cases of contempt are being made all the time, and they ought not to be left in any state of doubt".
The same point appears when the judgment of Romer LJ in Morgan v Carmarthen Corporation [1957] Ch 455 at 474, to which the Vice-Chancellor refers, is considered (emphases added):
"The significance which it is suggested the taxing master should attach to the phrase ["as between solicitor and client"] is that he should tax the costs not wholly on an indemnity basis in favour of the successful party to a contempt application but practically on an indemnity basis, subject to the power of the taxing master to cut down or reduce some obviously exorbitant charge. It may very well be that such a principle would be a highly desirable one to adopt, but the fact remains that it has not been enshrined in our procedure. I say it might be a highly desirable one to adopt because anything that is calculated to deter a person from bringing to the attention of the court the fact that there has been a contempt is to be deplored. If a person is called upon to put his hand to some extent into his own pocket when bringing contempt to the notice of the court he will be deterred from doing so. But, be that as it may, it is clear to me that there is no such principle incorporated in our practice".
It is apparent from these extracts that the deterrent to which the learned Vice-Chancellor was referring was that, as a result of a peculiarity of the costs rules as they then were, a successful party on a contempt motion may not receive a full indemnity for their costs. Neither of the English decisions to which I have referred is authority for the proposition that the fear of deterring something in the public interest, being the prosecution of contempts, means that an unsuccessful prosecutor should not be at risk as to the costs of the successful respondent.
As is so often the case, there are at least two public interests engaged in the present circumstances. The first is that there is a public interest in contempts being brought to the attention of the Court. There is, however, also a public interest in maintaining the predictability of the exercise of the costs discretion by adhering to the legislated starting point of costs following the event. For example, the risk of an adverse costs order is a consideration which should mitigate against frivolous or otherwise unmeritorious prosecutions for contempt being brought. Notwithstanding the public interest in prosecuting contempts, there are no special rules as to the costs of contempt motions, which should be determined by reference to the usual principles concerning the exercise of the Court's discretion as to costs.
The observations I have made in the preceding paragraph are not intended to foreclose the undoubted possibility that there may be cases where, in the proper exercise of the Court's discretion, an unsuccessful prosecutor should nevertheless have some or all of their costs, or that there should be no order as to costs. However, in this case the decisive consideration against that outcome is the defendants' submission that, where the Court has upheld the procedural strictness that attends prosecutions for contempt by reference to precisely what had been charged (in this case, criminal contempts) (see the Contempt Judgment at [131]), it would be inconsistent and unjust to determine the costs by reference to matters which although proven, were not the case which the defendants had to meet. It is this submission which confirms the Court in the view that it should not exercise its discretion to amend the costs order made at the conclusion of the Contempt Judgment, which order is an application of the principle that costs should follow the event.
[3]
Conclusion
While the Court will not depart from its earlier view as to the disposition of costs, there are two matters of refinement in relation to the costs order. The first arises from Mr Novelly's submission that because at the hearing the defendants elected not to go into evidence, they should not be entitled to their costs of or incidental to the preparation of affidavits which they served before the hearing from Ms Bolton and Mr Vedat, but did not read. The defendants made no response to this submission and the Court accepts Mr Novelly's submission in relation to those affidavits.
Second, for the avoidance of doubt, I will make clear that the costs order extends to the debate as to costs resolved by these reasons.
The order of the Court is:
1. Vary order 2 made on 8 September 2023 by adding ",including the defendants' costs of the argument as to costs but excluding the defendants' costs of and incidental to the preparation and service of the affidavits of the second defendant and Mr Vedat".
[4]
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Decision last updated: 18 October 2023