Puxty v Monarch Advisory Group Pty Ltd

1. The applicant pay the respondent's costs of the application for an extension of time and leave to appeal: (a) on the party and party basis up to and including 15 September 2021; and (b) on the indemnity basis from 16 September 2021.
2. The applicant pay the respondent's costs of this costs application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 On 25 February 2022, the Court refused to grant Mr Brett James Puxty leave to appeal from orders made by the primary judge on 16 July 2021: Puxty v Monarch Advisory Group Pty Ltd [2022] FCA 153. The Court made an order that Mr Puxty pay the respondent's costs unless either party applied for a different order as to costs within 7 days of the date of the order. The respondent, Monarch Advisory Group Pty Ltd, applied for an order that the costs be paid on an indemnity basis, but did not specify the date from which any such order should operate. The parties agreed orders for the exchange of submissions and for the question to be determined on the papers. Both parties filed submissions and Monarch filed two affidavits sworn by its solicitor with exhibits containing correspondence between the parties. The issue would have been determined earlier were it not for administrative oversight and the lack of any inquiry from the parties. 2 The decision the subject of Mr Puxty's application for an extension of time and leave to appeal was an interlocutory decision made by the primary judge, dismissing an application made by Mr Puxty (and others) for an order "removing and or barring" Madison Marcus Law Firm Pty Ltd, from acting for Monarch in the proceeding: Monarch Advisory Group Pty Ltd v Puxty (No 2) [2021] FCA 801. 3 The grounds for the application before the primary judge included: first, the asserted risk of misuse of confidential information said to have been provided by Mr Puxty to Madison Marcus when that firm was retained to act for him and Monarch; and secondly, to protect the due administration of justice by preserving the integrity of the judicial process in circumstances where it was alleged that Madison Marcus had previously acted for Mr Puxty and that it owed Mr Puxty an obligation of loyalty. 4 The draft notice of appeal on which Mr Puxty relied in his application for an extension of time and leave to appeal set out 14 proposed grounds of appeal. They were as follows: Grounds of application 1. The Court erred in refusing the applicant (Puxty) an opportunity to address the Court in relation to the [sic] Ms Coulter's refusal to testify in the hearing and the inference to be drawn as a result of that refusal. 2. The Court erred on [sic] relying on the affidavit evidence of Ms Coulter in circumstances where the affidavit was not read and there was no evidence of Ms Coulter before the Court. 3. The Court erred in relying on the evidence of John De La Hoyde in circumstances where is [sic] affidavit was not read and there was no evidence of Mr De La [Hoyde] before the Court. 4. The Court erred in failing to consider the inferences to be drawn where Ms Coulter failed to testify. 5. The Court erred in holding that the evidence of Ms Coulter was unchallenged. 6. The Court erred in not finding that the only evidence before the Court was the unchallenged evidence of Brett Puxty 7. The Court erred in finding that the information provided by Brett Puxty to Maddison Marcus was not confidential in its nature and character 8. The Court erred in concluding that there [was] no basis identified by the applicant, on which it is likely that any solicitor from Madison Marcus will be a potential witness. 9. The Court erred in concluding that there was no lawyer-client relationship between Mr Puxty and Madison Marcus and in the absence of such a relationship a fair minded reasonably informed member of public would not conclude that the administration of justice required the Court to exercise its inherent jurisdiction to restrain Madison Marcus from acting for Monarch in the case. 10. The Court erred in finding that a reasonably fair-minded member of the public would not conclude that the solicitors should be prevented from acting for the plaintiff in the interests of protecting the integrity of the judicial process including the appearance of justice. 11. The Court erred in holding that that there was no relationship between Madison Marcus and Brett Puxty in terms of which Madison Marcus owed Brett Puxty a duty in relation to information which Puxty had provided to Madison Marcus. 12. The Court erred in holding that there was no identified basis on which Madison Marcus solicitors could be compellable witnesses. 13. The Court erred in accepting Ms Coulters [sic] evidence that Madison Marcus was not a party to any joint venture. 14. The Court erred in holding that the third party Consolidated Corporate Pty Ltd received information in its capacity as a commercial participant to proposed agreements and that its officers received information in that capacity. 5 When Monarch received these draft grounds of appeal it wrote to Mr Puxty on 1 September 2021, explaining in detail over 7 pages its view that the each of the proposed grounds of appeal was misconceived. These included factual errors about what had occurred before the primary judge and contended legal errors. The letter invited Mr Puxty to withdraw his application within 14 days of the date of the letter without any adverse costs order and stated that Monarch would rely upon the letter in support of an application for indemnity costs if Mr Puxty persisted with his application. Mr Puxty persisted. 6 In refusing to grant leave to appeal, I concluded that grounds 1 to 6 of Mr Puxty's proposed appeal were misconceived in a number of respects: (1) First, contrary to ground 2, the affidavit of Ms Coulter dated 23 December 2020 was read on the interlocutory application before the primary judge. (2) Secondly, contrary to grounds 1 and 4 Ms Coulter did not "refuse to testify". (3) Thirdly, contrary to ground 5, Ms Coulter's evidence was unchallenged in the sense that she was not cross-examined. (4) Fourthly, contrary to ground 1, the Court did not refuse "an opportunity to address the Court in relation to … Ms Coulter's refusal to testify in the hearing and the inference to be drawn as a result of that refusal". The primary judge permitted Mr Puxty's counsel to make extensive submissions and did not prevent any opportunity, or deny any request by counsel for Mr Puxty, to address the issue identified in ground 1. (5) Fifthly, contrary to ground 6: (a) Mr Puxty's evidence was not the only evidence before the Court. The evidence of Ms Coulter and Mr de la Hoyde was also before the Court; (b) Mr Puxty's evidence was not "unchallenged". Mr Puxty was cross-examined and aspects of his evidence were inconsistent with aspects of Ms Coulter's affidavit of 23 December 2020. (6) Sixthly, contrary to ground 3, the affidavit of Mr John De La Hoyde sworn 23 December 2020 was read on the interlocutory application before the primary judge. 7 I stated that "[i]t is difficult to see how grounds 1 to 6 could properly be advanced" and that they had no prospect of success: at [29]. As to grounds 7, 9 and 11, Mr Puxty did not identify the confidential information sufficiently to warrant making the restraining orders he sought and the evidence did not establish that Mr Puxty and Madison Marcus were ever in a lawyer-client relationship or that, whatever the alleged unidentified confidential information was, it had any relevance to the claims which would need to be determined in the proceedings. 8 As to grounds 8, 10 and 12, I concluded that the primary judge's reasons were not arguably incorrect and the primary judge could not properly have made the orders which Mr Puxty had sought. Grounds 13 and 14 challenged findings of fact which were open and which, even if not made, could not have led to any different outcome. No intelligible submissions were made as to how those grounds could be made good or lead to a different outcome. 9 The principles for making an order for indemnity costs are well known. It is not necessary to repeat them. Both parties referred to the reasons of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 801; 46 FCR 225. The Court has a broad discretion to order costs: s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The Court must interpret and apply civil practice and procedure provisions in a way that best promotes the overarching purpose set out in ss 37M(1) - see: 37M(3) of the FCA Act. 10 I am satisfied that the costs of Mr Puxty's application for an extension of time and leave to appeal were unnecessarily and significantly increased by a lack of attention being given to the basis for the application as exposed in the draft grounds of appeal. The lack of attention is deserving of special criticism in circumstances where Monarch went to some length to explain why various (if not all) of the grounds were misconceived in an attempt to resolve the application. The proposed grounds of appeal ranged from utterly hopeless and misconceived to barely arguable. 11 Mr Puxty should be ordered to pay Monarch's costs of his application for an extension of time and leave to appeal on the party and party basis up to and including 15 September 2021 and on the indemnity basis from 16 September 2021. 12 Monarch also sought an order that Mr Puxty pay its costs of this application. Monarch relied upon a letter sent to Mr Puxty's solicitors on 28 February 2022, which included the following: 2. Pursuant to order 3 of the Orders, we are instructed to seek a variation of the costs order such that your client pay our client's costs on an indemnity basis (Costs Application). 3. Our client intends to rely on the affidavit of Johnathon de la Hoyde sworn 2 February 2022 in support of the Costs Application. … 4. We are instructed to provide your client with one final opportunity to consent to an indemnity costs order in relation to your client's failed application for leave. Please let us know your client's position by no later than 4pm on 1 March 2022. 5. If your client does not consent to the order or a response is not forthcoming, we will write to the Court and confirm our client's position. We will also request that the Costs Application be adjudicated on the papers. 6. Our client will also rely on this letter as to the question of costs associated with the Costs Application. 13 On 1 March 2022, Mr Puxty sent a letter to Monarch advising he would not consent to the indemnity costs order sought. 14 Mr Puxty should pay the costs associated with this application on the normal basis. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.