R v Murfett

Supreme Court of Victoria|2004-05-26|Before: Balmford J

Costs - Contempt proceedings - defendant successful - costs awarded to defendant on an indemnity basis.

In this matter I delivered judgment on 13 May 2004, dismissing two charges of contempt of court and inviting submissions from counsel as to costs. Those submissions were heard on 18 May 2004 and are dealt with here. These reasons should be read with the reasons for judgment delivered on 13 May ("the original reasons").

Mr Slonim, for the unsuccessful applicant, Pincott Pty Ltd, submitted that there should be no order as to costs. If I understood him correctly, he began by submitting that my finding that I was not satisfied of the charges beyond reasonable doubt was not a finding as to the objective truth of the affidavit sworn by Mr Murfett on 27 June 2003 which was placed before Redlich J on 30 June 2003, and that in the absence of an objective finding that the affidavit was false, it could not be said that the applicant was not justified in bringing the proceeding.

It is more than trite to say that a court hearing a criminal charge is not concerned with objective truth, but with whether the charge has been proved to the required standard.

The award of costs is always in the discretion of the court, and there are many factors which a court may take into account in considering the exercise of that discretion. This proceeding was initiated in the knowledge that the charges must be proved to the criminal standard, as to which see Witham v Holloway [1] and further, as Mr Ruskin, for the defendant, pointed out, both the charges, framed by the applicant, included an allegation that what was done was done "knowingly and wilfully". It is not appropriate to attempt at this stage to revisit the factual matters which were in issue.

The two decisions of the New South Wales Court of Appeal on which Mr Slonim relied, Ditford v Wild [2] and Ditford v Brown [3] cannot be said to be on all fours with the matter before me. Even if that were not so, where the exercise of a discretion is in issue, other cases can be no more than a guide to the exercise of that discretion. [4]

Accordingly I accept the submission of Mr Ruskin that there should be an order in this case that costs follow the event, in accordance with the usual practice.

Mr Ruskin submitted further that it was appropriate in all the circumstances of this case that the costs should be ordered to be paid on an indemnity basis.

Rule 63.30.1 of the Supreme Court (General Civil Procedure) Rules 1996 provides:

(1) Subject to paragraph (2), on a taxation on an indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

(2) Any doubt which the Taxing Master may have as to whether the costs were unreasonably incurred or were unreasonable in amount shall be resolved in favour of the party to whom the costs are payable.

In Colgate Palmolive Co v Cussons Pty Ltd [5] Sheppard J considered at some length the authorities as to the principles relating to the award of indemnity costs. At 231 His Honour set out the following passage from the judgment of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [6] :

I believe that it is appropriate to consider awarding "solicitor and client" or "indemnity" costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.

Sheppard J went on to cite the comment of Gummow J in Council of the Municipality of Botany v Secretary Department of the Arts, Sport, the Environment, Tourism and Territories [7], that the discretion was not so circumscribed that an order might be made only against an ethically or morally delinquent party. He also referred to the similar view of French J expressed in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers - Western Australian Branch [1993] FCA 42; (1993) 46 IR 301 at 303 in the following terms:

Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.

Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Teitjo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, decided on 3 May 1991), "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p 6) similar views in [Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, delivered on 5 March 1993)].

His Honour went on to enumerate a number of circumstances which have been thought to warrant the exercise of the discretion, including:

the fact that the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;

the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and

Those authorities should be considered in the light of the fact that this proceeding involved two charges of contempt of court, whereby the applicant claimed that the defendant knowingly and wilfully breached an undertaking given to the Court and knowingly and wilfully interfered with the administration of justice.

Mr Ruskin relied first on the judgment of Gillard J in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd, [8] where His Honour said:

. . . contempt proceedings should not be brought except in the clearest cases and where the circumstances demand that the contempt proceeding be brought to achieve obedience or to impose a penalty where the circumstances demanded punishment.

A contempt proceeding should not be brought for an ulterior purpose but, more importantly, should not be brought for what may be described as trivial breaches of an order.

In my view, although the plaintiff and its advisers were extremely suspicious of the conduct of the company and Mr Gleeson, and of his honesty, nevertheless, the proceedings should not have been brought until the charges had been carefully considered and careful thought had been given to the question of proof.

I would, with respect, adopt that passage, mutatis mutandis.

The circumstances of this case are not such that they could be said to demand that the proceeding be brought, either to achieve obedience or to impose a penalty. Indeed no submissions were made or foreshadowed by the applicant as to appropriate orders to be made by way of enforcement or punishment should the charges succeed. It would appear therefore that the purpose for which the charges were brought was unrelated to the achievement of obedience or the imposition of a penalty.

Mr Pincott's concerns, set out in his affidavit of 24 June 2003, about the whereabouts of the relevant equipment, were reflected in the terms of the first charge, which was, when the originating motion was filed on 11 December 2003, the only charge. Mr Ruskin's submission that no notice was given to the defendant before the filing of the originating motion was not challenged by Mr Slonim. An attempt should have been made to remedy those concerns by enquiry before issuing proceedings for contempt, and enquiry might well have resulted in the photographic evidence referred to in [26] and [30] of the original reasons being produced at that stage.

The second charge, which occupied by far the greater part of the hearing, was added by amendment of the originating motion on 19 March 2004, less than two weeks before the date on which the case was listed for hearing. Mr Ruskin submitted that the manner in which the proceeding was conducted, by subpoena of documents and cross-examination thereon, when considered in relation to the charges as framed, demonstrated that the applicant had engaged in a fishing expedition in the hope that material put to the defendant might demonstrate beyond reasonable doubt the bad faith which the charges as framed required the applicant to prove.

Whether or not that was the case, there was always going to be difficulty in proving the charges as framed, in particular the second charge, beyond reasonable doubt. This should have been apparent on careful consideration, of the kind which should take place, as indicated by Gillard J, before the issue of contempt proceedings.

It would be difficult not to form the opinion that this proceeding was initiated purely for the purpose of conducting an incidental battle in the war constituted by the principal proceeding, number 7324 of 2002. It is not appropriate to issue proceedings in contempt for such a purpose.

Mr Ruskin's second submission relied on a letter dated 29 March 2004, two days before the commencement of the hearing in this matter, from the solicitors for the defendant to the solicitors for the applicant, which reads in part:

In accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333, our clients offer in full and final settlement of the claim, interest and costs, that the proceeding, number 9244 of 2003 be withdrawn by your client and that there be no order as to costs and that the parties bear their own costs of the proceeding.

This letter will be used in relation to the question of costs.

Although there was no time limit on that offer, so that it could have been accepted at any time throughout the hearing, no response was received.

Mr Ruskin submitted that, given that the Court encourages resolution of proceedings, that offer should have been accepted.

I note the following passage from the commentary by the learned author of Williams: Civil Procedure Victoria [9] :

. . . the balance of judicial opinion now supports the view that the court may properly take an offer in the Calderbank form into account in considering whether in the exercise of the discretion as to costs the party who made the offer should be awarded costs on a more generous basis, and that as a rule such award ought to be made.

That view is supported by the judgment of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation [10] and the unreported judgment of Gillard J in MT Associates Pty Ltd v Aqua-Max Pty Ltd (No. 3) [11]

Taking into account all the circumstances of this case, considered in the light of the authorities to which I have referred, I am of the view that the costs of the defendant should be paid by the applicant on an indemnity basis, and there will be an order to that effect.

[2] unreported, decided on 22 February 1989

[4] And see the discussion by Ormiston JA in Transport Accident Commission v O'Reilly [1998] VSCA 106; [1999] 2 VR 436 at 456-7

Supreme Court (General Civil Procedure) Rules 1996

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