Reid v Hubbard

REASONS FOR JUDGMENT 1 On 5 December 2003 I dismissed an appeal against a judgment of Bryant CFM which had dismissed an application by the appellants Susan Reid and Michael James Reid to set aside a bankruptcy notice procured by the second respondent Esandcee Pty Ltd and directed to the first respondent John Harold Hubbard: Reid v Hubbard [2003] FCA 1424. I adjourned the question of costs to a date to be fixed for further argument as to whether there should be orders that (a) the appellants pay the second respondent's costs upon an indemnity basis; and (b) such costs be paid personally in whole or in part by the appellants' counsel and solicitors or some of them. 2 On 9 December 2003, at my direction, my Associate sent an email to the parties as follows: "His Honour has fixed the costs hearing at 10.15 am on 25 March 2004. His Honour is of the view that, because of the conflict of interest on the issue of costs, it would be inappropriate for the appellants to be represented by their present solicitors and counsel. Submissions are to be filed as follows: Appellants and solicitors and counsel, 1 March 2004, Second respondent, 15 March 2004." 3 There was no consultation with the parties prior to the giving of those directions. 4 By notice of motion filed on 24 February 2004, counsel who appeared for the appellants on the appeal, Ms Molyneux QC and Mr Kirby, sought the following orders: "(a) Insofar as it may be necessary, an order for the abridgment of time for service of this Notion of Motion; (b) An order that the directions given on 9 December 2003 by the Honourable Justice Heerey by email for the delivery of submissions on behalf of the parties to this Appeal and by the Appellants' solicitors and counsel in relation to the issue of costs concerning the Judgment of the Honourable Justice Heerey dated 5 December 2003 be vacated; (c) A direction that the Second Respondent specify any orders for costs of this Appeal which it seeks the identity of the persons against whom such orders are sought (whether parties to this Appeal or otherwise) and the nature of the orders for costs sought; (d) Orders and directions as to the further conduct of proceedings in respect of the costs of this Appeal; (e) Directions for the filing and service by the second Respondent of written submissions and of any affidavits upon which it seeks to rely and for the filing and service thereafter by the Applicants, their solicitors and counsel of written submissions and of any affidavits upon which any of them seek to rely; (f) An order in respect of the costs of the Motion; and (g) Such further or other relief as may seem appropriate to this Honourable Court." 5 Leave for such short service as may be necessary was not opposed. 6 On the return of the notice of motion, Mr Douglas Graham QC, senior counsel for Ms Molyneux and Mr Kirby, also sought a direction that I disqualify myself from hearing the costs issue on the ground of apprehended bias. This application was supported by Mr P J O'Callaghan QC, senior counsel for Marshalls and Dent, the solicitors for the appellants on the appeal. Mr J McDougall, counsel now appearing for the appellants, made no submissions on this application although he supported Mr Graham's submissions on procedural questions. Mr L Glick SC, senior counsel for the second respondent, opposed the motion and the disqualification application. It was common ground that, irrespective of my decision on the issue of disqualification, I should deal with the procedural questions and that acceding to my doing so would not be treated as any waiver on the part of those making the disqualification application. Procedural questions 7 Order 62 rule 9(1) of the Federal Court Rules provides: "(1) Without limiting the Court's discretion to award costs in a proceeding, if costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Court that a legal practitioner is responsible (whether personally or through a servant or agent), the Court may, after giving the legal practitioner a reasonable opportunity to be heard, do any of the following: (a) disallow the costs as between the legal practitioner and the legal practitioner's client; (b) if the legal practitioner is a barrister - disallow the costs as between the barrister and the barrister's instructing solicitor; (c) direct the legal practitioner to repay to the client, costs which the client has been ordered to pay to another party; (d) direct the legal practitioner to indemnify any party other than the client against costs payable by the party indemnified." 8 It is clear in my view that the jurisdiction conferred by the rule is not conditioned on an application being made by somebody other than the Court itself. There is nothing in the text of the rule to suggest this. On the contrary, the rule speaks of certain circumstances "appear(ing) to the Court". Rules equivalent to O 62 r 9(1) have been in force for many years in many jurisdictions. No authority was cited to me which suggests any such limitation. 9 In Shire of Gisborne v King [1995] 1 VR 103 the Appeal Division of the Victorian Supreme Court dealt with a case under the equivalent and very similar Victorian rule. The trial judge in that case had initiated the application of the rule. Although the Court held that he had not given adequate particulars to the practitioner concerned, it was not suggested that his Honour lacked power to invoke the rule of his own motion. 10 Policy considerations support this view. Order 62 r 9(1) is rooted in the long-established principle that legal practitioners owe a duty to the Court to exercise proper professional standards and the Court can and should enforce that duty. It would be an odd reading of O 62 r 9(1) if it could only be invoked by a client, even in circumstances where the client was ignorant or intimidated or in some other way at a disadvantage vis-a-vis his or her practitioner. (Of course, I am not suggesting that such circumstances in fact exist or do not exist in the present case.) 11 Once it is accepted that it is open to the Court to invoke O 62 r 9(1) of its own motion, the sequence of submissions that I have directed is that which naturally follows in such a case. The giving of a reasonable opportunity to be heard must involve the Court first informing the practitioner of the grounds on which it appears to the Court that costs have been incurred or wasted in the ways specified in the rule. That will usually be done in reasons given by the Court, as has occurred in the present case. The practitioner then knows what he or she has to meet and can respond accordingly. 12 In my view the terms of my judgment gave adequate notice of the grounds which it appears to me may, after full argument, be held to justify indemnity costs and an order under O 62 r 9(1). It was not submitted that in any identified respect the criticisms in my judgment of the conduct of the appellants' case were not understood, or were ambiguous or otherwise impossible to meet. No particularity was provided as to the alleged lack of particularity. I do not think the dictates of fairness or efficiency require that the criticisms in my judgment be recast in the form of pleadings and particulars. 13 In Gisborne, Tadgell J, with whom the other members of the Court agreed, said the following about the degree of formality in such matters (at 106): "Although not, of course, directly in point, the remarks of Lord Wright in Myers v Elman [1940] AC 282 at 318 suggest some guidance. His Lordship was there considering the disciplinary jurisdiction of the High Court of Justice against a solicitor, being a summary jurisdiction, to require him to pay costs, sometimes the costs of his own client, sometimes those of the opposite party, sometimes those of both in an appropriate case. Referring to the jurisdiction his Lordship observed that; Though the proceedings were penal, no stereotyped forms were followed. Hence now the complaint is not treated like a charge in an indictment or even as requiring the particularity of a pleading in a civil action. All that is necessary is that the judge should see that the solicitor has full and sufficient notice of what is the complaint made against him and full and sufficient opportunity of answering it. Thus, formal amendments of the complaint are not necessary, so long as the variations of the charge are sufficiently defined and the solicitor is given sufficient liberty to make his answer. The summary jurisdiction thus involves a discretion both as to procedure and as to substantive relief, though there was and is an appeal. I think, if I may say so, that that passage provides some wise and practical guidance upon the way in which an exercise of the jurisdiction conferred by rule 63.23 might be approached." In my view, that statement is applicable in the present case. Disqualification 14 As to disqualification on the ground of apprehended bias, the most recent formulation of the test is that of the High Court in Johnson v Johnson (2000) 201 CLR 488 at [11]: " It has been established by a series of decisions of this Court that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide." 15 However, when considering questions of apprehended bias based on alleged preconception, reference should also be made as to what was said by Dawson J in Vakauta v Kelly (1989) 167 CLR 568 at 575: "Preconceptions do not necessarily mean bias on the part of the judge who holds them. As was said by Charles J in R v London County Council; Ex parte Empire Theatre (1894) 71 LT 638 at 639, 'preconceived opinions - though it is unfortunate that a judge should have any - do not constitute such a bias, nor even the expression of such opinions, for it does not follow that the evidence will be disregarded'. And in this Court in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 161 CLR 342 at 372, a majority was of the opinion that when bias arising from preconceptions is in question, as distinguished from bias through interest, there must be strong grounds for finding its existence. A judge 'must so have conducted himself that a high probability arises of a bias inconsistent with the fair performance of his duties, with the result that a substantial distrust of the result must exist in the minds of reasonable persons.' In Re J.R.L.; Ex parte C.J.L. (1986) 161 CLR 342 at 372, I expressed the view that suspicion of bias may well be ineradicable where the bias is thought to result from preconceptions existing independently of the case. That is so, but it is not to say that bias is inevitably displayed merely because a judge holds preconceptions or reveals that he does. Unfortunate or not, it is virtually unavoidable that a judge, sitting in a jurisdiction such as that in which the trial judge was sitting, should form some view concerning a party appearing in case after case and of the expert witnesses habitually called by that party. But, as was pointed out in Reg. v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 at 554, a fair and unprejudiced mind 'is not necessarily a mind which has not given thought' to relevant matters or one which, having thought about them, 'has not formed any views or inclination of mind upon or with respect' to them." 16 I note that Dawson J was in the minority in the result in Vakauta v Kelly but I do not apprehend his Honour's general statements as being otherwise than, in my respectful view, a correct statement of the law. 17 Mr Graham referred to a passage in my judgment at [39]. I was speaking in the context of noting that Ms Molyneux, at the hearing, had not put to Mr Joseph the allegation of collusion and had abandoned it on the appeal as soon as it was raised by me. I said: " The conduct of the appellants´ case in relation to this particular issue is symptomatic of a great deal of the way in which senior counsel´s conduct fell below the standard that the Court and litigants are entitled to expect. I shall return to this aspect later." I also said at [55] -[56]: " There remains the question of costs. It will be apparent from the foregoing that I have concluded that this appeal, like the original application, was entirely without merit and should never have been brought. I shall adjourn the proceeding to a date to be fixed for further argument as to whether S & C´s costs (i) should be awarded on an indemnity basis and (ii) should be paid personally, in whole or in part, by the appellants´ counsel and solicitors, or some of them, pursuant to O 62 r 9 of the Federal Court Rules. In relation to the latter question, considerations which prima facie suggest that such a course might be taken include the criticisms I have already made and also the following: · Serious allegations of professional misconduct, such as colluding to effect an abuse of process, were made without any proper basis. · The nature of the appellants´ case suggests that it was a lawyers´ construct rather than a presentation of factual allegations of the client. · The comprehensive rejection of the case at first instance made the unthinking repetition of allegations on an appeal all the more reprehensible." 18 Certainly, I expressed a prima facie view that costs should be paid personally and it is fair to say, as Mr Graham submitted, that I expressed that view forcefully. However, in the particular setting of O 62 r 9(1), I do not think that the criterion of apprehended bias has been satisfied. Order 62 r 9(1) does not deal with the ordinary case of a judge coming to hear a dispute between parties, where the judge is required and expected to come with an open mind and is, so to speak, tabula rasa. On the contrary, the rule contemplates that there has been conduct by a practitioner which triggers in the judge's mind the possibility of the very exceptional situation of the practitioner being made personally liable for costs. The rule assumes that the judge must have formed some adverse view as to the conduct of the practitioner. Necessarily, it must be a view of some strength because O 62 r 9(1) is a very serious sanction, not lightly to be invoked. Apprehended bias only arises where a reasonable person might think that the view expressed might be an unshakeable one, incapable of being changed by full argument. I do not think that point has been reached in the present case. I therefore dismiss the application. 19 There was no objection to a modest adjustment of the times fixed. I will therefore direct the submissions of the appellants and solicitors and counsel be filed and served by 9 March, and those of the second respondent by 19 March. Since there was no directions hearing prior to my earlier directions, and given that today's hearing involved to a substantial extent procedural matters, I propose to order that the costs of the motion be costs in the appeal. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.