(3) Thirdly, to denote some relevant unfairness in the commencement or prosecution of proceedings: for example, where criminal proceedings are delayed to the point of unfairness to the accused, because he or she cannot receive a fair trial ( Jago v District Court of NSW (1989) 168 CLR 23).
62 Mr Parker's primary submission was that r 42.3(c) referred to the tort of abuse of process, not to what he said were the wider concepts underlying the phrase "abuse of process" summarised above in the preceding paragraph.
63 There is a textual consideration that favours the narrow view advanced in this submission. Rule 42.3(2)(d) authorises the Court to make an order for costs against a person who, without authority, purports to conduct proceedings in the name of another. Such behaviour may constitute an abuse of process.
64 The authorities were reviewed at length by Mason CJ and Deane J in Knight v F P Special Assets Limited (1992) 174 CLR 178, in particular at 186-190; and separately by Dawson J and McHugh J in the same case at 199-202 and 210-213 respectively. Their Honours referred to cases such as Mobbs v Vandenbrande (1864) 33 LJ QB 177, In re Gardiner; ex parte Orgill (1890) 16 VLR 641 and Palmer v Walesby (1868) LR 3 Ch 732, in all of which cases reference was made to a power to order a non-party to pay costs in a case of abuse of process.
65 Thus, Mason CJ and Deane J said at 190:
"It is plain enough that the courts from time to time awarded costs against a person who, not being a party on the record, was considered to be the "real party". It may be that these cases are capable of being explained on various grounds, including the ground that the non-party ordered to pay costs was guilty of abuse of process, taking a very broad view of what constitutes an abuse of process, but to say that does not deny that there was jurisdiction to make an order for costs against a non-party … ."
66 If (as the applicants submit is correct) the words "abuse of process" in r 42.3(c) are to be given their ordinary, wide meaning, and are not to be restricted to the tort of abuse of process, para (d) might be thought to be superfluous. Further, Mr Parker submitted, and by analogy, para (e) might be thought to be superfluous. However, the point is not so clear as to require acceptance of Mr Parker's submission. Palmer v Walesby was a case where a solicitor was said to have abused the Court's process by filing a bill without authority in the name of a plaintiff. By contrast, para (d) deals with a wider category: any person who commences proceedings without authority in the name of another. It may be that the legislature intended to ensure that the general case, and not just the particular one that was the subject of authority, was caught.
67 But in any event, I think that the difficulties standing in the way of acceptance of Mr Parker's submission are greater than any difficulty flowing from its rejection. The major difficulty in accepting the submission flows from the fact that the phrase "abuse of process"
is used elsewhere in the Rules: specifically, at UCPR r 13.4. That rule (which in substance restates SCR Pt 13 r 5) provides that proceedings may be stayed or dismissed generally or in relation to any claim for relief where, among other things, they are shown to be an abuse of process. It is clear in this context that "abuse of process" is not limited to - indeed, is separate from - the tort of abuse of process. See Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 at [3]-[5] (Gleeson CJ, Gummow, Hayne and Crennan JJ). I do not think that the legislature intended the concept of abuse of process to have one meaning in one rule and another, narrower, meaning in another.
68 The majority judgment in Batistatos makes it plain that the categories of abuse of process are not closed, and that they continue to develop (see, for example, paras [9], [14]). However, their Honours at para [15] cited with approval the judgment of McHugh J in Rogers v The Queen (1994) 181 CLR 251 at 286, where his Honour observed that:
"… abuses of procedure usually fall into one of three categories: (1) the Court's procedures are invoked for an illegitimate purpose; (2) the use of the Court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the Court's procedures would bring the administration of justice into disrepute."
69 Even if one confines the analysis of the concept of abuse of process to its use in r 42.3(2), it is difficult to see why the legislature would have intended to single out the tort of abuse of process from other kinds of abuse of process. It is as appropriate to speak of an abuse of process being "committed" in the second or third categories referred to in para [61] above as it is to speak of it being "committed" in the first category. And the underlying or unifying concept - that a person is brought to Court improperly when he or she should not have been brought to Court - seems to me to pervade each of Mr Parker's categories (para [61] above). It is quite unclear why a person improperly brought to Court in circumstances that fall within category 1 might be entitled to a non-party costs order, whereas a person improperly brought to Court in circumstances falling within category 2 or category 3 should not.
70 Equally, if one considers instead the three categories identified by McHugh J in Rogers, it is difficult to see in them any basis for limiting the connotation of the phrase "abuse of process" in r 42.3(2)(c) (or, for that matter, in r 13.4).
71 I am conscious that the question in Batistatos was not whether a non-party costs order should be made, but whether proceedings could be stayed by reason of great delay, with consequent unfairness to one party. I do not think that this distinction renders inapplicable to the present context their Honours' discussion of the concept of abuse of process.
72 Mr Parker pointed to the fact that para (c) empowers the Court to order the "payment … of the whole or any part of the costs of a party to proceedings occasioned by the … abuse of process". He contrasted that with the wording of some other paragraphs, including in particular paras (d) and (e). The difference in wording, however, seems to me to be entirely explicable by the different subject matters. An abuse of process may infect the whole of proceedings, or some part only. For example (in the latter category) it may infect only one claim for relief. Where an abuse of process does not infect the whole of proceedings, it might be unjust to order the "abuser" to pay the whole of the costs of those proceedings. By contrast, where the proceedings fall within para (d), they are entirely unauthorised and there is no basis for the "abuser" not to pay the whole of the costs of those proceedings. The same may be said for "contempt of Court", which is joined with abuse of process in para (c).
73 Nor do I think that the history of the rule lends any support to Mr Parker's submission.
74 As I have said, the High Court in Knight considered (among other things) traditional categories in which courts had made costs orders against non-parties. It is apparent that abuse of process was one such category. Mason CJ and Deane J referred at 192-193 to a further category in which a costs order could be made against a non-party. That was a case "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."
75 The precursor to UCPR r 42.3 was SCR Pt 52A r 4 (and, before it, Pt 52 r 4, introduced in 1993. Einstein J dealt with the legislative history in Idoport Pty Ltd v National Australia Bank Ltd [2004] NSWSC 695 at paras [61] to [66]. It is unnecessary to repeat that history). In Wentworth v Wentworth (2001) 52 NSWLR 602, Heydon JA (with whom Davies AJA agreed) noted at 636 that those rules were intended to abolish "several traditional categories of jurisdiction to order costs against non parties discussed" by Mason CJ and Deane J in Knight, "and in particular the newly formulated category relating to insolvent persons discussed" at 192-193.
76 Whilst I accept that the rule and its predecessors were intended to limit the power of the Court to order costs against non parties, it does not follow from this that the legislature intended to limit the power of the Court to order costs against a non-party who was guilty of abuse of process. That was a source of power under the general law (as was recognised in Knight); it remains a source of power now. Whilst it is correct to say in a general sense that the rules were intended to limit the effect of the decision in Knight, they did so by abolishing the power of the Court to make costs orders against non parties in certain classes of case. They did not (at least in express terms) do so by limiting that power in classes of case (such as abuse of process) that continued to provide a source of such power.
77 To my mind, therefore, the enquiry is whether there has been an abuse of process in any of the recognised senses of that phrase. Any other approach would lead to the elaboration of fine distinctions, depending on the nature of the conduct that is alleged to amount to abuse of process (particularly where that conduct could be seen to fall into more than one category, or to lie across the boundaries of two categories). I do not think that the legislature had this in mind. Indeed, I do not think that the legislature should be assumed to have had in mind any categorisation of the concept of abuse of process, whether as suggested by McHugh J in Rogers, or by Mr Parker in submissions, or otherwise.
78 I therefore conclude that the power of the Court to make a non-party costs order will be enlivened under r 42.3(2)(c) whenever the Court is satisfied that there has been an abuse of process, regardless of the precise nature or classification or characterisation of that abuse of process.
79 I should note that Mr S Y Reuben of counsel, who appeared for Mr Rickard, did not submit that the term "abuse of process" in r 42.3(2)(c) should be construed to refer only to the tort of abuse of process. He accepted that the paragraph referred to the concept in any way in which it was used in the law. His submission was that however one read the expression, Mr Rickard was not acting in abuse of process.
Abuse of process: other relevant authorities
80 The parties referred me to a substantial number of cases. Without being disrespectful either to those who decided all the cases relied upon, or to the submissions founded upon them, I do not propose to discuss them all.
81 The applicants laid particular stress on three decisions: those of the Court of Appeal in Fostif Pty Ltd v Campbell's Cash and Carry Pty Ltd (2005) 63 NSWLR 203 and Project 28 Pty Ltd v Tim Barr Pty Ltd & Ors [2005] NSWCA 240, and that of Einstein J in Idoport.
82 Both Fostif and Project 28 were applications for permanent stays. In that context, the Court of Appeal stressed that in considering whether there was an abuse of process one should consider the tendency of the funding arrangements of proceedings to produce an abuse of process (see for example Ipp JA, with whom Hodgson JA and Campbell AJA agreed, in Project 28 at paras [39] and [43]). In considering this question, "the court's basal inquiry should be whether the role of the particular funder has corrupted or is likely to corrupt the processes of the court to a degree that attracts the extraordinary jurisdiction to dismiss or stay permanently for abuse of process" (see Mason P, with whom Sheller JA and, with an irrelevant exception, Hodgson JA agreed, in Fostif at 234 [132]).
83 Ipp JA pointed out in Project 28 at para [58] that the categories of abuse of process were not closed. He said that there might be an abuse of process where the very nature of the funding arrangements "result[s] in the defendant being oppressed or prejudiced, or the procedures of the court subverted or improperly manipulated."
84 Fostif and Project 28 were different cases to the present. Both were, as I have said, cases where the defendants were seeking stays. In each, the inquiry as to abuse of process was prospective, or largely so.
85 Further, in Fostif, the funder was funding the prosecution of the claims for its own profit (see the description of the funder's role given by Mason P at 215 [50] and following). By contrast, in Project 28, the funder was found not to be trafficking in litigation (Ipp JA at para [59]). Likewise, in the present case, Mr Parker relied on an observation of Bergin J that SST Consulting and its principals were not investing in the litigation for the purposes of profit (Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2006] NSWSC 234 at para [56]).
86 Ipp JA noted in Project 28 at para [77] that there were circumstances in which one person could prosecute litigation in the name of another, and have "complete or absolute control" over that litigation, without there being an abuse of process. His Honour did say however that such control was "a relevant factor when regard is had to the whole picture, which is required when considering whether or not to grant a stay on the grounds of abuse of process."
87 Ipp JA held in Project 28 that a stay should be granted. The reason was that the funder had absolute control over the litigation without having any responsibility for the defendants' costs if the plaintiff's case against it, controlled by the funder, were to fail (see paras [117], [121]). His Honour said at para [120] that the discipline of the usual rule as to costs "is an essential safeguard of the adversarial system"; and it was a discipline missing in the proceedings as they were presently constituted. Thus, his Honour concluded at para [121], there was a material tendency for the Court's procedures to be converted into instruments of injustice or unfairness where the funder had control of the litigation without any corresponding liability for costs. Those two features justified the granting of a stay: not a permanent stay, but a stay until the funder agreed to indemnify the plaintiffs against any costs that they might be ordered to pay.
88 Along the way to this conclusion, Ipp JA drew a distinction between circumstances that might justify a non-party costs order and circumstances that might justify a stay for abuse of process (see, in particular, para [105], where his Honour noted that "[t]he need to establish an abuse of process under [Part 52A rule 4(5)(d)] is a relatively difficult obstacle for a party wishing to obtain costs against a non-party to overcome"). His Honour appeared to accept that circumstances that might justify the granting of a stay (permanent or otherwise) might not justify the granting of a non-party costs order.
89 Of course, the two questions fall to be considered at different times. Ipp JA appears to have accepted as much in Project 28 at para [111], where his Honour said, among other things, that the prospects of the defendant's "obtaining a costs order against [the funder] while the latter is not a party are dependent on [the defendant's] establishing an abuse of process at the stage it seeks such a costs order." The inquiry into abuse of process, for the purpose of deciding whether to grant a stay, will be conducted at or near the outset of the proceedings. The inquiry, for the purpose of considering whether to make a non-party costs order, will be considered after the proceedings have been concluded. Thus, the latter inquiry may proceed upon a more complete appreciation of all relevant circumstances. The basal inquiry is therefore not so much as to the tendency of the proved arrangements to subvert the processes of the Court, with consequent injustice or unfairness to one party, but whether such subversion has occurred. In the latter category, it is a better informed inquiry.
90 In Idoport, Einstein J recorded at para [80] the submission "that the funding by a third party of litigation as a commercial venture, for reward, without assuming liability for any adverse costs orders is or depending upon the particular circumstances, is capable of amounting to an abuse of process for the purposes of Part 52A rule 4(5)(d)" (his Honour's emphasis). As will be seen from paras [81] and following, his Honour was minded to accept that submission, although it might appear from para [89] that the acceptance was conditional.
91 It should be noted, however, that Einstein J's decision in Idoport predated the decisions of the Court of Appeal in Fostif and Project 28. Thus, what his Honour said must be read in the light of those later decisions.
Analysis
92 As I have indicated, there is a conceptual difficulty in applying the principles set out in Project 28 to an application of this nature. In a case such as Project 28, the inquiry is prospective: is there a material tendency for the proceedings to result in manifest unfairness to one party? As Ipp JA explained, that may arise where a funder, who has control of and makes decisions in relation to the litigation, is not constrained by a likely order for costs. His Honour said at para [112] that one of the important features of the adversarial system "is the discipline imposed by the knowledge that an unsuccessful party is likely to be ordered to pay the costs of the successful party. This rule provides a bridle against lack of restraint in taking points that are hardly arguable, or not arguable at all, and against other possible excesses in the conduct of litigation. It provides a measure of protection to those involved in litigation, and to the Court itself, against unscrupulous attempts to manipulate the system. It provides an incentive to act carefully in a measured way."
93 In my view, it is crucial to recognise, and take into account, the distinction between an application of the kind made in Project 28 (at the outset of proceedings, for a stay) and the application with which I am concerned (after the conclusion of the proceedings, for a non-party costs order). Whilst both applications depend for their success on the demonstration of abuse of process, the analysis is different because of the different times at which they are undertaken. In the former case, the Court is concerned (as the passage that I have quoted from the judgment of Ipp JA in Project 28 shows) to protect a defendant against potential lack of restraint, possible excesses, potential for unscrupulous manipulation, or potentially careless and unbalanced action. Those matters might not have occurred at the time the inquiry is undertaken; the risk is that they will occur. It is the lack of discipline, of the kind imposed by a liability for costs, that engenders the risk. It is the risk - the tendency - that may demonstrate abuse of process.
94 In the present case, however, the Court can see whether there has been lack of restraint, excess in the conduct of the litigation, unscrupulous manipulation, or careless or irresponsible actions. If there has not, the Court can conclude that the risk, or potential, has not matured into reality. In those circumstances, it is legitimate - and in my view dispositive - to enquire: how can there be an abuse of process if there were no relevant abuse in the conduct of the proceedings?
95 At the risk of repetition: the inquiry in Project 28 was directed (as was the inquiry in Fostif) to the existence of a "material tendency" for the Court's processes to be converted into instruments of oppression: see Ipp JA at para [121] (and see Mason P in Fostif at 234 [132]). In this case, there is no need to speculate about tendency; the Court can consider the events that have occurred, and ask whether the tendency has materialised.
96 In general, the submissions for the applicants appeared to proceed on the basis that if there were control coupled with absence of liability for costs, there was abuse of process. In putting their cases this way, the applicants failed to take into account, or give appropriate weight to, the time at which their applications were made. With perhaps one exception (in the case of Allianz), the applicants did not seek to demonstrate that there had been any material lack of restraint, excess, manipulation, carelessness or other misconduct in the way that these proceedings were run. Far less did they seek to demonstrate that any such misconduct (to use a general term) flowed from the involvement of SST Consulting as funder. In this context, the distinction between the kind of control that it possessed through its ability to turn off the tap, as opposed to the kind of control that Mr Rickard possessed through his ability to give instructions relating to the conduct of the litigation, is crucial; but it was not addressed.
97 Exactly the same problem affects the application made by Allianz against Mr Rickard. Indeed, the problem (from Allianz' perspective) is exacerbated in his case. That is because the only possible misconduct upon which it relied - relating to rejection of its settlement offers - was attributed by it, seizing in what I had said in my costs judgment, not to Mr Rickard but to SST Consulting.
98 As I have indicated, it may be that on a fair analysis, Allianz did submit that there had been one manifestation of unreasonable conduct, in the rejection of its settlement offers. It is correct to say that I characterised that conduct as "unreasonable", in the course of ordering Rickard Constructions to pay some of Allianz' costs on the indemnity basis. But as I have already explained, SST Consulting was not represented in (let alone a party to) that application, and it cannot be bound by the inference that I then drew implicating it in the decision to reject the settlement offers. Further, in this context, I think it is the appropriate conclusion from the evidence that was adduced on these applications, from Mr Quigley, that the relevant instructions were not given by or on behalf of SST Consulting.
99 In any event, I think, there is a very substantial separation between the characterisation of conduct as "unreasonable", in the context of considering an application for indemnity costs, and the characterisation of conduct as oppressive, for the process of considering whether to make a non-party costs order by reason of abuse of process.