Riva NSW Pty Ltd v Mark A Fraser & Christopher P Clancy t/as Fraser Clancy Lawyers

Court of Appeal (NSW)|2020-08-11|Before: Christopher P, Macfarlan JA, McCallum JA, Wright J, Mr P, Commission J, MacFarlan JA

Solicitors: Gells Lawyers (Applicants) Clancy Lawyers Pty Ltd (First Respondent) File Number(s): 2019/261955 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Citation: [2019] NSWDC 348 Date of Decision: 24 July 2019 Before: Wilson SC DCJ File Number(s): 2012/13479

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

MACFARLAN JA: This is an application for judicial review pursuant to s 69 of the Supreme Court Act 1970 (NSW) of orders made on 24 July 2019 by Wilson SC DCJ. The applicants in this Court, Riva NSW Pty Ltd ("Riva"), Mr Angelo Ferella (who is the controller of Riva) and Ms Tiziana Ferella (a director of Riva), seek relief in relation to his Honour's orders including the order that Riva pay on an indemnity basis the costs of the present first respondents, Mr Mark Fraser and Mr Christopher Clancy, who practise as Fraser Clancy Lawyers ("Fraser Clancy"), of an appeal brought by Riva in the District Court against a decision of a Costs Review Panel. The appeal proceedings in the District Court have been extraordinarily protracted, having been on foot from January 2012 to the present. In his decision of 24 July 2019, his Honour attributed the protraction of the proceedings to Riva and its representatives.
His Honour encapsulated his reasons for awarding indemnity costs to Fraser Clancy as follows (at [115]): "In relation to the application [by Notice of Motion] made by the Defendants [Fraser Clancy], I have no hesitation in finding that the Plaintiff [Riva] ought to pay the Defendants' costs on an indemnity basis, for the following reasons: (a) by its conduct, the Plaintiff has caused the Defendants to incur gross and unnecessary costs in these proceedings; (b) costs on any other basis would not adequately compensate for the Defendants for the costs unnecessarily incurred by the conduct of the Plaintiff; (c) the Plaintiff has, through its representatives, misled the Court, conducted proceedings on a false basis, given untruthful evidence, lacked any objective or other evidence to support their positions; (d) the Plaintiff has maintained hopeless proceedings, which they knew or ought to have known, particularly with legal advice, had no prospects, let alone reasonable prospects of success; and (e) the Plaintiff failed to accept reasonable offers of settlement made by the Defendants."
His Honour based these conclusions on matters described in a detailed chronology of what occurred in and in relation to the proceedings. The chronology was provided to his Honour by Fraser Clancy and his Honour noted that Riva had taken no exception to it, despite a specific enquiry being made as to whether it did. The material provided a proper basis for his Honour's conclusions.
The chronology revealed, inter alia, that on 10 August 2012, Curtis DCJ dismissed the appeal which was the basis of the District Court proceedings. Thereafter, Fraser Clancy sought to enforce its costs judgment by a number of means, including by obtaining a garnishee order and also freezing orders in relation to money that Riva held on deposit. As well, it sought to examine Riva, Mr Ferella and Ms Ferella. Interspersed with these steps were many attempts by Riva to challenge them, including by way of applications to this Court for judicial review.
In addition to ordering the payment of costs on an indemnity basis and the payment of interest on the costs, the primary judge made certain directions concerning the conduct of Mr Ferella and Ms Ferella and those who acted as Riva's legal representatives during the course of the proceedings. None of these persons were parties to the Notice of Motion which was the subject of his Honour's judgment of 24 July 2019. The former were parties to the substantive District Court proceedings but the latter were not. The effect of the directions was to require alleged misconduct of these persons to be brought to the attention of regulatory, prosecutorial and disciplinary authorities. I refer to the directions separately below.
The applicants' submissions to this Court on the summons for judicial review were contained in their written submissions, which were signed by counsel and dated 29 October 2019. There were no oral submissions made on the applicants' behalf as an application by their solicitor for adjournment of the hearing was refused and the solicitor thereafter chose simply to rely on the written submissions.
The applicants first submitted that for a variety of stated reasons the primary judge's criticism of their conduct in relation to the examinations was unwarranted.
Secondly, the applicants submitted that the primary judge's conclusion that Riva's attempts to have the asset freezing orders set aside were hopeless did not have a proper foundation.
Thirdly, the applicants contended that, again for a variety of identified reasons, the primary judge's attribution of delay and wastage of cost to Riva and its representatives was incorrect.
Fourthly, the applicants submitted that criticisms that the primary judge made of Riva's legal advisors were unwarranted and should not have been made in the absence of the persons criticised being afforded procedural fairness.

Consideration of the application for judicial review of the indemnity cost and interest orders

The proceedings in the District Court comprised an appeal pursuant to s 384 and s 385 of the Legal Profession Act 2004 (NSW) against the decision of a Costs Review Panel. There was no appeal available from any decision of the District Court in the proceedings because, being themselves an appeal to the District Court, they did not constitute an "action" for the purposes of s 4 of the District Court Act 1973 (NSW) (see Muldoon v Church of England Children's Homes Burwood (2011) 80 NSWLR 282; [2011] NSWCA 46 at [11]; Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; [2014] NSWCA 170 at [20] and [113]). The right of appeal to the Supreme Court conferred by s 127 of the District Court Act is limited to judgments or orders given or made "in an action".
Due to the absence of a right of appeal, the applicants seek judicial review relief under s 69 of the Supreme Court Act. Relevantly, such relief is only available where an applicant for relief can establish jurisdictional error or "an error of law that appears on the face of the record of the proceedings" (see s 69(3)). For this purpose, "face of the record" includes the reasons for judgment of the court whose decision is challenged (see s 69(4)).
The restriction of an applicant to reliance on error of law evident from the terms of the orders challenged and the reasons for judgment is not reflected in the applicants' submissions to this Court, which to a large extent, if not wholly, rely upon the evidence before the primary judge to establish error. Moreover, the applicants do not identify any relevant jurisdictional error. It is however unnecessary to descend to consideration of the detail of the applicants' submissions as in my view their application for relief should be refused on discretionary grounds.
It is well established that judicial review relief may be refused on this basis (see for example Reimers v Health Care Complaints Commission [2012] NSWCA 317 at [6]; JS v Secretary, Department of Family and Community Services [2014] NSWCA 441 at [54]; Toth v Director of Public Prosecutions (NSW) [2018] NSWCA 253 at [33], [40] and [41]; M Aronson, M Groves and G Weeks, Judicial Review of Administrative Action and Government Liability (6th ed, 2017, Lawbook Co) at [17.50]). As I consider that the application should be rejected on discretionary grounds, it is also unnecessary to consider whether the challenged orders have the necessary quality of finality to render them open to judicial review (see Toth at [26]-[31]).
I note in passing that there is no relevant privative provision in the District Court Act which would confine the basis for the judicial review presently sought to jurisdictional error (compare Kirk v Industrial Court (NSW) (2010) 239 CLR 531; [2010] HCA 1 where s 179 of the Industrial Relations Act 1996 (NSW) was applicable). Section 176 of the District Court Act is a privative provision but it is clear from the context in which it appears in that Act that it relates only to criminal proceedings in the District Court.
The matters that lead me to conclude that relief should be refused on discretionary grounds are as follows.
First, the principal order sought to be challenged is one as to costs. Where an appeal is available, leave to appeal is required to mount such a challenge (see for example District Court Act s 127(2); Supreme Court Act 1970 (NSW) s 101(2)(c) and (q)). This is indicative of a general policy that challenges to costs orders should be tightly confined.
Secondly, although the amount of the costs here in question is not known because they have not yet been assessed, the amount is not likely to be large in comparison to the amounts usually at stake in proceedings in this Court. I note in this respect that the present issue relates only to the basis for assessment of the costs (indemnity or party/party basis). A successful challenge to the indemnity basis of the order would only impact on a limited proportion of the costs actually awarded, that is, the difference between the costs calculated on a party/party basis and the costs calculated on an indemnity basis.
Thirdly, it does not appear from my consideration of the applicants' written submissions that Riva has a strongly arguable case for establishing jurisdictional error or error of law on the face of the record. On the contrary, it seems that by its judicial review proceedings Riva largely and impermissibly seeks to re-argue the matters that were before the primary judge in relation to the exercise of his costs discretion. Riva's difficulties in this respect are compounded by the absence of any attempt on its part to clearly identify the errors of law on the face of the record (or jurisdictional errors) which it contends should result in judicial review relief being granted.
Fourthly, even if Riva could establish jurisdictional error or an error of law on the face of the record and have the relevant orders quashed, any re-exercise of the costs discretion in the District Court would seem unlikely to produce any more favourable result for Riva than the orders already made, as there were many factual matters relating to Riva's conduct of the proceedings which justified the primary judge making an order for indemnity costs.
Fifthly, the proceedings have been extraordinarily protracted and, on the information that is before this Court, the primary judge would seem to have been well justified in attributing the blame for that to Riva.

The directions concerning the non-parties to the motion

The primary judge's directions to which I referred above concerning non-parties to the Notice of Motion were as follows (at [124]): "(a) I direct the Registrar of this Court to refer Angelo Ferella and Tiziana Ferella for investigation by the Australian Securities and Investments Commission, with my recommendation that they be placed on the list of persons disqualified from having any involvement in the management of corporations; (b) I further direct the Registrar of this Court to refer these proceedings to the Office of the Director of Public Prosecutions for consideration of prosecuting Angelo Ferella and Tiziana Ferella for swearing affidavits which they knew to be false; (c) I make the following directions in relation to the Plaintiff's legal representatives: (i) that the Solicitor for the Defendants provide the Registrar of this Court with a list of all Solicitors or Barristers who acted on behalf of the Plaintiff in relation to these proceedings and any proceedings arising out of same; (ii) that the Registrar notify the Law Society of New South Wales and the New South Wales Bar Association of any Solicitor or Barrister who has acted in relation these proceedings or any related proceedings, of their failure to comply with their duty to the Court and legal obligations under s56 of the Civil Procedure Act; … (h) I direct that a copy of this judgment be sent to the following: (i) the Plaintiff; (ii) the Defendants; (iii) Angelo Ferella; (iv) Tiziana Ferella; and (v) any legal practitioner identified by the Defendants as having acted for the Plaintiff in the course of these proceedings."
As the conduct of Mr Ferella, Ms Ferella and Riva's legal representatives bound Riva, it was inevitable that the proper exercise of his Honour's discretion to award indemnity costs would involve consideration, and possibly criticism, of those responsible for Riva's conduct of the proceedings. The primary judge's directions and, to some extent, his findings stated in his reasons for judgment however inappropriately went beyond consideration of their conduct for that purpose.
At least implicitly, and to some extent expressly, the directions stated the primary judge's views that Mr Ferella and Ms Ferella and Riva's legal representatives had engaged in misconduct. For example, direction (a) incorporated a recommendation that Mr Ferella and Ms Ferella "be placed on the list of persons disqualified from having any involvement in the management of corporations", direction (b) carried the implication at least on a prima facie basis that Mr Ferella and Ms Ferella had sworn affidavits that they knew to be false, and direction (c) incorporated as an assertion of fact that every legal representative who had acted for Riva in the proceedings or any related proceedings "[failed] to comply with their duty to the Court and legal obligations under s 56 of the Civil Procedure Act".
The making of these directions, particularly to the extent that they incorporated his Honour's views as to misconduct by Mr Ferella, Ms Ferella and Riva's legal representatives, in the absence of those persons being given an opportunity to be heard, constituted a denial of procedural fairness to them (see Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 576-578, 581; [1992] HCA 10 at [24], [27] and [37]). Even if the directions had simply been for referral of the conduct of those persons to the appropriate authorities, the publication of the directions in the judgment would in my view have been liable to adversely affect their reputation without them having been afforded procedural fairness.
It is of course important that misconduct, whether criminal or professional, which comes to the attention of a court should be referred to the appropriate authorities for consideration (see for example Simpson v Hodges [2007] NSWSC 1230 at [268]-[269]), but that in my view should not be done in a public fashion without notice being given to those concerned.
It is now necessary to determine what, if anything, should be done about the inappropriate directions. As Basten JA pointed in Rafidi v Commonwealth Bank of Australia [2017] NSWCA 96 at [16], a decision of a judge to refer possible misconduct to a relevant authority is an independent administrative decision by the court and not part of the judicial process. It is open to this Court to make declarations concerning administrative acts of judicial officers pursuant to its powers under s 75 of the Supreme Court Act (Sinkovich v Attorney General (NSW) (2013) 85 NSWLR 783; [2013] NSWCA 383 at [79]). This may be done at least where there has been jurisdictional error (Buttrose v Attorney General (NSW) [2015] NSWCA 221 at [4] citing Patsalis v Attorney General (NSW) (2013) 85 NSWLR 463; [2013] NSWCA 343 at [3], [7] and [23]-[24]; see also Buttrose at [36]-[40]). A failure to afford procedural fairness where it is required to be afforded is a jurisdictional error.
The Court should in my view make a declaration of the invalidity of the subject directions to mark its disapproval of their making and to lessen any harm to the reputations of the persons concerned.

Orders

For the reasons above, I propose the following orders: 1. Declare that the directions made by paragraph [124] subparagraphs (a), (b), (c) and (h) of the District Court judgment of 24 July 2019 are invalid because they were made without affording procedural fairness to the persons referred to in them. 2. Otherwise dismiss the summons for judicial review. 3. Order the first applicant to pay the first respondents' costs of the summons. 4. No order as to the costs of the second and third applicants.
I have proposed that no order be made as to the costs of Mr Ferella and Ms Ferella, the second and third applicants, because they did not have any interest in challenging the indemnity costs and interest orders as they were only made against Riva. Whilst they were successful in challenging the referral directions concerning them, Fraser Clancy, the first respondent, should not have to pay their costs as Fraser Clancy did not seek those directions. Instead, the primary judge made the directions on his own initiative.
McCALLUM JA: I agree with Macfarlan JA.
WRIGHT J: I agree with the orders proposed by Macfarlan JA for the reasons which his Honour has given.

Amendments 07 September 2020 - Name amended for first respondents' representation (solicitors) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 September 2020

Legal Profession Act 2004(NSW)

Supreme Court Act 1970(NSW)s 101(2)(c)

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