Wilson v Britten-Jones

Legal principles 7 The relevant principles were conveniently summarised by Perram J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 at [7]-[9] as follows: 7. The principles guiding the exercise of the discretion involved are well established. First, at a high level of generality, Rule 40.13 confers a discretion which 'should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice…' (Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 291; (1992) 36 FCR 297 at 312). 8. Secondly, in the exercise of the discretion, the Court should bear in mind the twin policy considerations underpinning Rule 40.13. These are that the Court should avoid exposing the parties to the perils of multiple taxation proceedings (Vasyli v AOL International Pty Ltd [1996] FCA 804) and should keep in mind that subsequent events in the litigation may generate costs orders going in the opposite direction and in respect of which set-offs may ultimately be available (Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at 145 [37]). A corollary of that latter consideration - particularly relevant to this case - is that prior costs orders may be available to set off the interlocutory costs order sought to be taxed. On the other hand, where no credit risks attend the parties to the litigation, this set-off consideration may be somewhat less significant (Courtney v Medtel Pty Limited (No 3) [2004] FCA 347 at [24]). 9. Thirdly, a range of factors may justify departure from the ordinary rule: where the final determination of the proceedings is far away: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13) [1995] FCA 1459 at [5] ('It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time.'); where a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in handling the proceeding with competence and diligence (Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 ('Life Airbag')); where, following a successful amendment application, a case is essentially a new proceeding (McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [19] and [40]); where a discrete issue has been resolved (Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 1425 at [7]); or where there is some reason to think that interlocutory disputation is having the effect of draining the ability of one side to conduct the litigation (Clipsal at [12]). 8 The party who seeks an order that costs of an interlocutory application be payable forthwith bears the onus of demonstrating a good reason why the general rule should be departed from: The Owners - Strata Plan No 87231 v 3A Composites GmbH (No 2) [2020] FCA 333 at [33] (The Owners - Strata Plan No 87231). 9 What has been said in previous cases does not lay down immutable or rigid rules in relation to the exercise of the discretion, as each case must be assessed on its own merits. Much will depend on the nature of the proceeding, the nature of the interlocutory application, the status or stage of the proceeding when the interlocutory application is considered and determined, and the circumstances of the parties: The Owners - Strata Plan No 87231 at [35]. 10 I note also the content of the Costs Practice Note and in particular those clauses referred to by the applicant: see cl 3.3, 3.6, 3.7-3.9, 3.13 and 3.14. This Note is to be read together with the Central Practice Note, of particular relevance is cl 7.1, 8.1, 8.5, 17.1 and 17.2.

Application for leave 11 The respondents submitted there are a number of compelling considerations that support a departure from the ordinary position, and that costs should be payable forthwith. First, the issues that arose on the application for leave are separate and discrete from the issues that will arise in the balance of the proceedings, with the rejection of the application having no bearing on the balance of the claims. Those remaining claims will constitute an entirely new case. It is appropriate that "a line be drawn under the costs of the proceedings to date". Second, final determination of the proceedings is still a long way away, with proceedings being at the pleadings stage. Given the nature and complexity of those claims there is no basis to assume that a trial would take place within the near future: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13) [1995] FCA 1459 at [5]. Third, the application for leave was wholly misconceived in a number of fundamental respects, referring to Wilson v Britten-Jones (No 2) at [93], [11], [118], [122], [123]-[124] and [129]. In this context the respondents submitted that they have incurred substantial costs. Fourth, this is not a case where the Court might decline to make an order for costs to be paid forthwith out of a concern that the order itself might jeopardise the applicant's capacity to advance her claims. There is no suggestion that the applicant does not have the financial capacity to meet a costs order at this time. 12 The applicant referred to the legal principles and policy considerations relevant to making an order for costs payable forthwith. The applicant submitted that the application was not separate from her overall claim, but was only one part of her claim. She alleged that improper motivations drove the firm's response to the employee allegations, many of which relate to entirely ordinary management and workplace interactions. The applicant may succeed wholly or partly in her remaining causes of action, and any costs order can be set-off against any interlocutory costs orders. The applicant made submissions about avoiding multiple taxations, and again took issue with the submission that a final judgment will not be delivered for a substantial period of time. The applicant submitted her claim was not misconceived and she was entitled to bring it, contending that the application was not without merit, although unsuccessful. The applicant submitted that while there is no evidence of her being impecunious, an order for costs forthwith will obviously impact on her finances, especially if the respondents have "incurred substantial costs in defending" the application for leave. The applicant contended that she should be allowed to continue to prosecute her claim without the added "burden" or "perils" of multiple taxation processes and costs orders, especially given she is an individual seeking relief against a large, well-resourced commercial law firm. She submitted that the respondents are making this application only to delay the proceedings. 13 In reply the respondents submitted there has been no evidence produced to demonstrate any detriment the applicant would face if the order were made for payment forthwith. The respondents took issue with the applicant's contention that the application is a mere "strategic device to gain advantage in the litigation". 14 The only issue for determination is whether the costs order should be made payable forthwith. 15 Although as the applicant contended, the sex discrimination was only one part of the proceedings, it was a discrete part. That claim required the grant of leave to proceed. The refusal to grant leave consequently concluded that part of the applicant's case. The refusal of leave meant that one cause of action had been "removed from the arena of dispute between the parties": Mitanis v Pioneer Concrete (Viv) Pty Ltd (Goldberg J, 25 February 1998, unreported) cited by Branson J in Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 at 12. That the remaining claims also relate to the applicant's former workplace does not alter that. 16 The applicant's contention that her claim was not misconceived must be viewed in light of the reasons for refusal of leave. As is apparent from the reasons for judgment, aspects of the claim and importantly, arguments in support thereof were both factually and legally misconceived. This is in the context where Nicholas J had raised a number of issues in relation to this claim when he refused the injunction, which were not addressed by the applicant in making her application for leave. 17 Contrary to the applicant's submission, given the nature of the issues raised in the remaining claims it is likely that the hearing and final judgment is still some considerable time away. These remaining proceedings are still at the pleadings stage with a request for further particulars being addressed. The respondents will not have the benefit of an award of costs in relation to this part of the preceding for a considerable period of time: Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (No 13) [1995] FCA 1459; Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545. 18 There is no basis to contend, as the applicant did, that this application is a mere "strategic device [by the respondents] to gain advantage in the litigation". Nor is there any basis to contend that the respondents are making this application only to serve to delay the proceedings. There is no proper reason why that would be so. 19 It can be accepted that paying the order forthwith would impact in some way on the applicant's finances. There is however, no evidence to suggest that the order might jeopardise the applicant's capacity to bring her remaining claims, which would have been expected if that were the case. 20 The applicant's submission that she is an individual seeking relief against a large and very well-resourced commercial law firm does not advance her position. The applicant has not explained the significance of that fact in circumstances where she accepts costs orders are properly made against her in the context of an absence of any evidence of the impact of the order being paid forthwith on her ability to prosecute the remainder of the case. 21 Given that the applicant properly accepts that she must pay the costs of the leave application, I am not prepared to act on the basis that the matter would necessarily go to taxation, and that the parties would be unable to negotiate a resolution. 22 In the circumstances, the respondents have established that there is a proper basis to depart from the ordinary position in relation to the costs for the refusal of the application for leave to commence the proceedings, and costs are ordered to be paid forthwith.

Injunction 23 The respondents submitted that the applicant sought injunctive relief in the context of her unlawful sex discrimination claims on the basis that there was an "arguable case" to advance in support of the injunction. In that context, the reasons advanced in support of costs in relation to the leave application were said to apply with equal force. 24 The applicant contended that any application that those costs be paid forthwith should have been made to Nicholas J at or about the time of the decision. She submitted that in any event the interests of justice in these circumstances do not sufficiently outweigh the policy considerations behind r 40.13 of the Federal Court Rules 2011 (Cth) (Rules). The applicant took issue as to how long it would take for the hearing to take place, and distinguished this case from Wotton, which was relied on by the respondent. The applicant submitted that Nicholas J considered the totality of the claims, many of which remain before the Court for final determination. She contended that there is no evidence from the respondents that the applicant's conduct "has caused significant additional costs such that the interests of justice demand a departure from the ordinary rule". If the applicant is wholly or partly successful in the remaining causes of action a set-off may be available where prior or subsequent cost orders are made in the opposite direction, citing see: Courtney v Medtel Pty Limited (No 3) [2004] FCA 347 at [20]; Bailey v Beagle Management Pty Ltd [2001] FCA 60; 105 FCR 136 at 145 [37]. The applicant submitted that the order will result in multiple taxations which should be avoided. 25 In response, the respondents identified that the applicant has not referred to any authority to support the proposition that the order should have been sought before Nicholas J, and submits that it was appropriate to wait for the outcome of the leave application. As to the timing of any hearing, the respondents submitted that the pleadings have not closed, with further particulars having been sought as to the statement of claim and their position to make a strike out application has been reserved. 26 As the applicant submitted, this case is factually different from the circumstances in Wotton. However, each case must be assessed on its own merits. 27 The injunction application was heard in February 2019, nearly two years ago. 28 This injunction application was heavily, if not solely, tied to the sex discrimination claim. So much is apparent from the reason of Nicholas J at [84]: 84. The principal difficulty I have with the applicant's claim to interlocutory relief based on breach of fiduciary duty is the absence of any evidence to suggest that Mr Britten-Jones or any other partner wishes to see the applicant expelled from the partnership for some improper purpose. The only improper purpose that the applicant has identified is expulsion of the applicant for the reason, or reasons that include, the fact that the applicant is a woman or that she had made or may make a sexual discrimination complaint against the partners. For reasons I have already explained, I do not think the evidence provides any support for either of those contentions. 29 It was not necessary that the application be made before Nicholas J at the time. To the contrary, the basis of this application is tied to the refusal of the grant of leave. Prior to that decision there may well have been no sufficient basis for the application. It is in those circumstances in which it is contended the order for costs made by Nicholas J ought now to be made payable forthwith. The applicant does not point to any authority to suggest an application cannot now be made. In that context I note that Branson J in Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 made orders in respect to proceedings before her, but also in respect to earlier proceedings before a different judge who had already made an order for costs. 30 The injunction is closely tied to the leave application, and for the reasons given in relation to the leave application, the respondents have established that there is a proper basis to depart from the ordinary position, and I order that the costs ordered by Nicholas J on 3 June 2019 be paid forthwith.

Notice to produce 31 The respondents seek an order that the costs of and incidental to the notice to produce application be paid by the applicant, forthwith. 32 As to the issue of costs, the respondents addressed the history of the proceedings, and relied in particular on Wilson v Britten-Jones (No 2) at [41]-[76]. Emphasis was placed on the observation at [76]: 76. As will be apparent from the recitation of the history of the proceedings the application for the notice to produce was tortured with the original notice being drafted with such breadth that various amendments were necessarily made, yet the amended notice still contained some paragraphs or aspects which were ultimately set aside. This may have consequences as to any costs order that may flow from this application. 33 Reliance was also placed on [115], that although the purpose of the amended notice was said to be directed to providing evidence as to comparators, and the submission was made by the applicant that the Court would be significantly assisted by those documents, no such evidence or documents were referred to or provided in the supplementary submissions and tender bundle. From that the respondents submitted the issue of the notice to produce (in its various iterations) was an exercise in futility, and the whole of the costs in connection with it are essentially costs thrown away. 34 As to the issue of payment forthwith, it was submitted the notice to produce was issued within the context of the application for leave and for no reason other than to procure documents for that purpose. It was submitted there is no reason why the position as to costs should be any different as for the leave application. 35 The applicant submitted that the respondents ought to pay costs as the applicant's claims were substantially successful. She also submitted that the respondent's conduct in the substantial delay in producing the documents resulted in the applicant incurring further significant legal costs. The applicant submitted the documents were requested from as early as January 2019, but were not produced for fifteen months, and only by Court order. She submitted this conduct was unreasonable and costs consequences should follow. Although the applicant accepted that some paragraphs of the notice to produce were varied and a smaller number were rejected, that is not a basis to depart from the ordinary position in relation to costs. The applicant took issue with the contention that the amended notice was "vastly different", and addressed the history of the proceedings. If the Court were to find against the applicant, she submitted in relation to the costs of the notice to produce, that the appropriate order would costs in the cause or that each party bear their own costs, as many of the documents are relevant to the remaining claims. The applicant submitted there was no basis to order costs forthwith. 36 In reply the respondents submitted that the applicant was not substantially successful, but rather they were. They submitted that the applicant's attempt to repackage the notice to produce as being relevant and useful for issues unrelated to the applicant's sex discrimination claims should be met with caution as it was plain that the applicant's primary purpose in issuing the notice was to assist her sex discrimination case and in particular, the application for leave. 37 This application relates to both the order for costs, and if found for the respondent, payment forthwith. 38 The issue of costs in relation to the notice to produce is less clear cut than the preceding matters. 39 A party who issued a notice to produce where production of documents is substantially ordered in accordance with the notice, might ordinarily expect to receive a costs order in their favour. 40 However, although orders were made for the production of documents, the applicant's contention that she substantially succeeded on her application cannot be accepted. The submission also ignored the applicant's conduct of those proceedings, and the consequences that flowed, which are detailed in Wilson v Britten-Jones (No 2) at [47]-[48] and [114]-[118]. So much is plain from the observations in Wilson v Britten-Jones (No 2) at [76] recited above at [32]. 41 I do not accept the applicant's contention regarding the respondents' conduct in the circumstances of this case, including inter alia, where the applicant did not issue a notice until just before the leave application with the inevitable consequence of delay in resolution of it, and in a context where over twelve months earlier Nicholas J had raised the necessity to issue a notice given the state of the evidence. 42 The respondents are correct that the purpose of the notice to produce was "said to be directed to providing evidence as to comparators, and the submission was made by the applicant that the Court would be significantly assisted by those documents, no such evidence or documents were referred to or provided in the supplementary submission and tender bundle": Wilson v Britten-Jones (No 2) at [115]. 43 That said, documents were ordered to be produced. The applicant now submits that despite the basis on which the notice was issued, the material produced is relevant to her remaining claims. Although the respondents submitted I ought to be cautious about that submission, given the preliminary stage of those proceedings I am not in a position to properly assess the submission. 44 The applicant's conduct in respect to the notice was such that she is not simply entitled to an order as to costs. However, given the circumstances where the applicant contends the material is relevant to the remaining claims it is not appropriate to make an order for costs for the respondents at this stage. The respondents' submission as to the futility of the notice to produce can only be properly considered after the remaining claims have been heard. In that context, in my view, the appropriate order at this stage is for costs of the notice application be deferred pending the determination of the applicant's other claims referred to above in [2]. I will hear the parties further following the determination of those claims in relation to the issue of costs for the notice to produce.

Conclusion 45 In respect to the application for leave I order that the applicant pay the respondents' costs to be agreed or assessed. The respondents have established that in the circumstances, the orders for costs in their favour in relation to the leave and injunction applications be paid forthwith. In respect to the notice to produce the application is deferred pending the determination of the applicant's remaining claims. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Abraham.

SCHEDULE OF PARTIES NSD 214 of 2019 Respondents Second Respondent: SHANNON ADAMS Third Respondent: FLORIAN AMMER Fourth Respondent: MICHAEL BACINA Fifth Respondent: ANDREA BEATTY Sixth Respondent: DONNA BENGE Seventh Respondent: MEGAN CALDER Eighth Respondent: TIM CAPELIN Ninth Respondent: TIM CLARK Tenth Respondent: TIM COLEMAN Eleventh Respondent: JAMES DICKSON Twelfth Respondent: PETER DWYER Thirteenth Respondent: GEOFF EMMETT Fourteenth Respondent: DAVID EY Fifteenth Respondent: ANNE FREEMAN Sixteenth Respondent: MARK GORDON Seventeenth Respondent: SEBASTIAN GREENE Eighteenth Respondent: GORDON GRIEVE Nineteenth Respondent: TOM GRIFFITH Twentieth Respondent: CHRIS HARTIGAN Twenty First Respondent: SINA KASSRA Twenty Second Respondent: TIM LANGE Twenty Third Respondent: MICHAEL LHUEDE Twenty Fourth Respondent: MARTIN LOVELL Twenty Fifth Respondent: SIMON MORRIS Twenty Sixth Respondent: IAN NATHANIEL Twenty Seventh Respondent: TIM O'CALLAGHAN Twenty Eighth Respondent: ANDREW RANKIN Twenty Ninth Respondent: ROBERT RIDDELL Thirtieth Respondent: ANDREW ROBERTSON Thirty First Respondent: THOMAS RUSSELL Thirty Second Respondent: GREG TAYLOR Thirty Third Respondent: SIMON VENUS Thirty Fourth Respondent: SIMON WARD Thirty Fifth Respondent: ASHLEY WATSON Thirty Sixth Respondent: GREG WHYTE Thirty Seventh Respondent: TED WILLIAMS Thirty Eighth Respondent: MARK WILLIAMSON Thirty Ninth Respondent: BRUCE CAMERON Fortieth Respondent: MICHAEL COKER Forty First Respondent: JAMES MACDONALD Forty Second Respondent: ALASDAIR MCLEAN Forty Third Respondent: HUGH SCALES Forty Fourth Respondent: MJC LEGAL PTY LTD ACN 127 069 229 AS TRUSTEE OF THE MJC LEGAL TRUST Forty Fifth Respondent: JAM LEGAL PTY LTD ACN 127 357 046 AS THE TRUSTEE OF THE JAM LEGAL TRUST Forty Sixth Respondent: ARM LEGAL PTY LTD ACN 600 054 037 AS TRUSTEE OF THE ARM LEGAL TRUST Forty Seventh Respondent: HS LEGAL PTY LTD ACN 127 356 852 AS THE TRUSTEE OF THE HS LEGAL TRUST