Young v Hughes Trueman Pty Ltd

Federal Court of Australia|2017-05-09|Before: Garling J, Farrell J

The application for an extension of time for the trustee to make an election under s 60(3) of the Bankruptcy Act 1966 (Cth) is dismissed.
The respondents' costs be paid from the appellant's bankrupt estate. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

FARRELL J: 1 On 23 March 2017, a sequestration order was made in relation to Mrs Margo Young's estate in the Federal Circuit Court of Australia: see Hughes Trueman Pty Ltd v Young [2017] FCCA 468. The debt on the basis of which the sequestration order was made was a lump sum order in the amount of $110,000 plus interest in favour of Hughes Trueman Pty Ltd and Dr Steven John Perrens (respondents) made on 1 May 2014 by Garling J in the Supreme Court of New South Wales: see Young v Hones (No 3) [2014] NSWSC 499. 2 On Monday, 1 May 2017, I made orders dismissing (with costs) Mrs Young's application under s 33(1)(c) of the Bankruptcy Act 1966 (Cth) to extend the period in s 60(3) of that Act for the trustee to make an election in relation to litigation identified by Kennedys (the lawyers for the respondents) in a letter to the Australian Financial Security Authority on 29 March 2017 (Kennedys letter). A trustee is deemed to have abandoned litigation brought by a bankrupt before the sequestration order was made if the trustee does not, within 28 days of receiving notice from a defendant or other party to the proceedings, elect to prosecute or discontinue those proceedings: see s 60(3). These are my reasons for making those orders. 3 Litigation between Mrs Young, Mr and Mrs King, Warringah Shire Council and Mrs Young's legal and other professional experts (including the respondents) who acted for her in 2003-2004 has a tortured history, which is set out in more detail below, particularly at [17]-[19]. Mrs Young claims that she has incurred about $3 million in legal costs payable to L.C. Muriniti & Associates, her current solicitors, in pursuing that litigation. 4 The dispute commenced with the question of where a drain should be placed following building and excavation works which were unauthorised at the time they were undertaken by the Kings on their property which neighbours Mrs Young's property. Following a conclave of experts, a solution to the drainage problem was devised and consent orders were made in 2004 by McClellan CJ (as his Honour then was) in the Land and Environment Court (L&E Court), on the basis of the Kings' undertaking to carry out specified remedial work. Mrs Young became dissatisfied with the solution and commenced action in 2008 to have the 2004 consent orders set aside. She commenced actions in negligence against her 2004 solicitor, barrister and experts (including the respondents) in February 2010. Mrs Young ultimately lost the attempt to set aside the 2004 consent orders: see Young v King (No 6) [2015] NSWLEC 111. She also lost the negligence actions when, on an agreed separate question, Garling J found that the defendants were entitled to advocate and witness immunity as then understood: Young v Hones (No 2) [2013] NSWSC 1429. 5 When Sheahan J handed down his decision in Young v King (No 6), he ordered Mrs Young to pay the Kings' costs but stayed that order for 42 days and directed the parties to "file any notices of motion seeking a different order by 20 August 2015". Although she was the losing party, on 20 August 2015, Mrs Young made applications seeking to recover from the Kings and 16 non-parties her costs incurred in the litigation since the making of the 2004 consent orders. Mrs Young's solicitor advocate (Mr Newell) conceded that the costs application was based on "fundamentally the same alleged conspiracy" rejected by Sheahan J in Young v King (No 6): see Young v King (No 9) [2016] NSWLEC 4 at [72]. Her application for costs against eight of the 16 non-parties (not including the respondents) were summarily dismissed in Young v King (No 8) [2015] NSWLEC 187. In Young v King (No 9), Sheahan J ordered Mrs Young to pay the Kings' costs of proceedings in the L&E Court (including in responding to the costs application) on an indemnity basis and dismissed (with costs) the applications against the other eight of the 16 non-parties (including the respondents). I will refer to these two decisions as the Costs Decisions. 6 Justice Garling's decision in Young v Hones (No 2) and Sheahan J's decisions in Young v King (No 6) and Young v King (No 9) (insofar as that decision relates to the Kings) have been the subject of unsuccessful appeals by Mrs Young to the New South Wales Court of Appeal and applications for special leave to appeal to the High Court (see further below). 7 The litigation which Kennedys notified to the trustee concerned (primarily) motions for leave to appeal the Costs Decisions, being proceedings 2015/375996, 2015/376036, 2016/76373 and 2016/76351 in the New South Wales Court of Appeal (the LEC Costs Appeals). 8 The basis asserted by Mrs Young for those motions is that the "conspiracy allegation" has not been litigated in Young v King (No 6), despite repeated submissions by those opposing Mrs Young to that effect. The primary submissions are (as written, footnotes omitted) that: "A conspiracy was never litigated in Young v King no. 6. An examination of the judgment reveals that there was no pleading referred to and no submission which spoke of conspiracy. For the most part, the references to conspiracy were rhetorical utterances quoted by His Honour which fell from the counsel for the Kings. There is no suggestion in the judgment that Mrs Young was alleging a conspiracy or that such a case was before the court". … In August 2015, Mrs Young brought an application for costs against 18 parties said to be involved in a conspiracy to shift the burden of drainage to her land from the Kings land … Those parties were said to be acting in the interests of the Council and the Council's agenda. … The conspiracy had resulted in seriously misleading matters being put to the Chief Justice of the Court resulting in a consent dismissal. … Motions to dismiss [Mrs Young's costs application] were brought by 18 parties. The evidence apart from that already before the court in no. 6 was not read. The motions were dismissed in No 8 and No 9 on the basis that they amount to a (relitigation) abuse of process. In Young v King No's 8 and Young v King No. 9, Justice Sheahan set out the principles but did not apply them to the facts. The process of application to the facts is a dense matter as the authorities show (see [29] to [30] in Young v King No. 8). The matters are on appeal for that reason alone. But more fundamental is the seemingly straightforward proposition that there cannot be a relitigation of a matter that has never been litigated. … There is no judgement in the LEC which has anything to say about the evidence in connection with the alleged conspiracy … The matter was appealed to the High Court. The High court gave inadequate reasons and on that basis there is proposed a further appeal … In the premises, it may be said that the conspiracy allegation has never been litigated and the evidence never been the subject of consideration. This alone disposes of a suggestion that it would be futile to allow the extension of time. However, it is also submitted that Mrs Young or her trustee must succeed on appeal. … [I]n circumstances such as those, and leaving aside what was actually alleged in Young v King no.6, the High Court has said that (a priori) there cannot be a suggested abuse of process. The relevant authority is Michael Wilson Partners v Nichols. The relevant learning in that case appears at [106] to [110] … Further, given the quantum of money involved, which has been estimated at more than $3,000,000, the recovery is of vital significance to the Applicant. It would be perverse in the known circumstances to describe the Applicant's desire to protect her recovery of costs as futile … Finally, anything which compromises her position leaves her vulnerable to losing her home. The application is not for a stay pending the appeal. But it has the effect (without any prejudice to anyone) to assist in protecting the subject-matter of the appeal".

Appeal against the sequestration order and application for stay 9 On 12 April 2017, Mrs Young lodged an appeal against the decision to make the sequestration order. That appeal has yet to be heard. On 18 April 2017, Mrs Young lodged an interlocutory application seeking a stay of the sequestration order. 10 On Thursday, 20 April 2017, Mrs Young's solicitor, Mr Leonardo Muriniti of L.C. Muriniti & Associates, wrote to the Court's Registry advising that the interlocutory application was extremely urgent due to the need to preserve appeals in the Supreme Court of New South Wales which were filed by Mrs Young before the sequestration order was made. The letter submitted that it was "imperative" that a stay be obtained by "no later than tomorrow". The matter came before me as duty judge and a brief hearing was held late on that day. I stood the matter over until the afternoon of 21 April 2017; it was unclear on what day the 28 day period in s 60(3) commenced.

Application for an extension of the time specified in s 60(3) of the Bankruptcy Act 11 On Friday, 21 April 2017, Mrs Young lodged an amended interlocutory application seeking an extension under s 33(1)(c) of the Bankruptcy Act of the 28 day period specified in s 60(3). The application did not specify any proposed period for the extension. 12 At the hearing on 21 April 2017, Mr Newell indicated that Mrs Young would proceed on the application for an extension of time and the application for a stay should be dealt with subsequently. Mr Newell and the respondents' counsel (Mr Gray) confirmed that they accepted that the Kennedys letter commenced the 28 day period specified in s 60(3) in relation to the LEC Costs Appeals. The consequence was that the 28 day period would expire on 26 April 2017. 13 Orders were made that Mrs Young file brief written submissions by 24 April 2017 and that the respondents file brief written submissions by 26 April 2017. The Court advised Mr Newell of the need for Mrs Young to provide written evidence of the trustee's attitude to the application by 26 April 2016. The matter was set down for argument in the afternoon of Friday, 28 April 2017. In the interest of justice to enable appropriate consideration of the application, I made an order extending the period under s 60(3) to 1 May 2017.

Litigation notified in the Kennedys letter 14 In addition to the LEC Costs Appeals, the Kennedys' letter put the trustee on notice of proceedings S284 of 2016 in the High Court of Australia (the Show Cause Application). This is an application for an order to show cause filed by Mrs Young seeking prerogative writs against this Court, the Federal Circuit Court, Hughes Trueman and Dr Perrens. This application relates to a decision by Bromwich J to dismiss an application by Mrs Young for an extension of time to file a notice of appeal against a decision of Judge Smith of the Federal Circuit Court to dismiss her application to set aside the bankruptcy notice which founded the sequestration order: see Hughes Trueman Pty Ltd v Young [2016] FCA 1176 (the Extension Of Time Decision). 15 The Kennedys letter also advised of an application brought by the respondents seeking special costs orders against Mrs Young, L.C. Muriniti & Associates, Mr Muriniti and Mr Newell arising from the Extension of Time Application (the Special Costs Application). That application was set down for hearing on 27 April 2017. Mr Gray told the Court that the trustee had advised in writing that it did not intend to appear at the hearing on 27 April 2017. I note that Bromwich J recused himself from hearing the Special Costs Application; it was heard by Lee J. 16 At the hearing on 28 April 2017, I was advised that the LEC Costs Appeals were listed for directions on 1 May 2017. Mr Newell submitted that he assumed that those matters would be stood over if an extension were granted in this case in order to give the trustee time to consider its position in relation to them.

Litigation background 17 The application has a complex litigation background which was summarised by Bromwich J in the Extension of Time Decision ([2016] FCA 1176) at [8]-[28]: The applicant's dispute with her neighbours [8] In about 2001, Mr and Mrs King, [Mrs Young's] next door neighbours in Forestville in suburban Sydney, built a granny flat which required excavation of their property. The works that the neighbours carried out caused drainage problems for the applicant because of the physical features of the two adjoining properties, which are situated in a natural depression. Only a part of the works carried out by the neighbours was the subject of a valid consent. The part of the works that was ultimately the subject of consent was carried out before consent was obtained from the local council. Overview of the original L&E Court proceedings and the ensuing litigation [9] By an application dated 14 April 2003, [Mrs Young] commenced proceedings in the L&E Court in relation to what had been done by her neighbours. Those proceedings were resolved in [Mrs Young's] favour on 19 February 2004, following a conclave of the experts retained by the parties. [10] [Dr Perrens] was one of the experts who participated in the conclave. He was a hydrological engineer retained by the applicant for the purposes of the L&E Court proceedings to give evidence as to what her neighbours had done and the requisite remedial works. [Hughes Trueman] was the company that employed [Dr Perrens]. [11] The L&E Court proceedings were finalised by consent orders formally dismissing those proceedings (the 2004 Consent Orders). The 2004 Consent Orders were made by the then Chief Justice of the L&E Court upon his Honour accepting and noting as part of those orders an undertaking by the neighbours to carry out certain works as part of those orders. His Honour gave a judgment on the issues leading to the orders being made: Young v King [2004] NSWLEC 93 (McClellan CJ). A costs order was also made in the applicant's favour. [12] [Mrs Young] was later dissatisfied with the 2004 Consent Orders and in particular was unhappy with the scope of the undertaking upon which they were predicated. [Her] complaint is an allegation that there was a material difference between the benefit she thought that she would be getting from the performance of the undertaking by her neighbours and the benefit she would in fact be getting. She considered that she had been misled. [13] Since discovering the asserted difference between the benefit [Mrs Young] thought that she would be getting and the benefit she would in fact be getting from the undertaking given by her neighbours, she has claimed that she would not have agreed to the 2004 Consent Orders had she properly understood what the undertaking in fact required her neighbours to do. She has vigorously litigated this issue since 2008. [14] The history of the litigation sparked initially by [Mrs Young's] dispute with her neighbours has included: (1) a negligence suit in the Supreme Court against, inter alia, [Hughes Trueman and Dr Perrens], in relation to the conclave, undertaking, settlement and 2004 Consent Orders in the L&E Court; (2) attempts by [Mrs Young] to set aside the 2004 Consent Orders; and (3) collateral to the failed attempts to set aside the 2004 Consent Orders, applications for costs against those who successfully resisted the setting aside of the 2004 Consent Orders, and against a range of others who had no involvement in that failed application, including [Hughes Trueman and Dr Perrens], based on their conduct allegedly causing her to have to bring all of this (failed) litigation. [15] Underpinning the attempts by [Mrs Young] to set aside the 2004 Consent Orders has been an allegation of collusion or conspiracy by which those orders were arrived at, with [Mrs Young] alleging [Hughes Trueman and Dr Perrens] were parties to that conduct. Negligence suit and costs orders upon which the bankruptcy notice is based [16] In February 2010, [Mrs Young] commenced proceedings in the Supreme Court, alleging negligence on the part of her former lawyers and on the part of [Hughes Trueman and Dr Perrens] as her former engineering experts for their part in bringing about the 19 February 2004 settlement of her L&E Court proceedings, including in particular the 2004 Consent Orders and related undertaking. It is important to note that it would seem that negligence as an explanation for the terms of the undertaking given to the L&E Court does not sit well with an allegation of conspiracy, because the latter suggests deliberate malign behaviour, not an inadequate standard of professional conduct. The very bringing of the negligence suit seems to entail [Mrs Young] contemplating the reasonable possibility that this is an explanation for how [Mrs Young] came to be misled about the effect of the undertaking given by her neighbours. [17] On 27 September 2013, the Supreme Court negligence proceedings were dismissed by Garling J: Young v Hones (No 2) [2013] NSWSC 1429. His Honour reached that conclusion by answering agreed separate questions concerning advocate immunity and witness immunity adversely to [Mrs Young]. In upholding claims of both advocate immunity and witness immunity to defeat [Mrs Young's] negligence suit, his Honour applied the High Court decision of D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1. His Honour ordered the plaintiff ([Mrs Young]) to pay the costs of the defendants to the negligence suit, including [Hughes Trueman and Dr Perrens]. It is those costs orders that were the basis of the present bankruptcy notice. [18] On 1 October 2014, an appeal by [Mrs Young] to the Court of Appeal was dismissed: Young v Hones [2014] NSWCA 337. The judgment of Ward JA at [41] to [64] provides a detailed summary of the history of the prior litigation which has been running in various New South Wales Courts since 2003. Those paragraphs do not need to be reproduced, but do assist in better understanding the negligence suit and related litigation if that is needed. [19] On 6 May 2015, the High Court dismissed an application for special leave to appeal from the above Court of Appeal decision in which the scope of D'Orta-Ekenaike was expressly raised: Margo Young v Brian Keith Hones & Ors [2015] HCASL 73. The reason the High Court gave for refusing special leave was that this case did not provide a suitable vehicle for reconsidering that issue because of the procedural course adopted of separate questions and did not otherwise raise a question of principle sufficient to warrant the grant of special leave. [20] One year later, the High Court decided that while D'Orta-Ekenaike should not be overturned, the scope of the immunity arising from that case should be limited so that it does not preclude the possibility of a successful claim against a lawyer in respect of negligent advice which contributes to the making of a voluntary agreement (such as to settle proceedings), irrespective of whether that agreement is embodied in consent orders: Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; (2016) 331 ALR 1 at 4 [6]. [21] If the proceedings had been brought before Garling J or the appeal brought in the Court of Appeal after Attwells was handed down, the result might well have been different on the issue of immunity from suit (leaving the issue of alleged negligence still to be determined, which was by no means straightforward or assured of success, or perhaps even soundly based). However, the decision in Attwells avails [Mrs Young] nothing as the High Court had already refused her application for special leave to appeal. Accordingly the decision of the Court of Appeal upholding the decision of Garling J must stand, and as a consequence the costs order upon which the bankruptcy notice is based cannot be impugned. Summary of litigation since the 2004 Consent Orders [22] As noted above, since 2008 [Mrs Young] has unsuccessfully sought to set aside the 2004 Consent Orders and in effect reopen her L&E Court proceedings. That process commenced with a notice of motion filed in the L&E Court on 23 May 2008. After a number of amendments, prior decisions and an appeal, that motion was finally dismissed on 9 July 2015 in Young v King (No 6) [2015] NSWLEC 111, discussed further below. [23] The basis of that motion was an assertion that the undertaking underpinning the 2004 Consent Orders had been deliberately brought about as a result of the conspiracy referred to above and in further detail below. [24] In Young v King (No 6), [Mrs Young] was ordered to pay the costs of the respondents to that motion (being her neighbours, not [Hughes Trueman and Dr Perrens]), subject to a stay during which the parties were directed to file any notices of motion seeking a different costs order (at [237]). [25] On or about 6 August 2015, [Mrs Young] appealed against Young v King (No 6) and pending that appeal also sought costs not only against her neighbours but against 16 other respondents who were not parties to the proceedings or to the motion, including [Hughes Trueman and Dr Perrens]. [Mrs Young] (and her lawyers) treated the leave granted to file notices of motion to seek a different costs order as a result of [her] motion failing as a means of seeking to have all 18 respondents pay her costs of the entire L&E Court proceedings. This application was plainly beyond the evident purpose and intention of the stay of the costs orders made against the applicant by Sheahan J on 9 July 2015. [26] On 1 December 2015, the costs application made against eight of those additional sixteen respondents (not including [Hughes Trueman and Dr Perrens]) was summarily dismissed, with costs: Young v King (No 8) [2015] NSWLEC 187. [27] On 19 February 2016, the costs application made against the neighbours and the other eight additional respondents, including the present respondents, was heard and dismissed: Young v King (No 9) [2016] NSWLEC 4. Sheahan J held at [93] of Young v King (No 9) that the application for costs was an abuse of process. This passage was referred to by the primary judge in these proceedings at [16]. [28] [Mrs Young] has filed an application for leave to appeal against both Young v King (No 6) and Young v King (No 9) in the Court of Appeal. [Her] case before the primary judge and in this Court depends in part upon the success of those applications and any appeal if leave is granted. This is addressed in greater detail below. However, at this stage I observe that it is difficult to see how any competent lawyer could ever imagine that to respond to failing on a motion by seeking costs against persons who were not parties to that motion, or indeed to those proceedings, was appropriate in the circumstances of that case. That is not to say that third party costs orders can never be made, but rather no attempt appears ever to have been made to establish a proper factual or legal foundation for such an application. 18 In submissions, Mr Newell conceded that, in making the Show Cause Application, Mrs Young's lawyers had proceeded under a misapprehension that the Extension of Time Decision could not be appealed. While that application is extant, they now understand that the correct position is that Mrs Young has a right of appeal and a special leave application could be brought. If the sequestration order were to be stayed, it would be their intention to substitute a special leave application for the Show Cause Application. 19 Mrs Young's appeal to the New South Wales Court of Appeal in relation to Young v King (No 6) was unsuccessful. The Court of Appeal also refused leave to Mrs Young to pursue appeals against the Costs Decisions in so far as they related to the Kings: Young v King [2016] NSWCA 282. An application to the High Court for special leave to appeal from the Court of Appeal's decision was dismissed in March of this year: Young v King [2017] HCASL 28. The High Court (Gordon and Edelman JJ) said that this was on the basis that an extension of time would be required but it was futile to grant the extension, as the appeal raised no question of general importance and there was no reason to doubt the correctness of the Court of Appeal's decision. 20 In March this year, the High Court (Gordon and Edelman JJ) also dismissed a further application for special leave to appeal the Court of Appeal's decision in Young v Hones [2014] NSWCA 337: Young v Hones [2017] HCASL 27. Noting that it had previously dismissed a special leave application in relation to this decision (in Young v Hones [2015] HCASL 73 (Bell and Gageler JJ)), the High Court said that there was no identified basis for the Court to grant special leave and it was not otherwise in the interests of justice to do so.

Trustee's attitude 21 The hearing on 28 April 2017 commenced at 2.15 pm. Mr Newell tendered an email exchange between Mr Muriniti and Mr Shaun Rowland of the Australian Financial Security Authority (exhibit C). At 12.06 pm on 28 April 2017, Mr Rowland advised Mr Muriniti that "the Official Trustee has no objection to you seeking an extension of 28 days in which an election can be made pursuant to s 60(3) of the Bankruptcy Act 1966". The email responded to Mr Muriniti's email of 11.56 am on the same day in which Mr Muriniti said (among other things): Thank you for your email of yesterday. I apologise for not responding sooner, unfortunately we were in court yesterday and we are also in court today. Mr Newell of my office will be preparing an advice note for you by Monday in which he will set out the merits of the appeals that are presently before the Court of Appeal. Today, we are scheduled to appear before [Justice] Farrell at 2:15 pm at which time her Honour will want a report as to what communications have occurred between myself and yourself and how long you might require by way of extension of time to consider the matter. I propose to inform her Honour that you have written to me requesting documents and information to enable you to make an informed decision and that a reasonable period of time for us to address your enquiries and to permit you to make a determination would be 28 days. Could you please confirm that you are agreeable to my asking for an extension of 28 days? It is my very strong view that the appeals have excellent prospects of success for reasons which Mr Newell of my office (a former barrister of some 15 years' experience as a barrister) will set out in his advice note to you. We can then have discussions to answer any further queries that you have and provide you with any additional documents. 22 Mr Rowland's "email of yesterday" was not included in the email chain comprising exhibit C.

Governing principles 23 Mr Newell did not refer the Court to any authority in relation to the making of an order under s 33(1)(c) of the Bankruptcy Act. His submissions were primarily focussed on the merit of the LEC Costs Appeals. 24 The respondents relied on the decision of North J in Abeyratne v Trkulja [1998] FCA 1676; 90 FCR 253 in which his Honour expressed the view that the Court has the power to make such orders with a view to achieving fairness in the particular circumstances. 25 In Newman v Bain [2013] FCA 558; 213 FCR 370 at [56]-[60] and [65], Gilmour J considered the factors which may be relevant to determination of an application for an extension of the time prescribed in s 60(3). In summary they are: (1) the reason for the trustee's delay in making an election within the legislatively prescribed time limit; (2) in light of the merits of the litigation under consideration, any prejudice to the trustee; (3) the reasonable expectation of finality in the trustee's decision-making by other parties to the litigation, and (4) the prejudice to the interests of other parties to the litigation by further uncertainty. 26 I accept that these are relevant considerations for the disposition of this application.

Consideration 27 In submissions, Mr Newell challenged the appropriateness of the respondents attending and resisting the orders sought by Mrs Young. On an application which would otherwise be ex parte but which clearly affects the interests of all creditors of Mrs Young's bankrupt estate, it is entirely appropriate that the Court be assisted by a contradictor.

Is there an adequate reason for delay? 28 The Court was offered no reason, let alone a satisfactory one, for the trustee's delay in making an election in relation to the litigation notified to it by the Kennedys letter. 29 There is no evidence that the trustee, rather than the bankrupt, seeks more time to consider the LEC Costs Appeals or the Show Cause Application. The trustee chose not to appear at the hearing of Mrs Young's application for an extension of the time specified in s 60(3) or to support it expressly. The trustee has simply raised no objection when pressed with the bankrupt's proposal that the trustee be given a further 28 days from 1 May 2017 to consider its position; 32 days having then passed since the date of the Kennedys letter. There is no indication that the trustee has turned its mind to how long it might, in fact, require to decide how or whether it will make an election in relation to the notified litigation. 30 Mr Muriniti's email to Mr Rowland would suggest that no materials had been provided by Mrs Young's advisors to the trustee at the time that Mrs Young's application for an extension of the time in s 60(3) was set down for hearing on 28 April 2017, which was more than 28 days after the Kennedys letter. 31 These matters weigh against the grant of an extension of time.

Merit of the notified litigation 32 It is necessary for Mrs Young to be able to demonstrate that the notified litigation has merit in order to justify a further extension of the time in s 60(3). However, I am not satisfied that any of the notified litigation has any reasonable prospect of success.

Costs Decisions 33 In Young v King (No 8), Sheahan J observed at [2]: The consistent claim put to the Court by Young over the years has been that the 2004 decision and orders worked an injustice against her, as a result of an "unlawful means conspiracy" involving the Kings, Warringah Council, and a range of others, devised by the Council from at least 2001, and aimed at forcing an easement and drainage works onto her land. 34 His Honour went on to say at [18]-[31]: 18 The central argument is that Young's broad costs NOM is an "abuse of process", as it is "not a proper resort to the Court's costs jurisdiction", and "seeks to re-litigate issues decided or barred" by judgment No. 6. 19 It fails the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (per Barwick CJ), in that the court can be satisfied that it cannot succeed, and that it would amount to a "collateral attack" on judgment No 6, against which Young has appealed. 20 The costs argument against non-parties "threatens to become new and costly satellite litigation", contrary to the principles in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 (see McColl JA at [92]). 21 The purpose of a costs order is to compensate a successful party for the expense of conducting the proceedings, not to punish an unsuccessful party: see Latoudis v Casey (1990) 170 CLR 534, and Oshlack v Richmond River Council (1998) 193 CLR 72. 22 Nor is its purpose to compensate for loss caused by substantive wrongdoing: Harrison v Schipp [2001] NSWCA 13. 23 Costs orders against non-parties are generally "inappropriate". To achieve one, the circumstances need to be "exceptional" and the court must be satisfied that considerations of justice require it: see Knight v FP Special Assets Ltd (1992) 174 CLR 178, at 192 and 203. 24 A clear interest in the subject, and an active role in the conduct of proceedings, would appear to be required (eg. solicitor, insurer, funder, director, receiver): FPM Constructions v City of Blue Mountains [2005] NSWCA 340. 25 It is sometimes said that the party against whom costs are claimed has to be "the effective litigant". In the present case, Mr Newell says Council is the "real party", aided and abetted by the other respondents (T30.11.15, P59, LL24-25). Orders were entered which ought not have been entered had the respondents done their duty to the Court and not "flagrantly misconducted themselves" (T30.11.15, p58, LL14-16). 26 The respondent Griffiths, and the witnesses against whom Young claims, enjoy immunity under the principles in Young v Hones (No 2) [2013] NSWSC 1249, which were not disturbed on appeal by the Court of Appeal (Young v Hones [2014] NSWCA 337). (See Dr Berveling's submissions, at paras 7 to 12, 12.B and 12.C.) 27 Mr Faulkner specifically submits (par 33) that Young's proposed costs order has nothing to do with the conduct of her two applications to set aside the 2004 orders. The arguments raised by Young in her affidavit and submissions in support of her costs NOM of 20 August 2015 were among those I rejected in judgment No 6, and Mr Newell admitted before the Registrar that the allegations in the present motion are "in essence the same" (T10.9.15, p12, L29). 28 I agree with Mr Faulkner and other counsel that there is no basis for an order that the presently moving parties should pay Young's costs of those applications. 29 The issues she raises now have been raised, argued and dealt with by the Court, and, if there were others she wanted to raise, she should [have] taken the ample opportunity she was given to do so. As I warned her in 2012 (in judgment No 4 [2012] NSWLEC 236, at [26]): Regrettably for Mrs Young, in respect of costs, the High Court has said on many occasions that a party is bound by the conduct of litigation by its legal representatives - eg, University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68, at 71, and Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1; see also the judgment of this court in Bankstown City Council v Mohamed El Dana [2009] NSWLEC 68, at [44]-[55]. 30 Mr Faulkner relied also in this regard on the principles in Hunter v Chief Constable of the West Midlands Police [1982] AC 529, as applied in Australian estoppel-type cases, such as Rippon v Chilcotin Pty Ltd ("Rippon") (2001) 53 NSWLR 198 (per Handley JA, with whom Mason P and Heydon JA agreed). 31 In Rippon, Handley JA set out the key principles (at [31] - [32]): 31 In Haines v Australian Broadcasting Corporation [(1995) 43 NSWLR 404] Hunt CJ at CL distilled the following statement of principle from the authorities: "There are obviously limitations to striking out pleadings or causes of action as an abuse of process upon the basis stated in Reichel v Magrath [(1889) 14 APP CAS 665] … The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the latter lost in the former … It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that … the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance … In normal circumstances, the decision disposing of the issue must have been a final one … There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the unsuccessful party a manifest injustice … all the circumstances of the determination in the earlier case may be considered … ." 32 In State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Reports 81-423 (64,077) at 64,089, another case involving abuse of process in seeking to re-litigate an issue, Giles CJ Comm D said: "… The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are - (a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or ultimate issue; (b) the opportunity available and taken to fully litigate the issue; (c) the terms and finality of the finding as to the issue; (d) the identity between the relevant issues in the two proceedings; (e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; … (f) the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and (g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process." 35 In Young v King (No 9), Sheahan J said at [41]-[43] and [47]-[54]: 41 In summarily dismissing the claims against those eight respondents [in Young v King (No 8)], I agreed with Mr Faulkner SC (appearing for Warwick Davies) that the Court's costs discretion could not embrace "any anterior conspiracy giving rise to the original wrong" (T11.11.15, p13, LL25 - 26). 42 I essentially upheld submissions by those respondents to the effect that: (1) Young's claims against them were an abuse of the Court's costs powers and processes in that: (a) they inappropriately invoked the Court's costs jurisdiction, and (b) they were a "collateral attack" on matters I had already decided. (See T11.11.15, p13, LL10 - 15, and the House of Lords in Hunter v Chief Constable of the West Midlands Police [1982] AC 529.) (2) they did not serve the interests of justice; and (3) the necessary "exceptional circumstances" did not exist in this litigation, so as to justify orders being made against non-parties (see No 8, at [16] - [31]). 43 I am now fortified in the view I took on the summary dismissal motions by the judgment on "abuse of process" recently given by Davies J in Stankovic v State of NSW [2016] NSWSC 18 (see, especially, [19], and [34] - [36]). … 47 As claims of conspiracy were central to the substantive case and are now central to Young's costs claims, I turn now to consider them. C: Young's "Conspiracy" Claims 48 Allegations by Young of fraud, collusion, unconscionable conduct, and/or conspiracy have characterised, indeed dogged, the proceedings, to various degrees, since I first became involved in 2008. 49 I gave Young more than ample opportunity to argue her conspiracy case, and I dealt with it in several of my earlier judgments. 50 However, she has again sought to agitate such issues. 51 As Mr Wright (for the Kings) told the Court (T11.11.15, p6, LL29 - 30), Young's costs case is a "refabrication of the same conspiracy theory on the same old material". 52 Mr McManus (for 3 and 4Rs, Hones) submitted (T1.12.15, p100, LL31 - 32) that Young was "attempting to ... re-run that case and try and obtain different findings". 53 Dr Berveling (for the 13R, Tuxworth) observed (T30.11.15, p48, LL48 - 49), that Young's present claims against the new respondents are "essentially a claim for damages in tort, based on a conspiracy ... dressed up as a costs claim". 54 In view of the case argued against her that she is making a collateral attack on decisions already made by this Court, it is necessary to set out some of the more important extracts from some of my earlier judgments relevant to these conspiracy issues (some emphasis added): 36 His Honour went on to set out extracts at [55]-[58] from his judgments in Young v King (No 2) [2009] NSWLEC 125 at [68], Young v King (No 3) [2012] NSWLEC 42 at [21]-[25], Young v King (No 4) [2012] NSWLEC 236 at [3]-[5], [26], [85]-[89], [107], [207]-[208], [210], [223]-[224], [285], [355] and [395]-[402] and Young v King (No 6) at [87], [96]-[97], [140], [170-[173], [177], [185] and [226]-[229]. 37 His Honour then went on to say in Young v King (No 9) at [59]-[60]: 59 It is clear from the judgments quoted above that the Court (1) was aware, in clear, if general, terms, but well before the delivery of judgment No 6, of the ambit of Young's allegations of fraud and conspiracy against all 18 costs respondents, and (2) found no evidence of "any real, probative value" upon which to base any finding of fraud or conspiracy "against anyone involved in the matter" (judgment No 6 at [227] and [229], quoted immediately above, in 58 - further emphasis now added). 60 I reject Newell's attempts (T30.11.15, p63, LL19 - 34) to "read down" that finding to exclude anyone not a party to the substantive proceedings, and to rely on what he says is a failure by the respondents to deny the fact of a conspiracy (p65, L30 - p66, L10). … 38 At [67] of Young v King (No 9), his Honour noted that the non-party respondents relied on the arguments set out in Young v King (No 8) at [17]-[27] and [29]-[31]: see [34] above. After considering the parties' submissions, his Honour concluded at [93]-[103]: Conclusion re the non-parties 93 The arguments which prevailed in favour of the non-party respondents who secured summary dismissals in judgment No 8 (set out in [42] and [67] above) prevail again in favour of the remaining non-party respondents, for the reasons there given: Young's costs application is an "abuse of process" (No 8 at [17] - [23]. See also [30], and the cases cited therein.). 94 The courts have hesitated to try to define too closely what will constitute an abuse of process. It depends on all the facts and circumstances of the case at hand. In Rogers v The Queen ("Rogers") (1994) 181 CLR 251, McHugh J said (at 286): Although the categories of abuse of procedure remain open, 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. Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process. 95 That passage in Rogers was cited with approval by the plurality of the High Court more recently in Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427, at [89]. 96 I agree with Faulkner and other counsel that (Tp31, LL40 - 41) "this application remarkably falls within all three of those categories" defined by McHugh J. 97 Young's costs applications against the remaining non-party respondents should be dismissed, with costs. The Kings 98 Turning now to the position with the Kings, I came to the firm conclusion in judgment No 6 that, having been totally unsuccessful, Young should pay their costs. 99 Recalling that the Kings had long before informed the Court that they would seek an order for indemnity costs, not only against Young but against one or both of Muriniti and Newell, I made an order for costs (Order (3)) on the traditional "party-party basis, as agreed or assessed", but left an opening (Order (4)) for the question to be further argued (see [14] above). 100 Quite extraordinarily, Young took that opportunity to seek indemnity costs against the Kings, as well as 16 other respondents, all of whom have now successfully resisted any such orders. 101 However, virtually nothing in Newell's copious written submissions on her behalf dealt directly with any suggested merits in a costs claim by her against the Kings, except in the sense that they might be punished for "disentitling conduct", i.e. their part in the conspiracy alleged against all respondents (Tp79, LL4 - 6). 102 It must be clearly stated that there is nothing in any of my earlier judgments in this matter which would warrant my not making an order in Kings' favour, and I am certainly not persuaded by this latest hearing to reverse the effect of Order (3). 103 It is also clear that Young cannot possibly succeed on her 2012 NOM for a costs order against the Kings, and, for completeness, it should now be formally dismissed. 39 His Honour went on to order that Mrs Young pay the Kings' costs on an indemnity basis. 40 Mr Newell's attack on the Costs Decisions is primarily focused on the question of whether or not the issue of conspiracy or collusion was relevantly raised and resolved in the proceedings leading to the decision in Young v King (No 6), such that a finding of abuse of process by re-litigation of the kind contemplated in Reichel v Magrath (1889) 14 App Cas 665 was available. Mr Newell submitted that the conspiracy claim had never been litigated. He says that it was not enough that Sheahan J thought that the basis for Mrs Young's claims for costs against the Kings and 16 other parties was an attempt to re-litigate that issue or that he set out the principles concerning abuse of process of that kind if he failed to apply those principles to the facts. 41 In my view that attack is misconceived. It is clear that issues of conspiracy and conclusion in achieving the 2004 consent orders were raised and dealt with in the proceedings determined in Young v King (No 6); indeed, they were raised well before as demonstrated by Sheahan J in Young v King (No 9). However, the substance of Sheahan J's decisions to dismiss Mrs Young's costs application in the Costs Decisions was that Mrs Young's claims for costs against the Kings and the non-party respondents: inappropriately invoked the Court's costs jurisdiction; were a "collateral attack" on matters that his Honour had already decided; did not serve the interests of justice; and necessary "exceptional circumstances" did not exist so as to justify orders being made against non-parties. 42 Insofar as the Kings were concerned, Mrs Young's costs application was a straightforward collateral attack on the matters decided in Young v King (No 6). The orders made in favour of non-party respondents in the Costs Decisions were plainly justified by the matters Sheahan J set out in Young v King (No 8) at [18]-[27] and relied on at [28] and then in Young v King (No 9) at [93]. 43 Further, Mrs Young failed to persuade the Court of Appeal in Young v King that the decision in Young v King (No 6) contained appellable error on any of the bases pleaded (see Young v King at [88]). In relation to Young v King (No 6), at [90], Emmett AJA (with whom Basten and Gleeson JJA agreed) found that "the entire thrust of the complaints made by Mrs Young, through her counsel, [were] directed at the conduct of her legal advisors and witnesses in 2004", there was "not a skerrick of evidence for the conspiracy hinted at by Mrs Young", and "[t]he allegation of a conspiracy involving Mrs Young's advisors is completely without foundation in the evidence and should never have been made". This remark was made in the context of Emmett AJA having traced the background to Sheahan J's decision to refuse leave to Mrs Young to issue subpoenas to her 2004 legal advisors, solicitor Mr Jason Hones and barrister Mr Ian Hemmings and to decide to set aside subpoenas issued without his Honour's leave to engineers, Mr Warwick Davies and Dr Perrens, and refuse leave for Mr Davies and Dr Perrens to be required to give evidence: see Young v King at [56]-[57], [69] and [89]. Emmett AJA found no error in Sheahan J's approach to those decisions and found that Mrs Young was bound by the conduct of her advisors at the relevant time: see Young v King at [91]-[96]. This is a conventional approach to these issues: any deficiency in evidence to support the claimed collusion results from the choices made by Mrs Young's advisors in the conduct of the proceedings leading to the decision in Young v King (No 6). 44 Emmett AJA also rejected Mrs Young's complaint that the cumulative effect of Sheahan J's decisions gave rise to a reasonable apprehension of bias. His Honour found that the complaint was "completely without substance" and "amounts to nothing more than a complaint that Mrs Young has been completely unsuccessful in her attempts to have the Original Orders set aside". In his Honour's view, "there can be no suggestion that a reasonable observer might have any concern that his Honour might not decide Mrs Young's case impartially": see Young v King at [97]. 45 Mrs Young claimed that the costs orders made in Young v King (No 9) in favour of the Kings (which Emmett AJA referred to as the 2016 Orders) were the occasion of a "substantial injustice". She claimed that in Young v King (No 6) she had effectively been deprived of a hearing of her fraud allegations against the Kings as a result of Sheahan J's decisions in relation to Messrs Hones, Hemmings and Davies and Dr Perrens. She said that their evidence would have demonstrated fraud in light of the proper construction of "Exhibit A", the plan which formed the basis of the remedial work to be done in accordance with the 2004 consent orders. Emmett AJA found that "it is clear enough that the basis upon which Mrs Young seeks to challenge the 2016 Orders is dependent upon her success in the substantive appeals. For the reasons indicated above, those appeals fail" and dismissed the appeal against the costs orders made in favour of the Kings in Young v King (No 9) in favour of the Kings: see Young v King at [99]-[104]. 46 As noted previously, special leave to appeal the decision in Young v King has been refused: Young v King [2017] HCASL 28. This was because, among other reasons, there was "no reason to doubt the correctness of the decision or reasoning of the Court of Appeal of the Supreme Court of NSW (Basten and Gleeson JJA and Emmett AJA)". 47 In my view, the reasoning of the Court of Appeal of the Supreme Court of New South Wales is compelling. Mrs Young's applications for leave to appeal and any appeal from the Costs Decisions on the basis that the collusion and conspiracy claim had not been determined in Young v King (No 6) have no reasonable prospects of success.

Show Cause Application 48 Mr Newell appears to accept that this application is misconceived in its current form. Even if the application were reformulated as an appeal from the Extension of Time Decision, it is difficult to envisage that it would have any prospect of success. Not only is it not apparent that Bromwich J misconceived or failed to perform his task in considering the application to extend time to appeal the Federal Circuit Court's decision to set aside the bankruptcy notice, it is also difficult to see any utility in an appeal at this stage. A creditor's petition has been presented and a sequestration order made. I perceive no reasonable prospect of success of any application of that kind.

Prejudice to the trustee or parties to the notified litigation 49 As the notified litigation appears to lack any merit, and the trustee has not chosen to seek an extension of the time specified in s 60(3), it is difficult to see what, if any, prejudice there would be to the trustee or the bankrupt estate in refusing to extend time. 50 In saying this, I am aware that there are extant an application for a stay of the sequestration order and an appeal from the decision to make the sequestration order. I am also aware that the effect of refusing the extension of time will be that the notified litigation will be taken to have been abandoned. I have considered what, if any, detriment might arise to the parties to the notified litigation from an extension of time where the sequestration order remains in place so that the notified litigation is stayed by force of s 60(2). Mrs Young claims that there is no detriment to the respondents or anyone else. In some circumstances there may be little detriment, however, in this case, a directions hearing in relation to leave to appeal the Costs Decisions was to be held imminently. In the circumstances of the decision in Young v King (No 6), Mrs Young's costs application was a clear abuse of process necessitating 16 non-parties' involvement in Young v King (No 8) and Young v King (No 9). It would be inappropriate to further that abuse by exposing the respondents to the continued conduct of case management of that litigation and the prolongation of uncertainty attendant on an extension of time.

Conclusion 51 For these reasons, the application to extend the period under s 60(3) of the Bankruptcy Act should be dismissed. On 1 May 2017, I ordered that Mrs Young pay the respondent's costs. However, I have amended that order under the "slip rule" as, in the circumstances, it is more appropriate that the respondents' costs be borne by the bankrupt estate.

Application for extension of time pending delivery of written reasons 52 In the afternoon of 1 May 2017, my chambers received an email from Mr Muriniti advising that he had received instructions from Mrs Young to appeal my orders and seeking an extension of the period under s 60(3) until 48 hours after written reasons were delivered. Upon enquiry, the respondents opposed this course. I refused the extension since I am not satisfied that the notified litigation has any reasonable prospect of success and having regard to the litigation history leading up to and following the Costs Decisions, I do not consider that the balance of convenience weighs in favour of an extension being granted. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.

Bankruptcy Act 1966(Cth)ss 33(1)(c), 60(2), 60(3)

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