AGL Energy Ltd v Hardy (No 3)

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FEDERAL COURT OF AUSTRALIA

AGL Energy Limited v Hardy (No 3) [2017] FCA 952

File number: VID 176 of 2017
Judge: O'CALLAGHAN  J
Date of judgment: 23 August 2017
Catchwords: COSTS – where respondent found guilty of contempt for failing to comply with search order made pursuant to r 7.43 of the Federal Court Rules 2011 (Cth) – fine of $25,000 previously imposed – whether contemnor should pay applicants’ costs on an indemnity basis
Legislation:

Federal Court of Australia Act 1976 (Cth), s 43

Federal Court Rules 2011 (Cth), rr 7.43, 7.47
Cases cited:

AGL Energy Limited v Hardy [2017] FCA 420

AGL Energy Limited v Hardy (No 2) [2017] FCA 863

Ali v Collection Point Pty Ltd [2011] FCAFC 87

Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279

Bovis Lend Lease Pty Ltd v Construction Forestry Mining and Energy Union (No 2) [2009] FCA 650

Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13; 196 ALR 350

Degmam Pty Ltd (in Liq) v Wright (No 2) [1983] 2 NSWLR 354

Evenco Pty Ltd v Amalgamated Society of Carpenters, Joiners, Bricklayers and Plasterers of Australasia Union of Employees, Queensland [1999] QSC 77

Evenco Pty Ltd v Australian Building Construction Employees & Builders Labourers Federation (Qld Branch) [2000] QCA 108; [2001] 2 Qd R 118

Hinch v Attorney-General (Vic) (1987) 164 CLR 15

Kazal v Thunder Studios Inc (California) [2017] FCAFC 111

McIntyre v Perkes (1988) 15 NSWLR 417

Ronowska v Kus (No 2) [2012] NSWSC 817; 221 A Crim R 261

Dal Pont, Law of Costs (3rd ed, LexisNexis Butterworths 2013)
Date of hearing: Determined on the papers
Date of last submission: 15 August 2017
Registry: Victoria
Division: Fair Work
National Practice Area: Employment and Industrial Relations
Category: Catchwords
Number of paragraphs: 21
Counsel for the Prospective Applicants: Mr CJ Murdoch QC
Solicitor for the Prospective Applicants: Minter Ellison
Counsel for the First Prospective Respondent: Mr EP White
Solicitor for the First Prospective Respondent: Slater and Gordon Lawyers

ORDERS

VID 176 of 2017
BETWEEN:

AGL ENERGY LIMITED (and others named in the Schedule)
First Prospective Applicant
AND: GREGORY THOMAS HARDY (and another named in the Schedule)
First Prospective Respondent

JUDGE:

O’CALLAGHAN J

DATE OF ORDER:

23 AUGUST 2017

THE COURT ORDERS THAT:

1.Gregory Thomas Hardy pay the prospective applicants’ costs of the proceeding on an indemnity basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

O’CALLAGHAN J:

  1. On 26 April 2017, the Court found that Mr Hardy was guilty of contempt of court, in that on 2 March 2017, after being served with a search order made by the Court pursuant to r 7.43 of the Federal Court Rules 2011 (Cth) on 28 February 2017 (the Search Order), he failed to comply with paragraph 11 of that order by refusing to permit members of the “Search Party” to enter the “Premises”…

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Details
Case
[2017] FCA 952
Decision Date

CaseChat Overview and Summary

In the matter of AGL Energy Ltd v Hardy (No 3), the respondent, Mr Hardy, was found guilty of contempt for failing to comply with a search order made under rule 7.43 of the Federal Court Rules 2011 (Cth). The applicants, AGL Energy Ltd, sought an order for Mr Hardy to pay their costs on an indemnity basis. The primary legal issue before the court was whether the contemnor, Mr Hardy, should be liable to pay the applicants' costs on an indemnity basis. Mr Hardy argued against an indemnity costs order, asserting that the substantial penalty imposed on him and his own incurred costs in complying with the consent orders should be taken into account. The court considered the arguments and concluded that the substantial penalty and the costs incurred by Mr Hardy in complying with the consent orders were not relevant to the question of the basis upon which costs should be awarded. The court determined that there was no reason why AGL should be out of pocket because Mr Hardy defied the Search Order and had to incur costs months after the independent lawyer unsuccessfully attempted to execute the Search Order. The court ordered that Mr Hardy pay the applicants' costs of the proceeding on an indemnity basis.

Orders

Orders of the court

1. Gregory Thomas Hardy pay the prospective applicants’ costs of the proceeding on an indemnity basis.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Fourthly, AGL must be regarded, at least in part, as acting in the public interest and no reason has been identified why, in all the circumstances of this case, in the exercise of the Court’s discretion, AGL should be out of pocket for commencing the contempt proceeding and seeing it through. As Holland J said in Degmam Pty Ltd (in Liq) v Wright (No 2) [1983] 2 NSWLR 354 at 358F “…in cases where an application is made to the court for committal for contempt such orders being made in an endeavour to ensure that the party that has been enforced to take that extra step, in order to obtain his rights, after they have been adjudicated by the court, may be relieved entirely of the expense of doing so...”. SUBMISSIONS AND EVIDENCE Mr Hardy submits that a costs order on an indemnity basis should not be made because the Court has imposed a substantial penalty. Mr Hardy also submits that a costs order on an indemnity basis should not be made because he himself has incurred substantial costs in complying with the “protocol”, which was contained in the consent orders made on 30 May 2017 and annexed to the Court’s reasons in AGL Energy Limited v Hardy (No 2) [2017] FCA 863. He relies on an affidavit of his solicitor, Mr Naughton, sworn 10 August 2017, which relevantly deposes that Mr Hardy has paid approximately $42,850 in legal and other costs in complying with the 30 May 2017 orders. That evidence is as follows:Orders 6(a) and 6 (b) of the Orders of the Court dated 30 May 2017 required:(a)NuLegal to conduct searches over Mr Hardy’s Privilege Claim Electronic Places to identify documents that fall within the NuLegal Search Parameters to prepare the NuLegal Search Report;(b)NuLegal to provide the NuLegal Search Report to the solicitors for Mr Hardy…The Court ordered that the costs associated with Orders 6(a) to (b) were to be borne by Mr Hardy. Mr Hardy’s costs in complying with the orders are approximately $23,150, comprising approximately $19,250 in fees charged by NuLegal and approximately $3,900 in professional fees incurred by Slater + Gordon.Order 6 (c) … required the solicitors for Mr Hardy to conduct searches of the documents identified in the NuLegal Search Report to identify any Listed Things. Mr Hardy’s costs in complying with this order are approximately $16,700, being the professional fees incurred by Slater + Gordon.Order 7 (a) … required Mr Hardy to prepare an affidavit containing so many of the Listed Things to which objection to production is taken on the basis of his claim for civil penalty privilege and/or client legal privilege and deliver those documents to the Court. Order 7 (b) … required Mr Hardy to file and serve on [AGL] a separate affidavit setting out the basis of any objection with respect to those documents. Mr Hardy’s costs in complying with those orders are approximately $3,000, being the professional fees incurred by Slater + Gordon.CONSIDERATION It may readily be accepted that the penalty imposed on Mr Hardy is a substantial one, but in this case it is not relevant for the purposes of determining the basis upon which costs should be awarded. There is here no connection between the two.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Mr Hardy also submits that a costs order on an indemnity basis should not be made because he himself has incurred substantial costs in complying with the “protocol”, which was contained in the consent orders made on 30 May 2017 and annexed to the Court’s reasons in AGL Energy Limited v Hardy (No 2) [2017] FCA 863. He relies on an affidavit of his solicitor, Mr Naughton, sworn 10 August 2017, which relevantly deposes that Mr Hardy has paid approximately $42,850 in legal and other costs in complying with the 30 May 2017 orders. That evidence is as follows:Orders 6(a) and 6 (b) of the Orders of the Court dated 30 May 2017 required:(a)NuLegal to conduct searches over Mr Hardy’s Privilege Claim Electronic Places to identify documents that fall within the NuLegal Search Parameters to prepare the NuLegal Search Report;(b)NuLegal to provide the NuLegal Search Report to the solicitors for Mr Hardy…The Court ordered that the costs associated with Orders 6(a) to (b) were to be borne by Mr Hardy. Mr Hardy’s costs in complying with the orders are approximately $23,150, comprising approximately $19,250 in fees charged by NuLegal and approximately $3,900 in professional fees incurred by Slater + Gordon.Order 6 (c) … required the solicitors for Mr Hardy to conduct searches of the documents identified in the NuLegal Search Report to identify any Listed Things. Mr Hardy’s costs in complying with this order are approximately $16,700, being the professional fees incurred by Slater + Gordon.Order 7 (a) … required Mr Hardy to prepare an affidavit containing so many of the Listed Things to which objection to production is taken on the basis of his claim for civil penalty privilege and/or client legal privilege and deliver those documents to the Court. Order 7 (b) … required Mr Hardy to file and serve on [AGL] a separate affidavit setting out the basis of any objection with respect to those documents. Mr Hardy’s costs in complying with those orders are approximately $3,000, being the professional fees incurred by Slater + Gordon.CONSIDERATION It may readily be accepted that the penalty imposed on Mr Hardy is a substantial one, but in this case it is not relevant for the purposes of determining the basis upon which costs should be awarded. There is here no connection between the two. As for the submission that Mr Hardy has spent a large sum of money complying with the protocol to which he consented on 30 May 2017, that is also irrelevant to the question of the basis upon which an award for costs should be made. First, some part of that expenditure would have been necessarily incurred by Mr Hardy had he complied with the Search Order and then made claims for privilege in respect of seized documents. Secondly, and most importantly, Mr Hardy has only himself to blame. Had he complied with, and not defied, the Search Order, he would not have incurred those expenses, or most of them in any event. In my view, the fact that he had to incur them is no reason that AGL should not, in the exercise of the Court’s discretion, be paid their costs of the proceeding on an indemnity basis. There is no reason why AGL should be out of pocket because Mr Hardy, for his own purposes, months after the independent lawyer unsuccessfully attempted to execute the Search Order, agreed to orders designed to address the contempt: see AGL Energy Limited v Hardy (No 2) [2017] FCA 863 at [36]-[38].