Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd

[1995] FCA 732

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )
  )
GENERAL DIVISION                  )

Matter Number NG 381 of 1994

BETWEEN:ALLSTATE LIFE INSURANCE CO and the parties listed as applicants in Annexure A to the amended statement of claim

Applicants

AND:AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED and the parties listed as respondents in Annexure B to the amended statement of claim

Respondents

Matter Number NG 259 of 1995

BETWEEN:ABN AMRO AUSTRALIA PTY LIMITED

Applicant

AND:LINTER GROUP LIMITED (IN LIQUIDATION) & ORS

Respondents

Matter Number NG 260 of 1995

BETWEEN:SOCIETE GENERALE AUSTRALIA LIMITED

Applicant

AND:LINTER GROUP LIMITED (IN LIQUIDATION) and others according to schedule A of the Notice of Appearance for the Respondents

Respondents

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    1 JUNE 1995

REASONS FOR JUDGMENT

On 26 May 1995 I delivered reasons for judgment in respect of the various motions referred to in those reasons.  I stood the motions over to hear argument on the question of costs and as to the form of orders to be made.  In accordance with my orders at that time, the solicitors for the applicants in the holding writs and for the proposed cross-claimants brought in draft short minutes of order to reflect those reasons.  There is no objection to the form of the terms of those draft short minutes and in due course I propose to make orders in accordance with them.

The only outstanding matter in respect of which orders need to be made is the matter of costs.  Counsel for the subsequent participant banks in written submissions has argued that not only should I order costs in favour of his clients, but that a proper order in the circumstances was that the costs be paid on a solicitor and client basis.

Mr Santamaria submits that solicitor and client costs are appropriate, having regard to the serious allegations made in the proceedings against senior legal practitioners where ultimately, after what is referred to as extensive cross-examination of a particularly vigorous quality, that cross-examination failed in its purpose and I rejected ultimately the allegations of abuse of process.  It is also submitted that the relief sought was disproportionate and, put shortly, that the course which the proceedings took was inappropriate.

Reference is also made to the substantial affidavit of Mr Burt, which ultimately was not relied upon, and the course the matter took as a result of the filing of that affidavit.  The orders sought by the subsequent participant banks are opposed by other parties.  Senior counsel for Freehill Hollingdale and Page, whose submissions were adopted substantially by other parties, submitted that the proper course was that there be no order as to costs at all.  He pointed to the fact that Mr Schoenberg's affidavit of 17 March 1995 had been the source of great controversy; it had been contradicted by his affidavit of 5 April 1995; that I had expressed the view in my reasons that cross-examination was therefore inevitable and that at least it was only after the second day that the ultimate truth emerged.

It was submitted also that the subsequent participant banks have not been entirely successful and indeed that it was only essentially in reply that senior counsel for the subsequent participant banks had made an application for leave. It was submitted that prior to that the position had been adopted that no leave was necessary, even in respect of such of the subsequent participant banks as had ceased to be parties before the cross-claims were bought.
         It was submitted also that the present was not an appropriate case for indemnity costs.  The matter was not a contempt proceeding and to some extent the proceedings were justified if only because leave was in any event required.  A further submission made by counsel for the 10th respondent, was that the question of costs should be deferred until all  the motions before the court, which included strike out applications, were decided.  It was said that if ultimately those motions were decided in favour of one or other party, that party should be entitled to obtain costs. 

The above perhaps represents an inadequate summary of all the submissions, but it will suffice for present purposes.  There is certainly something to be said for the view that there should be a distinction between the costs up to the date when the evidence was taken orally and submissions were made and the course of the actual hearing itself.  Prior to the hearing it might be said that Mr Schoenberg's affidavit did in some measure precipitate the course which the matter took, but there was also of course the matter of Mr Burt's affidavit, although this in part could be explained by some of the material in Mr Schoenberg's affidavit.

However, I think that up to the time the hearing commenced it was appropriate that there be no order as to costs.  The position, I think, becomes rather more complicated having regard to the course the proceedings took.  There were two major issues of credit to which cross-examination was directed, going both to the use of discovered material and to the question of whether the material before Mr Hayes and Mr Schoenberg justified allegations of fraud.  This cross-examination took a considerable time and ultimately was unsuccessful. 

Some of that time, however would have been required if only to elucidate the position in regard to Mr Schoenberg's affidavits. I have formed the view that in the present circumstances the subsequent banks should be entitled to costs in respect of all but one day of the hearing. I do not think that it is appropriate in the circumstances that costs be assessed on a solicitor and client basis.  It is true of course that the court has power to order costs on this basis and will only do so if there are some circumstances which are at least out of the ordinary so as to justify that course. 

Although there is something to be said for the fact that the present proceedings were far from ordinary,  I think that in the circumstances where both parties were at fault it would be inappropriate to make an order along those lines.  Accordingly I would propose to order that the costs of the subsequent banks, limited to the costs of the hearing of the motions other than the costs of the first day, be borne by the following parties, namely:

(1)The 27th defendant and 3rd respondent, Barclays Bank.

(2)The 28th defendant and 4th respondent, Chase Manhattan Bank.

(3)The 34th defendant and 10th respondent, Sumitomo International Finance Australia Ltd.

(4)The 19th to 269th defendants and the 54th respondent, Freehill Hollingdale and Page.

I make orders 1 to 6 in accordance with the Notice of Motion filed by Sanwa Australia Ltd, Banque Nationale de Paris and Credit Lyonnais Australia Ltd in proceedings NG 381 of 1994 on 1 June 1995.

In matters number NG 259 of 1995 and NG 260 of 1995 I make orders 1 to 3 in accordance with the short minutes of order which I initial and date and which will be placed with the papers. As to the costs of the motions in these matters, I order costs to be paid in the same order as in the main proceedings (NG 381 of 1994, NG 523 of 1991, NG 622 of 1991 and NG 635 of 1991), as discussed above, but in total there is to be only one order as to costs.

In matters number NG 195 of 1995 and NG 286 - 288 of 1995 I make orders 1 to 4 in accordance with the short minutes of order which I initial and date and which will be placed with the papers.

In matters number NG 381 of 1994, NG 523 of 1991, NG 622 of 1991 and NG 635 of 1991, I make orders 1 to 6 in accordance with the short minutes of order which I initial and date and which will be placed with the papers. 

I certify that this and the
preceding six (6) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:
Date: 8 September  1995

Counsel and solicitors      M Pembroke instructed by

for 1st, 7th, 8th and       Allen Allen & Hemsley

11th Respondents:

Counsel and solicitors      P Durack instructed by

for 3rd Respondent:         Clayton Utz

Counsel and solicitors      P Anastassiou instructed by
5th-6th Respondents:        Mallesons Stephens Jaques

Counsel and solicitors      T Hughes QC with R Sofroniou

for 10th Respondent:        instructed by Middletons Moore & Bevins

Counsel and solicitors      M Weinberg QC with P Santamaria
for 12th-21st, 23rd-25th,    instructed by Arthur Robinson &
27th-28th Respondents:      Hedderwicks

Counsel and solicitors      L Aitken instructed by
for 26th Respondent:        Minter Ellison

Counsel and solicitors      S Rushton instructed by
for 28th Respondent:        Clayton Utz

Counsel and solicitors      S Gageler instructed by
37th-193rd Respondents:     Dibbs Crowther & Osborne

Counsel and solicitors      P Jacobson QC and R Smith
for 195th-269th Respondents: instructed by Norton Smith & Co

Solicitors for 264th-280th   Sly & Weigall

Cross-Respondents in the
proposed cross-claims:

Date of Hearing:            1 June 1995

Date Judgment Delivered:         1 June 1995