Dale v Clayton Utz (a firm) (No 3)
[2014] VSC 591
•28 November 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
ARBITRATION LIST
S CI 2011 04655
| CHRISTOPHER ANTONY DALE | Plaintiff |
| v | |
| CLAYTON UTZ | Defendant |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 19 November 2014 |
DATE OF JUDGMENT: | 28 November 2014 |
CASE MAY BE CITED AS: | Dale v Clayton Utz (a firm) (No 3) |
MEDIUM NEUTRAL CITATION: | [2014] VSC 591 |
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PRACTICE AND PROCEDURE – Orders giving effect to split of plaintiff’s case in accordance with the principles in Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co (1985) VR 187 (FC).
COSTS – Interlocutory matters – Immediate taxation of costs – Significance of delay in resolving issues at trial – Dale v Clayton Utz (No 3) [2013] VSC 593 (Hollingworth J) – Supreme Court (General Civil Procedure) Rules 2005, Rule 63.20.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Wilson QC with Mr P. Ehrlich | O’Donnell Salzano Lawyers |
| For the Defendant | Mr J. Karkar QC | Minter Ellison |
HIS HONOUR:
Introduction
The plaintiff seeks various orders following the publication of my reasons on 22 October 2014 (“the reasons”) in relation to various matters including, particularly, whether the trial should be subject to a Protean Holdings split and the extent to which the plaintiff was entitled to rely on the privilege against self-incrimination. The position I reached, as set out in the reasons, is that the trial should be split as proposed by the plaintiff, and that he is entitled to rely on the privilege against self-incrimination. I also observed that he is, in substance, a defendant to the allegations sought to be established against him by the defendant firm in these proceedings.
The conclusions and orders section of the reasons, expressly reserved the question of costs and required the parties to bring in orders to give effect to the reasons.
The issues between the parties now with respect to the orders proposed by the plaintiff go principally to paragraph 2(c), a provision in the context of provisions with respect to the Protean Holdings split, and paragraph 6 with respect to costs.
Proposed paragraph 2(c) provides that:
The plaintiff have leave to file a Further Amended Reply at the conclusion of the defendants case in relation to any issue on which the defendant has the burden of proof, being the issues pleaded in paragraphs 49 to 145 of the Amended Defence.
The plaintiff, in his written submissions dated 18 November 2014 contends that he is entitled to seek an order as an aspect of the right of election given to a person accused of wrongdoing – to plead and conduct a positive case in rebuttal at the conclusion of the accuser’s case – an integral part of the protection afforded by the privileges.
In my view, the plaintiff’s position in this respect follows both from the reasons and on the basis of the authorities relied upon in his submissions. [1] The position is, in my view, also well supported by the authorities and the propositions they are said to stand for in the plaintiff’s submissions, particularly the following:[2]
[1]See Transcript, page 12, line 24 to page 15, line 22 and the submissions made by Mr Wilson QC for the plaintiff.
[2]Plaintiff’s Submissions (18 November 2014), [4] – [6].
4. For the Court to accede to that request would be entirely inconsistent with established principle which holds that:
(a) “those who allege criminality or other illegal conduct should prove it”: Rich v Australia Securities and Inverstemnts (sic) Commission (2004) 220 CLR 129 at [24]; The Daniles Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 [31];
(b) an election is only required to be made at the conclusion of the prosecuting case:
per Austin J in Australian Securities and Investments Commission (ASIC) v Rich (2006) 235 ALR 587;
“[11] In the present case the usual procedure has not been followed, because the defendants, relying on their privilege against exposure to a penalty vindicated by them in the High Court (Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; 209 ALR 271; 50 ACSR 242; [2004] HCA 42), chose not to state whether they would go into evidence or notify ASIC of their evidence until after ASIC closed its case…”
per Finkelstein J in Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 65 ACSR 264 at [13] and [16] to [17]:
“[13] There is a potential problem if, as in this case, a defendant wishes to run a positive case. Ordinarily a positive case must be raised in the defence. Whether it must be raised in a defence in a civil action to recover a penalty is by no means clear. The view I favour is that there can be no such requirement as it would be inconsistent with the privilege. On the other hand, if a defendant who wishes to run a positive case is required to plead his case that can be accommodated while maintaining the privilege. What should occur is that the defendant should be entitled to rely on the privilege until the plaintiff’s case is concluded. If at that point the defendant decides to run a positive case he can deliver an amended defence that will outline his case. In an exceptional case the judge may grant a short adjournment to allow the plaintiff time to prepare, if he is otherwise taken by surprise. In most cases that will not be necessary. By the time the plaintiff has closed his case the nature of the defence will usually be apparent. That is the experience of those who prosecute criminal cases. The advocate who runs a civil penalty proceeding should be equally adept at dealing with the defendant and his witnesses without knowing in advance every word they are about to say.
[16] A defendant cannot be required to provide information that may be the basis of an investigation that may lead to the discovery of real evidence: Reid v Howard [1995] HCA 40; (1995) 184 CLR 1; 6 – 7. If a defendant is required to plead a positive case there is a risk of that happening: Chief Executive Officer of Customs v Camile Pty Ltd [2004] NSWSC 1256; (2004) 58 ATR 163, 169.
[17] In any event even if, contrary to my view, Bridal Fashions stands for the proposition that a positive defence can never incriminate a defendant or expose him to a penalty, it says nothing about when the defence must be delivered. On my alternative approach a defendant can rely on the privilege up to the point he decides to go into evidence. It is only at that moment, if the defendant elects to run a positive case, that he must give up the privilege and file a defence that outlines the case he intends to run.” (underlining added)
5. Australian Securities and Investments Commission v Mining Projects Group Ltd at [13] also demonstrates that no relevant prejudice arises to the defendant that cannot be cured by a short adjournment.
6. Further, in some circumstances, the accuser may also be given leave to reopen if taken by surprise by unforeseen matters, as the headnote in Australian Securities and Investments Commission (ASIC) v Rich makes clear:
“(i) Section 1317L of the Corporations Act 2001 (Cth) requires the court to apply the rules of evidence and procedure for civil matters when hearing proceedings for a declaration of contravention.
…
(iii) The general principle in criminal cases is that the prosecution must present its case completely before the accused is called upon for his defence, and therefore, although the trial judge has a discretion to allow the prosecution to call further evidence after evidence has been given for the defence, the prosecution should e permitted to call evidence at that stage only if the circumstances are very special or exceptional and, generally speaking, not if the occasion calling for further evidence ought reasonably to have been foreseen and applied.
R v Chin (1985) 157 CLR 671; 59 ALR 1; Shaw v R (1952) 85 CLR 365; [1952] ALR 257, applied
(iv) Generally, the same principles govern the exercise of the court’s discretion in civil cases. However, the court applies the principles about splitting the prosecutor’s case less strictly in a civil case.
(v) The court treats an ASIC civil penalty case in which a declaration of contravention is sought as a proceeding subject to the civil rules of evidence and procedure, but when exercising its discretion in evidentiary and procedural matters, the court has regard to the nature of the proceeding as a civil penalty proceeding and the seriousness of the consequences of granting the relief sought (including disqualification orders that have penal effect).
Re HIH Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2001) 40 ACSR 214; [2001] NSWSC 1168, applied
(vi) Matters which are relevant to the exercise of the court’s discretion in civil penalty proceedings are: the nature of the proceeding; whether the occasion for calling the further evidence ought to have been foreseen; the consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce; the extent to which the plaintiff has embarked upon calling evidence on this issue in question in its case-in-chief; the importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case; the degree of relevance and probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time; the prejudice to the defendant in terms of delay in the completion of the proceeding and the consequential costs; the public interest in the timely conclusion of litigation; and what explanation is offered by the plaintiff for not having called the evidence-in-chief.” (underlining added)
The defendant, on the other hand, contends in its written submissions dated 19 November 2014 that there is no legitimate reason why the plaintiff should not have to make his election prior to trial in the ordinary course of the proceeding – adding that this is not a case in which a civil penalty is sought in the proceeding in which the privileges are claimed.[3]
[3]Defendant’s Submissions (19 November 2014), [21] – [22].
In my view, the defendant’s contentions in this respect are both at odds with the reasons – and at odds with the authorities to which reference is made in detail in the plaintiff’s submissions.[4] Moreover, I regard it is a very relevant consideration that, as contended by the plaintiff, the defendant is for all practical purposes prosecuting a civil penalty proceeding because it asks the Court, which has inherent power to strike solicitors off the roll, to find that Mr Dale is guilty of criminal conduct and serious professional misconduct.
[4]Plaintiff’s Submissions (18 November 2014), [7] – [8].
Finally, in the context of proposed paragraph 2(c) of the orders sought the defendant contends that prejudice could be caused to the defendant and the trial disrupted as it would be entitled to an adjournment and to reopen its case if this course were followed. It puts this position in the following terms:[5]
23. Further, the plaintiff’s proposed order could cause prejudice to to (sic) the defendant in that the firm would not know the case it has to meet at trial. If the Court is minded to make order 2(c), and in the event that the plaintiff seeks to file and serve a further amended reply at the conclusion of the defendant’s case, the defendant submits it would plainly be entitled to seek an adjournment of the trial and may have leave to reopen its case. As such, the plaintiff’s proposed order would cause delay and disruption to the conduct of the trial.
Procedural fairness is, of course, to be accorded to all parties, assiduously. However, as observed in the plaintiff’s submissions, the issues raised by the defendant do not cause difficulty that cannot be addressed by an adjournment or leave to reopen its case.[6]
[5]Defendant’s Submissions (19 November 2014), [23].
[6]See Plaintiff’s Submissions (18 November 2014), [5] – [6].
Finally, there is the question of costs and the proposed orders contained in paragraphs 7 and 8 providing for payment by the defendant and leave for the plaintiff for immediate taxation.
In summary, the position of the parties in this respect is that the defendant seeks to maintain the usual position that, as under Supreme Court (General Civil Procedure) Rules 2005, Rule 63.20, costs of an interlocutory application shall be costs in the proceeding. This rule is subject to the Court ordering otherwise.
In my view, the applications the subject of the reasons are not typical interlocutory applications. They raised substantial issues – over three hearing days with extensive written and oral submissions and raised “a self-contained part of the proceedings” which issues will not be revisited at trial.[7] Moreover, there are considerations of delay in the process of reaching and resolving issues at trial – a position which I think is accurately summarised in the submissions of the plaintiff, particularly by reference to similar issues dealt with by Hollingworth J in Dale v Clayton Utz (No 3).[8]
[7]See Dale v Clayton Utz (No 3) [2013] VSC 593 at [80] – [83] (Hollingworth J).
[8]See Plaintiff’s Submissions (18 November 2014), referring to Dale v Clayton Utz (No 3) [2013] VSC 593 at [68] – [79] (Hollingworth J).
Counsel for the defendant submitted at hearing that the judgment of Chernov JA (with whom Winneke P and Tadgell JA agreed) in Wong v Carter,[9] and in particular, his Honour’s statement that a decision to allow a plaintiff to split its case is a discretionary decision on a matter of practice and procedure and not one which deals with substantive rights, supports the defendant’s contention that costs should be awarded in the usual manner for interlocutory applications. The relevant passage in his Honour’s judgment is reproduced in its broader context in my reasons delivered on 22 October 2014,[10] but I set out it again as follows:[11]
18. Turning first to the last matter mentioned, it is clear that a decision of a trial judge on the question on whether the plaintiff can defer the calling of its evidence on an issue until after defendant has presented its evidence on it, and thereby split its case, is a discretionary decision on a matter of practice and procedure and not one which deals with substantive rights; Protean at 191; Re Hardiman dec’d [1967] V.R. 577 at 580; and Beevis v. Dawson [1957] 1 Q.B. 195 at 204 per Singleton, L.J. and at 215 per Jenkins, L.J. Moreover, other than in exceptional circumstances, the judge’s decision on the matter is final; Beevis v. Dawson at 204 per Singleton, L.J..
I note that his Honour’s statement was made in the context of an appeal, but not in the context of a costs application, or in the context of Rule 63.20. Rule 63.20 is subject to the Court ordering otherwise, and for the reasons indicated previously, it is appropriate to invoke the Court’s discretion to treat the plaintiff’s application to “split” his case differently from other interlocutory applications. In this regard, I note that Counsel for the defendant conceded that if the application were a discrete application, the costs of the application would flow to the plaintiff.[12] I accept that it would be unfair not to allow the plaintiff to have his costs of the application taxed immediately, having regard to the complex, and essential nature of the application, and also the length of the application, and the considerations flowing from delay to which Hollingworth J made reference in Dale v Clayton Utz (No. 3).[13]
[9][2000] VSCA 53.
[10]Dale v Clayton Utz (a firm) (No 2) [2014] VSC 517 at [31].
[11]Wong v Carter [2000] VSCA 53 at [18] (Chernov JA).
[12]Transcript, page 7, line 27 to line 31.
[13][2013] SC 593 at [68] – [79].
For these reasons I am of the view that the ordinary course with respect to costs in interlocutory matters is not appropriate and that costs should be taxed immediately.
On 19 November 2014, orders were made as sought by the plaintiffs. These are the reasons for making those orders, the subsequent publication of which was foreshadowed when those orders were made.