Higginbotham v Kerr

Case [2017] FCA 686

FEDERAL COURT OF AUSTRALIA

Higginbotham v Kerr [2017] FCA 686

File number: NSD 641 of 2017
Judge: BURLEY J
Date of judgment: 19 June 2017
Catchwords:

EVIDENCE – application reopened to file additional evidence – evidence revealed material nondisclosure of facts relevant to application – whether submissions, evidence and transcripts should be referred to the Legal Services Commissioner

COSTS – whether indemnity costs should be payable forthwith
Legislation:

Australian Human Rights Commission Act 1986 (Cth) s 46PP

Federal Court Rules 2011 (Cth) r 40.13
Cases cited:

Bevillesta Pty Ltd v D Tannous No 2 Pty Ltd [2010] NSWCA 277

Coe v NSW Bar Association [2000] NSWCA 13

Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1

Legal Practitioners Complaints Committee v Dixon [2006] WASCA 27

McKellar v Container Terminal Management Services Ltd [1999] FCA 1639

Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 2) [2015] FCA 824

Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 423; (1992) 36 FCR 297
Date of hearing: 3, 5, 10, 12 and 30 May 2017
Registry: New South Wales
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 22
Counsel for the Applicant: Mr G J Hatcher SC with Mr M Seck
Solicitor for the Applicant: Mills Oakley
Counsel for the Respondents: Mr A Moses SC with Mr P Sharp
Solicitor for the Respondents: Hall & Wilcox

ORDERS

NSD 641 of 2017
BETWEEN:

CRAIG HIGGINBOTHAM

Applicant
AND:

TEAN KERR

First Respondent

GREG MCKENZIE

Second Respondent

JOHNATHAN QUILTY (and others named in the Schedule)

Third Respondent

JUDGE:

BURLEY J

DATE OF ORDER:

19 JUNE 2017

THE COURT ORDERS THAT:

1.The applicant pay the respondents’ costs of the application for interlocutory relief, set out in the Originating Application filed on 3 May 2017, on an indemnity basis forthwith.

2.The New South Wales District Registrar of the Federal Court refer to the Legal Services Commissioner of New South Wales these reasons, the evidence filed by the parties, the transcripts and the parties’ submissions in connection with the application for interlocutory relief set out in the Originating Application filed on 3 May 2017, for consideration as to whether the applicant has filed evidence which was misleading and/or not truthful and if so, what ramifications, if any, that should have in relation to his role as a legal practitioner.

3.The applicant notify the Court within seven (7) days of the completion of any conciliation conference or other resolution of the proceedings.

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


REASONS FOR JUDGMENT

BURLEY J:

INTRODUCTION

  1. These proceedings first came before me as duty judge on 3 May 2017, when the applicant, a legal practitioner and partner of the law firm Lander & Rogers, sought interlocutory relief to restrain his fellow partners from requiring his retirement from the partnership. I heard the application on an urgent basis on 5…

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Higginbotham v Kerr [2017] FCA 686
Case
[2017] FCA 686
Decision Date

CaseChat Overview and Summary

In the case of Higginbotham v Kerr, the dispute arose from an application for interlocutory relief by the applicant, who sought to restrain the equity partners of Lander & Rogers from terminating his partnership. The applicant had filed an originating application seeking an interim injunction to prevent the enforcement of notices terminating his partnership. However, the respondents subsequently sought leave to reopen the hearing to present additional evidence, which the applicant had not disclosed. The case was heard by the Federal Court of Australia, which had to determine the appropriate costs order and whether the additional evidence and submissions should be referred to the Legal Services Commissioner.

The legal issues the court had to decide included whether the applicant's nondisclosure of material facts warranted an order for indemnity costs to be paid forthwith and whether the additional evidence and submissions should be referred to the Legal Services Commissioner for consideration of any ramifications for the applicant's role as a legal practitioner. The court also had to consider whether the demands of justice required a departure from the ordinary rule expressed in FCR r 40.13, which generally requires costs to be taxed at the conclusion of the proceeding.

The court found that the applicant's nondisclosure was material and warranted the concessions subsequently made by the applicant. The court held that the circumstances of the case justified a departure from the ordinary rule, as the applicant's unreasonable conduct warranted an order for indemnity costs to be paid forthwith. The court also found that the additional evidence and submissions should be referred to the Legal Services Commissioner for consideration of any ramifications for the applicant's role as a legal practitioner.

The final orders made by the court were that the applicant pay the respondents' costs of the application for interlocutory relief on an indemnity basis forthwith, that the New South Wales District Registrar of the Federal Court refer to the Legal Services Commissioner of New South Wales the reasons, evidence filed by the parties, transcripts, and submissions in connection with the application for interlocutory relief, and that the applicant notify the Court within seven days of the completion of any conciliation conference or other resolution of the proceedings.

Orders

Orders of the court

1. The applicant pay the respondents’ costs of the application for interlocutory relief, set out in the Originating Application filed on 3 May 2017, on an indemnity basis forthwith.

2. The New South Wales District Registrar of the Federal Court refer to the Legal Services Commissioner of New South Wales these reasons, the evidence filed by the parties, the transcripts and the parties’ submissions in connection with the application for interlocutory relief set out in the Originating Application filed on 3 May 2017, for consideration as to whether the applicant has filed evidence which was misleading and/or not truthful and if so, what ramifications, if any, that should have in relation to his role as a legal practitioner.

3. The applicant notify the Court within seven (7) days of the completion of any conciliation conference or other resolution of the proceedings.

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

Background

Background to the litigation

For the reasons set out below, I consider that it is appropriate for the applicant to pay the costs forthwith and also that the papers relating to the interlocutory application, including these reasons, should be referred to the Legal Services Commissioner.BACKGROUND On 6 April 2017, the equity partners of Lander & Rogers, lawyers, gave notice to the applicant, under their Partnership Agreement, that after the expiration of one month, his interest as a fixed share partner of the partnership will be terminated. On 11 April 2017, the equity partners gave a further notice to the applicant that he must retire as a fixed share partner six months after receipt of that notice. On 3 May 2017, the applicant filed an Originating Application which sought as interlocutory relief an interim injunction pursuant to s 46PP of the Australian Human Rights Commission Act 1986 (Cth) restraining the equity partners from giving effect to each of the notices, or alternatively, a mandatory injunction directing the respondents to rescind or withdraw the notices. The parties cooperated in the preparation of the matter for an urgent interlocutory hearing on 5 May 2017. At the hearing several affidavits were read, including one dated 2 May 2017 sworn by the applicant. I then reserved my decision. On Wednesday 10 May 2017, the respondents brought an application seeking leave to reopen the hearing in order to file additional evidence that had recently, and fortuitously, come to their attention. The applicant did not oppose the grant of leave and accordingly two further affidavits were received into evidence on the interlocutory application. I gave directions for the filing of affidavit evidence in response and further submissions by the parties as to the ramifications of the additional evidence, and set the matter down for a resumption of the hearing on Friday 12 May 2017. Prior to that resumption, the applicant informed the Court and the respondents that he no longer sought any interlocutory relief. However, there remained an outstanding dispute as to the payment of costs, with the respondents contending that in light of the events that transpired, the applicant should pay them forthwith, on an indemnity basis. The respondents also contended that the affidavits and submissions filed in relation to the interlocutory application, as well as the hearing transcripts, should be provided to the Legal Services Commissioner of New South Wales. I adjourned the proceeding until 30 May 2017 to enable further affidavits and submissions to be filed in relation to the remaining matters in dispute. The applicant filed affidavits in response to the additional evidence on 11 and 15 May 2017. In the latter he accepted that he had failed to provide information to the Court that was material to the grant of the interlocutory injunction, in the form of a job offer that had been made to him prior to the initial hearing. It is unnecessary to go into detail about the non-disclosure. For present purposes it is sufficient to observe that during the course of submissions on 30 May 2017, Senior Counsel for the applicant accepted: (a) that the applicant had been responsible for a material nondisclosure of facts relevant to the Court’s assessment of the balance of convenience in the interlocutory application; (b) that the fact of the nondisclosure meant that the interlocutory application was unable to be maintained; and (c) that for these reasons the applicant consents to an order that he pay the respondents’ costs on an indemnity basis.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The applicant opposes such an order on the basis that, when he commenced the application, he considered that there was a serious question to be tried and that there would be significant adverse financial and reputational consequences for him in the event that he ceased being a partner of Lander & Rogers. He submits that had he disclosed the additional information about a job offer from a different firm, such information would have had no material bearing upon the outcome of his interlocutory application. In those circumstances, whilst he accepts that he should have disclosed the matters omitted from his evidence, he submits that it does not warrant an order for indemnity costs to be paid forthwith.CONSIDERATION It is unnecessary for present purposes to address the detail of the applicant’s nondisclosure. I have recorded the effect of the concessions that he has made in [8] above. I consider that the nondisclosure was material and entirely warranted the concessions subsequently made by the applicant. It was plainly incumbent upon the applicant as an officer of the Court, to ensure that material facts within his knowledge were disclosed; Legal Practitioners Complaints Committee v Dixon [2006] WASCA 27 at [10]; Coe v NSW Bar Association [2000] NSWCA 13 at [8] – [10]. In circumstances where the applicant sought to restrain his partners from terminating his involvement in the partnership, the relevance to the question of the balance of convenience of his receipt of what was at least an offer of a position with another firm is, and ought to have been, obvious. In my view the facts of the present case warrant a departure from the ordinary rule expressed in FCR r 40.13. The circumstances in which the Court may make an order as to the payment of costs forthwith should be governed by the question of whether the demands of justice require that there be a departure from the general practice envisaged by the rule; Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 423; (1992) 36 FCR 297 at 312 (Olney J). The categories of cases where a forthwith order is appropriate are open, but unreasonable conduct on the part of the party against whom costs have been ordered is one such category; Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1 at [12]. See also Bevillesta Pty Ltd v D Tannous No 2 Pty Ltd [2010] NSWCA 277 at [31] – [39] (McColl JA, Allsop P and Handley AJA agreeing). Another is where the final determination of the parties’ competing claims will not be heard for some time. In that circumstance it may be appropriate to justify a departure from the normal position set out in FCR r 40.13 in the absence of any unreasonable conduct; Nichia at [7]. A consideration to take into account is whether inconvenience would be caused because essentially the same costs might be taxed on two separate occasions; McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 (Weinberg J) at [24]. The interlocutory application brought by the applicant represents a discrete part of the controversy between the parties. It has now been concluded. The evidence indicates that in the normal course it may be between four and five months before the complaint to the Human Rights Commission (Commission) can be allocated to an officer in the Commission and, once allocated, a further 2 – 4 weeks for conciliation to take place. If the Commission believes there is no reasonable prospect of resolving the matter by conciliation, the complaint will be terminated, which will likely take a further week. If the matter is expedited by the Commission, the complaint could be set down for conciliation in June 2017, but there is no evidence that an application for expedition has been made, and in the absence of interlocutory orders being in place it is perhaps unlikely that expedition would be granted.