Michael Wilson & Partners Ltd v Nicholls (No 9)
[2022] ACTCA 70
•9 December 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Michael Wilson & Partners Ltd v Nicholls (No 9) |
Citation: | [2022] ACTCA 70 |
Hearing Date: | 1 November 2022 |
DecisionDate: | 9 December 2022 |
Before: | Loukas-Karlsson J |
Decision: | See [104] |
Catchwords: | APPEAL – APPEAL FROM SUPREME COURT – CIVIL – COSTS – appropriate costs orders in relation to a series of interlocutory applications – where applicant claimed seventh respondent was effectively a silent observer – seventh respondent entitled to its costs on the usual basis – whether sixth respondent should receive its costs on other than usual basis – consideration of applicant’s conduct during proceedings – where applicant’s conduct significantly extended hearing time to address irrelevant issues – where applicant’s submissions had a tendency to seek to re-agitate decided or irrelevant matters – where counsel for the applicant made personal attacks on other representatives – indemnity costs ordered |
Legislation Cited: | Supreme Court Act 1933 (ACT) s 37J |
Cases Cited: | Bhagat v Royal & Sun Alliance Life Assurance Australia Limited [2000] NSWSC 159 |
Parties: | Michael Wilson & Partners Ltd (Applicant) Robert Colin Nicholls (First Respondent) David Ross Slater (Second Respondent) Temujin Services Ltd (Third Respondent) Temujin International Ltd (Fourth Respondent) Temujin International FZE (Fifth Respondent) John Forster Emmott (Sixth Respondent) Effective Funds Management Pty Ltd (Seventh Respondent) |
Representation: | Counsel M Wilson (Applicant) J Baird (Sixth Respondent) B Glare (Seventh Respondent) |
| Solicitors Michael Wilson & Partners (Applicant) Duggan Legal (Sixth Respondent) Rothwell Lawyers (Seventh Respondent) | |
File Number: | ACTCA 36 of 2021 |
Decision under appeal: | Court/Tribunal: ACT Supreme Court Before: McWilliam AsJ Date of Decision: 30 June 2021 Case Title: Michael Wilson & Partners Ltd v Nicholls & Ors Citation: [2021] ACTSC 128 |
Loukas-Karlsson J:
Introduction
1․On 1 November 2022 I heard three applications sitting as the Court of Appeal constituted by a single judge pursuant to s 37J of the Supreme Court Act 1933 (ACT) (Supreme Court Act). This judgment deals with my orders and reasons in relation to the final application concerning the appropriate costs order to be made concerning the various applications I have heard in this proceeding.
2․These reasons for judgment assume a familiarity with my earlier judgments in this proceeding, which outline the reasons for the various steps taken in the proceeding since it came before me in May 2022: see MichaelWilson & Partners Ltd v Nicholls (No 4) [2022] ACTCA 23; MichaelWilson & Partners Ltd v Nicholls (No 5) [2022] ACTCA 39 (Wilson (No 5)); MichaelWilson & Partners Ltd v Nicholls (No 6) [2022] ACTCA 41 (Wilson (No 6)); MichaelWilson & Partners Ltd v Nicholls (No 7) [2022] ACTCA 43 (Wilson (No 7)) and MichaelWilson & Partners Ltd v Nicholls (No 8) [2022] ACTCA 64 (Wilson No 8).
3․I note that Mr Michael Wilson appeared as counsel for the applicant. I will refer in this judgment to the applicant as the applicant or as MWP. On one view, Mr Wilson was not appearing as a self-represented party, but rather as an admitted practitioner representing a company that he has an interest in. This was not a matter the parties advanced submissions on. For the purposes of this judgment, however, there is no need to resolve this issue. I will assume, in the applicant’s favour, that the applicant is in the position of a self-represented party. As I will come to later in these reasons, that is a matter relevant to the question of whether costs should be ordered on an indemnity basis.
4․A short summary of the applications I have heard in this proceeding, and the outcome of those applications, is as follows:
(a)On 2 May 2022 the matter was listed before me for the hearing of the sixth respondent’s application for security for costs. At that hearing the applicant sought access to documents by way of a notice to produce (the first notice to produce) that the applicant had served on the sixth and seventh respondents. That notice was dismissed for a failure to comply with r 6748(2) of the Court Procedures Rules 2006 (ACT) and the hearing was adjourned to 21 July 2022: Wilson (No 4).
(b)On 21 July 2022 the matter returned to me for the continuation of the hearing of the sixth respondent’s application for security for costs. At that hearing the applicant sought to rely on a notice to produce dated 11 May 2022 (the second notice to produce), again directed at the sixth and seventh respondents. That notice was set aside as the categories of documents MWP sought were variously overbroad, oppressive, irrelevant or privileged: Wilson (No 5). In relation to the application for security for costs, I made orders on 21 July 2022 granting the sixth respondent’s application, with reasons published on 28 July 2022: Wilson (No 6). At the hearing on 21 July 2022 the applicant indicated that MWP would like the opportunity to provide written submissions on costs following publication of reasons for judgment, and orders were made to that effect. The applicant also foreshadowed a potential application to advance oral submissions on costs and leave was granted for the written submissions to address that issue.
(c)On 23 August 2022 I published my reasons in Wilson (No 7) which listed the matter for oral submissions on costs. In summary, I was not satisfied that the Court of Appeal when constituted by a single judge had the power to decide an “incidental matter” within the meaning of s 37J(2) of the Supreme Court Act “on the papers”. In the circumstances of the particular case and noting the applicant’s application for the matter to be heard orally, I made orders listing the matter for hearing on costs with an estimate of one hour: Wilson (No 7).
(d)The applicant subsequently filed an application in proceeding dated 14 September 2022 which sought orders varying and/or setting aside the orders made requiring the applicant to provide security for costs and orders adjourning the hearing then listed on 16 September 2022 before me.
That hearing date was vacated due to an ongoing jury trial. The applicant’s application to set aside the order for security for costs was ultimately listed before me on 1 November 2022.(e)At the hearing on 1 November 2022, I also heard an application by the sixth respondent concerning the applicant’s compliance with the security for costs order. At that hearing I also heard from the parties on the reserved question of costs.
5․Ultimately, as outlined in the reasons for judgment in Wilson (No 8), I dismissed the applicant’s application to set aside the security for costs order and made orders requiring various amendments to be made to the present bank guarantee provided by the applicant to the sixth respondent. Those orders permitted the applicant to instead provide security by way of payment into Court. The orders in that judgment also provided for the matter to be listed before the Deputy Registrar to determine if any other procedural matters had to be dealt with before the matter could proceed for the hearing of the applicant’s application for leave to appeal from the orders of the primary judge.
6․I understand that the matter has now been listed in the Court of Appeal call over in February 2023 and will receive a substantive hearing date next year.
7․This judgment now relates to the reserved costs of the applications discussed above. In relation to the matter broadly, I note that this judgment does not vary the earlier costs order made by Elkaim J with respect to the application for a stay of the application for security for costs: Michael Wilson & Partners Ltd v Nicholls [2021] ACTCA 32; Michael Wilson & Partners Ltd v Nicholls (No 2) [2021] ACTCA 36. By that order, his Honour ordered that each party pay its own costs of that application. The orders I make will expressly note that they do not disturb the costs order made by Elkaim J.
8․The Court received written submissions in chief concerning costs from the applicant, the sixth respondent and the seventh respondent and submissions in reply from the applicant and the sixth respondent. The parties also had the opportunity to address the Court orally at the hearing on 1 November 2022. No critique is made of the seventh respondent for not providing submissions in reply; indeed, for reasons I will come to that, course could only be described as prudent.
9․I note at the outset that the costs issues before the Court, as will be explained in more detail below, are not without their complexity. In particular, the seventh respondent only sought to be heard on particular issues, quite properly taking no position in relation to the sixth respondent’s application for security for costs. As I will come to, the seventh respondent was, however, in my view, required to attend the hearings in order to address the Court on the notices to produce which had been served by the respondent on the seventh respondent.
10․Before addressing the parties’ submissions concerning costs it is worth outlining the relevant legal principles that apply to the exercise of the costs discretion.
Principles relevant to the question of costs
11․The principles relevant to the exercise of the costs discretion are well-settled and I do not understand there to be any contest between the parties as to the legal tests I must apply.
12․In terms of awarding costs, the Court’s discretion is unfettered save that the discretion must be exercised judicially: Perisher Blue Pty Limited v Chubb Fire Safety Limited [2014] ACTCA 43 at [41]-[42]. Determining the appropriate costs order requires a broad evaluative judgment of what justice requires in the particular circumstances of the case. So much is apparent from the comments of French CJ, Hayne, Bell, Gageler and Keane JJ in Gray v Richards (No 2) [2014] HCA 47; 252 CLR 601 at [2], where their Honours stated:
The disposition of costs is within the general discretion of the court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.
(Emphasis added, citations omitted)
13․The ordinary consequence is that costs follow the event: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 (Oshlack) at [67], [134]. That is to say, that the successful party will generally be entitled to its costs on a party-party basis.
14․Where there is a division of success, between factual or legal issues in a dispute, costs may be adjusted commensurately, but this will not occur in every case: Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; 254 ALR 328 at 330-331; Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 at 234 [11].
15․As will become apparent later in these reasons, a significant issue in this case is whether indemnity costs should be awarded. In that regard it is relevant to set out the factors identified by the Full Federal Court as relevant to that question in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 (Melbourne City Investments) at [5]:
In broad terms an order for indemnity costs requires that some special or unusual feature arises… Indemnity costs are not punitive but are designed for “compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”… Such circumstances may include where allegations are made “which ought never to have been made”, where the case is “unduly prolonged by groundless contentions” … and where “the applicant, properly advised, should have known that he had no chance of success” … or “persists in what should on proper consideration be seen to be a hopeless case” …
(Citations omitted)
16․It is also relevant to note the comments of Hodgson CJ (in Equity) in relation to how principles relating to costs and indemnity costs apply to self-represented parties. In Bhagat v Royal & Sun Alliance Life Assurance Australia Limited [2000] NSWSC 159, his Honour noted at [13]:
I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they otherwise would be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.
(Emphasis added)
17․An award for indemnity costs against a self-represented litigant was subject to recent comment by Elkaim J in Ezekiel-Hart v Council of the Law Society of the ACT [2022] ACTCA 33. In that case, Elkaim J was sitting as the Court of Appeal constituted by a single judge pursuant to s 37J of the Supreme Court Act deciding whether leave to appeal should be granted from a decision of a single judge of the Court to order indemnity costs. Leave was ultimately refused, however, as is clear from Elkaim J’s comments at [26]-[27], his Honour was satisfied that there was at least a strong argument against awarding indemnity costs against a self-represented party:
As noted above the basis for the awarding of indemnity costs was his Honour’s view that the applicant should be held “to a standard close to that which would be applied to a party with legal representation. Nevertheless, some allowance should be made for his position”.
Acknowledging that the applicant is legally qualified, I nevertheless think that there is a real argument against the awarding of indemnity costs for the reasons given by his Honour, because:
(a) It is not uncommon with self-represented persons, and it seems abundantly evident here from the applicant’s written submissions, that he has formed a very personal view of his legal situation such that his capacity to have objectively weighed up the strength of the written submissions served upon him on 3 May 2022 might have been compromised.
(b) Although having some legal qualifications, even a brief perusal of the applicant’s written submissions call into question his capacity to understand legal principles. Not only do his written submissions wander over a plethora of issues, but they are infected with ‘non-legal’ musings. …
Submissions
Written Submissions
18․It is convenient to first address the parties’ written submissions before turning to their oral submissions. This course is preferable in this case as the parties’ oral submissions largely supplemented the written submissions. I did not, however, understand any party to resile from their written submissions.
19․The sixth respondent submitted that the sixth respondent had “complete success” in the security for costs application filed on 15 August 2021 and that the sixth respondent should have all costs (including reserved costs) relating to that application as well as in resisting the applicant’s notice of motion filed 28 April 2022, noting the hearing occupied two full days on 2 May 2022 and 21 July 2022.
20․The sixth respondent further submitted that the sixth respondent was successful in setting aside the two notices to produce and should have the costs relating to the setting aside of those notices.
21․The sixth respondent submitted that ordering costs on an indemnity basis was a matter within the Court’s discretion. In support of this point, counsel for the sixth respondent referred to Federal Court and NSW Supreme Court authority, including Leichhardt Municipal Council v Green [2004] NSWCA 341 at [48]. I have already outlined above some of the matters relevant to the issue of awarding indemnity costs.
22․Counsel for the sixth respondent submitted in particular that the conduct of the applicant in adducing voluminous material (much of which counsel submitted was irrelevant), in making repeated personal attacks on the representatives of the sixth respondent and “addressing the Court at such length that the hearing occupied two full days instead of the initial … estimate”. I interpolate to note that the security for costs hearing was originally listed before me for a half-day hearing. As is clear from the summary above, a far greater amount of Court time has been required for the hearing of the security for costs application. I note that on a review of the transcript material, the time taken to deal with the applications before me was a direct result of the applicant’s repeated and protracted submissions (as I will turn to later).
23․I previously noted in Wilson No (6) that “[s]uch issues are not limited to this jurisdiction” referring to comments in Michael Wilson & Partners Ltd v Emmott [2019] EWCA Civ 219, where Peter Jackson LJ noted that:
… [this] pathological litigation has already consumed far too great a share of the court’s resources and if it continues judges will doubtless be astute to allow the parties only an appropriate allotment of court time.
(Emphasis added)
24․Counsel for the seventh respondent submitted that the seventh respondent was entitled to its costs of and incidental to the appearances counsel was required to make.
25․The applicant advanced a number of submissions in writing. First, the applicant submitted that the seventh respondent “played no role in relation to all or any of the [applications] and was a mere silent observer and spectator throughout”. In the result, the applicant submitted that the seventh respondent “is not entitled to claim or receive any of its costs”.
26․More broadly, the applicant submitted that a review of my previous judgments as well as the judgments of Elkaim J demonstrated that the applicant had “considerable success” and the sixth respondent did not have “complete success”. In relation to this matter, I note at the outset that any success before Elkaim J is not relevant to the question of costs before me. Elkaim J has already made costs orders relating to the application that was before his Honour and that order will not be disturbed by my judgment.
27․The applicant submitted that MWP was successful in the following ways:
(a)In foreseeing that judgment would be handed down in its favour by Judge Pelling KC;
(b)That as Wilson (No 6) established, the applicant was successful in showing that MWP had assets in Australia and that MWP had successfully shown that those assets were unencumbered by the worldwide freezing order;
(c)That the applicant was successful in showing that the sixth respondent’s evidence had not been read until 21 July 2022 and “in proving that the sixth respondent had wrongly shared and provided [documents] to MWP’s adversaries in the Federal Court of Australia”;
(d)In “forcing” the sixth respondent to produce two engagement letters dated 13 August 2021 and 20 August 2021 in response to its second notice to produce.
28․The applicant also advanced the following submissions directed at the specific applications.
29․First, in relation to the sixth respondent’s application for security for costs, the applicant submitted that:
(a)Through its opposition and objection to the provision of security, the amount of security ordered was limited to $22,500 and “without [the applicant’s opposition the [sixth respondent] would have claimed more”.
(b)The applicant was also successful in allowing for the provision of security by way of bank guarantee.
30․Second, in relation to the applicant’s application, the applicant submitted that:
(a)The errors in the security for costs application pointed out by the applicant were correct.
(b)The first notice to produce was dismissed on a pure technicality.
(c)The hearing was adjourned pending the hand-down of the judgment of Judge Pelling KC and the applicant succeeded in that judgment.
(d)The second notice to produce led to the sixth respondent providing documents to the Court.
31․Ultimately, the applicant submitted that the appropriate order was that each party bear its own costs, or that there be no order as to costs.
32․In reply the sixth respondent submitted that the successes claimed by the applicant are first, disputed, and, second, relate only to peripheral issues in the proceeding.
33․I accept the sixth respondent’s submission. First, it is worth noting that I do not accept the applicant was successful on all the matters claimed. In that regard I note that the applicant did not point to any aspect of my reasons that supported its success on the various matters advanced. I note, in particular, the following matters:
(a)There is nothing that supports the applicant’s submission that MWP was successful in showing that the sixth respondent had incorrectly shared documents with a different party in litigation with the applicant in another Court. Indeed, as I will come to when addressing the parties’ oral submissions, nothing in any of the judgments to date, nor any of the material before the Court supports such a claim.
(b)The order which provided for security to be provided by guarantee or money paid into Court was in a usual or standard form, and it is not relevant to the success of the application. The applicant had not, for example, submitted that MWP would consent to an order for security but objected to the form sought by the sixth respondent and would only provide the security on a particular basis.
(c)While the applicant did obtain an adjournment on 2 May 2022, in the context of the hearing it must be noted that the applicant was then ultimately unsuccessful in resisting the application for security for costs.
34․Second, and more broadly, the applicant did not succeed on any legal issue in the proceeding. The sixth respondent sought an order for $22,500 in security for costs and the sixth respondent obtained that order. That the applicant may have been successful in relation to some findings, not critical to the reasoning, does not change that overall position. The sixth respondent was successful in obtaining orders for security for costs and orders dismissing the applicant’s application and the two notices to produce. Similarly, the seventh respondent was successful in resisting the applicant’s notices to produce. The successes claimed by the applicant are peripheral matters. The overall success lies solely with the sixth and seventh respondents, save on the issue of whether there should be an oral hearing on costs.
35․On that matter, I note that in my reasons, explaining why I listed the matter for an oral hearing on costs, I did not accept any of the submissions advanced by the applicant as to why such a hearing was desirable or necessary. Rather, as I explained I was not satisfied I had the power to refuse the request for an oral hearing while sitting as a single judge comprising the Court of Appeal pursuant to s 37J of the Supreme Court Act. This was not a matter raised by the applicant in its submissions.
36․While there are examples where a court has ordered the overall successful party be entitled to its costs save costs referable to written submissions on a discrete issue where the Court found for the other party: see, eg, Rutherfurd (Bankrupt) v Inspector-General in Bankruptcy [2022] FCA 1469 (Rutherford) at [35] (Logan J), in my view, this is not such a case. Having regard to the sixth respondent’s written submissions opposing the oral hearing, the amount of costs incurred opposing the oral hearing could only be described as negligible or low. Those submissions formed a very small part (in the order of a sentence) of the sixth respondent’s submissions in reply on costs. In my view, it would not overcompensate the sixth respondent by not excluding these costs: cf Rutherford at [35].
37․Returning to the broader question, that some findings, on one view, favoured the applicant, does not alter the fundamental position of the parties. Namely, that the applicant resisted the successful security for costs application, and filed applications which were dismissed. The sixth and seventh respondents incurred costs at the hearing of those applications and, in accordance with the usual practice, would be entitled to those costs: Oshlack.
38․It is further not relevant for the applicant to suggest that its opposition reduced the amount of security the sixth respondent claimed. Such a submission may perhaps be relevant where a party is successful in obtaining a lesser amount of security in a contested application and the resisting party had indicated it would consent to that lesser amount. This is not such a case.
39․Irrespective of whatever discussions occurred between the parties in the lead up to the application for security for costs being filed (and I pause to note that the applicant has not referred me to any such correspondence that indicates that the sixth respondent was originally seeking some higher amount), the ultimate application that was filed was an application seeking $22,500 in security for costs.
40․On that application the sixth respondent was wholly successful. An order was made for $22,500 in security for costs.
41․Similar points can be made to the applicant’s claim that MWP was successful in relation to the notices to produce as some documents were provided to the Court by the sixth respondent. The applicant called on the notices to produce, and the sixth and seventh respondent successfully resisted that call by having the notices set aside, including on the basis that much of the material sought was irrelevant to the application for security for costs. That the sixth respondent voluntarily chose to tender some material is not relevant; what is relevant was the order that I made setting aside the notice to produce. The sixth and seventh respondent incurred costs in seeking (successfully) to set aside the notices to produce.
42․Nor does the reason for the dismissal for the applicant’s first notice to produce aid the applicant. While, on one view, it was a “technical” dismissal, that must be considered in the context of the overall litigation. The second notice to produce sought documents in similar or identical terms to the first and was dismissed on several related bases, including that many of the documents sought were wholly irrelevant to the issue before the Court. Further, and in any event, the applicant has not explained what the relevance is of a technical dismissal to the question of costs. It does not seem to me that merely because a matter was dismissed on a technical basis a party would not be entitled to costs incurred defending the matter. Certainly, the applicant has not referred to any authority supporting such a submission.
43․In reply, the applicant’s written submissions largely repeated or expanded on its earlier submissions, including through submitting that the applicant succeeded on a number of issues (including by forcing the sixth respondent to provide documents) and that the sixth respondent’s representatives had breached the rules of the Court, as well as “the CPR, CCG and implied Harman Undertaking”.
44․The applicant also advanced the following submission:
[A]s the Bench-Sheets and transcripts of the hearings before Mossop J show and prove, MWP was also successful in proving that judgment was reserved and that Mossop J is and was bound to follow the judgments of the Federal Circuit Court, QBD and Croyden County Court of 2014/2015.
45․With great respect to counsel for the applicant, this is not a matter the applicant has demonstrated. Indeed, this is the central issue that forms part of the (yet to be decided) application for leave to appeal. As noted in Wilson (No 6) at [120]-[121]:
In relation to the prospects of success of the application for leave to appeal, I accept the sixth respondent’s submission that a Court of Appeal will only rarely intervene in relation to a matter of practice or procedure. I also make the following observations:
(a) First, the draft notice of appeal primarily recites a list of disagreements that the applicant has with the primary judge’s findings. There is no clear suggestion in the draft notice that the primary judge has misapplied any principle of law or has made any legal error in how her Honour approached the question before her.
(b) Second, as developed in oral submissions before me the applicant indicated that the prospects of success were strong primarily on the basis that her Honour erred in finding that the proceeding would be deemed to be dismissed while judgment was reserved by Mossop AsJ. It is however apparent from the primary judge’s careful reasons, that her Honour did not make any such finding. Rather, her Honour found that judgment had not been reserved by Mossop AsJ. This was due to bankruptcy proceedings filed in the Federal Court meaning there was no longer any issue before Mossop AsJ to be determined (apart for the issue of costs). This is clearly outlined in the primary judgment at [47].
(c) Third, even were there sound reason to suggest that the primary judge erred in determining whether the proceeding had been deemed to be dismissed, there is at least a strong argument that the proceeding the applicant is now seeking to be reinstated is fundamentally different to the original proceeding filed in the Court below. In the original proceedings, the applicant sought orders in relation to recognition of a judgment debt in NSW against the first to fifth respondents and then sought orders in relation to possession of a particular property in the ACT and some related orders in respect of companies who had registered caveats and interests over that property. The applicant now seeks orders extending the sixth respondent’s liability to a purported US$14 million judgment debt: primary judgment at [68]. For the reasons advanced by the primary judge at [69] and [70] the proper way for the applicant to bring such a claim is to file a new originating claim.
In my view, given the above, the likelihood of leave being granted to the applicant is itself an extremely doubtful prospect.
(Emphasis added)
Oral Submissions
46․As noted above, in addition to the written submissions, the parties advanced oral submissions.
47․Counsel for the sixth respondent relied on his written submissions and noted that the Court had the express power to award indemnity costs. In relation to that matter, counsel, helpfully referred me to the judgment of Stewart J in Michael Wilson & Partners Ltd v Porter (No 3) [2022] FCA 998 (Wilson (FCA Costs)). In that decision, Stewart J outlined his reasons for ordering the applicant to pay indemnity costs in relation to an application brought in the Federal Court. Counsel expressly referred me to [6], [13], [30]-[31] submitting that similar reasoning would apply to the facts of this case. It is worth setting out [13], [30]-[31]:
Secondly, MWP made scandalous allegations that ought never to have been made, which were irrelevant to the issues on the interlocutory application and for which there was no apparent foundation. To identify those allegations in these reasons would serve merely to make the allegations public and thereby defeat the reason they were struck out. I will therefore say no more about them. It suffices to observe that MWP’s Mr Wilson casts allegations around like confetti at a wedding without the least regard for their relevance to the issues at hand or whether they can be substantiated.
…
These reasons for judgment, as well as many others in this Court and courts abroad, including in the Court of Appeal of England and Wales, have been critical of Mr Wilson’s conduct of this and other related cases on behalf of MWP. Mr Wilson is a principal of MWP and apparently has a financial interest in it. He has pursued, and continues to pursue, this and related litigation on MWP’s behalf in an obsessive, unrelenting and burdensome way which is, perhaps, borne of his personal interest in it. None of that need be explored any further, let alone decided, now.
…
However, a question arises whether in any further litigation by MWP in Australian courts Mr Wilson should continue to appear on its behalf, or represent it as a solicitor, having regard to the principles identified in … See also r 17.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) which requires that a solicitor representing a client in a matter that is before the court must not act as the mere mouthpiece of the client and must exercise the forensic judgments called for during the case independently.
(Emphasis added, citations omitted)
48․I note that it is important that when I assess the suitable costs order, I do not have regard to the conduct of the applicant in the Federal Court proceeding. As I will come to, the question is whether it was unreasonable for the applicant in the ACT proceeding to have subjected the sixth respondent to the expenditure of costs: Melbourne City Investments.
49․The seventh respondent relied on its written submissions.
50․The applicant advanced the following oral submissions. First, the applicant submitted that the representatives for the sixth respondent breached the rules of this Court and an implied Harman Undertaking by sharing documents with lawyers acting for a different party in the Federal Court. This submission was advanced on the basis that if regard was had to an affidavit filed in the Federal Court it was apparent that the index and language was so similar that it was based upon an affidavit prepared by a solicitor acting for the sixth respondent in this matter. The applicant also referred to exhibits attached to the Federal Court affidavit which reproduced the Commercial List Statement and orders attached to Mr Duggan’s affidavit in this matter.
51․The applicant submitted, with reference to court bench sheets, that the affidavit of Mr Duggan had not been read until July 2022, after it had been shared with the solicitor in the Federal Court proceeding. On this matter I note (without deciding the point) that it is not clear to me that bench sheets can be relied upon to always fully and accurately record when an affidavit was read. It seems to me that the transcript of the hearing dates would be more accurate than a bench sheet. Issues relating to bench sheets have been noted in another context previously: R v Collaery (No 10) [2021] ACTSC 311 at [12] (relating to which Judge(s) had made which orders). There is, in my view, at least some doubt that one could rely solely on a bench sheet to establish an affidavit had not been read so as to support a finding of a breach of a Harman Undertaking or rule of the Court. In that regard I note the seriousness of an allegation of a breach of a duty such as a rule of the Court or Harman Undertaking by an admitted legal practitioner: see generally the comments in regarding the scrutiny of evidence Briginshaw v Briginshaw (1938) 60 CLR 336. There is, however, no need to resolve the issue of when the affidavit was read. As I will come to, even if it was not read until July this year, I do not accept that the Harman Undertaking principles apply.
52․The conduct of the legal practitioners was said by the applicant to be similar to a pattern of conduct in the United Kingdom and in the Federal Court. There is no need to outline that submission in full. Whatever conduct the sixth respondent has or has not engaged in (and I make no finding either way) in other jurisdictions is not relevant to the costs order made by this Court in relation to matters before it. That the applicant continues to advance arguments relating to broader matters in other jurisdictions is a matter I will turn to later in these reasons.
53․In relation to the decision of Stewart J in Wilson (FCA Costs) that the sixth respondent referred to, the applicant submitted that “this costs issues wasn’t considered because he [Stewart J] didn’t grant permission to appeal. But effectively MWP was awarded security for costs against it where the security for costs issues was not even dealt with on the merits”.
54․The applicant also submitted that following the provision of written submissions, Judge Pelling KC delivered judgment discharging in full the worldwide freezing order and ordering an enquiry into damages. The applicant submitted that this fundamentally altered the basis of the original security for costs application. I have already dealt with aspects of this overall submission in my reasons for refusing the applicant’s application to set aside the security for costs order: Wilson (No 8).
55․One aspect of the applicant’s submissions should, however, be addressed. Namely, the applicant’s submission that counsel for the sixth respondent has “no proper basis to claim costs, because those costs were repayable to [the applicant] because on 27 August 2021 [the applicant] purchased all the rights of Mr Sinclair”.
56․This submission was directed to what was referred to by the applicant as the second addendum to a funding deed between the sixth respondent and Mr Sinclair. The applicant submitted that the deed effectively meant that any funds the sixth respondent recovers in this jurisdiction (including costs awards) must, in turn, be paid to Mr Sinclair. The applicant submitted that as MWP has acquired the rights of Mr Sinclair, those monies have to be paid to the applicant and, as such, the sixth respondent cannot claim its costs from this Court.
57․A copy of the second addendum was annexed to an affidavit of Mr Wilson and was before me and it is worth setting out the text of cl 2 which inserted clause 5.1(A) into the funding deed
5.1(A) Any recovery made by Mr Emmott from MWP in or arising out of the Arbitration Proceedings, including the security for costs pledged by MWP in the Arbitration proceedings, is to be applied first in repayment of the amounts advanced by Mr Sinclair pursuant to the Amended Funding Deed and this Addendum, before being applied by Mr Emmott for his own benefit or for the purpose of paying other sums then owing by him to others, including sums owing by Mr Emmott to his legal advisors.
58․That addendum was dated 15 February 2010. It is, of course, apparent that that date precedes this proceeding.
59․Also in evidence before me was a copy of a document referred to by the applicant as a vesting letter dated 1 May 2020. By that letter, the applicant submitted that Mr Emmott vested in Mr Sinclair 30% of all recoveries made from the applicant in the proceedings up to a maximum sum of £1.2 million.
60․Overall, the applicant submitted that this meant that the “sixth respondent has nothing left in any of the proceedings. Because all of the rights that [the sixth respondent] may ever recover are owned by [the applicant]”. The applicant submitted this would extend to any costs ordered in this proceeding.
61․The applicant further submitted that the overall point was that the security for costs application should never have been brought and was brought improperly as the sixth respondent had no right to recover costs based on the existence of the addendum and vesting letter.
62․The applicant further submitted that it was the sixth respondent whose conduct had been improper. In particular, the applicant referred to the sixth respondent’s conditional appearance, submitting that following High Court orders of 8 and 9 September this year, the sixth respondent had no basis for appearing conditionally. I will deal with this submission later in these reasons.
63․Finally, the applicant submitted that the sixth respondent was not entitled to indemnity costs as the applicant had defended the security for costs application on the basis that MWP was a net creditor and had significant assets in Australia.
64․In reply, counsel for the sixth respondent submitted that the decision of Judge Pelling KC was not relevant to the issue of costs, and it had already been a matter that I had considered in my original judgment ordering security for costs.
65․In relation to the addendum and vesting letter, the sixth respondent submitted that as a matter of construction the interest that those documents referred to related to the arbitration proceeding in the United Kingdom and, as such, costs awarded in relation to this matter in this jurisdiction would not be captured by those documents. I accept that submission. Even accepting for the purpose of this judgment the applicant’s submissions as to the rights the applicant acquired from Mr Sinclair, it is patently clear that the documents the applicant put before the Court relate to the arbitration proceeding or related litigation in the United Kingdom.
66․This is the case for the following reasons. First, as I noted above, the second addendum was signed in 2010, prior to the commencement of the ACT Court of Appeal proceedings (and prior to the commencement of the original proceedings in the ACT Supreme Court). Similarly, it is clear that the vesting letter is, in effect, an update on what had occurred to date in the United Kingdom. Second, the ACT proceedings are not in any sense related to the United Kingdom arbitration. In the result, objectively and as a matter of construction of the relevant documents, the ACT proceeding is not captured by those documents.
67․In any event, if I were wrong in reaching that conclusion, I nevertheless do not accept that the sixth respondent would not be entitled to seek costs from the applicant. At its highest, the documents relied upon by the applicant suggest that Mr Emmott may be required to repay Mr Sinclair (and if the applicant’s submission is accepted the applicant as the holder of that debt) some amount of money. The 2020 vesting letter, in particular, notes that there is a maximum sum of the repayment in the order of £1.2 million.
68․This means that even if the applicant can somehow claim that some debt is owed to it by the sixth respondent under either document, a matter not before this Court and one that is outside my jurisdiction to consider, it would not prevent this Court from ordering the applicant pay the sixth respondent’s costs. This is because, that sum would reduce any debt owed to the applicant.
69․If the applicant’s submission were accepted the Court would not order costs and the debt would simply remain there in perpetuity, despite the applicant receiving a significant financial advantage by avoiding any order that MWP pay the sixth respondent’s costs. Plainly that course is ridiculous.
70․In relation to the point concerning the Harman Undertaking, the sixth respondent submitted that the principles relating to those obligations relate to documents obtained under compulsion, court order or process. Counsel for the sixth respondent submitted that the affidavit of Mr Duggan that he himself prepared was not a document obtained from the applicant under a compulsion and it is therefore not captured by the principles.
71․I accept that submission. There is nothing before me to suggest that the sixth respondent or any of its representatives has breached any rule of this Court or the Harman principles. The documents the applicant referred to, were not ones obtained under a compulsion. Indeed, many of those documents were public court orders.
72․Counsel further submitted that the conduct of Mr Wilson in the costs hearing, in continuing personal attacks upon the legal representatives, in raising issues that are irrelevant and in burdening the court with voluminous irrelevant material are matters that are relevant to the question of whether costs should be ordered on an indemnity basis. I will come to this submission later in these reasons.
Consideration
73․As I have noted earlier, the sixth respondent was wholly successful in relation to the applications, and the applicant wholly unsuccessful except for the listing of the matter for an oral hearing on costs. I have also rejected the applicant’s submissions that the sixth respondent has breached some court order or implied Harman Undertaking which would disentitle the sixth respondent to costs.
74․In the result, it is clear that, in relation to the sixth respondent’s costs, the usual order would be that costs follow the event: Oshlack.
75․There are therefore two matters to consider. First, whether the costs awarded to the sixth respondent should be awarded on an indemnity basis due to the applicant’s conduct in the proceeding to date. The second is the appropriate costs order with regard to the seventh respondent. It is convenient to deal with the second matter first.
What costs order is appropriate with regard to the seventh respondent
76․I note, in response to the applicant’s submission that the seventh respondent was present when not needed that such matters are not unique to this proceeding. Where a party brings separate applications with respect of different respondents and those applications are heard together there are inevitable impacts on the costs incurred by the parties: see, eg, Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [3]; Hood v Bush Pharmacy Pty Ltd (No 2) [2021] FCA 138 (I note in relation to the latter matter, that Nicholas J’s approach to the issue of costs was not disturbed on appeal: Hood v Down Under Enterprises International Pty Limited [2022] FCAFC 69).
77․While it is true that the seventh respondent did not seek to be heard in relation to the sixth respondent’s application for security for costs that does not mean that I accept the applicant’s submission that the seventh respondent was simply a court observer at the hearings on 2 May 2022, 21 July 2022 or 1 November 2022.
78․To the contrary, the applicant sought relief against the seventh respondent. In particular, through the first and second notice to produce, the applicant attempted to compel the seventh respondent to provide a significant volume of material.
79․So much is clear when regard is had to the applicant’s application in proceeding dated 19 April 2022. The third order sought by that application was that the:
The First and Second Respondent’s [sic] must comply with the Notice to Produce, by no later than 30 April 2022.
80․I note that while the order sought refers to the first and second respondents it is clear in context that those references should be to the sixth and seventh respondents.
81․Having sought relief against the seventh respondent, the applicant is not able to now submit that the seventh respondent is not entitled to the costs incurred in successfully resisting the production of documents sought by the first and second notices to produce and resisting the applicant’s application in proceeding.
82․In that regard, I also note that counsel for the seventh respondent appropriately sought to be excused at the hearing on 1 November 2022 when the application with which her client had an interest had concluded.
83․Counsel also (again appropriately) sought to be excused in relation to the hearing of the security for costs application on 2 May 2022 (see T4.6-9, 2 May 2022) and 21 July 2022 (see T4.21-40, 21 July 2022) but remained on the AVL hearing link to assist the Court in relation to the applicant’s application (I note that on those dates the applicant called on the two notices to produce).
84․In my view, the appropriate order will be that the seventh respondent is entitled to its costs on a party/party basis. The order will make clear that the costs do not extend to the hearing of the sixth respondent’s application for security for costs but will cover the parts of those hearing days where the seventh respondent was required to attend in order to address the issue of the notice to produce.
85․I do not think, however, that the seventh respondent should receive its costs on an indemnity basis. As I will come to, the applicant’s personal attacks and irrelevant arguments were largely directed to the sixth respondent and the sixth respondent’s representatives. It is the sixth respondent who has had to incur the additional expense of significant further hearing time, review of irrelevant material, and repeatedly address the same or similar arguments despite those matters have been assessed in the favour of the sixth respondent. That view is further fortified in circumstances where the seventh respondent has not sought costs in written submissions on an indemnity basis. There is no need to further consider that issue. In my view, there is nothing justifying departure from the usual rule in relation to the costs of the seventh respondent, namely the costs should follow the event.
What costs order is appropriate in respect of the sixth respondent
86․I have already outlined why I do not accept the applicant’s submissions that MWP was successful on a number of issues or that there is anything to justify an order that the parties bear their own costs.
87․The central question before me is whether the costs should be ordered on an indemnity basis, as the sixth respondent seeks, or on a party-party basis.
88․It is clear that the Court has the power to order indemnity costs: r 1752 of the Court Procedures Rules 2006 (ACT).
89․In relation to the circumstances that are relevant to this question, it is worth restating the principles outlined in Melbourne City Investments at [5]:
In broad terms an order for indemnity costs requires that some special or unusual feature arises… Indemnity costs are not punitive but are designed for “compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”… Such circumstances may include where allegations are made “which ought never to have been made”, where the case is “unduly prolonged by groundless contentions” … and where “the applicant, properly advised, should have known that he had no chance of success” … or “persists in what should on proper consideration be seen to be a hopeless case” …
(Citations omitted)
90․In my view, the applicant should be required to pay the sixth respondent’s costs on an indemnity basis. This is the case for the following reasons.
91․First, while it could not be said that the applicant had no chance of success in all of the applications, the applicant’s overall conduct has had the effect of unduly prolonging the proceedings. As I have noted on previous occasions, the applicant has often attempted to advance broader arguments related to other litigation. This has included extensive discussion of proceedings in the United Kingdom, the High Court, the NSW Supreme Court and Court of Appeal and the Federal Court.
92․Many of these arguments were wholly irrelevant to the issues before this Court, which was dealing with what should have been, on each occasion, a narrow interlocutory issue. In that regard, I note that the applicant provided thousands of pages of material to the Court, much of which was not relevant. Similarly, the applicant advanced submissions that were, at times, unbecoming of an admitted practitioner who has overarching duties to the Court. I will address this in more detail below.
93․In terms of the issues advanced at the oral hearings, the applicant also had a significant tendency to seek to re-agitate the same or similar points, prolonging the proceedings through what were, at this point, undoubtedly groundless or irrelevant contentions. For example, the applicant had advanced submissions at the hearing on the security for costs application relating to whether the sixth respondent could appear conditionally. I dealt with this issue in Wilson (No 6) at [88] effectively finding that that issue was a matter for the Court of Appeal hearing the ultimate application and that, in any event, there appeared to be a sound basis for the conditional appearance in this Court (at least at the interlocutory stage). Nevertheless, the applicant persisted in advancing similar arguments at the hearing on costs, indeed arguing that the conditional appearance was improper and disentitled the sixth respondent to an order for costs. Such an argument was wholly without merit and ignored my earlier findings. That the applicant persisted in repeatedly re-arguing and re-agitating issues, issues that the applicant had not sought leave to appeal from, demonstrates the applicant’s overall conduct in the proceeding and significantly increased the hearing time necessary to deal with the issues before the Court.
94․Running repeated and protracted arguments on irrelevant issues significantly increased the costs the parties faced in litigating what was on each occasion a narrow interlocutory question. In that regard I note the applicant’s submission that MWP defended the security for costs application on a narrow basis, namely that MWP had significant assets in Australia and was a net creditor. On review of the transcript of the hearing on 2 May 2022 and 21 July 2022, that narrow defence could not have been said to be the basis for many of the applicant’s submissions. In my view, it was unreasonable for the applicant to subject the sixth respondent to the level of costs involved in what was, on its face, a narrow question.
95․Second, in at least some of the applications it could only be said that the applicant, if properly advised, should have realised that there was no chance of success. The clearest (but not only) example of this is the applications relating to the notices to produce. As I noted in Wilson (No 5) the notices to produce sought documents including documents related to the litigation in the United Kingdom (Category 4) and relating to Federal Court proceedings (Category 7, noting that NSD 428 of 2020 and NSD 767 of 2021 are Federal Court proceeding numbers) that could not have been relevant to the questions before this Court: see Wilson (No 5) at [38]. As I outlined at [42]-[46]:
The central argument advanced by the applicant as to the relevance of the documents sought by the notice to produce was that they are relevant to the question of the costs estimate underpinning the claim for $22,500 in security for costs. The notice to produce, however, is far broader than would be required to answer that question. The documents sought cover correspondence over a decade and which, on their face, have no relevance to this proceeding.
In particular, the notice to produce requires documents relating to this proceeding or the proceeding below dating back to 2015 (and in one case 2012). Those documents could not be sensibly said to be relevant either to the questions before the Court now, or the questions that will be before the Court at the hearing of the application for leave to appeal.
The categories of documents sought in the application are also extremely vague. Notices to produce impose onerous obligations on parties and require documents to be produced relatively quickly. Given those obligations, the Court expects that notices are carefully drafted to ensure they are directed to relevant and clearly defined categories such that parties can comply with their obligations and so that the Court can determine when a party has failed to comply with their obligations.
In relation to the question of privilege, I note that Mr Wilson advanced an argument that in addition to appearing for the applicant he was appearing qua a number of other individuals/entities (namely the first to fifth respondents). I understand that such a claim was advanced to counter the suggestion by the sixth respondent that some documents were privileged and could not be produced.
Without needing to decide whether Mr Wilson has acquired the rights that he claims or whether any such acquisition could ever defeat a claim for privilege (both propositions that appear doubtful to say the least), again the central issue with the applicant’s suggestion is the scope of documents that could be relevant to the issue before me or the issue that will be before the Court when hearing the substantive leave to appeal application.
(emphasis added)
96․Similar points may be made with regard to the applicant’s application to set aside the security for costs order. The applicant at the hearing had argued that the judgment of Judge Pelling KC setting aside the worldwide freezing order meant that there was no basis for the security for costs order. This submission fundamentally failed to grapple with the original security for costs judgment, which had expressly not been based on the existence of any worldwide freezing order.
97․Third, similar to the behaviour of the applicant in the Federal Court, the applicant advanced unsubstantiated allegations against the counsel and solicitors acting for the sixth respondent. Similar to the approach taken by Stewart J in Wilson (FCA Costs) outlined above, I will not repeat them in this judgment. Suffice to say that there was no evidence advanced supporting the various personal attacks made of counsel and solicitors. The repeated attacks served to needlessly extend the Court hearing and increase the costs incurred by the sixth respondent. That attacks were repeated after stern warning from the Court, including over multiple hearing days is unacceptable and unbecoming of an admitted practitioner.
98․While overall not every argument the applicant advanced was hopeless, in my view, the significant volume of irrelevant material and irrelevant submissions and personal attacks and repeated raising of previously dismissed arguments has led to the sixth respondent incurring an unnecessary and unreasonable amount of legal expenses. The applicant’s conduct is such that, in my view, the only appropriate order is one for indemnity costs.
99․In summary, I am satisfied that the features of this case are such that it was unreasonable for the applicant to have subjected the sixth respondent to the costs the sixth respondent has had to incur in prosecuting and defending a series of interlocutory applications.
100․In reaching that conclusion I have noted the comments of Elkaim J and Hodgson CJ regarding the rarity of an indemnity costs order in the context of a self-represented party. In that regard, I note that counsel for the applicant is a currently admitted practitioner in multiple jurisdictions with significant experience. He is not akin to a formerly practicing solicitor, but rather runs his own law firm in Kazakhstan. Indeed, the sixth affidavit of Mr Wilson sworn on 14 September 2022 included the following summary of his experience:
… I previously worked with Herbert Smith Freehills and Baker McKenzie, in Sydney, Australia, as to the latter of which I was an international equity and capital partner, and founder of the most successful group of new offices (five (5) in total), in the entire history of that firm, anywhere in the world.
I am an admitted solicitor of the Supreme Courts of New South Wales and Victoria, Australia and a solicitor of the Supreme Court of England and Wales.
101․Plainly Mr Wilson could not be described as the usual self-represented party. He is a practicing lawyer with significant experience, on his own evidence.
102․Further, the applicant persisted in running irrelevant arguments and making personal attacks over multiple hearing days and following warnings from the bench regarding time estimates. In my view, the facts of this case can be distinguished from those before Elkaim J and Hodgson CJ.
103․The final matter to note is that at the hearing on 1 November 2022, counsel for the sixth respondent foreshadowed that the sixth respondent would be seeking a lump sum costs order in the event counsel was successful in the application for costs. Counsel for the sixth respondent expressly noted that the sixth respondent was not seeking such an order at this stage. It is appropriate, however, that I note that submission.
Orders
104․I make the following orders:
(a)The applicant is to pay the sixth respondent’s costs relating to the following items on an indemnity basis:
(i)The costs of and incidental to the hearing of the sixth respondent’s application filed on 15 August 2021;
(ii)The costs of and incidental to the setting aside the applicant’s two notices to produce;
(iii)The costs of and incidental to the hearing of the applicant’s application filed on 28 April 2022; and
(iv)The costs of and incidental to the hearing on 1 November 2022.
(b)The applicant is to pay the seventh respondent’s relating to the following items on a party-party basis:
(i)The costs of and incidental to the setting aside the applicant’s two notices to produce, including the relevant periods of time where the seventh respondent was required to appear at the hearings on 2 May 2022 and 21 July 2022;
(ii)The costs of and incidental to the hearing of the applicant’s application filed on 28 April 2022; and
(iii)The costs of and incidental to the hearing regarding the issue of reserved costs on 1 November 2022.
105․To those orders I include the following notation: “For the avoidance of any doubt, nothing in these orders alters the costs order made by Elkaim J in relation to the application to adjourn the hearing of the application for security for costs.”
| I certify that the preceding one-hundred and five [105] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Andrew Ray Date: 9 December 2022 |
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