Moran v Schwartz Publishing Pty Ltd (No 6)
[2016] WASC 168
•7 JUNE 2016
MORAN -v- SCHWARTZ PUBLISHING PTY LTD [No 6] [2016] WASC 168
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 168 | |
| Case No: | CIV:1894/2014 | ON THE PAPERS | |
| Coram: | KENNETH MARTIN J | 7/06/16 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application refused | ||
| B | |||
| PDF Version |
| Parties: | TOBIAS FRIEDRICH MORAN SCHWARTZ PUBLISHING PTY LTD VIRGINIA PETERS |
Catchwords: | Practice and procedure Variation of order Security for costs Variation to timing of payment Interlocutory considerations |
Legislation: | Nil |
Case References: | Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 Ballard v Brookfield Australia Investments Ltd [2013] NSWCA 82 Capital Webworks Pty Ltd v Adultshop.com.limited [2002] FCA 1420 Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115 Gurtler v Finance Now Pty Ltd [2009] FCA 631 Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35 Moran v Schwartz Publishing Pty Ltd [No 3] [2015] WASC 215 Moran v Schwartz Publishing Pty Ltd [No 4] [2015] WASC 328 Moran v Schwartz Publishing Pty Ltd [No 5] [2016] WASC 67 Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2001] FCA 1603 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
SCHWARTZ PUBLISHING PTY LTD
First Defendant
VIRGINIA PETERS
Second Defendant
Catchwords:
Practice and procedure - Variation of order - Security for costs - Variation to timing of payment - Interlocutory considerations
Legislation:
Nil
Result:
Application refused
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Bennett
First Defendant : Ms C Galati
Second Defendant : Ms C Galati
Solicitors:
Plaintiff : Bennett + Co
First Defendant : Carmel Galati
Second Defendant : Carmel Galati
Case(s) referred to in judgment(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
Ballard v Brookfield Australia Investments Ltd [2013] NSWCA 82
Capital Webworks Pty Ltd v Adultshop.com.limited [2002] FCA 1420
Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115
Gurtler v Finance Now Pty Ltd [2009] FCA 631
Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35
Moran v Schwartz Publishing Pty Ltd [No 3] [2015] WASC 215
Moran v Schwartz Publishing Pty Ltd [No 4] [2015] WASC 328
Moran v Schwartz Publishing Pty Ltd [No 5] [2016] WASC 67
Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2001] FCA 1603
1 KENNETH MARTIN J: By the defendants' minute of proposed orders of 7 April 2016, they seek to vary orders for security for costs I made on 27 February 2015. Those orders issued in the aftermath of my 3 February 2015 reasons Moran v Schwartz Publishing Pty Ltd [No 2] [2015] WASC 35.
2 The defendants do not seek any increase in the figure of security ($500,000) ordered to be paid to secure the defendants' trial costs, should they be successful at trial. But they do seek to advance the timing of a partial payment of a second tranche of security I ordered, so that it is met earlier than as part of a next $400,000 security instalment which I ordered to be paid when the plaintiff entered his action for trial (albeit I added the rider, 'or as otherwise ordered by the Court').
3 Under the 3 February 2015 reasons, I had concluded:
[87] On that basis, an order for security is appropriate. But security at the level of $780,000 would, effectively, be an order approaching the level of providing a complete indemnification to the defendants. In my view, an order for substantial security is called for. The draft bill estimate of the defendants' taxed costs at around $780,000, should they be successful at the trial, is reliable. But the figure for security should be reduced to roughly two-third of that figure, the $500,000.
[88] Concerning that level of overall security, it is appropriate that it be ordered to be provided in tranches as the action progresses to a trial. I would order that $100,000 security be provided by 28 February 2015, under payment or bank guarantee arrangements the parties' solicitors can resolve as between themselves. Absent that security instalment, the action will be stayed from that time. The balance of the security is to be provided at the time of the filing of an entry for trial by the plaintiff, or as I may otherwise order.
[89] The defendants being successful, should prima facie have their taxed costs of this application as well. The defendants, as the essentially successful party upon this application, should, after conferral with the plaintiff's solicitors, provide a minute of orders reflecting these reasons, hopefully agreed, within 14 days of the publication of the reasons. If there is any dispute over appropriate orders, then I will resolve such matters on the papers.
4 In implementation of those reasons, I issued orders, after the parties' conferral, in the following terms on 27 February 2015:
1. The plaintiff provide security for the defendants' costs of the action, in the total sum of $500,000, in the following manner:
(a) by 28 February 2015 the plaintiff provide security in the sum of $100,000;
(b) the plaintiff provide security in the sum of $400,000 at the time of the plaintiff entering this action for trial, or as otherwise ordered by the Court; and
(c) security be in the form of payment, deposited into an interest bearing trust account to be held by Bennett + Co, subject to an order of the Court.
2. If the plaintiff does not provide security in accordance with 1 above, this action be stayed from the dates referred to above, or such further date ordered by the Court, until such time as the plaintiff provides security in the ordered amounts.
…
5 It is uncontroversial that $100,000 was paid by 28 February 2015 by the plaintiff in accord with par 1(a) of the orders as issued.
6 The intent of the present application is to require the plaintiff to render a further $100,000 payment within 14 days - altering the timetable for the payment of the par 1(b) tranche of further security - to the extent of an advanced $100,000 payment (from the $400,000 that is otherwise due to be paid when the matter is entered for trial by the plaintiff).
7 Clearly, the matter has not yet been entered for trial. Nor has a date yet been set for entry for trial to occur.
8 There have been a number of interlocutory arguments between the parties in this defamation action since February 2015. My interlocutory decisions Moran v Schwartz Publishing Pty Ltd [No 3] [2015] WASC 215, Moran v Schwartz Publishing Pty Ltd [No 4] [2015] WASC 328 and Moran v Schwartz Publishing Pty Ltd [No 5] [2016] WASC 67 will provide insights towards the multiple disputes which have arisen and have had to be resolved. Moreover, further interlocutory disputation looms on the horizon, prior to the matter being ready for a trial.
9 Part of the future foreshadowed interlocutory disputation arises out of the stance of the plaintiff in articulating, albeit he is a defamation plaintiff advancing civil litigation at his initiative claiming damages, his asserted privilege against self-incrimination as regards the inspection of certain discovered documents.
10 From that platform, the plaintiff also indicates, at this stage, an in principle objection to subjecting himself to any degree of cross-examination at a trial of his action, or allowing an inspection of certain documents that form part of his discoverable list of relevant documents and within his possession, custody or control: see generally my reasons in Moran v Schwartz Publishing [No 5] at [65] and [73], which provide background to the plaintiff's privilege assertions against his self-incrimination.
11 As indicated, the present application is being determined on the papers. To that end, the parties provided me with their extensive written submissions in support of their rival positions.
12 From the applicant defendants, I hold their written submissions of 7 April 2016 and their written reply submissions of 11 May 2016. Accompanying those submissions is the affidavit sworn by the defendants' solicitor of record, Ms Carmelina Galati, of 7 April 2016. Significantly, Ms Galati's affidavit appends a three-page schedule of costs, indicating the total costs incurred by the defendants to date (albeit with some excisions for interlocutory costs the defendants have either recouped or accept they cannot claim).
13 An aggregate amount appearing at the end of a schedule to that affidavit is the sum that the defendants say would otherwise be claimable under a taxed bill of costs - assuming the defendants enjoyed such an entitlement to claim their legal costs incurred to date. The costs amount of $135,128.35 is shown. As to that sum, Ms Galati's affidavit says at par 7:
The schedule does not reflect the actual sum incurred by the defendants in these proceedings, which is approximately $300,000. The defendants have recouped $46,520.83 in costs for the application for security for costs dated 2 October 2014 and will be seeking approximately $30-$35,000 in respect of successfully resisting the plaintiffs' application dated 1 February 2016 to dispense with trial by jury and for preliminary determination.
14 Ms Galati's affidavit continues at par 8:
The schedule excludes:
(i) all costs in respect of the applications in which the defendants have been successful and have had costs orders made in their favour, namely the applications referred to in paragraph 7 above; and
(ii) the costs in respect of which the defendants were unsuccessful, namely the plaintiff's application to strike out parts of the amended defence dated 16 February 2015.
15 Ms Galati's affidavit then points to the uncompleted (ie, as of 7 April 2016) process of discovery for the defendants, indicating the identification of some 21 lever arch files of collated and potentially relevant materials for discovery by the defendants, and speaking of her anticipation that the volume of documents discoverable by the defendants was likely to increase. A broad assessment, in respect of the costs of completing discovery is said to be in the vicinity of $15,000 to $20,000.
16 There is then foreshadowed by Ms Galati, the likely interlocutory disputation concerning the foreshadowed objection by the plaintiff to allowing an inspection of documents in his discovered list of documents, upon the basis of privilege against self-incrimination - against which claim Ms Galati foreshadows the defendants are likely to challenge and press for open inspection, leading to an incurring of more legal costs in that process. There is foreshadowed a substantial argument upon this issue, as to which a cost estimate in the range of $25,000 to $30,000 is given (on the assumed basis I again infer, that the defendants postulate they will be wholly successful upon a future interlocutory clash with the plaintiff over that privilege assertion issue - an assumption, of course, which remains to be proven).
17 Ms Galati foreshadows that after discovery is completed there will be substantial work incurred in the drafting and settling of witness statements. She says that it is difficult to provide a 'meaningful estimate' of the costs likely to be incurred. She also foreshadows the likely cost of participating in a mediation, prior to the trial. I would observe as regards witness statements that if, as is indicated currently by her clients, the action is to proceed to a civil jury trial, there is then considerable scope for reducing the costs associated with the usual elaborate preparation of witness statements - on the basis that it is likely that viva voce evidence would be elicited from the witnesses to a civil jury. Hence, less formal bare summaries of proposed evidence from each side's witnesses could be exchanged, rather than exchanging formal witness statements - the objective of a summary being to fairly appraise each side of the essence of the trial evidence in chief proposed to be otherwise led viva voce. That process should ameliorate any potential surprises arising from witness evidence that is otherwise led in orthodox fashion at trial to the civil jury.
18 The plaintiff, through his solicitors, resists the application to vary the February 2015 security orders in respects as sought by the defendants. To that end, the plaintiff's solicitors provided written submissions of 3 May 2016. Those submissions take issue with the expressed two-fold basis for the variation application under the first tranche of the defendants' written submissions at par 3. The defendants had there contended in terms:
The defendants submit that it is appropriate at this time for an order requiring a bringing forward of $100,000 of the remaining $400,000 to be made on two bases. Firstly, because the defendants have incurred in excess of $100,000 in claimable costs in the action to date. Secondly, given the range of matters raised by the pleadings and the nature of the disputes which have arisen to date, the defendants anticipate that their projected future costs prior to entry for trial by the plaintiff, are likely to exceed $100,000.
19 Resisting such variation, the plaintiff's representatives take issue with the expressed basis for the application, to contend the defendants have not raised 'matters which enliven the court's discretion to vary the existing security for costs order'. They say that sufficient security and a regime for provision of security has already been provided for the defendants by the plaintiff, pursuant to existing orders of the court (par 3 of the plaintiff's written submissions).
20 The plaintiff's solicitors draw my attention to a number of cases concerning applications to vary orders for security for costs (see Gurtler v Finance Now Pty Ltd [2009] FCA 631, Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2001] FCA 1603, Capital Webworks Pty Ltd v Adultshop.com.limited [2002] FCA 1420 and Ballard v Brookfield Australia Investments Ltd [2013] NSWCA 82). However, the defendants correctly point out that those cases were essentially concerned with applications to vary the total amount of security ordered, or to set the security amount aside. That is in some contrast to the present application - which does not seek to increase the amount of total security and, rather, only seeks to advance the timing of a 25% component within the second tranche of security, prior to entry of the matter for trial.
21 The defendants point out, correctly, that my reasons of 27 February 2015 explicitly contemplated the order made concerning the payment of the $400,000 at the time the plaintiff entered this action for trial might be the subject of an ordering otherwise, in appropriate circumstances.
22 In short then, the defendants argue that the incurring of further claimable costs in a period since February 2015 and a looming horizon of further interlocutory costs, including a high level of incurred legal costs associated with their giving of discovery, supports their variation application. Under par 11 of the first tranche of written submissions, the defendants contend:
It is submitted that in these circumstances there is an increased risk the plaintiff would discontinue the proceedings if in fact the jury trial is ordered or if he is advised that any further application to exclude a jury is not likely to be successful. If that were to occur, given the plaintiff's financial position as deposed to at pars 39 and 40 of his affidavit dated 31 October 2014, affirmed in these proceedings in opposition to the defendants' application for security for costs, the defendants would have no ability to recover their expended costs from the plaintiff.
23 Against that rationale, the plaintiff argues, by paragraphs 32 and 33 of his written submissions, that no matters have arisen which may be properly regarded as constituting a material change in underlying circumstances to support the proposed variation in the orders. Nor, he contends, has any new material emerged which would warrant the plaintiff being required to render an earlier payment of a $100,000 component of the next ($400,000) tranche of security - otherwise due to be paid when the plaintiff enters the matter for trial. It is also said at par 33:
To the extent that the defendants have under-estimated the likely costs they are to incur prior to entry for trial, that is an issue for the defendants and the plaintiff should not have to be put to the cost of this application on account of that circumstance.
24 Accordingly, the plaintiff says the variation application is misconceived, as it, in essence, lacks any proper conceptual basis and should be dismissed.
25 For the reasons which I give below, I am not satisfied that it is presently appropriate to render any timing variation to the security for costs orders which I issued on 27 February 2015.
Estimated costs - for the interlocutory stages and for the trial
26 A key focus of the defendants' application for security for costs in October 2014 was the financial exposure the defendants said they would outlay in the course of preparing for and then running a trial of an estimated five weeks' duration, involving a large number of witnesses to support the Polly Peck, alternate justification defence. A clear focus upon a high anticipated level of trial costs is evident from the submissions and the affidavit materials provided to me by the defendants to support that security application, as my reasons in Moran v Schwartz Publishing [No 2] show.
27 Notably, the defendants indicated that 38 witnesses would be required for a trial of the action, including civilian witnesses, NSW police witnesses, expert witnesses, German experts and police witnesses, and others - see par 9 and annexure 'CG 1' of Ms Galati's affidavit of 2 October 2014. Included with that affidavit was a schedule of costs, about which it was said at paragraphs 19 and 20:
On 1 August 2014, I provided Mr David Garnsworthy with a brief to provide me with his cost estimate for these proceedings, including a 25 day trial. Annexed hereto and marked 'CG 2' is a copy of my briefing email to Mr Garnsworthy.
Annexed hereto and marked 'CG 3' is a copy of a schedule prepared by Mr Garnsworthy in which he arrives at a total cost estimate of $780,712.75 for these proceedings. This assessment, which was finalised on 18 August 2014, includes an allowance for special costs orders in respect of some of the attendances identified in the schedule, such as the drafting of the defence, preparation for trial and Counsel's fees. The schedule of costs does not include the costs of taking evidence of the German-based witnesses by way of video-link.
28 The schedule of costs, as it appears at annexure 'CG 3', sets out a list of items of work and includes an applicable scale item reference, as well as indicating applicable 'scale rates' and proposed 'special order rates' for the items.
29 As regards anticipated costs of giving discovery (under scale item 7b), the schedule indicates only a 'scale rate' of $4,730 and then the same amount (ie, $4,730) under the 'special order rate'. I infer, by the date of the schedule, that the applicable costs determination (ie, scale) was the Legal Profession (Supreme Court) (Contentious Business) Determination 2014 (WA). The maximum allowance for scale item 7(b) (Giving discovery of documents) under that costs determination is $4,730, calculated on the basis of 10 hours of work by a Senior Practitioner (SP) at the maximum hourly rate for a Senior Practitioner ($473).
30 It would therefore seem that the defendants had not, at that point, identified that the costs for the giving of discovery would exceed that maximum allowance or, thus, a prospective need to apply for a special costs order to remove that scale limit. That is, perhaps, a little curious, given the number of witnesses intended to be called and the proposition, stated at par 7 of Ms Galati's affidavit of 2 October 2014, that 'establishing the justification defence will be tantamount to the defendant conducting a prosecution of a criminal trial, albeit on a civil burden of proof'. That all sits uneasily with the defendants' currently asserted position as regards the high level of costs incurred in giving discovery on the basis that the first defendant has some 357 documents to discover and the second defendant will have in the order of 21 lever arch volumes to discover, with total costs of completing the discovery exercise for the defendants now said to be 'in the vicinity' of $15,000 - $20,000 - see paragraphs 9 - 11 of Ms Galati's affidavit of 7 April 2016.
Determination
31 There is no need to repeat the underlying security for costs principles I canvassed in the reasons in Moran v Schwartz Publishing [No 2]. Those principles remain applicable. Nor can it be seriously contended that this court lacks power to issue a timing variation to order 1(b) of the 27 February 2015 orders, where such a variation is otherwise appropriate, as regards an adjustment to what are interlocutory orders, to take account of material changes in underlying circumstances or of new events: see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 and Ballard v Brookfield Australia Investments Ltd [11] - [13]. See also Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115 [9] - [12]. The question then is whether it is appropriate to make such a timing variation as is sought by the defendants on the materials now before me.
32 There are two important underlying policy principles applicable to the case management of actions in the Commercial and Managed Cases (CMC) List (where all defamation actions begun in this court are uniformly case managed). In combination they count against the present application.
33 In the first place, it is the policy of the CMC List to strongly discourage undue interlocutory applications, but then, when they do arise, to seek to limit the scope of such applications to their bare essentials. Secondly, in circumstances where an interlocutory application is advanced in the CMC List and is determined, it is the policy of the court that the interlocutory application costs be dealt with, generally by ordering the immediate payment of the interlocutory costs at that time - as against a practice of allowing interlocutory costs to be deferred and to accumulate until after the trial - an event which frequently does not eventuate.
34 In the first policy principle, I refer to the Consolidated Practice Directions for the case management of CMC List matters - see Practice Direction (PD) 4.1.2, particularly par 20, which says:
A fundamental object of the CMC list, and indeed the general practices and procedures of the Court, is the discouragement of interlocutory disputes with all means of the Court's disposal, including costs orders in appropriate cases …
35 Another practice direction illustrates the second policy for CMC List application costs orders - that is, to usually require immediate payment to be made by the unsuccessful party, upon the interlocutory outcome being determined, rather than those costs being left to sit in futurity: see PD 4.7.1 at paragraphs 3 - 7. Paragraph 7 is in terms:
Accordingly, the court will generally order that interlocutory costs ordered to be paid by a party are to be paid forthwith or by a particular date, rather than in any event.
36 Objectives stated at O 1 r 4B(1) of the Rules of the Supreme Court 1971 (WA) (RSC) underlie the case management of CMC List matters and those include principles of efficiency, timeliness and proportionality.
37 Towards the present application, to the extent the suggested altered circumstances raised by the defendants invoke a consideration of likely future interlocutory disputation over disputed privilege issues and consequential legal costs incurred by the defendants associated with that - then it first must be recognised that such interlocutory disputes are actively discouraged, unless where they cannot be avoided. The parties' lawyers must be correlatively encouraged to engage in a genuine process of conferral to attempt to avoid such disputations, if at all possible. That, indeed, is the underlying substance of RSC O 59 r 9 as regards legal practitioner conferral prior to the pursuit of interlocutory applications. That said, however, if there must be argument, it is very likely that the ultimately assessed loser will be ordered to immediately pay to the other side the costs associated with the argument, once the result is known.
38 Towards present circumstances, there appears to be an implicit assumption by the defendants that they are overwhelmingly likely to be successful at these suggested looming interlocutory disputations. That assumption, even if confidently held, is premature. On an opposite hypothesis that the defendants may be unsuccessful in such disputations, then their application to vary the timing of the security ordered at this time is seen to proceed upon a false premise. But even if successful, it is likely there would be a costs order following that event in their favour, payable immediately.
39 Beyond those considerations, however, it needs to be remembered that the basis for the current security for costs orders favouring the defendants (at $500,000) was predicated upon a foundational hypothesis that the action proceeds to a trial, where the defendants are ultimately successful at a final disposition of the litigation - but then find themselves unable to effectively recover upon a costs order in their favour, arising from their trial outcome success, by reasons of the plaintiff's overall impecuniosity and lack of assets in the jurisdiction to meet the costs award. From that premise, the present application can be seen to be misconceived, since the interlocutory application considerations and outcomes presently raised on the part of the defendants, in essence, say little, if anything, about the potential outcome of the trial. The present security orders were made upon the basis of an assumption hypothesis favouring the defendants at trial - rather than towards providing for security for the defendants along the way as interlocutory processes unfold prior to the trial.
40 Currently then, from my perspective as case manager, I assess the expressed concerns of the defendants in relation to a possible unilateral discontinuance of his action by the plaintiff, in the event of a looming civil jury trial, as lacking a foundation. They are, essentially, wholly speculative. Such a consideration provides no sound basis to vary the security orders, in terms as are now sought.
41 What might in the future be an activating consideration supporting a variation of those security orders is a scenario under which, say, a substantial interlocutory costs order payable immediately were to be made in favour of the defendants but then was not met within a reasonable period by the plaintiff. On such wholly hypothetical circumstances, my active consideration would then need to be given to a request for a variation of the security orders globally to address that non-payment exposure problem. But those are not the presenting facts. I find there are no other relevant considerations raised by the defendants, on my assessment, to support the requested timing variation of the present security orders, at this time.
42 Consequently, the defendants' application, made as it is (and determined as it now is) on the papers, must be dismissed. The costs of this application must follow that event and, therefore, be the plaintiff's taxed costs, payable immediately once quantified.
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