National Australia Bank Limited v Idoport Pty Limited

[2004] NSWSC 212

CITATION:	National Australia Bank Limited v Idoport Pty Limited [2004] NSWSC 212
HEARING DATE(S):	8/12/03
JUDGMENT DATE:	25 March 2004
JUDGMENT OF:	Burchett AJ at 1
DECISION:	Declaration made as to the meaning of an order pronounced upon the dismissal of certain actions barring the bringing of fresh proceedings until payment of the costs of the dismissed actions.
CATCHWORDS:	PRACTICE AND PROCEDURE - order barring the bringing of proceedings until payment of certain costs - construction of the order - effect of observations made in Court of Appeal when appeal from the order was dismissed - effect of observations made arguendo - principles on which orders are made barring fresh proceedings until costs of an earlier unsuccessful proceeding are paid - remedy for delay in assessment of costs - effect of statutes of limitations - power to make declaration as to meaning of a Court order.
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (NSW)
CASES CITED:	Bowen v Hickey (1958) 78 WN (NSW) 820 Glandon Pty Ltd v Strata Consolidated Pty Ltd (1988) BC 8802270 Heydon v NRMA Ltd (2000) 51 NSWLR 1 Morton v Palmer (1882) 9 QBD 89 Sinclair v British Telecommunications plc [2001] 1 WLR 38 Thames Investment & Securities Plc v Benjamin [1984] 1 WLR 1381 Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd [2003] NSWSC 775
PARTIES :	National Australia Bank Limited (first plaintiff) National Markets Group Limited (second plaintiff) National Australia Financial Management Limited (third plaintiff) Australian Market Automated Quotation (Ausmaq) System Limited (fourth plaintiff) MLC Limited (fifth plaintiff) MLC Holdings Limited (sixth plaintiff) Your Prosperity Limited (seventh plaintiff) National Wealth Management Holdings Limited (eighth plaintiff) National Online Trading Limited (ninth plaintiff) Glenn L L Barnes (tenth plaintiff) Francis J Cicutto (eleventh plaintiff) David M Krasnostein (twelfth plaintiff) Kevin F Courtney (thirteenth plaintiff) Russell A McKimm (fourteenth plaintiff) Donald Robert Argus (fifteenth plaintiff) Richard McKinnon (sixteenth plaintiff) Simon Moore (seventeenth plaintiff) Idoport Pty Limited (first defendant) Negubo Pty Ltd (second defendant) Investors Buying Service (IBS) Pty Limited (third defendant) John Malcolm Maconochie (fourth defendant)
FILE NUMBER(S):	SC 3541/02
COUNSEL:	J.R. Sackar QC / J.K. Kirk (Plaintiffs) N.C. Hutley SC / A.J. Paterson (Defendants)
SOLICITORS:	Freehills (Plaintiffs) Withnell Hetherington (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Burchett AJ

25 March 2004

3541/02

National Australia Bank Limited (first plaintiff), National Markets Group Limited (second plaintiff), National Australia Financial Management Limited (third plaintiff), Australian Market Automated Quotation (Ausmaq) System Limited (fourth plaintiff), MLC Limited (fifth plaintiff), MLC Holdings Limited (sixth plaintiff), Your Prosperity Limited (seventh plaintiff), National Wealth Management Holdings Limited (eighth plaintiff), National Online Trading Limited (ninth plaintiff), Glenn L L Barnes (tenth plaintiff), Francis J Cicutto (eleventh plaintiff), David M Krasnostein (twelfth plaintiff), Kevin F Courtney (thirteenth plaintiff), Russell A McKimm (fourteenth plaintiff), Donald Robert Argus (fifteenth plaintiff), Richard McKinnon (sixteenth plaintiff), Simon Moore (seventeenth plaintiff) v Idoport Pty Limited (first defendant), Negubo Pty Ltd (second defendant), Investors Buying Service (IBS) Pty Limited (third defendant), John Malcolm Maconochie (fourth defendant)

JUDGMENT

1 His Honour: As an aftershock of a litigious earthquake of a case, there has come before me an application to restrain its renewal until satisfaction of a costs order made on its dismissal. When one appreciates that the principal action was barely half heard at almost the end of a year of hearing at a cost to date of many tens of millions of dollars and a total projected cost, if fought to a conclusion, of the order of one hundred million dollars, and that the claim for damages expanded from some billions of dollars to more than the entire market capitalisation of the National Australia Bank, the main defendant, it will be realised that this was indeed a huge dispute. Perhaps, as one theory asserts of the dinosaurs, the fatal defect of the claim was its enormous growth, which attracted such an expenditure on lawyers, evidence, investigations and documents that the claimants were inevitably unable to meet the consequential orders for security for costs.

2 The claims the renewal of which is in some sense threatened are claims of misleading and deceptive conduct within the meaning of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW), breach of contract, breach of fiduciary duty, participation in breaches of fiduciary duty and inducement of breach of contract. The action was heard before Einstein J who, during the course of it, made an order for security for costs in favour of the defendants and, upon security not being provided, stood the matter over for some time. Then, on 29 January 2002, his Honour refused to adjourn the matter further on the plaintiffs’ application and ordered, pursuant to Part 53 rule 4 of the Supreme Court Rules, that the proceedings be dismissed with costs. His Honour then added an order which is of crucial importance in the matter now before me, that is to say:

“That the Plaintiff and each of the Cross-Claimants to the Second Cross-Claim be barred from bringing fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by any of them in these proceedings, until costs in these proceedings have been paid in full.”

I have quoted the order from the particular suit brought by Idoport Pty Limited in matter number 50113 of 1998; orders in similar terms were made in other proceedings that were brought concurrently with it.

3 Idoport Pty Limited launched an application for leave to appeal in the Court of Appeal, where it obtained leave, but its appeal was dismissed. An application for special leave to appeal to the High Court was also dismissed.

4 It is alleged by the Bank and the other plaintiffs in the action before me (to whom I shall refer collectively as the Bank) that the costs to which they are entitled are of the order of $60 million and that Idoport Pty Limited and the other parties who were plaintiffs in the earlier proceedings (to whom I shall refer collectively as Idoport) have neither taken any step to effect payment nor, on the evidence, have any prospect of being able to do so. But early in July 2002, while the application for leave to appeal to the Court of Appeal was still pending, certain information came to the notice of the Bank which led to an urgent application for an interim injunction being made to Barrett J on 10 July 2002. His Honour held there was “a serious question to be tried as to whether actions of the Idoport parties are in progress or in contemplation, particularly in some other country, which would or could be inconsistent with the orders made by this Court on 29 January 2002.” He granted an injunction on an interim basis, and subsequently undertakings were given to satisfy his Honour’s particular concern that proceedings might be brought in some other country. The matter has now come before me to determine what, if any, final relief should be granted beyond the undertakings, which are accepted as satisfying any requirement for an anti-suit injunction in respect of the bringing of an application in a foreign jurisdiction.

5 Shorn of the anti-suit injunction aspect, this proceeding seemed to me to have become otiose, having regard to the order already made by Einstein J. However, it became clear during the hearing that counsel for Idoport did not accept the order should be understood in its literal sense, and I gave leave to the plaintiffs to file in Court a second further amended summons by which an order was sought in the following terms:

“A declaration that Order 3 of the orders made by Justice Einstein on 29 January 2002 (the ‘Orders’) in each of Proceedings 50113 of 1998, 50026 of 1999 and 3991 of 2000 (the ‘Proceedings’) has the effect that fresh proceedings covered by the terms of the Orders cannot be commenced (including by filing originating process) until Idoport has paid the costs of the Proceedings in full.”

6 In order to understand the problem thus thrown up for decision, it is necessary to see the order made by Einstein J against the background of the principle upon which it was based, and in the light of the judgment of the Court of Appeal. The principle has been well established for a long time. It was stated by Cave J in Morton v Palmer (1882) 9 QBD 89 at 92:

“The principle of the practice in each court [the Court of Chancery and the common law courts] was the same, viz., that, if a litigant had brought an action or made a motion against another and had failed, he should not bring a fresh action or renew his motion until he had paid the costs of the previous proceeding.”

This statement of the law, the very language of which, it will be appreciated, is reflected in the order made by Einstein J, was quoted and applied by Goulding J in Thames Investment & Securities Plc v Benjamin [1984] 1 WLR 1381 at 1383, where his Honour said it was “plain as a general rule” that “where an application has been made for particular relief and has been dismissed with costs because of some fault or lack of success on the part of the applicant, then, generally speaking, the applicant ought not to be permitted to apply again for identical or equivalent relief if he is guilty of failure to pay the costs of the previous application”. In that case, the costs of the earlier application had not been taxed or assessed, and the judge followed (at 1384 – 1385) an old decision of Sir John Romilly MR holding that the remedy was to “bring a sufficient amount into court”. Goulding J assessed this amount.

7 In Bowen v Hickey (1958) 78 WN (NSW) 820, the Full Court (Street CJ, Owen and Manning JJ in a joint judgment) affirmed (at 822) “the rule that a second action in the same cause and against the same defendant shall be stayed until the costs of the first action are paid”. Their Honours explained (at 823):

“The plaintiff has already had one opportunity to litigate his claim and the proceedings ended in favour of the defendant. An action which is instituted with a view to litigating the same complaint a second time against the same defendant without paying the costs of the first action, is one which is, prima facie , regarded as vexatious, and it is to prevent a litigant enjoying the privilege of a multiplicity of actions at the expense of the defendant that the rule is aimed. In any event, no question arises which would disentitle the plaintiff to litigate his claim a second time, the only question is whether he should be entitled so to do without first paying the costs of the original action in which he was unsuccessful.”

8 The final authority to which I shall refer on this point is Sinclair v British Telecommunications plc [2001] 1 WLR 38. That was a decision of the Court of Appeal in which Judge LJ (with whom Peter Gibson LJ agreed) said (at 49):

“Approaching the problem with an appropriate degree of caution, the starting point in this case is the well established principle that ‘if a litigant had brought an action or made a motion against another and had failed, he should not bring a fresh action or renew his motion until he had paid the costs of the previous proceeding’: Morton v Palmer (1882) 9 QBD 89, 92.

…
Examples of the operation of these principles [his Lordship had also referred to Thames Investment & Securities Plc v Benjamin ] spring readily to mind. Where, exceptionally, before the expiry of the limitation period an action is struck out for want of prosecution, with costs, the costs should be paid before the fresh proceedings start, save perhaps when the limitation period is about to expire and a protective writ is urgently needed.”

The exceptional case which Judge LJ was prepared to think might exist was relied on by senior counsel for Idoport as a qualification on the appropriateness of an order that would prevent the institution of proceedings until the payment of the costs of an earlier action; but it seems to me that the Lord Justice was not suggesting a general qualification on the appropriate form of order, but rather that in particular circumstances there might be cause to modify it to meet a special exigency. I do not understand his Lordship to have been suggesting that it should generally be open to a party to file a proceeding, merely in order to interrupt the running of a statute of limitations for some substantial period, while failing to pay a relevant costs order, but rather that some temporary action may be appropriately permitted to cater for an immediate need. The former course would plainly be open to abuse, as it would be apt to lead to all the vices of long delayed hearings, or to the imposition upon the other party of the yet further (very likely irrecoverable) costs of an application for dismissal for want of prosecution.

9 When the Court of Appeal granted leave to Idoport Pty Limited, but dismissed its appeal, reasons were given by Mason P (with whom Stein JA agreed) and by Giles JA, who also agreed with Mason P, subject to some reasons of his own. It emerges from the two sets of reasons that both the orders for dismissal and the costs orders were subject to challenge, but what is relevant for present purposes is how the Court of Appeal dealt with the stay order in respect of the costs, although it is necessary to note that it did so in the context of the particular grounds of appeal that had been raised. These grounds went to the factors taken into account by the trial judge in the exercise of his discretion to refuse Idoport’s application for an adjournment and to dismiss the proceedings.

10 In his reasons, Mason P, having dismissed various grounds of appeal alleging that irrelevant factors had been taken into account, or that relevant factors had not been taken into account or had not been given sufficient weight, referred to “Ground 1 (a): Failure to take account of the irreparable prejudice caused by dismissal, especially in relation to the claims under the Trade Practices Act”, and continued:

“69 This is the ground that initially troubled me.
70 Einstein J said:
‘No issue estoppel or res judicata .
56. A dismissal under Part 52 of the Rules will not, in law, shut out the plaintiff from commencing fresh proceedings relating to subject matter of the proceedings dismissed. No issue estoppel or res judicata arises. As the defendants point out Part 40 Rule 8 of the Rules permits new proceedings to be commenced in circumstances such as the present. A dismissal, of itself, will not shut Idoport out from litigating an issue which is fairly arguable (see, for example, Queensland v J. L. Holdings Pty Ltd 189 CLR 146 at 154). A dismissal merely provides certainty to a defendant when proceedings have been stayed.’
71 The pleaded claims included allegations of misleading and deceptive conduct contrary to the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW). These were said to have occurred in July – September 1996 in the course of negotiations leading to the entry into certain transactions by Mr Maconochie and Market Holdings Pty Ltd… . The pleaded representations were said to be of continuing operation… . In reliance upon them Mr Maconochie and Market Holdings are said to have entered into various Agreements and to have caused the plaintiff to have done likewise… . The plaintiff also pleads detrimental reliance by entry into a September 1996 Agreement… . The plaintiff and Market Holdings claimed damages… .
72 The appellant correctly points out that, if and when fresh proceedings are commenced, they would be statute-barred having regard to s 82 (3) of the Trade Practices Act and s 68 (2) of the Fair Trading Act . The primary judge did not consider this particular aspect of prejudice to the plaintiff. Indeed, it is arguable that he decided to the contrary in J56 quoted above.
73 The respondents seek to meet the argument by showing that only the Trade Practices/Fair Trading causes of action are affected; and by pointing to the plaintiff’s allegations of continuing representations occurring after September 1996. No such claims are pleaded in the MLC proceedings. These factors reduce the scope of the plaintiff’s complaint, but do not remove it altogether.
74 The respondents also submit that, as this issue was not raised by the plaintiff on 29 January, his Honour cannot be criticised for not taking it into account. The affidavit of Mr Maconochie and the written submissions signed by him, each of 29 January 2002, are silent on this matter. The appellant’s retort is that neither Mr Maconochie nor the junior counsel retained on 29 January in an unsuccessful attempt to get an adjournment should be faulted for not having thought of the point: it was up to Einstein J to do so if he was to consider all matters relevant to the discretion to dismiss.
75 The respondents’ rejoinder is that this is not enough to show error in the exercise of a discretion. The appellant’s rights do not rise and fall depending on whether or not it is legally represented. The respondents also point to evidence and arguments that could possibly be raised at first instance had the point been taken (… . Cf Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645). They cite a passage in the judgment of Heydon JA (with whom Sheller JA and Studdert J agreed) in Micalleff v ICI Australia Operations Pty Ltd [2001] NSWCA 274 where he said (at [83]):
‘…while it is legitimate to criticise a primary judge considering a discretionary judgment for not understanding matters of which he had been informed, it is not legitimate to criticise a primary judge for not taking account of matters not drawn to his attention. If there was some inadequacy in the primary judge’s understanding because of what he had not been informed of by the plaintiff’s representative, it was not an inadequacy of which the plaintiff can complain on appeal.’
76 I am not sure that this statement can be elevated to a universal principle. There will I think be some considerations of such importance and obviousness that failure to take them into account will not save a discretionary judgment even if they were not pointed out or relied upon by the litigant.
77 Nevertheless, I have concluded that the exercise of the discretion cannot be faulted legally, in light of the various matters stated in the penultimate paragraph. I would add reference to the fact that Einstein J had given clear directions as to the filing of affidavits and submissions for the 29 January adjourned dismissal application and the appellant had not complied with them.
78 In any event, I am firmly satisfied that the omission occasioned no substantial injustice, having regard to the principle stated by Kitto J in Lovell v Lovell (1950) 81 CLR 513 [at 533, where Kitto J said that even if an appeal court “considers that insufficient weight has been given to some relevant consideration, it will still not substitute its judgment for that of the primary judge unless it comes clearly to the conclusion for that reason that the discretion has been exercised wrongfully”]. Cf also the related principle in administrative law ( Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at 40, Australian Conservation Foundation v Forestry Commission (1988) 19 FCR 125 at 135 . Had the point been taken into account the decision would have been the same in view of the weight of factors supporting dismissal, including (of particular relevance here) the probability that matters were unlikely to change.

79 Alternatively, were the discretion to be exercised afresh at this point of time I would in any event reach the same decision as Einstein J.
Costs

80 Finally, the appellant submits that even if it is unsuccessful in overturning the orders for dismissal, the costs orders were unjust and ought to be set aside. It is submitted that the costs orders should have been limited to costs thrown away by the dismissal of the proceedings. The orders barring the commencement of fresh proceedings until the costs are paid were precedented but unduly burdensome.

81 The propositions were stated but barely developed.

82 There are two insurmountable difficulties with the submission. First, it does not point to any basis of appealable error in the exercise of the costs discretion. Second, the submission treats the dismissal orders as somehow contingent in its implicit attempt to park the costs not thrown away pending something ‘turning up’. By leaving those costs unresolved and unallocated, it deprives the successful party of the usual measure of indemnity attendant upon success in litigation ( Cachia v Hanes (1994) 179 CLR 403 at 410).

83 If and when the appellant commences fresh proceedings it will, in the normal course, have to pay or secure the respondents' costs of the dismissed proceedings before being allowed to prosecute those proceedings ( Bowen v Hickey (1958) 78 WN(NSW) 820, Sinclair v British Telecommunications plc [2001] 1 WLR 38 at 40). Einstein J did no more than spell this out explicitly. This type of order may well be most burdensome, but it seems a better outcome in the interests of justice than leaving matters in a costs limbo, which would be the result of the appellant's proposal. There will be some savings that stem from work already done for the instant proceedings and these can be taken into account in the costs orders made in those fresh proceedings.”

11 His Honour then granted leave to appeal and dismissed the appeal with costs. As I have said, Stein JA agreed and Giles JA also agreed, subject to making some further remarks including a reference to the trial judge’s finding “that on the evidence presently before the Court, Idoport has no real prospect of being able to fund the continuance of the proceedings at first instance to finality”. Giles JA observed that he was “not as troubled” by the ground of appeal numbered 1(a) as was Mason P. He suggested there was “some unreality in the ground” since, at the hearing of the appeal in late July 2002, “the appellant was in no better position to fund the proceedings than as found by Einstein J”.

12 What senior counsel for Idoport fastened upon was paragraph 83 of the reasons of Mason P with its reference to “the normal course” of having to pay or secure the respondents’ costs of the dismissed proceedings before being allowed to prosecute fresh proceedings “[i]f and when the appellant commences fresh proceedings”. The argument drew attention to the statement: “Einstein J did no more than spell this out explicitly”. Attention was drawn to Part 40 rule 8 of the Supreme Court Rules which makes provision for a case where the Court, having dismissed proceedings, orders a party to pay costs, and that party brings further proceedings on the same cause of action: in such a case, “the Court may stay the further proceedings until those costs are paid”. The argument was that the Court of Appeal was construing the order made by Einstein J as such an order, that is to say, as an order which would not prevent the institution of proceedings but would, upon their institution, stay them until the costs should be paid. It is claimed that the distinction is important because of the time that must elapse before the costs can be paid, and indeed before their amount can be fixed by assessment or otherwise, and the possibility of a statute of limitations biting in the interim.

13 Attention was drawn to the fact that paragraph 83 is the penultimate paragraph of the reasons of the President, and it is said that the importance of the statements in it, upon which Idoport relies, is underlined in paragraph 77, where the President says that he has “concluded that the exercise of the discretion [by the trial judge] cannot be faulted legally, in light of the various matters stated in the penultimate paragraph”. However, it will be observed that paragraph 83 is found in a separate section headed “Costs” and it does not set out a series of matters justifying “the exercise of the discretion” to which paragraph 77 is referring, that is, the discretion to dismiss Idoport’s action notwithstanding the immediate effect of that dismissal on certain of the claims made under the Trade Practices Act and the Fair Trading Act – claims which could not be raised again since in any fresh action they would be time barred. That paragraph 77 is indeed talking about this the central discretion under appeal is confirmed by paragraphs 78 and 79.

14 In countering the argument put for Idoport, senior counsel for the Bank suggested that the words “the penultimate paragraph” in paragraph 77 refer to paragraph 75, the penultimate paragraph in what preceded paragraph 77. But paragraph 75 seems to me to be concerned with much too narrow a point to answer to the logic of the construction of paragraph 77. In paragraph 75, the President is merely pointing to one counter punch in the forensic contest that had taken place before the Court of Appeal; in rejoinder to an argument put for Idoport that the irretrievable effect of a dismissal on certain causes of action should have been weighed by the trial judge even though not adverted to on behalf of Idoport, the judge records in paragraph 75 the Bank’s citation of authority to the effect that “it is not legitimate to criticise a primary judge for not taking account of matters not drawn to his attention”. In the very next paragraph of his judgment, paragraph 76, the President utters a warning about the accuracy of this rejoinder. When he then goes on in paragraph 77 to say that the exercise of the discretion (that must be, by the trial judge) cannot be faulted legally in light of the various matters stated in the penultimate paragraph, he is obviously not referring to a single point made by counsel upon the appeal, the force of which in the particular case he has just made it clear he doubts.

15 In my opinion, the apparent difficulty will disappear if attention is paid to the context and the logic of the argument being put by Mason P. Having quoted a very lengthy extract from the reasons of the trial judge, and dismissed various ineffective objections that had been urged in argument in the Court of Appeal, he comes in paragraph 69 of his reasons to the ground which had given him some concern initially, and he finds that the trial judge had indeed failed to take account of a particular element of prejudice to the plaintiff, namely, that dismissal would permanently deprive him of several causes of action. His Honour then refers to certain arguments that had been put on that subject and concludes, in paragraph 77, that even though an error had occurred (he uses the word “nevertheless”) “the exercise of the discretion cannot be faulted legally, in light of the various matters stated in the penultimate paragraph”. It seems to me quite clear that what his Honour is referring to is the penultimate paragraph of the long section he had earlier reproduced from the trial judge’s judgment. For that paragraph, paragraph 59, sets out at length the essential considerations, and it does so under the trial judge’s own heading “Dealing with the issue”. It contains the following:

“To my mind Idoport has been given the last two months to place its funding house in order. The November judgment represented a standing back from the minutiae and a concerted effort, albeit at high expense, of halting, for Idoport’s assistance, every step then in place for the regular continuance of the final hearing. Even if the proceedings were now re-enlivened upon immediate payment of all outstanding amounts due under the security for costs orders, it would take probably months before the Court could expect the defendants to be ready to continue the final hearing. The whole of the momentum of the final hearing reached by late November last year simply stopped in mid air from one moment to the next. This meant that many steps then in the course of being taken in a particular order, ceased. Witnesses who had been planned to be called in late November and early December had to be put off. A United Kingdom witness… whose personal convenience had led to special steps for him to be given what amounted to a ‘special fixture’ for the taking of his evidence, could no longer be cross-examined early in the new term. Important questions in terms of the testing of the Court’s order for the appointment of an examiner were not able to be dealt with. And in all of this one has to recall that these are commercial proceedings being heard in the commercial list which naturally strain the ability of the Court to deal with other cases. Notwithstanding that fact, any suit for an amount exceeding the capitalisation of what is probably the largest bank in this country has to be given very special attention. And a suit in which Idoport…made very serious claims generally outlined in the interlocutory judgment delivered in mid 1999 required and received very special attention from the Court. But the courts [ sic ] resources are not unlimited. A stop-start regime in litigation of this order cannot generally be permitted. The many reasons include the complexity of the issues. As earlier stated the current transcript covers over 15,000 pages. The number of witnesses anticipated to be called, the number of statements filed, the complexity of the issues to be dealt with and the general nature of those issues which include for example a patent suit in which United States patent law requires to be proven and understood, all serve to make the point that the final hearing cannot stop and start and stop again, certainly for very long. It should also be recalled that the Technology Court is being used for the final hearing. An outside Project Manager has been appointed. The funding difficulties have meant that Idoport has ceased to pay, as I understand it, the Project Manager. An independent Court Reporting company has been responsible for producing the transcript. The funding difficulties have meant that Idoport has ceased to pay, as I understand it, that Court Reporting company. Reference was made in paragraph 116 of the November judgment to the point made by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 in terms of the importance that a party contemplating litigation, [or, as here, contemplating continuing the current mammoth final hearing], be under a sober realisation of the potential financial expense involved in that exercise.”

That penultimate paragraph of the lengthy extract reproduced by the President from Einstein J’s judgment seems to me to be, without doubt, a statement of the various matters in the light of which the exercise of his Honour’s discretion could not be faulted legally. Indeed, it so obviously fits the flow of the President’s reasoning, brought to a conclusion in paragraph 77 of his reasons, as to make it almost a matter of supererogation to note that the President’s next sentence in this paragraph, referring to directions which had not been complied with as at 29 January, is totally consistent with the recital of factors contained in the trial judge’s paragraph 59 and neatly caps that recital.

16 Having, in paragraph 77, concluded that the various matters referred to did justify the exercise of discretion in question, in paragraph 78 the President adds that the omission with which ground 1(a) is concerned had “occasioned no substantial injustice”, and he cites two High Court cases and a decision of my own in the Federal Court where that proposition was held to justify dismissal of an appeal grounded on an omission of the kind alleged. Finally, in paragraph 79, he holds that he would have reached the same decision had he exercised the discretion afresh at the time of the hearing in the Court of Appeal.

17 I have analysed at some length the portion of the President’s judgment preceding the paragraphs headed “Costs” because of the suggestion of a link between paragraphs 77 and 83 of the reasons, and also because I think it is important to see paragraphs 80 to 83 as simply an addendum dealing with a quite separate issue. That issue was of a very limited kind. There was no submission from the appellant that an order of the nature of the order barring the bringing of a fresh proceeding in certain circumstances should not have been made. The submission was simply that it should not have related to the whole of the costs of the action, but should have been “limited to costs thrown away by the dismissal of the proceedings”. It was acknowledged that an order in respect of the whole of the costs of the action was, to use the President’s word, “precedented”, but it was said to be “unduly burdensome”. That was because some of the costs incurred would simply not be thrown away if a fresh proceeding were brought. But the President pointed out in paragraph 82 that no error was shown in relation to the trial judge’s consideration of this matter and that the appellant’s proposition would deprive the Bank of the normal fruits of success in litigation by leaving the costs in part “unresolved” (that is, unless and until the completion of a further proceeding).

18 It is after disposing of this final argument upon the appeal in the way I have indicated, that Mason P makes the comments in paragraph 83 on which Idoport relies. These comments do not seem to me to do more than explain the justification, in general terms, of an order of the kind Einstein J had made. They do not purport to expound the precise terms of the order, and they certainly do not reformulate it. In saying that the burdensome consequences are a better outcome “in the interests of justice than leaving matters in a costs limbo”, his Honour is clearly referring back to counsel’s proposition that costs other than those thrown away, although certainly incurred, should not be provided for in an order of this kind, made as an interlocutory order and before it can finally be said that the litigation will never be revived.

19 Had the Court of Appeal seen something objectionable in the terms of an order that Idoport “be barred from bringing fresh proceedings concerning any cause of action … in these proceedings, until costs in these proceedings have been paid in full”, and intended, as Idoport now claims, that the bar apply, not to the bringing of the proceedings in the ordinary sense of their institution, but to their further prosecution after they had been brought, it would have been easy, and in accordance with usual practice, to have dismissed the appeal subject to an appropriate variation of the order. But nothing of the sort was done. Nor did the Court see fit to vary the order, so as to deal with the problem of delay in the assessment of the costs in the way suggested by Sir John Romilly MR and Goulding J to which earlier reference has been made in these reasons.

20 However, counsel for Idoport point to certain comments made in the course of the argument, which they seek to call in aid in the interpretation of the reasons of Mason P. It has often been remarked that there is limited value to be found in an attempt to rely upon observations which may have been Socratic in nature or merely aimed at testing the validity of an hypothesis. Even when uttered in the High Court, explorations of arguments advanced during the debate at a hearing have been described as “of tenuous relevance” to the problems of the law: see Heydon v NRMA Ltd (2000) 51 NSWLR 1 at 242, per Ormiston A-JA.

21 Reference to the argument in this case in the Court of Appeal suggests that differing views were aired during the course of it. The strongest statement, from Idoport’s point of view, was that of Mason P at page 54 of the transcript:

“And it would be very unfair if this order meant that a stop writ couldn’t be filed but I read it as not having quite that effect.”

But at transcript 55 Mr Walker SC, who appeared on the appeal leading Mr M McHugh for the appellant, said:

“[T]he very mechanics of a perfectly bona fide assessment on both sides could mean that new proceedings could not be commenced with all the limitations problems that that means until – well if I said the end of next year perhaps it would be more modest.”

Mason P commented:

“I mean in form the order doesn’t pose as a sort of a proleptic interlocutory order that will descend on the new proceedings the minute they’re commenced. In form it’s part of the final order in the present proceedings.”

And his Honour added:

“And is it capable of variation? Is it one of these orders that unless you appeal you are stuck with it forever? What does it really mean?”

Notwithstanding the invitation perhaps implicit in the President’s remarks, no application was made to amend the notice of appeal, and the argument urged in respect of the order in question remained that the trial judge had erred in not restricting it to costs thrown away.

22 Other remarks made in the course of the argument in the Court of Appeal were less helpful to Idoport’s position. Stein JA is recorded (at transcript 49) as remarking:

“How would it work in practical terms if Idoport was ready to recommence further proceedings, new proceedings and had arranged some funding, then it couldn’t under the order for costs order that exists commence those proceedings until it had paid the costs. “

And Giles JA is recorded as saying (at transcript 50):

“But does that mean that on [an] assessment the plaintiff would have to say to the assessing officer this is the form of pleading which we propose to file once the costs have been assessed and paid?”

And his Honour added (at transcript 51):

“Those costs would be paid. Idoport would bring fresh proceedings then and only then would the question of the identity of the fresh proceedings with the old proceedings matter.”

And again (at transcript 53), after a discussion of the mechanics of assessment of costs if an order were made only in respect of costs thrown away:

“I would have thought that any fresh proceedings might be able to be commenced about 2010 in that event.”

Earlier (at transcript 29), Giles JA had put to Mr Walker SC:

“The costs order, I take it you mean by that the order that you have to pay the bank’s costs before you can start again?”

to which Mr Walker responded: “Yes”. Giles JA then pointed out that the Notice of Appeal did not complain of this, and the ensuing discussion made it clear Mr Walker was not contending the order “should…go wholly”, but that it should be limited to “[c]osts thrown away”. It is clear that, during the argument, Giles JA was thinking through the problems upon the basis that the order would prevent the commencement of proceedings until payment of whatever costs it encompassed, and that Stein JA also accepted this basis.

23 It is worth pointing out that, when Mason P came to write his judgment, he also, in paragraph 80 which has been quoted earlier, referred to the relevant orders as “barring the commencement (emphasis added) of fresh proceedings”. That understanding accords with the ordinary meaning, in a legal context, to be understood from the use of the expression “barred from bringing fresh proceedings”. In The Oxford English Dictionary, 2 ed (2001), vol. I, the verb “to bar” is relevantly defined as:

“a. To arrest or stop (a person) by ground of legal objection from enforcing some claim. b. To stay or arrest (an action); to exclude or prevent the advancement of (a plea, claim, right.)”

In vol. II, the verb “to bring” is relevantly defined as:

“To prefer or lay (a charge or accusation); to institute, set on foot (an action at law)”.

Applying these definitions, the orders prevent the institution of a fresh proceeding until the costs are paid.

24 I have reached the conclusion that, whatever difficulties may have been seen to attend the form of the order, the Court of Appeal, in the absence of an appropriate ground of appeal, and in the absence of any reliance on the particular difficulty now taken up, dismissed the appeal, not only without varying the order, but also without making anything in the nature of a declaration as to its true construction. In this situation, I must construe it in accordance with its language. I think its language is correctly reflected in the declaration which is sought and, as this view of the meaning of the order is contested by Idoport, it is appropriate I should make a declaration accordingly. Relief of that kind, as senior counsel for Idoport conceded, has been held to be available in an appropriate case: Glandon Pty Ltd v Strata Consolidated Pty Ltd (1988) BC 8802270; Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd [2003] NSWSC 775 at [13]. Although the proceeding before the Court began as a summons in which injunctive relief was sought, I understand it to be accepted, having regard to the undertakings given by the defendants, that a declaration in the form sought would meet the needs of the plaintiffs. Accordingly that is the only order I propose to make, except an order as to costs. I direct that the plaintiffs bring in, on a date to be fixed, short minutes of orders to reflect these reasons.

**********

Last Modified: 03/30/2004