Pekar v Rickards Legal (No.4)
[2016] FCCA 2602
•20 October 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PEKAR v RICKARDS LEGAL (No.4) | [2016] FCCA 2602 |
| Catchwords: BANKRUPTCY – Ruling on costs application. |
| Legislation: Federal Court Rules 2011, rr.40.02, 25 Federal Circuit Court Rules 2001, r.1.05 |
| Cases cited: Pekar v Rickards Legal (No.2) [2015] FCCA 870 Cachia v Hanes (1994) 179 CLR 403 Pekar v Rickards Legal (No 2) [2016] FCCA 670 Emanuel Management Proprietary Limited (in liquidation) & Ors v Foster’s Brewing Group Ltd & Ors [2003] QSC 299 |
| Applicant: | FIMA PEKAR |
| Respondent: | RICKARDS LEGAL |
| File Number: | MLG 1636 OF 2015 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 29 August 2016 |
| Date of Last Submission: | 13 September 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 20 October 2016 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Counsel for the Respondent: | Mr Rickards |
| Solicitors for the Respondent: | Rickards Legal |
ORDERS
The Applicant pay the Respondent’s costs of the proceeding commenced by Interim Application filed 3 March 2016 to be taxed in default of agreement pursuant to the Federal Court Rules on an indemnity basis and as a priority payment pursuant to s.109 of the Bankruptcy Act 1966 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
No. MLG 1636 of 2015
| FIMA PEKAR |
Applicant
And
| RICKARDS LEGAL |
Respondent
REASONS FOR JUDGMENT
On 29 August 2016, I issued judgment in this matter. I dismissed Mr Pekar’s interim application filed 3 March 2016. I ordered the respondent to file and serve written submissions as to costs on or before 5 September 2016, giving the applicant until 12 September 2016 to reply.
On 12 September 2016, the respondent’s costs submissions, dated 8 September 2016, were formally filed. Mr Pekar has not filed any written submissions as to costs.
The respondent seeks an order for indemnity costs.
The respondent purports to rely upon r.40.02 and r.25.14 of the Federal Court Rules 2011 (“FCA rules”) in support of the application for indemnity costs. As I pointed out in Pekar v Rickards Legal (No.2) [2015] FCCA 870, that reliance ignores the fact that the rules of the Federal Court will only be applied where this court determines to apply those rules pursuant to r.1.05 of the Federal Circuit Court Rules 2001. There is no automatic entitlement to the application of the Federal Court Rules in this court.
The respondent’s written submissions assert, in substance, that r.25.14(2) of the FCA rules applies because an offer to settle in writing was made, was not accepted by the applicant, was in compliance with r.25 and with the applicant being on notice that there was no basis to his application, the application was dismissed.
In support of that proposition, the respondent annexes two letters to Mr Pekar, dated 6 April 2016 and 4 August 2016 respectively. They are similar in their terms. Relevantly, they put the applicant on notice that his application had no basis and was doomed to fail and noted that the application made a serious allegation of fraud against the respondent firm. The letters assert that the interim application:
“…discloses no cause of action against Rickards Legal. Additionally, your application is scandalous, vexatious and an abuse of process.”
Both the letters note that Mr Pekar has been involved with litigation for many years and assert that Mr Pekar has continued to make serious allegations of fraud without any proper basis to do so. The letters purport to offer not to seek costs, provided that Mr Pekar withdraws his application.
It should be noted that a number of assertions made by Rickards Legal, both in the letter and in the written submissions, are indeed correct. Mr Pekar has indeed pressed an allegation of fraud against Rickards Legal. He has been intimating to this effect for some years. He has yet to persuade any court of which I am aware that there is any merit to his claims. From materials filed from time to time, it would seem that he has had a marked lack of success in, amongst other places, the Magistrates’ Court of Victoria, Victorian Civil and Administrative Tribunal, this Court and the Federal Court.
I note that, in a strong judgment given by Judge Hartnett on 25 February 2016, an indemnity costs order was made by her Honour Judge Hartnett against Mr Pekar.
There must be some doubt that the offer made in this instance by the respondent complies with the terms of r.25 of the FCA rules. Pursuant to r.25.03, the Notice required to be given by r.25.01 (something with which the respondent has not complied, because the offer is not made in accordance with Form 45) must state whether the offer is inclusive of costs or whether costs are in addition to the offer (r.25.03(1)). An offer merely to effectively walk away is arguably not an offer to settle within the meaning of the rules.
More particularly, since the offer posited an outcome whereby Mr Pekar’s claim was dismissed, he did not, in the ultimate, achieve a worse result. So r.25.14(1) does not apply. The question, therefore, is whether an offer was made by the respondent, and Mr Pekar unreasonably failed to accept it, bearing in mind that the application has been dismissed (r.25.14(2)).
In my view, the offer was not made in accordance with the rules, because it was not made in the prescribed form. It did not accord with the rule, inasmuch as it did not contemplate an offer being made, with or without costs, albeit that, in substance, it was clear that no costs were being offered.
In my opinion, the assertion by the respondent that it is entitled to costs on an indemnity basis, such entitlement being rebuttable, because of the operation of the FCA rules, is simply not made out.
The further difficulty in this matter is whether or not Mr Rickards, as a lawyer who has effectively been self-represented, is entitled to costs in any event. In Cachia v Hanes (1994) 179 CLR 403 (“Cachia”), the High Court made it plain (see the headnote):
“…that the costs for which r.23(2) provided were confined to money paid or liabilities incurred for professional legal services and did not include compensation for time spent by a litigant who was not a lawyer in preparing and conducting his case.”
Mason CJ, Brennan, Dawson, Deane and McHugh JJ opined that:
‘The exception allowing a solicitor acting for himself to claim his costs is doubtful.”
Since then, the matter has been considered by a number of state Supreme Courts and by the Federal Court. As the authors of CCH Australian High Court & Federal Court Practice point out at paragraph 21-780 at pages 54221-54227, the law is by no means wholly clear in this area.
Assuming for present purposes that there is power to grant Mr Rickards a costs order (Cachia has never been expressly overruled, and the doubts expressed by the plurality in that case have never been formally adopted by the High Court or unequivocally by the Full Federal Court) the question becomes whether or not the Court should make an indemnity costs order.
Although I do not think that the offer made by Rickards Legal complies with the FCA rules, assuming they were to be applied in any event, this would ordinarily be a case in which an indemnity cost order would be appropriate.
As I observed in my substantive judgment issued on 12 August 2016, Mr Pekar’s case faced a considerable number of insuperable difficulties. The allegation of fraud has been pursued to judgment and never abandoned. In Pekar v Rickards Legal (No 2) [2016] FCCA 670, Judge Hartnett, at [19], quoted from the decision of Chesterman J in Emanuel Management Proprietary Limited (in liquidation) & Ors v Foster’s Brewing Group Ltd & Ors [2003] QSC 299 at [17] to [18], as follows:
“[17] The authority to which attention is usually directed is Colgate-Palmolive Co. v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 in which Sheppard J identified a number of circumstances in which it may be appropriate to make an order for indemnity costs. They include:
(i) Making allegations of fraud knowing them to be false, or making irrelevant allegations of fraud.
(ii) Misconduct that causes loss of time to the court and the opponent.
(iii) Commencing or continuing proceedings for some ulterior motive or in wilful disregard of known facts or clear law.
(iv) Making groundless allegations.
(v) An imprudent refusal of an offer of compromise.
The question must always be whether the particular facts and circumstances … warrant the making of an order for payment of costs other than on a party into (sic) party basis.”
Here, Mr Pekar is continuing to seek to, in effect, go behind earlier judgments of the court, given both by me and by Judge Hartnett. His case was always doomed to fail. He is a man with considerable experience in litigation. Despite the fact that he is self-represented and the inevitable difficulties to which this gives rise and the fact that I strongly suspect Mr Pekar genuinely and passionately believes he has been wronged by Rickards Legal, that view is entirely unreasonable. Mr Pekar’s conduct has about it that quality of the reprehensible that makes it appropriate to contemplate an order for indemnity costs. In all the circumstances, and placing emphasis on the allegations of fraud and misconduct made against the respondent, and more so again on the hopeless, and abuse of process, nature of the application, I think such an order should be made.
I would doubt whether Mr Rickards will be able to point to much in the way of actual costs incurred by him, but if need be, that will be a matter for the taxation process. Self-evidently, it will be very helpful to subordinate courts when the law in relation to solicitors who act for themselves charging fees is clarified. With the greatest of respect, I entirely share the reservations of the High Court expressed in Cachia. I do not think that legal practitioners acting for themselves, certainly in proceedings such as this one, are, in truth, liable to have any very meaningful expenses at all beyond disbursements.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Date: 20 October 2016
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