Police Association of New South Wales v Higgins, Jeannie
[1997] FCA 492
•4 JUNE 1997
CATCHWORDS
Costs ‑ whether indemnity costs should be awarded - whether claims were made in wilful disregard of known facts or clearly established law - whether the allegations, ought never to have been made - whether the proceedings were unduly prolonged through the making of groundless contentions - whether the respondent’s position was similar to a trustee
Colgate‑Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Cachia v Hanes (1991) 23 NSWLR 304
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Preston v Preston [1982] 1 All ER 41
Ragata Developments Pty Ltd v Westpac Banking Corporation FCA Davies J, 5 March 1993 unreported
Colgate‑Palmolive Company v Cussons Pty Ltd (1993) 28 IPR 561
POLICE ASSOCIATION OF NEW SOUTH WALES v JEANNIE HIGGINS
No. NG 216 of 1996
CORAM: Lehane J
PLACE: Sydney
DATE: 4 June 1997
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 216 of 1996
GENERAL DIVISION )
BETWEEN:POLICE ASSOCIATION OF NEW SOUTH WALES
Applicant
AND: JEANNIE HIGGINS
Respondent
CORAM: Lehane J
PLACE: Sydney
DATE: 4 June 1997
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The applicant pay the respondent’s costs of the proceedings, other than those of the motion for indemnity costs.
The respondent to pay applicant’s costs of the motion for indemnity costs.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 216 of 1996
GENERAL DIVISION )
BETWEEN:POLICE ASSOCIATION OF NEW SOUTH WALES
Applicant
AND: JEANNIE HIGGINS
Respondent
CORAM: Lehane J
PLACE: Sydney
DATE: 4 June 1997
REASONS FOR JUDGMENT
LEHANE J:
The Applicant (the Association) sought orders for the delivery up by the respondent (Dr Higgins) of certain material on the footing that it represented “findings” to which the Association claimed to be entitled under a contract with Dr Higgins. On 22 May 1997, for reasons which I then gave, I ordered that the application be dismissed. Although there can be no doubt that the Association should pay Dr Higgins’ costs, no order for costs has yet been made because counsel indicated that Dr Higgins sought an order for costs on the indemnity basis. Counsel for Dr Higgins filed written submissions in support of the application for indemnity costs and I have heard oral argument on it.
The facts, the issue agitated between the parties at trial and their contentions about it are described at length in my earlier reasons and need not be repeated. Dr Higgins relied on certain of the circumstances identified by Sheppard J in Colgate‑Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233 as justifying an order for costs on the indemnity basis:
... It is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud ...; evidence of particular misconduct that causes loss of time to the Court and to other parties ...; the fact that the proceedings were commenced or continued for some ulterior motive ... or in wilful disregard of known facts or clearly established law ...; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions ...; and imprudent refusal of an offer to compromise ...
Particularly, counsel submitted that the claims in these proceedings were made in wilful disregard of known facts or clearly established law; that the Association made allegations which ought never to have been made and unduly prolonged the proceedings by making groundless contentions; and that the Association imprudently refused an offer of compromise put by Dr Higgins shortly after the commencement of the proceedings. Counsel put the application on an additional basis, that the position of Dr Higgins, in relation to these proceedings, was similar to that of a trustee: in resisting the claim of the Association, Dr Higgins was not so much defending interests of her own as upholding the rights of those who had supplied sensitive information, for the purpose of her research, to have that information kept confidential.
In order to make good the contention that the claims were made in wilful disregard of known facts or clearly established law and that allegations were made which ought never to have been made, counsel relied in part on correspondence passing between the solicitors for the Association, on the one hand, and, on the other, Dr Higgins and the solicitors formerly acting for her. The first in the series of letters is one from the Association’s solicitors to Dr Higgins dated 1 June 1995: I have referred to it in my earlier reasons. It suggests (wrongly) that Dr Higgins was an employee of the Association; it asserts (wrongly) that the Association “owned” both “all data that was collected by you during your period of employment by” the Association and “any other research material, however described, which was created by you during your term of employment by” the Association. It demands that Dr Higgins forward that material to the solicitors. It then threatens legal proceedings. The next item is Dr Higgins’ reply of 11 June 1995. Dr Higgins wrote that she has never been employed by the Association; she referred to the “verbal agreement, subsequently confirmed in writing” and particularly the term with which the case ultimately was concerned; she claimed that she had retained sole ownership of her data, research findings and reports. Apparently the Association’s solicitors did not then receive Dr Higgins’ reply; they wrote to her again on 30 August 1995 repeating a somewhat expanded version of the Association’s demands. Then, on 15 September 1995, the Association’s solicitors wrote again, having seen the letter of 11 June. They said that they had read the letter but that the Association’s position remained the same; they threatened litigation if the Association’s requirements were not met. They concluded with the following observation:
Finally, we note that since we first communicated with you, you have communicated directly with some members of the Police Association. That is not the correct way to do things. If you had wished to enter into discussion with our client regarding the matter then, the proper way to do it was to communicate directly with this firm.
That prompted Dr Higgins to seek legal advice. Solicitors instructed by her wrote to the Association’s solicitors on 22 September 1995. They reiterated that Dr Higgins had never been an employee of the Association; they suggested that the Association’s view that it owned the copyright in the data and other material was wrong, as was its solicitors’ “assurance” to that effect. They pointed out that there was nothing improper about direct contact between Dr Higgins and members of the Association; and they asserted that it was clear that access to completed questionnaires would involve a serious breach of confidence, and access to proforma questionnaires would be useless. They concluded by claiming that the funds which had been provided for the research were not refundable, and that that applied as much to funds provided for the purchase of books as to any other funds; they offered, however, as “a gesture of goodwill” a full refund of the cost of three books purchased.
That letter, it may be said, referred to matters which were clearly within the knowledge of the Association, were clearly correct and were not ultimately in dispute. Nor, in my view, could it be said that the letter was by any means inflammatory in tone. That being so, the response from the Association’s solicitors, by letter dated 9 October 1995, was somewhat surprising. Omitting formal parts, it read as follows:
We refer to your letter of 29th September, 1995.
Given the contents and tone of your letter, it seems that there is no point in us addressing each of the matters raised by you.
We must say however, that much of your letter we find difficult to follow. Particularly paragraph 6(c).
Would you please advise us within seven days whether or not you have instructions from your client to accept service on her behalf.
After some further correspondence, these proceedings were commenced by an application filed on 18 March 1996. At the first directions hearing, on 26 April 1996, orders were made by consent for the filing and service of pleadings; a statement of claim was filed on 4 June 1996 which, in brief summary, based the Association’s claim on the contract on which it ultimately relied, on terms both express and implied to the effect that the Association would have unqualified access to all Dr Higgins’ reports and findings and on Dr Higgins alleged failure to do so. The relief sought was, however, extremely wide, extending well beyond that ultimately sought. It included delivery up of all completed questionnaires, tapes or transcripts of interviews, data entry or working sheets in relation to material gathered by Dr Higgins, material stored on disc, “hard” copies of material stored on discs, and interim and final reports. Declarations were sought that the Association was entitled jointly with Dr Higgins to copyright in all that material and alternatively that Dr Higgins had granted the Association an unqualified licence with respect to any copyright in the material or that Dr Higgins was estopped from asserting any copyright in it. Additionally, a declaration was sought that the Association was entitled to license any other researcher to use and, if need be, publish the material.
At that stage, of course, no doubt the Association did not know the precise limits of the material which Dr Higgins had gathered, or what analysis she had made of it (other than that appearing in the final report) which might conceivably fall within the word “findings”. What, however, might have been reasonably plain was that much of what was sought at that stage was unlikely to be regarded as “findings” and that much of it had been obtained on the basis of clear undertakings that it would be kept confidential. During the interlocutory stages of the proceedings, the latter point apparently became evident to the Association and its advisers; and the process of discovery, and correspondence between the parties, elicited the information that there was in fact no other material apart from the completed questionnaires, the material stored on disc and, possibly, data entry or working sheets prepared for the purpose of entering the data on the discs. Consequently, the statement of claim was amended so that, although the form of the orders sought did not change, the categories of material in relation to which relief was sought were narrowed considerably. In addition to the reports, final and interim, the material sought was restricted to;
1.Data entry or working sheets prepared for the purpose of data entry as the basis for some statistical analysis of material gathered by the respondent in the course of her research into Traumatic Stress Reactions in Police from 1 October 1991 to 6 April 1995 subject to the removal of police registration numbers and any other material which might reveal the identity of any individual respondent to a questionnaire used by the respondent to these proceedings for the purpose of collecting data;
2.The material stored on disk as a result of the data entry process referred to in 3. Above [sic] subject to the removal of police registration numbers and any other material which might reveal the identity of any individual respondent to a questionnaire used by the respondent to these proceedings for the purpose of collecting data;
The completed questionnaires, particularly, were no longer covered by the relief sought. When the matter came on for hearing, counsel for the Association made it clear that orders were then sought only in relation to the material specified in paragraph 2, which I have just quoted: orders in relation to the reports, interim and final, were not required, because those documents had been provided at the outset; orders in relation to category 1 (quoted above) were not sought; and satisfactory arrangements had been reached in relation to the copying of the reports. The basis on which the claim was put to me was simply the express term of the contract between the parties under which the Association was entitled to “unqualified access” to Dr Higgins’ reports and findings.
Two other matters require mention. One is that after the filing of the application, but before the filing of the statement of claim, Dr Higgins’s solicitors wrote what they described as a “calderbank” letter in which they offered settlement on the basis that the proceedings would be dismissed, each party paying its own costs. That offer, of course, was not accepted. The other matter is that Dr Higgins was cross‑examined at considerable length: her cross‑examination was interrupted, but it occupied, in total, not far short of one of the two days during which the matter was heard. A good deal of the cross‑examination related to the final report: particularly, its concurrent role as a doctoral dissertation and the methods used by Dr Higgins in analysing her material (for instance the way in which it used material obtained in answer to certain of the questions in the questionnaires). It was said that the cross‑examination went both to the issue in the proceedings and to credit; but no submission was or I think could have been, put to me as to credit and in the end I do not think that cross‑examination assisted in relation to any matter in issue in the proceedings. It related, in the end, more to what seemed to me a strong underlying theme of the proceedings, a concern of the Association that the final report was of limited practical utility to it rather than a concentration on what exactly it was to which the Association was contractually entitled. There was, after all, no issue in the proceedings as to the adequacy of the report: particularly, no claim that, in the way in which she had prepared the report or by reason of what it included or did not include, Dr Higgins had breached any obligation she owed to the Association.
The matters to which I have referred formed the basis of the submission by counsel for Dr Higgins that the claims in these proceedings were made in wilful disregard of known facts or clearly established law, that allegations had been made which ought never to have been made and that the proceedings were unduly prolonged by the making of groundless contentions (the cross‑examination was relevant to that point) and that there had been an imprudent refusal of an offer to compromise. On the “prolongation point”, counsel also relied on the calling by the Association of what he characterised as expert evidence as to the “blindingly obvious” fact that one could produce a version of the material on disc, edited by omitting particular information and by merging categories of information.
Ordinarily, a successful respondent, including one (like Dr Higgins) whose position is completely vindicated by the Court, will not be fully compensated for the cost and disruption caused by the litigation. Such as a respondent is not compensated for losses resulting, for example, from the need to attend in Court to instruct legal representatives. The indemnity given by the usual order for costs in favour of the successful party is by no means complete. That is so whether the case successfully resisted was apparently of considerable or, on the other hand, of little strength unless that case was so weak that it might properly be regarded as “hopeless”, or as based on a claim which should never have been made. The principles are well established. In Cachia v Hanes (1991) 23 NSWLR 304 at 318, a case involving a litigant in person, Handley JA expressed them as follows:
Under the existing law represented litigants do not receive anything like a complete indemnity against the costs incurred and time lost in litigation. A legally represented litigant must spend considerable time in the preparation of his or her own case and in instructing solicitors. If such a litigant is successful he or she receives no compensation for loss of time apart from sums properly allowable as witness’ expenses. A party is not allowed on taxation “the costs of attending merely to observe or instruct” ... . Nor does a successful represented litigant receive a complete indemnity for the costs paid to his or her solicitors.
The existing law causes no greater injustice to the litigant in person than to represented litigants. Litigation is already very expensive. The limited indemnity provided to a successful represented litigant for expense incurred and time lost reflects a compromise between the interests of successful and unsuccessful litigants. It is also an important spur to settlement. The rule that a litigant in person can only recover out of pocket expenses also represents a compromise between the interests of successful and unsuccessful litigants. In my opinion if the existing law is to be changed this must be done either by the High Court or by Parliament.
The question is whether there is “some special or unusual feature” in this case (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400, quoting Preston v Preston [1982] 1 All ER 41 at 58) justifying an exercise of the discretion to award costs on the indemnity basis. Clearly the mere fact that an applicant does not persist with particular claims, so that at trial the issues are substantially narrowed, it is not ordinarily regarded as a circumstance justifying an award of indemnity costs: Ragata Developments Pty Ltd v Westpac Banking Corporation FCA Davies J, 5 March 1993 unreported, see also Colgate‑Palmolive as reported in (1993) 28 IPR 561 at 574, 575. Here, the claims initially made were put on a basis which the Association, properly advised, should have known was groundless and in a manner which might be taken, as the correspondence proceeded, as displaying an obstinate refusal to see (or consider) reason. It is considerably less easy, however, to say that of the claim as ultimately pursued. That claim failed; in my judgment it clearly failed; but it was not in my view a claim so clearly lacking in any reasonable foundation in fact or law that it could properly be described as a claim which should never have been brought. Certainly my earlier judgment did not deal with it in that way, and I think it would have been inappropriate to do so. As for the arguments about prolongation, the evidence as to what might be done by way of editing the material on disc, even if obvious, was very brief. The cross‑examination may, to an extent, be a different matter. As I have said, it produced in the end nothing of particular assistance, and Dr Higgins made it clear that she regarded it as both ill‑founded and intrusive. But the case was finished in the time allotted to it, and overall, having regard among other things to the extent to which the cross‑examination proceeded without objection and to the result of objections when taken, I do not think it is to be regarded as a substantial matter in favour of an award of indemnity costs. Once that point is reached, I do not think that the failure to accept the “calderbank” offer should be regarded as imprudent so as to give rise to circumstances justifying a special order for costs.
Counsel for Dr Higgins put the claim for indemnity costs, as I have mentioned, on a second basis: Dr Higgins’ position should, he contended, be regarded similarly to that of a trustee. In defending the proceedings, she was in substance acting to vindicate the rights of respondents to the questionnaires to have their confidence respected. Certainly it is possible to see that Dr Higgins may well have considered that she had a moral as well as a legal duty to protect the confidential information which she had obtained. But ‑ quite apart from the lack of any trust estate ‑ I do not think that the trustee analogy can be sustained. The issue was simply one as to the true construction of the contract between Dr Higgins and the Association; I do not think it makes any relevant difference that she may have felt more constrained about settling the matter by providing information than she would have had she not been bound by any obligation of confidence.
In the result, therefore, the application for indemnity costs fails. In addition to the order made on 22 May 1997, there will be an order that the applicant pay the respondent’s costs of the proceedings, other than those of the motion for indemnity costs.
I certify that this and the preceding 10 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lehane.
Associate:
Dated:4 June 1997
Heard: 28 May 1997
Place: Sydney
Decision: 4 June 1997
Appearances: M B Evans of counsel instructed by Walter Madden Jenkins appeared for the applicant
J V Nicholas of counsel instructed by Phillips Fox appeared for the respondent.
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