Queensland & Anor v Mantle

[2000] HCATrans 301

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B59 of 1999

B e t w e e n -

STATE OF QUEENSLAND

First Applicant

SOUTH BANK CORPORATION

Second Applicant

and

GODFREY NORMAN MANTLE

Respondent

Application for special leave to appeal

McHUGH J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 22 JUNE 2000, AT 9.31 AM

Copyright in the High Court of Australia

MR R.W. GOTTERSON, QC:   If the Court pleases, I appear with my learned friend, MR J.D. McKENNA, for the applicant.  (instructed by C.W. Lohe, Crown Solicitor for Queensland)

MR T. MATTHEWS:   If the Court pleases, I appear for the respondent.  (instructed by Minter Ellison)

McHUGH J:   Before you commence, Mr Gotterson, the Registrar has informed me that in the appeal before the court below, two additional parties were named as respondents.  They were Jennifer Deborah Mantle and Jimmy’s on the Mall Pty Limited.  The Deputy Registrar is informed by the solicitors for those parties and also solicitors for the named respondent that they are aware of the applications for special leave to appeal but they do not seek to set aside any of the orders of the court below.  These two parties do not propose to take any part in the application for special leave to appeal.

MR GOTTERSON:   If the Court pleases, the question of law that the proposed appeal raises is whether the Court’s discretion to award costs against a non‑party is governed by this principle, that costs are not to be awarded against a non‑party when the defendant has previously obtained a security for costs order against the plaintiff and the amount of the security is adequate according to the rules relating to security for costs but the security falls short of the full indemnity for costs that are subsequently awarded to the defendant or, to put it another way, as a matter of principle, must a costs order against a non‑party be refused because adequate security for costs was previously ordered?  If there is such a principle, in our submission, then a hole is exposed in the protection.

McHUGH J:   But is not the problem that you face that the Full Court took the view that Justice Kiefel did not purport to apply a principle that where the court has ordered for security for costs, the court should not make an order for costs against a non‑party?  The Full Court simply took the view that her Honour had merely concluded that nothing in the evidence required her to conclude that the security was inadequate to meet the defendant’s costs.

MR GOTTERSON:   If your Honour pleases, if I can take the Court to passages in the judgment of her Honour and also the Full Court to explain why this application is made.  I need not go to lengthy extracts but at page 16 of the appeal record, which is paragraph 8 of the last page in her Honour’s judgment, the issue of the non‑party costs is dealt with in the last three paragraphs and her Honour made the observation in the first of those paragraphs that:

There is no doubt of his –

Mr Mantle’s –

connexion with the litigation and that he would have derived benefit from it.

She mentioned that he provided some “security for costs” and then, in the second of those paragraphs, her Honour deals with the submission, but really it is the third paragraph.

McHUGH J:   But if she refers to a statement of mine that I made back in 1992 in the course of an argument that one should not make orders for costs against third parties because ordinarily security would be sufficient, but security had been ordered in this particular case and her Honour thought, in the exercise of her discretion, that was sufficient to protect the defendants.  She may have been right or wrong but it does not seem to me, and it certainly did not seem to the Full Court to think, that she was applying any principle of law.

MR GOTTERSON:   Yes.  If the Court pleases, her Honour made a reference to your Honour’s own observations in Knight but then what her Honour did say was this:

It seems to me that what is now sought, by way of this order, is an increase to the security previously ordered, on the basis that it was not sufficient.  The trial was conducted largely within the parameters put forward when security for costs was determined ‑ ‑ ‑

McHUGH J:   But, Mr Gotterson, put at your highest, all that would do is that her Honour misdirected herself on a matter going to discretion, hardly a point warranting a grant of special leave to appeal.

MR GOTTERSON:   If the Court pleases, what her Honour did was to assimilate the issue of an application for costs against a non‑party with a notional application for increased security for costs against the plaintiff.  In fact, what her Honour did, though she referred to what your Honour had said, was refuse the non‑party costs order because she treated it as if it was an application for increased security made after the trial which should be refused because, as she said, the security ordered before the trial was adequate according to security for costs principles.  Those principles, of course, are ones which state that security when it is given is not given as a full indemnity for costs that would be recoverable.  Contingencies are allowed for and the amount that you will get security for costs for is less than - and, indeed, happened here - any estimate made before or during the trial of what recoverable costs will be.

Her Honour applied, in our submission, a constraint upon the discretion and the constraint was that if security has been ordered pre‑trial and given, then notwithstanding every other discretionary factor in favour of it, notwithstanding the involvement of the non‑party in the litigation, the sponsoring of it, the likelihood of benefit from it, notwithstanding all of that, a costs order against the non‑party is to be refused because there was security for costs ordered.

McHUGH J:   Whatever her Honour’s judgment stands for, the fact is that at page 31 the Full Court said that her Honour did not apply my observations in Knight as a rule binding on her.

MR GOTTERSON:   Indeed, they said that, your Honour, but again, what they did do in paragraph 27 on page 31 was simply to repeat her observation about how the trial was conducted and then her statement that it was “not appropriate, in effect, to revisit”.

McHUGH J:   But making costs orders against third parties to litigation is a very drastic step.  Do you not concede that it is legitimate for a judge in determining whether he or she will make such an order that the judge consider the amount of security for costs, if any, already awarded in the case?

MR GOTTERSON:   In our submission, the application for costs against a non‑party must be judged upon its merits and not refused, as her Honour did, and, in our submission, the Full Court merely endorsed uncritically and not circumscribed by principle that there will be no costs order because there has been the security for costs.

McHUGH J:   But an order for costs against a person who is not a party to litigation is an extraordinary exercise of the court’s inherent jurisdiction, and surely it is legitimate for a judge to take into account the fact that there is already adequate security which will protect the defendant.  Why should the third party be exposed to costs in those circumstances in allowing the defendant to execute against the third party rather than seek reimbursement under the security?

MR GOTTERSON:   What your Honour proposes would be this, that anyone who then has the misfortune to be sued by an impecunious party who promptly applies for security for costs gets it and has it fixed, as we all know, according to principles which do not provide a full indemnity for costs and then wins at the trial, must bear the burden of the shortfall ‑ ‑ ‑

McHUGH J:   Not at all.  I said it is a matter that the judge is entitled to take into account and if there is going to be a shortfall, particularly if there is going to be a substantial shortfall, the judge may say, “It is proper that I should make an order requiring the third party, wholly or partly, to pay the costs”, but it seems to me it must be a factor open to a judge to take into account and it seems that the Full Court regarded her Honour in this case as doing no more.

MR GOTTERSON:   In our submission, if that is to be the case that courts are to take into account when fixing security for costs that there may not or, indeed, will not be an order against a non‑party, then there should be some direction from this Court that that is the appropriate way to exercise the discretion.

McHUGH J:   I do not think we will be granting special leave to be giving general advice to how courts will exercise their discretion.

MR GOTTERSON:   But, your Honour, it would be a matter not of general advice, but it would be a matter of principle that in exercising the discretion that factor is to be taken into account.  It is legitimate, in other words, to depart from the hitherto principle that security for costs is not to be a full indemnity for costs, that if there is a non‑party in a position to provide that some order provisionally be made against that party or, alternatively, that the security for costs ordered against the impecunious plaintiff be in such an amount that will provide a full indemnity.  That is not done now and, in our submission, the matter should be revisited by the Court in order that in future cases, and in this case, a means for giving a full indemnity for those sued by impecunious parties can be explored.

GUMMOW J:   You have to face up too to paragraph 25, do you not, in the Full Court judgment on page 31?

MR GOTTERSON:   Yes, your Honour.

GUMMOW J:   At the level of special leave.

MR GOTTERSON:   Indeed, your Honour, but that paragraph itself – there are two things to say about it.  One, there was some evidence before Justice Kiefel, evidence from a solicitor, that the security given would result in a shortfall but, put that to one side, does it not, in our respectful submission, raise a question as to when appropriately an order for non‑party costs or costs from a non‑party ought to be raised.

If there was some substance, real substance, in that observation of the Full Court it would mean really that an application against a non‑party ought not be entertained until after an assessment or a taxation, that it has been determined there has been a shortfall but that, of course, exposes the

non‑party to not having an opportunity to be present at or be heard upon any assessment or taxation of costs.

So, all it does is give rise to a question because when appropriately an application against a non‑party for costs may be made, it does not resolve it and, in our respectful submission, proceeds upon an unwarranted criticism because you must - if a non‑party is to bear the costs, they must have some opportunity to participate in the assessment or the taxation and they will be able to - if the order is made against them before assessment or taxation and determination of a shortfall, if there is a shortfall, well and good, they must pay it.  If there is no shortfall, they have had an opportunity to be heard upon the taxation and costs provisions can be made to protect them.  If the Court pleases.

McHUGH J:   We need not hear you, Mr Matthews.

In this matter, the Full Court of the Federal Court took the view that Justice Kiefel did not purport to apply a principle that, where the court has ordered security for costs, the court should not make an order for costs against a non-party.  The Full Court took the view that her Honour had merely concluded that nothing in the evidence required her to conclude that the security given was inadequate to meet the defendant’s costs.  That was a matter which the trial judge was entitled to take into account in exercising her discretion whether or not to award costs against a third party. 

The Full Court also said, “It is by no means clear, having regard to the costs orders that were made, that there would be a substantial shortfall between the costs the applicant was ordered to pay and the amount that had been ordered to be provided by way of security.  The quantification of any shortfall, even on a very broad brush basis is, on the material, quite problematic.” 

That being so, the case raises no point of principle, nor does it raise any matter suggesting a possible miscarriage of justice.  Special leave to appeal is refused. 

It must be with costs, I think, Mr Gotterson.

MR GOTTERSON:   Of course, your Honour.  I cannot say anything about that.

McHUGH J:   Thank you.  Special leave is refused with costs.

Call the next matter.

AT 9.48 AM THE MATTER WAS CONCLUDED