R v Witt (Costs Ruling)
[2016] VSC 169
•19 April 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2014 4690
| THE QUEEN | Plaintiff |
| v | |
| MICHAEL GEOFFREY WITT | Defendant |
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JUDGE: | J FORREST J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 April 2016 |
DATE OF RULING: | 19 April 2016 |
CASE MAY BE CITED AS: | R v Witt (Costs Ruling) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 169 First revision (10 May 2016) |
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CONTEMPT OF COURT – Costs of contempt of court proceeding – Principles – Indemnity costs – Payment of costs where charges withdrawn or dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S J Howells | Tolhurst Druce and Emmerson |
| For the Defendant | Mr R Meldrum QC | Holman Webb Lawyers |
HIS HONOUR:
Introduction
On 11 April, I published my reasons for imposing a fine of $25,000 upon Mr Witt for contempt of court arising out of an email he sent to members of Jan Talacko’s family on 18 July 2009 (charge 4).[1]
[1][2016] VSC 142 (Charge 4 reasons).
Originally, the applicants laid five separate charges of contempt against Mr Witt. One was dismissed (charge 3) and three were withdrawn (charges 1, 2 and 5).
Mr Witt does not dispute that he is liable to pay some of the applicants’ costs on an indemnity basis. The contest is confined to the extent of Mr Witt’s liability to pay indemnity costs.
In a nutshell, the applicants seek payment of all costs associated with the proceeding for contempt on an indemnity basis. Mr Witt contends that he should only be liable for costs associated with charge 4 (which was admitted early in the piece). Indeed, counsel for Mr Witt went further and said that he was instructed to apply for the costs incurred by Mr Witt relating to charges other than charge 4.
I have comfortably reached the conclusion that the applicants should have all their costs associated with the proceeding on an indemnity basis. The background and the issues associated with the five charges, as I shall try to demonstrate, were intertwined. None of the counts were demonstrably hopeless and there is a real matter of principle associated with the applicants’ motion.
I regard the application for Mr Witt’s costs as completely untenable.
Background matters
The originating motion was issued by the applicants on 5 September 2014. It identified five separate counts:
1.That Michael Witt an officer of the Court be dealt with for Contempt in the face of the Court namely that on 9 September 2008 he prepared, and filed in the Court in proceeding 7393 of 1998 an affidavit of his client Jan Emil Talacko that contained statements as to his intention in relation to his properties that the said Michael Witt knew or ought reasonably to have known to be false or misleading to the Court.
Particulars
On or about 9 September 2008 the said Michael Witt prepared, executed and filed and served an affidavit of his client Jan Emil Talacko in which his client swore that “I have no intention of selling disposing, encumbering on in any other way dealing with the properties other than in the normal course of letting some of them out on normal commercial terms where that his permitted.”
The said Mr Witt so acted in spite of having prior to that date received a copy of an email dated 29 April 2008 sent by Paul Talacko, a son of Jan Emil Talacko, expressed by written and sent on behalf of Jan Emil Talacko to Martin Hrodek, lawyer of the firm Baker & McKenzie in which Paul Talacko sought advice about the avoidance of the jurisdiction of this Court and the use of Bankruptcy to avoid the consequences of orders of this Court.
2.That Michael Witt an officer of the Court be dealt with for Contempt in the face of the Court namely that on 17 June 2009 he proposed that his client Jan Emil Talacko should advance before the Court in proceeding 7393 of 1998 a reason for his disposition of his properties that the said Michael Witt knew or ought reasonably to have known to be false or misleading to the Court.
Particulars
On or about 17 June 2009 the said Michael Witt sent an email to his client in which he proposed that an affidavit of his client Jan Emil Talacko be prepared, executed, filed and served in which he would swear that his reason for disposing of his properties was in order to avoid Czech inheritance law when the said Michael Witt knew this to be false or misleading to the Court. The email contained the following: “Further to our phone call of this morning, attached are some extracts from the Czech Civil Code which, although they do not go as far as you thought, do support what you are saying. I have provided a copy of these to Russell and Daryl and asked them to consider whether they feel that Jan should sign an affidavit stating that he was gifting the properties to the boys in order to avoid Czech inheritance law”.
The said Michael Witt so acted in spite of having received a copy of an email dated 29 April 2008 sent by Paul Talacko, a son of Jan Emil Talacko, expressed to be sent on behalf of Jan Emil Talacko to Martin Hrodek, lawyer of the firm Baker & McKenzie in which Baker & McKenzie in which Paul Talcko sought advice about the avoidance of the jurisdiction of the Court and the use of Bankruptcy to avoid the consequences of orders of the Court.
3.That Michael Witt an officer of the Court be dealt with for Contempt in the face of the Court namely that on 18 July 2009 he did communicate with his client Jan Emil Talacko and his client’s wife Judith Talacko and their children Peter Talacko and Nicole Talacko in a manner that disparaged the Court in proceedings 7819 of 2009 and was bound to prompt the Defendants in that proceeding to misunderstand and disregard the law and the Court and its Orders and thereby fostered and encouraged contumacious and contumelios disregard of the Court and the law.
Particulars
The email dated 18 July 2009 contained the words “In the new case the Judge made orders against Paul and David restraining them from trying to progress the transfers. That he felt that he had power and/or jurisdiction to do this is surprising but nothing surprises me in this case anymore. He also attached a contempt endorsement to these orders”.
4.That Michael Witt an officer of the Court be dealt with for Contempt of Court namely that on 18 July 2009 being an officer of the Court he did communicate with his client Jan Emil Talacko and his with Judith Talacko and their children Peter Talacko and Nicole Talacko and sought to prevent the Second and Third Defendants from becoming apprised of the Orders made on 17 July 2009 in proceeding 7819 of 2009 and thereby to frustrate the intended effect of those Orders.
Particulars
The email dated 18 July 2009 contained the words “I have deliberately left Paul and David off this email as I do not want it to be able to be said that they had any notice or knowledge of the orders made against them because for so long they do not have notice of this then they cannot be in contempt if they do not comply. I therefore strongly advice that no one tells Paul or David anything about this new case other than to warn them to look out for process servers in Prague”.
5.That Michael Witt an officer of the Court be dealt with for Contempt of Court namely that on 18 July 2009 in breach of the Order of the Court made on 16 July 2009 he did communicate with his client Jan Emi Talacko and his wife Judith Talacko and his children Peter Talacko and Nicole Talacko and sought to prevent the Second and Third Defendants in proceeding 7819 of 2009 from becoming apprised of the Orders made in that proceeding on 17 July 2009 and thereby to frustrate the intended effect of those Orders.
Particulars
On or about 18 July 2009 the said Michael Witt sent an email in which he counselled concealment of the Orders of 17 July 2009 from Paul Talacko and David Talacko in spite of being aware of the terms and effect of the said Orders.
In its initial stages, the proceeding was managed by Elliott J, who made a number of procedural orders: on 11 September 2014, 23 October 2014, 14 November 2014, 5 December 2014, 20 February 2015 and 1 May 2015.
On 27 April 2015 (after Mr Witt filed his submissions in relation to the five charges), his solicitors forwarded the following open letter to the solicitors for the applicants:
We refer to this matter and to our client’s Submissions forwarded to you. Specifically, we note paragraph 7 thereof in respect of Charge 4.
On an open basis, our client now offers to pay the Applicant’s costs of proving Charge 4 on an indemnity basis (subject to the reasonableness of the fees claimed).
Further, we note that in light of our client’s submissions and the evidence that your clients attempt to provide in support of the other four charges, we invite your clients at this stage to withdraw the charges other than Charge 4. Should your clients choose to do so our clients will not seek the costs of those charges.
We put you on notice that should your clients fail to withdraw the charges within the next fourteen (14) days, and fail to be successful at trial in relation to those charges, we shall use this letter in relation to the question of costs and seek indemnity costs against your client from the date of this letter.
The trial was originally fixed for 15 July 2015, but that was vacated on the application of Mr Witt and re-fixed for hearing on 21 October 2015. That hearing was adjourned by the Court on 1 September 2015 to 26 November 2015.
On 13 October 2015, the solicitors for the applicants advised that they would seek to withdraw charges 1 and 2 but still required payment of the applicants’ costs in respect of all charges.
Consequently, Elliott J made consent orders in the following terms:
1.The applicants be granted leave to withdraw paragraphs 1 and 2 of the originating motion filed 5 September 2014.
2. The question of costs be reserved for determination by the trial judge.
Those orders left charges 3, 4 and 5 extant as at the hearing in November.
On 26 November 2015, the hearing of the remaining charges (3, 4 and 5) commenced. It was agreed between the parties that I should deal with charge 4 separately and subsequent to the remaining two charges. After some discussion, charge 5 was withdrawn by the applicants and I proceeded to hear charge 3.
On 1 February 2016, I delivered my judgment in relation to charge 3, which I dismissed.[2]
[2][2016] VSC 19 (Charge 3 reasons).
On 29 February and 1 March 2016, I heard charge 4.
On 11 April 2016 I handed down judgment in relation to charge 4 and, the following day, I heard the argument as to costs – the subject of this ruling.
Principles
I repeat what I said at [182] to [186] of the Charge 4 reasons. The short point is that a charge of contempt and any resulting order for costs is treated completely differently to the usual inter partes civil proceeding.
The authorities are also clear that the applicants in such a case are generally entitled to costs on an indemnity basis.
In National Australia Bank Ltd v Juric (No 2),[3] Gillard J said as follows:
In a proceeding involving a contempt of court, if a charge is made out, the normal and usual rule is to order the contemnor to pay costs on a solicitor/client basis. This is a practice that goes back over many years. In Stan Combe v Trowbridge Urban Council, the Court ordered the contemnor, who had breached an injunction, to pay costs on a solicitor/client basis.
I also refer to McNair Anderson & Associates v Hinch, which was also a case involving a breach in injunction. This Court ordered costs on a solicitor/client basis.
Nothing that Mr Perkins has put to me persuades me that the normal order should not be made. Of course, it is a matter for the Court as to the costs of an application for punishment of contempt and the Court has a wide discretion in respect to costs. I also accept that the normal rule in litigation is that costs are to follow the event and are usually on a party/party basis.
It is only when special circumstances are shown that costs should be paid on any other basis. However, it has been recognised for many, many years in contempt cases, that a litigant who must come to court in order to enforce an order which has been breached by contempt, or to have a person dealt with contempt, should not be out of pocket. In my view, the rule should apply here.[4]
[3][2001] VSC 398 (‘NAB v Juric’).
[4]Ibid [67] – [70] (emphasis added and citations omitted).
Although NAB v Juric involved a case of criminal contempt,[5] the principles apply equally to a case of civil contempt.
[5]Ibid [3].
Analysis
As I have indicated, the contest here is confined to the scope of the order for costs.
For the following reasons, the applicants should have their costs of the application, including all hearing costs, on an indemnity basis.
First, I am not satisfied that any significant additional costs were incurred by Mr Witt or the applicants as a result of the prosecution of charges 1 and 2 up to October 2015; nor of charge 5 up to November 2015.
The proper disposition of charge 4 depended upon a comprehensive understanding of Mr Witt’s involvement with Jan Talacko and his family.
Charges 1 related to an affidavit of Jan Talacko that was prepared, executed, filed and served by Mr Witt in September 2008; charge 2 related to an email of 17 June 2009 forwarded by Mr Witt to Jan and Judy Talacko, which I reproduced with the observations of McDonald J[6] at [33] and [34] of the Charge 4 reasons.
[6]See Talacko v Talacko [2015] VSC 287.
The email of 17 June 2009 revealed Mr Witt’s close association with the interests of Jan and Judith Talacko. In it, he raised the possibility of seeking advice from counsel as to whether Jan should swear a false affidavit as to the purpose for the execution of the donation agreements. It demonstrates the closeness of association between Mr Witt and the Jan Talacko family in relation to the transfers of the properties in the Czech Republic. Whilst it no longer formed the basis of the charge, it was germane to an understanding of the relationship. As was Mr Witt’s explanation for the contents of the email.
In summary, the material filed by Mr Witt, and by the applicants, relating to charges 1 and 2, was relevant to the disposition of charge 4.
As to charge 5, it was withdrawn as, at least to my observation, it seemed to add little to charge 4. As far as I can tell, no costs consequences flowed from the withdrawal of that charge.
Second, whilst charge 3 (which related to the same email the subject of charge 4) was ultimately dismissed for the reasons I set out at paragraphs [54] to [77] of my Charge 3 reasons, that day’s hearing was not confined to the circumstances surrounding that charge alone. Mr Witt gave evidence at that hearing as to his conduct generally and the effects of the contempt charges on himself and his family. He also gave quite detailed evidence about the circumstances surrounding the email. That material was relevant to the disposition of charge 4 – as were a number of the submissions made by his counsel on the day of that hearing.
Third, many affidavits were filed on behalf of the applicants and Mr Witt. The contents of most of those filed by Mr Witt went to a number of aspects of the charges as a whole and could not be confined to one charge alone.
For instance, a number of affidavits went to Mr Witt’s character and reputation. Some, in part, went to the circumstances surrounding Mr Witt’s handling of matters on behalf of Jan Talacko and his family and the influence of Mr Findlay on the conduct of the defence.
Similarly, the affidavits filed on behalf of the applicants enabled a general understanding of the proceeding generally and the relationship between Mr Witt and the Talacko family.
Fourth, many of the orders made in the course of the procedural steps were made on the papers. In other words, there was little or no additional expenditure in relation to appearances which might, arguably, be related to charges other than charge 4.
Fifth, whilst I accept that the letter of 27 April 2015 from Mr Witt’s solicitors endeavoured to narrow the issues, and ultimately proved to be an accurate prediction of how the case would be disposed of, that alone does not entitle a party to costs. As I mentioned in the charge 4 reasons,[7] a case of contempt of court cannot be treated in the same vein as a standard civil proceeding. Although the letter did not refer to the principles of Calderbank[8] (or in this state Hazeldene),[9] it was clearly that type of offer, as it threatened to seek indemnity costs in relation to charges which may not be established at trial.
[7][2016] VSC 142, [184].
[8]Calderbank v Calderbank (1975) 3 W.L.R. 586.
[9]Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435.
I have no reason to depart from what I said earlier – a Calderbank or Hazeldene mechanism is not appropriate in a contempt case where the Court’s supervisory jurisdiction is enjoined. I do, however, accept (as I mentioned in the Charge 4 reasons)[10] that if costs were incurred by a respondent to a contempt application which had no merit (or to charges that had no merit), that may enliven the Court’s general jurisdiction to order costs on an indemnity basis.[11] This is not such a case. There is no merit to the application for costs in favour of Mr Witt.
[10][2016] VSC 142, [184].
[11]See Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]-[8].
Accordingly, there is no basis for endeavouring to differentiate costs associated with charges other than charge 4 from those of charge 4.
Conclusion
The applicants should have their costs of the proceeding on an indemnity basis. For avoidance of doubt, the costs of the hearings on 26 November 2015, 29 February 2016, 1 March 2016, 11 April 2016 and 12 April 2016 are to be included in such an order.
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