Real Tech Systems Integration Pty Ltd v Meuross

[1998] FCA 270

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - costs - whether order for costs in a contempt proceeding is interlocutory or final - whether contempt proceeding is separate and distinct from the principal proceeding - whether distinction should be drawn between civil and criminal contempt.

Federal Court Rules, 0 40 r 5, 0 62 r 3.

O'Shea v O'Shea (1890) 15 PD 59, applied
Viner v Australian Building Construction Employees and Builders’ Labourers’ Federation (1981) 38 ALR 550, cited
Australian Meat Industry Employees’ Union v Mudginberri Station Pty Limited(No.2) (1985) 9 FCR 194, cited
Microsoft Corporation v Marks (No.1) (1996) 69 FCR 117, cited
George Stack v Brisbane City Council (1996) 71 FCR 523, cited

REAL TECH SYSTEMS INTEGRATION PTY LIMITED and EAGLE DEVELOPMENTS INTERNATIONAL PTY LIMITED V DOUGLAS SIDNEY MEUROSS and HI-TECH FREIGHT SOLUTIONS PTY LIMITED

NG 149 OF 1997

LEHANE J
SYDNEY
20 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 149  of   1997

BETWEEN:

REAL TECH SYSTEMS INTEGRATION PTY LIMITED
First Applicant

EAGLE DEVELOPMENTS INTERNATIONAL PTY LIMITED
Second Applicant

AND:

DOUGLAS SIDNEY MEUROSS
First Respondent

HI-TECH FREIGHT SOLUTIONS PTY LIMITED
Second Respondent

JUDGE:

LEHANE J

DATE OF ORDER:

20 MARCH 1998

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1. The first respondent, subject to taxation, pay forthwith the applicants’ costs, in accordance with the order of the Court made on 21 November 1997.

1. Taxation of those costs may proceed forthwith.

1. The first respondent pay the applicants’ costs of the motion filed on 17 March 1998.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 149 of 1997

BETWEEN:

REAL TECH SYSTEMS INTEGRATION PTY LIMITED
First Applicant

EAGLE DEVELOPMENTS INTERNATIONAL PTY LIMITED
Second Applicant

AND:

DOUGLAS SIDNEY MEUROSS
First Respondent

HI-TECH FREIGHT SOLUTIONS PTY LIMITED
Second Respondent

JUDGE:	LEHANE J
DATE:	20 MARCH 1998
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

The motion before me is one by which the applicants seek an order that the first respondent pay the applicants’ costs, awarded by the court on 21 November 1997, forthwith.  By the orders of the court made on 21 November 1997, for reasons which I then gave, the first respondent was found guilty of a contempt of court in that he had breached certain undertakings given to the court in connection with an application (which then did not proceed) for interlocutory relief.  The court ordered that the first respondent pay, on an indemnity basis, the applicants’ costs of the motion by which, in proceedings between the parties which I shall call the principal proceedings, the charge of contempt was before the court.  No further penalty was imposed.

At the time, no order was made that the applicants’ costs be taxed and paid forthwith and no such order was sought.  When the applicants sought to tax their costs they were met in effect by an objection made by the solicitors for the first respondent, which found favour with the Deputy Registrar, that taxation could not proceed unless an order were first made under O 62  r 3(3) of the Federal Court Rules: that was thought to be so because the order made on 21 November was an order for costs in an interlocutory proceeding.

The matters argued before me this morning relate, first, to the question whether the proceeding and the order were interlocutory and secondly, if so, whether the court ought to make the order sought and, if not, whether the court should in any event stay the order for costs pending the completion of the principal proceedings.

In my view the orders made on 21 November 1997, including the order for payment of the applicants’ costs, were not interlocutory orders and the proceeding in which they were made was not an interlocutory proceeding.  Although it may be that there is no authority directly in point in relation to a contempt of the kind found to have occurred here, the course of authority requires nevertheless, in my view, the conclusion that the orders made were final orders.

In relation to the form of contempt traditionally regarded as criminal the principle has long been established that a proceeding in which contempt is charged, though commenced by motion in an existing proceeding, is nevertheless dealt with in a proceeding which is to be regarded as separate and distinct from the existing proceeding.  The leading authority is the decision of the Court of Appeal in O'Shea v O'Shea (1890) 15 PD 59. That decision has been followed in a number of Australian decisions including that of this court in Viner v Australian Building Construction Employees and Builders’ Labourers’ Federation (1981) 38 ALR 550. There are also authorities in which the court has proceeded on the basis that an order by which a party to a proceeding is found either guilty or not guilty of a contempt, allegedly constituted by failure to comply with an injunction or undertaking, is not interlocutory so that an appeal lies as of right, not only by leave: see Australian Meat Industry Employees’ Union v Mudginberri Station Pty Limited(No.2) (1985) 9 FCR 194, a decision affirmed by the High Court, whose decision is reported at (1986) 161 CLR 98; see also Microsoft Corporation v Marks (No.1) (1996) 69 FCR 117.

For the purpose of applying the O'Shea principle, no distinction in my view is to be drawn between a proceeding charging contempt regarded as criminal and contempt regarded as civil.  Precisely the same procedure is required by the Rules to be adopted in each case.  There is no reason, I think, to conclude that any distinction is to be drawn as to the nature of the proceeding by reference to which class of alleged contempt is involved.  Authority plainly indicates that in the case of a criminal contempt the proceeding is a separate one from the principal proceeding, not an interlocutory proceeding in the course of the principal proceeding.  The cases dealing with appeals confirm in my view that the same approach ought to be adopted where the contempt alleged is civil.   That conclusion is reinforced by O 40 r 5(1), which provides that if contempt is charged by a proceeding separately commenced rather than by motion in an existing proceeding, the court may nevertheless deal with it as if it had been commenced by motion.  If, however, a separate proceeding is instituted, there is no basis on which that proceeding could be held to be interlocutory. 

For those reasons, in my view, the basis on which the Deputy Registrar has proceeded in this case was erroneous, and there was no reason why the applicants’ bill of costs should not have been taxed and the taxed amount required to be paid forthwith.

The first respondent's counsel indicated that were I to reach that conclusion she would seek a stay of the orders made on 21 November and supported the argument that a stay should be granted by reference to similar discretionary considerations which might apply to a question whether an order under O 62 r 3(3) should be made.  In my view, the considerations are in fact rather different.  The policy underlying the general rule that costs in interlocutory proceedings are not immediately taxed or paid has been discussed in a number of authorities including, most recently, the decision of Drummond J in George Stack v Brisbane City Council (1996) 71 FCR 523. In the case of a final order, however, the general principle is that a successful applicant is entitled to the fruits of its success unless there are particular considerations justifying postponement of their enjoyment. One such circumstance may be the pendency of an appeal. The matters urged in this case relate to difficulties that may be caused to the first respondent by being required to pay the costs ordered to be paid in circumstances where the principal proceeding remains undetermined and where there is no evidence that there will be any particular delay in arriving at a final determination. In those circumstances, it was suggested, the balance of justice favours postponing the obligation to pay costs until the principal proceeding is determined. The applicants, on the other hand, point to the fact that, until the costs are paid, of necessity either they or their lawyers are out of pocket; the order being final, they submit, there is no reason in justice why that situation should be allowed to continue.

In my view, the considerations that are relevant to orders for payment of costs in an interlocutory proceeding are not applicable here.  In a sense, it is, I think, more appropriate to regard the order for payment of costs in a similar light to the order for payment of a fine for contempt of which a party charged has been found guilty.  The order is final.  The costs will have to be paid.  There is no reason why the applicants should be kept out of pocket for those costs.  In my view, it would be inappropriate to grant a stay.

Accordingly, I think the appropriate order, though it is not an order under O 62 r 3, is order 1 as sought in the notice of motion: that is, that the first respondent pay the applicants’ costs awarded by the court on 21 November 1997, subject to taxation, forthwith.  The taxation may, of course, proceed immediately.  The applicants seek their costs of the present motion.  The issue arose because the first respondent by his solicitors took a point, which was accepted by the Deputy Registrar, that the order made was interlocutory.  The applicants have thus been required to vindicate what I have held to be their entitlement.  In the circumstances I think the applicants should have their costs of the present motion and I so order.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane

Associate:

Dated:             20 March 1998

Counsel for the Applicants:	Mr J.V. Nicholas
Solicitor for the Applicants:	Jenkins & Associates
Counsel for the First Respondent:	Ms J.R. Baird
Solicitor for the First Respondent:	Hunt & Hunt
Date of Hearing:	20 March 1998
Date of Judgment:	20 March 1998