Robinson v Blackheart Industries Pty Ltd & Ors
[2014] FCCA 1353
•27 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ROBINSON v BLACKHEART INDUSTRIES PTY LTD & ORS | [2014] FCCA 1353 |
| Catchwords: COSTS – Construction of r.21.07 of the FCCR – whether a person seeking an order for costs pursuant to r.21.07 of the FCCR must prove that he or she has incurred costs because of the alleged misconduct of the lawyer against whom an order for costs is sought – whether “negligence” as used in r.21.07 means “gross or serious negligence” or whether it means failure to act with the competence reasonably to be expected of ordinary members of the legal profession – whether in an application for an order for costs under r.21.07 it is necessary to formulate carefully and concisely the complaint and ground on which such an order is sought. COSTS – Whether there is a prima facie case that an order for costs under r.21.07 of the FCCR should be made against the solicitor for the applicant – whether there is a prima facie case that the lawyer for the applicant misconducted himself negligently within the meaning of r.21.07 of the FCCR by causing the Court to issue subpoenas which were held to be an abuse of process – whether there is a prima facie case that the lawyer for the applicant misconducted himself or acted with gross negligence or serious negligence by gaining access to documents produced on subpoena purportedly pursuant to r.15A.13 where the preconditions for access under that rule had not been satisfied – whether there is a prima facie case that the actual costs the second respondent incurred in obtaining an order for destruction were caused by the alleged misconduct of the applicant’s lawyer – prima facie case for the making of an order for costs under r.21.07 against the applicant’s lawyer not made out. |
| Legislation: Acts Interpretation Act 1901 (Cth), ss.2K, 2K(1) |
| APLA Limited v Legal Services Commissioner (NSW) (2005) 224 CLR 322 Baik v Minister for Immigration & Anor [2008] FMCA 61 Briginshaw v Briginshaw (1938) 60 CLR 336 Buckland v Watts [1970] 1 Q.B. 27 Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 Cachia v Hanes (1994) 179 CLR 403 Chappel v Hart (1998) 195 CLR 232 De Pardo v Legal Practitioners Complaints Committee (2000) 97 FCR 575 Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd(No.2) [2010] FCA 1224 Diners Club Pty Ltd v Wakim [2006] FMCA 1038 Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd [1998] 1 All ER Etna v Arif [1999] 2 V.R. 353 Fair Work Ombudsman v Offshore Marine Services Pty Ltd (No.2) [2013] FCA 943 Harding v Coburn [1976] 2 NZLR 577 In re A Barrister (Wasted Costs Order) (No.1 of 1991) [1993] Q.B. 293 Knight v FP Special Assets Ltd (1992) 174 CLR 178 Macteldir Pty Limited v Roskov [2007] FCAFC 49 March v E & MH Stramere Pty Ltd (1991) 171 CLR 506 May v O’Sullivan (1955) 92 CLR 654 Oakley v Insurance Manufacturers of Australia Pty Ltd [2008] VSC 68 Ridehalgh v. Horsefield [1994] Ch. 205 Robinson v Blackheart Industries Pty Ltd (In Liq) & Ors [2013] FCCA 1829 Veolia Transport Sydney Pty Ltd v Mifsud [2012] FCA 1472 |
| Applicant: | PAUL ROBINSON |
| First Respondent: | BLACKHEART INDUSTRIES PTY LTD |
| Second Respondent: | KYLE ARNOLD |
| Third Respondent: | BEVERLEY ARNOLD |
| File Number: | SYG 2407 of 2012 |
| Judgment of: | Judge Manousaridis |
| Hearing dates: | 18 December 2013 and 21 February 2014 |
| Delivered at: | Sydney |
| Delivered on: | 27 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms M. Painter SC with Mr T. Glover |
| Solicitors for the Applicant: | FCB Workplace Law |
| Counsel for the Second Respondent: | Ms R. Francois |
| Solicitors for the Second Respondent: | Clinch Long Letherbarrow |
ORDERS
The application made by the second respondent for an order under r.21.07 of the Federal Circuit Court Rules 2001 (Cth) that Matthew Nicholas Robinson pay the second respondent’s costs is dismissed.
If the second respondent or Matthew Nicholas Robinson or both intend to apply for any order as to costs in relation to the application referred to in order 1, he or they must do so by filing an application in a case, together with any supporting affidavit, by no later than 11 July 2014.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2407 of 2012
| PAUL ROBINSON |
Applicant
And
| BLACKHEART INDUSTRIES PTY LTD |
First Respondent
| KYLE ARNOLD |
Second Respondent
| BEVERLEY ARNOLD |
Third Respondent
REASONS FOR JUDGMENT
Introduction
On 8 November 2013 I ordered the applicant destroy copies of documents in his possession that he had obtained as a result of gaining access to documents that had been produced to the Court in answer to two subpoenas.[1] I made the order in response to an application filed by the second respondent, Mr Arnold.
[1] Robinson v Blackheart Industries Pty Ltd (In Liq) & Ors [2013] FCCA 1829
The matter was next listed before me on 22 November 2013. I was then informed that Mr Arnold proposed to apply for an order that the applicant’s solicitor, Mr Matthew Nicholas Robinson, personally pay the costs of the application I determined on 8 November 2013. Mr Arnold, I was told, proposed to apply for a lump sum costs order. The costs were identified in an affidavit of Mr Woodbridge, the solicitor for Mr Arnold. According to that affidavit, Mr Arnold proposed to apply for “costs fixed in the sum of $52,851.01”.
The only notice Mr Arnold apparently gave to Mr Robinson before 22 November 2013 of the proposed application was an email Mr Arnold’s solicitors sent to Mr Robinson’s firm. The email, so I was told, stated that Mr Arnold intended to apply for an order for costs under r.21.07 of the Federal Circuit Court Rules 2001 (Cth) (FCCR), but did not identify the grounds on which the application was to be made. In response to my question about the grounds on which Mr Arnold claimed a personal costs order against Mr Robinson, counsel for Mr Arnold said that the application “would be based upon the abusive process and the misconduct, or gross negligence, depending on how you view it”.[2]
[2] 22.11.2013, T2.25
I indicated that the serious allegations Mr Arnold, through his counsel, intended to make against Mr Robinson should be particularised. I also indicated that I wished to satisfy myself that Mr Arnold had an arguable case that a personal costs order should be made against Mr Robinson before Mr Robinson would be required to decide whether he should put on evidence, and so expose himself to a cross-examination in which counsel would impute serious misconduct against him.
In the event, I directed that the application for the personal costs order be set down for hearing on 18 December 2013 for the limited purpose of hearing argument on whether Mr Arnold has a prima facie case that an order for costs be made against Mr Robinson under r.21.07 of the FCCR. I also directed the parties file written submissions before the hearing.
The parties, as directed, filed written submissions. In his submissions, however, Mr Robinson contended that r.21.07 of the FCCR did not apply to the conduct alleged against Mr Robinson because the matter in which the conduct took place was one commenced under the Fair Work Act 2009 (Cth) (FW Act), and the only circumstances in which an order for costs can be made in such proceedings cannot be made against a legal practitioner or any other non-party.
On 18 December 2013 and 21 February 2014, I heard argument on whether Mr Arnold has a prima facie case against Mr Robinson for an order under r.21.07 of the FCCR, and also on whether that rule applies to conduct that has taken place in a proceeding under the FW Act.
In these reasons for judgment, therefore, I consider whether Mr Arnold has established a prima facie case for the making of an order under r.21.07 of the FCCR against Mr Robinson, and whether r.21.07 can apply to proceedings under the FW Act.
Arrangement of reasons
These reasons are arranged as follows:
a)I first consider whether Mr Arnold was required to identify on a prima facie basis the costs he claims he incurred because of Mr Robinson’s alleged misconduct. At the hearing on 21 February 2014, counsel for Mr Arnold submitted Mr Arnold was not so required, having acknowledged in a written submission dated 21 February 2014 that “it is not possible for the Court to determine whether the statutory test is satisfied in relation to each and every component of the costs claimed”.[3] In address, counsel accepted that the Court “can’t see the sufficiency of the connection”[4] between the alleged misconduct of Mr Robinson and the costs identified in the affidavit of Mr Woodbridge. If Mr Arnold is not correct in his submission that he was not required to identify on a prima facie basis the costs he claims he incurred because of Mr Robinson’s alleged misconduct, Mr Arnold will fail to show he has a prima facie case for the making of an order against Mr Robinson under r.21.07 of the FCCR, and his application for such order must be dismissed.
b)Next, I consider Mr Arnold’s claim on the basis it was put during the directions hearing on 22 November 2013 and at the hearing on 18 December 2013, namely, that the costs Mr Arnold incurred as a result of the alleged misconduct of Mr Robinson are the costs identified in the affidavit of Mr Woodbridge. That will require me, first, to identify each of the acts of misconduct Mr Arnold alleges Mr Robinson engaged in and to consider whether Mr Arnold has established a prima facie case of misconduct; and then to consider whether Mr Arnold has established on a prima facie basis that he has incurred the costs identified in the affidavit of Mr Woodbridge because of the alleged misconduct of Mr Robinson.
c)Finally, I will consider Mr Robinson’s submission that r.21.07 does not apply to conduct of a lawyer engaged in a matter under the FW Act.
[3] Outline of Submissions in Reply on Costs, [18]
[4] 21.02.14, T30.25
Must a claimant prove the costs that have been incurred before an order for costs can be made?
Rule 21.07(1) of the FCCR provides:
The Court or a Registrar may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
(a) to be incurred by a party or another person; or
(b) to be thrown away;
because of undue delay, negligence, improper conduct or other misconduct or default.
It will be seen that the rule confers power on the Court to make “an order for costs against a lawyer” (defaulting lawyer). Although the word “costs” is not defined in the FCCR or the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act), when used in rules of court it has a well-understood and stable meaning. That meaning has been considered in cases dealing with whether an unrepresented litigant may obtain a costs order to cover his or her work in the proceeding. For example, in Buckland v Watts Willmer LJ said:[5]
What a successful party who has got an order for costs is entitled to recover falls, as is well known, under two headings. One heading covers his disbursements; that is to say, money which he has actually had to pay out to other people, such as witnesses, counsel, professional advisers and so forth. The other heading is described as 'costs'. This is intended to cover remuneration for the exercise of professional legal skill.
[5] [1970] 1 Q.B. 27 at page 37. The passage I have quoted is included in the longer passage from the judgment of Willmer LJ set out in the judgment of the plurality in Cachia v Hanes (1994) 179 CLR 403 at page 413
The power under r.21.07 to make an order for costs against a defaulting lawyer is discretionary: the Court “may” make such order. And it may make such order “if” two conditions are satisfied. The first is that a party or another person has incurred costs, or that costs have been thrown away. The second condition is that the defaulting lawyer “caused” the incurring or throwing away of the costs “because of undue delay, negligence, improper conduct or other misconduct or default”.
If one of the conditions of the Court’s making an order under r.21.07 is that costs have been incurred or thrown away, it follows that a person claiming an order under r.21.07 (claimant) must identify the costs the claimant asserts he or she incurred or have been thrown away because of the defaulting lawyer’s conduct, and to adduce evidence of those costs and evidence that establishes those costs were incurred or thrown away because of the defaulting lawyer’s conduct.
This view of r.21.07 appears to have been shared by Mr Arnold’s counsel, at least on 22 November 2013 when counsel filed in Court the affidavit of Mr Woodbridge. As I say at the beginning of these reasons, Mr Woodbridge deposed that Mr Arnold was applying for “costs fixed in the sum of $52,851.01”. Mr Woodbridge annexed to his affidavit fee notes and other documents evidencing costs and disbursements that, together with amounts referred to in the body of his affidavit, totalled $52,851.01. As I understood the application Mr Arnold intended to make, the Court was to be asked to accept that the costs identified in Mr Woodbridge’s affidavit were the costs Mr Arnold claimed he incurred as a result of the alleged misconduct of Mr Robinson.
During the hearing on 18 December 2013, counsel for Mr Arnold appeared to continue to accept that it was necessary for Mr Arnold to identify the costs Mr Arnold alleged he incurred as a result of the alleged misconduct of Mr Robinson.[6] At the hearing on 21 February 2014, however, counsel changed her position. In a written submission dated 21 February 2014, counsel acknowledged that “in the absence of the relevant files of the solicitors, it is not possible for the Court to determine whether the statutory test is satisfied in relation to each and every component of the costs claimed”.[7]
[6] 18.12.2013, T34.40ff: “HIS HONOUR: . . . .you’ve got to identify the act or omission, and you’ve got to identify [a] causal link. That’s what I understand . . . you have to establish on a prima facie basis. MS FRANCOIS: Well, you have to establish that. Has cause[d] costs to be incurred or thrown away because of - - - HIS HONOUR: Don’t you have to identify the costs and the causal connection between those costs and the conduct? MS FRANCOIS: Yes. HIS HONOUR: Yes. MS FRANCOIS: So we say all costs - - - HIS HONOUR: And you have to do that on a prima facie basis. So you say all costs. MS FRANCOIS: Yes. All costs after the issue of these subpoenas.”
[7] Outline of Submissions in Reply on Costs, [18]
During the hearing on 21 February 2014, I asked counsel the following question:[8]
What’s wrong with my [construction] that in order to obtain an order for costs against a solicitor, you must prove the costs, you must prove the conduct and you must prove the causal connection? That’s the construction I think is the correct one and I’m asking you whether you agree and if not, why not.
[8] 21.2.14, T31.45
Counsel responded by submitting that the requirement that costs have been incurred was met “by the fact that Mr Arnold in his next affidavit says he did incur costs as a result of the subpoenas and the access”,[9] although counsel acknowledged that Mr Arnold did not identify the costs he incurred “by reference to particular costs”.[10] Counsel also submitted that r.21.07 did not require the Court to “identify specifically those costs”;[11] that “where costs have been awarded against solicitors . . . they’re ordered on the usual basis of you pay costs, and it’s the taxation basis”;[12] and that judges of this Court “have taken the approach that it’s obvious that costs have been incurred of a certain kind and they order that the costs be paid”,[13] although counsel accepted that no judge of this Court had considered the particular construction of r.21.07 that I put to counsel.
[9] 21.2.14, T32.15
[10] 21.2.14, T32.25
[11] 21.2.14, T32.45
[12] 21.2.14, T33.10
[13] 21.2.14, T33.10
The submission that counsel for Mr Arnold ultimately made was as follows:[14]
. . . your Honour is not acting as a taxing agent so that your Honour has to examine each of the costs that will ultimately be claimed to see whether or not they have a sufficient relationship because that would require the breach of my client’s privilege for your Honour to be able to properly assess the relationship between what has been charged and the act in question. So that’s the reason why I’ve withdrawn it, your Honour, because I can’t open up my solicitor’s files and burden the court with that level of analysis, but your Honour would be satisfied, having regard to Mr Arnold’s evidence and the appearance of me and my solicitors and the fact that your Honour knows, if I need to put on evidence that we’re not [acting] pro bono, Mr Arnold has paid our bills . . .
[14] 21.2.14, T33.25-T33.35
I do not accept counsel’s submissions. First, the submissions do not distinguish between the preconditions for making an order under r.21.07 and the amount of costs the Court may order the defaulting lawyer pay, once those preconditions have been satisfied. As I say above, the preconditions for making an order under r.21.07 are that the claimant has incurred costs, or has incurred costs that have been thrown away, and those costs were incurred or thrown away because of the misconduct of the defaulting lawyer. Once these preconditions are satisfied, and the Court is satisfied that in the exercise of its discretion an order for costs against the lawyer should be made, the Court makes an order for costs. It is at that stage the Court considers the amount of the costs the defaulting lawyer should pay. The Court may itself decide the defaulting lawyer should pay all of the costs the claimant has shown he or she incurred, or the Court may decide that a lesser amount should be paid. In either case, the result will be an order requiring the defaulting lawyer to pay a specific sum. Instead of determining for itself what amount of the costs incurred by the claimant should be reimbursed to the claimant by an award for costs, the Court may order that those costs be assessed in some other way.
Second, on counsel’s submission, the Court need only be satisfied that some costs have been incurred before it can make an order under r.21.07; once the Court is so satisfied, the matter is to be referred to a taxing officer to determine all the costs that have in fact been incurred. On that approach, it would be for the taxing officer, not a judge of the Court, to determine which costs were incurred because of the defaulting lawyer’s misconduct. The jurisdiction for the determination of that question, however, is conferred on a judge of the Court, not on a taxing officer. The only jurisdiction the Court could confer on a taxing officer is to assess the reasonableness of the costs that the Court has already found the claimant has incurred, or which had been thrown away because of the conduct of the defaulting lawyer.[15]
[15] Pursuant to r.21.02(2) of the FCCR
I have based my construction of r.21.07 of the FCCR on the language of the rule itself. This construction, however, is supported by two decisions of the English Court of Appeal that considered relevantly analogous rules to r.21.07. The first is In re A Barrister (Wasted Costs Order) (No.1 of 1991)[16] where the English Court of Appeal considered s.19A of the Prosecution of Offences Act 1985. That section provided that the Court could order a legal practitioner to pay “wasted costs”, which were defined as costs incurred by a party “as a result of any improper, unreasonable or negligent act or omission on the part of any representative”. The Court of Appeal recommended a three-stage test or approach when contemplating an order under s.19A of that Act:[17]
[16] [1993] Q.B. 293
[17] [1993] Q.B. 293 at page 301G-302A
(i) Has there been an improper, unreasonable or negligent act or omission? (ii) As a result have any costs been incurred by a party? (iii) If the answers to (i) and (ii) are “Yes,” should the court exercise its discretion to disallow or order the representative to meet the whole or any part of the relevant costs, and if so what specific sum is involved?
. . .
As is indicated above the judge must specify the sum to be disallowed or ordered. Alternatively the relevant available procedure should be substituted, should it be impossible to fix the sum: see the 1991 guide, p. 20, para. 6.7.[18]
[18] The 1991 guide is a reference to A Guide to the Award of Costs in Criminal Proceedings (R.C.J) referred to in [1993] Q.B. 293 at page 300H
The approach recommended by the Court of Appeal presupposes the identification by the Court not only of the costs that are claimed to have been wasted, but also their amount. For it is part of the recommended approach that the Court decide whether the lawyer should pay all or part of the costs so identified or, where it is impossible to undertake that task, whether another procedure determining that question should be substituted.
The second case is Ridehalgh v. Horsefield[19] where the Court of Appeal considered s.51(6) of the Supreme Court Act 1981 (UK) which provided that the Court could order a legal practitioner to pay “wasted costs”. That expression was defined in s.51(7) of that Act to mean any costs incurred by a party “as a result of any improper, unreasonable or negligent act or omission on the part of any legal . . . representative”. The English Court of Appeal referred to In re A Barrister, and said as follows:[20]
It was held on appeal, in our view quite rightly, that courts should apply a three-stage test when a wasted costs order is contemplated. (1) Has the legal representative of whom complaint is made acted improperly, unreasonably or negligently? (2) If so, did such conduct cause the applicant to incur unnecessary costs? (3) If so, is it in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs? (If so, the costs to be met must be specified and, in a criminal case, the amount of the costs.) We have somewhat altered the wording of the court’s ruling but not, we think, its effect.
[19] [1994] Ch. 205
[20] [1994] Ch. 205 at page 231F
This passage, too, indicates that the making of a costs order under the rule considered in that case presupposes the Court identifying the costs that have been incurred and then determining whether the legal representative should be ordered to compensate the claimant “for the whole or any part of the relevant costs”. That the Court was of that view is further demonstrated in that part of the Court’s judgment that deals with the discretion to make an order for costs after the Court is satisfied of the existence of “an identifiable sum of wasted costs”. [21]
[21] [1994] Ch. 205 at page 239E
In my opinion, therefore, to establish a prima facie case that a costs order should be made against Mr Robinson under r.21.07, it is necessary for Mr Arnold to identify the costs he claims he incurred because of the alleged misconduct of Mr Robinson, and to prove on a prima facie basis that those costs were incurred or had been thrown away because of the alleged misconduct of Mr Robinson.
It is now necessary to assess the implication of Mr Arnold’s counsel accepting that “it is not possible for the Court to determine whether the statutory test is satisfied in relation to each and every component of the costs claimed”, and that “the applicant would seek that his costs pursuant to any order be paid as taxed or agreed”. In my opinion, this amounted to an abandonment or repudiation by Mr Arnold of an intention to identify and prove on a prima facie basis the costs he says he incurred because of the alleged misconduct of Mr Robinson. Given that I am of the opinion that it is a precondition to the making of an order under r.21.07 that a claimant prove the costs which he or she claims were incurred or thrown away because of the conduct of the defaulting lawyer, Mr Arnold’s abandonment of an intention to prove the costs he says he incurred because of the alleged misconduct of Mr Robinson must result in the dismissal of his application for an order under r.21.07 of the FCCR.
Having so concluded, it is unnecessary for me to consider Mr Arnold’s allegations of misconduct and whether r.21.07 applies to proceedings brought under the FW Act. As detailed submissions were made about these matters, however, I propose to consider them. I will consider Mr Arnold’s claim for an order under r.21.07 on the assumption that he has not abandoned his intention to prove on a prima facie basis that he incurred costs as a result of misconduct by Mr Robinson, and that the costs which he claims were incurred because of that misconduct are the costs identified in the affidavit of Mr Woodbridge.
Before I consider Mr Arnold’s claim, it will be useful to address a number of points of construction in relation to r.21.07 of the FCCR.
Rule 21.07 – some issues of construction
Construction of one phrase or words within the phrase
The first point of construction concerns whether the words “undue delay, negligence, improper conduct or other misconduct or default” are to be construed as one phrase, or whether each word in the phrase must be assigned a meaning, and applied to the impugned conduct of the lawyer.
This question arises because r.21.07 has been applied without referring to the meaning of each of the words in the phrase. In Baik v Minister for Immigration & Anor,[22] for example, Barnes FM (as her Honour then was) held that the principles that should govern the exercise of the power under r.21.07 of the FCCR are those that the Full Federal Court in Macteldir Pty Limited v Roskov[23] held to apply when exercising the power under Order 62 Rule 9 of the previous Federal Court Rules.[24] Barnes FM said[25] that an order under r.21.07 should occur only after the exercise of great caution “and upon the Court being satisfied that the relevant default of the legal practitioner is sufficiently serious to amount to be a breach of duty, not only to the relevant client, but also to the Court”.[26] Her Honour[27] quoted the following passage from Macteldir Pty Limited v Roskov:[28]
...the question before the present Full Court is not whether there was a failure on the part of the Barrister and Solicitor to fulfil or perform their instructions and retainer carefully and competently. The present proceeding is not a claim by the Client against the Barrister and the Solicitor for breach of a duty to give careful and competent advice in connection with the conduct of the Wrongdoers. Nor is it a claim for damages for breach of a term of the retainer by the Client of the Barrister and the Solicitor. If this proceeding were a claim for damages for breach of a duty to advise carefully and competently or for breach of a term of the retainer of the Barrister and Solicitor in the conduct of the proceeding, a question would arise as to whether advocate’s immunity could be called in aid as an answer to such a claim. Such immunity should not be circumvented by a claim under Order 62 rule 9. To succeed in a claim under Order 62 rule 9, much more must be established.
To succeed in a claim under Order 62 rule 9, the legal practitioner must be responsible for costs being incurred improperly or without reasonable cause or for costs being wasted by misconduct or default. That requires conduct much more serious than would give rise to a claim for damages. The question is whether the conduct of the Barrister and the Solicitor constitutes a serious dereliction, or failure to fulfil, their duty to the Court.
[22] [2008] FMCA 61
[23] [2007] FCAFC 49
[24] Order 62 r.9 empowered the Federal Court to order, among other things, directing a legal practitioner to repay to the client costs which the client had been ordered to pay to another party “if costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default . . . .”
[25] Baik v Minister for Immigration& Anor [2008] FMCA 61 at [54]
[26] The quote is from Macteldir Pty Limited v Roskov [2007] FCAFC 49 at [55]
[27] Baik v Minister for Immigration & Anor [2008] FMCA 61 at [54]
[28] Macteldir Pty Limited v Roskov [2007] FCAFC 49 at [73]-[74]
On the other hand, there are cases where the words in the phrase have been construed and applied to the facts before the Court. One example is Ridehalgh v. Horsefield[29] where the English Court of Appeal considered the meaning of “improper” and “negligence”. Another example is Etna v Arif[30] where the Court of Appeal of the Supreme Court of Victoria considered the meaning of “negligence”.
[29] [1994] Ch. 205
[30] Etna v Arif [1999] 2 V.R. 353
In my opinion, the correct approach to the application of r.21.07 is to consider whether the misconduct alleged against the defaulting lawyer falls within any one or more of the words contained in the phrase “undue delay, negligence, improper conduct or other misconduct or default”. It may be that after that is done, the matters to which Barnes FM referred to in Baik v Minister for Immigration & Anor,[31] are to be taken into account when the Court considers whether to exercise its discretion in favour of making an order for costs under r.21.07.
[31] [2008] FMCA 61
Meaning of “improper” and “negligence”
In Ridehalgh v. Horsefield, the Court of Appeal said that the word “improper”:[32]
. . . covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.
[32] Ridehalgh v. Horsefield [1994] Ch. 205 at page 232D
In Ridehalgh v. Horsefield the Court of Appeal also considered the meaning of “negligent”. The Court said:[33]
[W]e are clear that “negligent” should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.
[33] Ridehalgh v. Horsefield [1994] Ch. 205 at page 232H-233C
A different construction was given to the word “negligence” in Etna v Arif.[34] In that case, Batt JA (with whose reasons Charles and Callaway JJA agreed) considered the construction of r.63.23 of Chapter I of the Supreme Court Rules (Vic) which empowered the Supreme Court of Victoria to make a costs order against a solicitor for a party where the solicitor caused costs to be incurred improperly or without reasonable cause or to be wasted by “undue delay or negligence or by any other misconduct or default”. Batt JA said:[35]
I consider that "negligence" in para.(1) connotes more than "mere" or "tortious" negligence: some kind of professional impropriety or "gross" negligence is required. This follows from the language of the paragraph itself, the apparent history or source of the particular words, and such authorities as there are. As regards the language of para.(1), the word "negligence" appears as one of the alternatives in the second limb (namely, that commencing "to be wasted") of the introductory "where" clause. It appears there in a context of words denoting blameworthy conduct: it is juxtaposed to the preceding "undue delay" and the succeeding "other misconduct or default" (emphasis added). That context suggests that its meaning is to be ascertained from that of its companion words or phrases. More importantly, the word "other" suggests that "undue delay" and "negligence" are to be construed as being of the same kind as "misconduct or default". That "negligence" connotes negligent misconduct or other negligent impropriety is shown, for a start, by decisions on forerunners or cognates of the present r.63.71(1).
[34] Etna v Arif [1999] 2 V.R. 353
[35] Etna v Arif [1999] 2 V.R. 353 at page 383, [79]
His Honour further said:[36]
So far as duty is concerned, it is the solicitor's duty to the court that is relevant. Thus, it seems to me, that the summary of Myers v. Elman by the Court of Appeal in Ridehalgh v. Horsefield at 227 is, in essence, applicable to the Victorian rule. In particular, “[w]hile mere mistake or error of judgment would not justify an order, misconduct, default or even negligence is enough if the negligence is serious or gross”.
[36] Etna v Arif [1999] 2 V.R. 353 at page 385, [82]
The language of r.21.07 is closer to the language of the rule considered in Etna v Arif than the language of the rule considered in Ridehalgh v. Horsefield. For that reason, in my opinion, “negligence” for the purposes of r.21.07 means negligence that is “serious or gross”. In these reasons, however, I will consider Mr Arnold’s claims on both the construction favoured by Batt JA in Etna v Arif and the construction favoured by the English Court of Appeal in Ridehalgh v. Horsefield.
“Has caused costs”
The words “has caused costs” requires a causal link between what is alleged to be the lawyer’s “undue delay, negligence, improper conduct or other misconduct or default” and the incurring of or throwing away of costs. The requirement of a causal connection in the rule considered by the Court of Appeal in Ridehalgh v. Horsefield was stated in the following terms:[37]
[T]he court has jurisdiction to make a wasted costs order only where the improper, unreasonable or negligent conduct complained of has caused a waste of costs and only to the extent of such wasted costs. Demonstration of a causal link is essential. Where the conduct is proved but no waste of costs is shown to have resulted, the case may be one to be referred to the appropriate disciplinary body or the legal aid authorities, but it is not one for exercise of the wasted costs jurisdiction.
[37] Ridehalgh v. Horsefield [1994] Ch. 205 at page 237E
It may safely be accepted that the notion of “causation” employed in r.21.07 is the common sense notion discussed by the High Court in March v E & MH Stramere Pty Ltd.[38] However, “‘common sense’ answers to questions of causation will differ according to the purpose for which the question is asked and the rule by which responsibility is being attributed”,[39] and that “one cannot give a common sense answer to a question of causation for the purpose of attributing responsibility under some rule without knowing the purpose and scope of the rule”.[40] The “legal context and relevant rule of responsibility direct one to the relevant legal policy and purpose of the causal question, thus affecting the evaluation of the extent of the required factual involvement of the impugned act or omission in assessing legal responsibility for the loss”.[41]
[38] (1991) 171 CLR 506
[39] Chappel v Hart (1998) 195 CLR 232 at page 256 ([63]), Gummow and Hayne JJ quoted with approval Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd [1998] 1 All ER 481 at page 487 (Lord Hoffman).
[40] Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd [1998] 1 All ER 481 at 488 (Lord Hoffman) quoted with approval by Gummow and Hayne JJ in Chappel v Hart (1998) 195 CLR 232 at page 256 ([63])
[41] Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [67] (Allsop P, as his Honour then was)
The context in which the question of causation under r.21.07 must be applied is the costs that result from “undue delay, negligence, improper conduct or other misconduct or default” of the defaulting lawyer. In virtually all cases, the costs the defaulting lawyer’s conduct will be alleged to have caused to be incurred, or to be thrown away, will be costs incurred as the result of the conduct of other lawyers (non-defaulting lawyers). That implies that for there to be a causal link for the purposes of r.21.07 between the conduct of the defaulting lawyer and the conduct of the non-defaulting lawyer, the conduct of the non-defaulting lawyer must not be negligent or unreasonable. Stated another way, the costs which it is alleged were incurred or thrown away because of the defaulting lawyer’s conduct must be costs that have been reasonably incurred.
Discretion
The power to order costs is discretionary. That is, the Court is not bound to make an order under r.21.07 even if the Court is satisfied costs have been incurred or thrown away because of defaulting conduct. The existence of this discretion was referred to in Ridehalgh v. Horsefield:[42]
Even if the court is satisfied that a legal representative has acted improperly, unreasonably or negligently and that such conduct has caused the other side to incur an identifiable sum of wasted costs, it is not bound to make an order, but in that situation it would of course have to give sustainable reasons for exercising its discretion against making an order.
[42] [1994] Ch. 205 at page 239E-239F
Procedure
In approaching applications for a personal costs order under r.21.07, it is important to bear in mind that such applications often involve serious allegations of misconduct against persons practising a profession which, if established, may have adverse consequences to that person’s professional reputation. There are at least two consequences that flow from this. The first is the following observation of Macpherson of Cluny J speaking for the Court of Appeal in In re A Barrister (Wasted Costs Order) (No 1 of 1991) which, in my opinion, applies equally to applications made under r.21.07:[43]
There is a clear need for any judge or court intending to exercise the wasted costs jurisdiction to formulate carefully and concisely the complaint and ground upon which such an order may be sought. These measures are draconian, and, as in contempt proceedings, the grounds must be clear and particular.
[43] [1993] Q.B. 293 at page 301
I would add that the obligation of the Court referred to in this passage obviously applies to legal practitioners who are instructed to apply for an order under r.21.07. Legal practitioners must formulate carefully and concisely the complaint upon which the order is sought.
The second consequence relates to the standard of persuasion that is to be applied to claims under r.21.07. What standard is to be applied is governed by s.140(2)(c) of the Evidence Act 1995 (Cth) which requires the Court, when considering whether it is satisfied that a claim or defence has been proved on the balance of probabilities, to take into account “the gravity of the matters alleged”. And it is relevant, also, to refer to the well-known passage from the judgment of Dixon J (as his Honour then was) in Briginshaw v Briginshaw:[44]
Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency.
[44] (1938) 60 CLR 336 at pages 361-362
Is there a prima facie case of misconduct by Mr Robinson?
Counsel for Mr Arnold submits that the test of whether Mr Arnold has a prima facie case for an order against Mr Robinson under r.21.07 of the FCCR is the same as the test that is applied where there is a no case submission at the close of a prosecutor’s case. Mr Robinson did not submit otherwise, and I accept that the question whether Mr Arnold has established a prima facie case will be answered in the affirmative if his claim for an order under r.21.07 can withstand an application that the claim be dismissed because it raises no case to answer.
Counsel referred me to a number of authorities that describe what must be established before a Court upholds a claim that a defendant or an accused has no case to answer, and I do not need to set out the passage on which counsel particularly relied.[45] In addition to the authorities referred to by counsel, the following passage from the reasons for judgment of Gilmour J in Fair Work Ombudsman v Offshore Marine Services Pty Ltd (No.2) provide a useful statement of the relevant principles:[46]
[45] Submissions on Costs, [9]-[14]
[46] [2013] FCA 943 at [120]
In Australian Securities and Investments Commission v Healey (2011) 196 FCR 291 at [535], Middleton J approved the principles concerning a no case submission identified by Kaye J in Oakley v Insurance Manufacturers of Australia Pty Ltd [2008] VSC 68 at [3] as follows:
[3] In my view the authorities, to which I shall shortly refer, establish the following broad principles which should apply to the application which is before me:
1. Where a no case submission is made in a trial by jury, the role of the judge is to determine whether, on the view of the evidence most favourable to the party against whom such a submission has been made (“the respondent party”), the jury could (not would) find in favour of the respondent party.
2. The test which is applicable, where a judge is sitting without a jury, is less stringent. In such a case the judge may uphold a no case submission, notwithstanding that the evidence, on the view most favourable to the respondent party, could support a judgment in favour of the respondent party.
3. In such a case the judge may perform an assessment of the quality of the evidence which has been called on behalf of the respondent party. In some cases, such an assessment may involve the judge evaluating the credit of witnesses from whom such evidence has been called.
4. In determining a no case submission, the judge is entitled to draw inferences from the evidence.
5. On a no case submission, the judge cannot draw an inference against the party making the submission (“the moving party”) based upon the absence of evidence from that party.
6. Although the judge, sitting alone, may assess the quality of the evidence in determining a no case submission, nonetheless the test which is to be applied by the judge, at that stage, is different to the test which the judge would apply in determining the ultimate outcome of the case, at the conclusion of a trial. Notwithstanding that the judge, in determining the no case submission, may assess the quality of the evidence, nonetheless the test remains whether, on the evidence so assessed, the judge “could” (not would) find for the respondent party on the evidence so far led. In such a case, the judge would only find against the respondent party if the evidence, so far adduced, is so unsatisfactory or inherently unreliable or equivocal that he were to conclude that he could not be reasonably satisfied of the case made by the respondent party on the evidence thus far adduced.
I will apply the approach set out in the authorities referred to by counsel for Mr Arnold and the principles summarised in Oakley v Insurance Manufacturers of Australia Pty Ltd.
The alleged misconduct of Mr Robinson – general
The conduct of Mr Robinson Mr Arnold alleges constitutes misconduct, and the grounds on which Mr Arnold claims it is misconduct, are set out in Mr Arnold’s counsel’s written submissions dated 26 November 2013 and 21 February 2014. There are eight acts on which Mr Arnold relies.
Drafting and issuing of subpoena for an improper purpose
The first act Mr Arnold complains constitutes misconduct is Mr Robinson’s drafting and issuing the subpoenas that in my reasons for judgment published on 8 November 2013 (earlier reasons) I found to be an abuse of process. Counsel for Mr Arnold submits that Mr Robinson “plainly made no attempt” to “draft the terms of the subpoenas in any way so as to make the material sought relevant to the issues in the proceedings”.[47] Nor did Mr Robinson attempt to justify the breadth of the subpoenas until the hearing on 31 October 2013.[48]
[47] Submissions on Costs, [17(a)]
[48] Submissions on Costs, [17(a)]
In her “Outline of Submissions in Reply on Costs” dated 21 February 2014, counsel for Mr Arnold identified what counsel referred to as the “background context” against which it was submitted I should judge the allegations of misconduct by Mr Robinson:[49]
Finally, the background context of this application supports the drawing of adverse inferences: being that Mr Robinson is the cousin of the applicant and that, based upon the objective evidence in Mr Arnold’s affidavits about the applicant’s business activities, the applicant had clearly intended to establish a rival business to Mr Arnold. In these circumstances, the extraordinary breath [sic] of the subpoenas, plainly designed to catch absolutely all available privileged, commercially sensitive and personal communications from 1 October 2010 to May 2013, properly gives rise to an inference of misconduct or gross negligence.
[49] At [14]
The “objective evidence in Mr Arnold’s affidavits about the applicant’s business activities” to which this passage of counsel’s submissions appears to refer is paragraphs 2 to 6 of Mr Arnold’s affidavit of 11 October 2013. There Mr Arnold deposes that the business of the first respondent (of which Mr Arnold was a director) included the production of a government military magazine called “On Duty”; that, before 14 September 2012, the applicant had been employed as editor of that magazine; the applicant, together with a Mr Foxton, left the employment of the first respondent on 14 September 2012; seven days later, the applicant and Mr Foxton commenced to publish a rival magazine called “Line Magazine”; and that on 13 November 2012 the applicant had written to a person informing her of “Line Magazine”, and that “[a]ll of the contributors from On Duty have come with us as have many of the key advertisers”.[50]
[50] Affidavit of K B Arnold, 11.10.13, [5]
It is important to be clear about what is alleged against Mr Robinson. He is not alleged to have drafted impermissibly broad subpoenas per se; the allegation is that Mr Robinson made “no attempt” to “draft the terms of the subpoenas in any way so as to make the material sought relevant to the issues in the proceedings”. That implies the allegation that it formed no part of Mr Robinson’s purpose when drafting the subpoenas to obtain documents related to any issue in the proceedings. Given the nature of the “background context” Mr Arnold invites the Court to consider when assessing Mr Arnold’s claim of misconduct or gross or serious negligence, the allegation appears to be that Mr Robinson drafted and issued the subpoenas for the purpose of enabling the applicant to improperly obtain commercially sensitive information about the first respondent to assist the applicant in his commercial interests.
The evidence on which Mr Arnold relies for this allegation appears to be the width of the subpoenas, the applicant’s having established a rival magazine to that conducted by the first respondent (six months before the subpoenas were issued); and Mr Robinson’s being the cousin of the applicant. In my opinion, however, these matters are incapable of rationally grounding a finding of the profoundly improper purpose alleged against Mr Robinson. The allegation is not supported by testimony, definite or indefinite, or by proofs, exact or inexact. At most, it is based on “indirect inferences”. The materials on which Mr Arnold relies for what amounts to an allegation “involving grave moral delinquency” on the part of Mr Robinson are of a kind that could “not satisfy any sound and prudent judgment” of the moral delinquency alleged against Mr Robinson.
In my opinion, Mr Arnold has failed to make a prima facie case that Mr Robinson prepared and issued the subpoenas for the improper purpose alleged against him, and hence he has failed to establish a prima facie case that Mr Robinson misconducted himself in connection with the drafting and issuing of the subpoenas.
If, contrary to my understanding of the scope of Mr Arnold’s claim against Mr Robinson, Mr Arnold contends that the issuing of impermissibly wide subpoenas by itself constitutes prima facie evidence of gross or serious negligence, that contention must be assessed by reference to my conclusions contained in the preceding paragraph. In my opinion, the drafting of what I have found to be impermissibly wide subpoenas cannot by itself afford a prima facie case of gross or serious negligence against Mr Arnold. If, contrary to my conclusion, “negligence” in r.21.07 has the meaning discussed in Ridehalgh v. Horsefield, I am of the opinion that there is a prima facie case that the drafting of the impermissibly wide subpoenas constitutes negligence. That is so because reasonably competent lawyers are expected to conduct litigation in accordance with the rules of court, and ought to be acquainted with well-established principles associated with particular areas of practice, such as the issuing of subpoenas.
Failure to promptly serve subpoenas on Mr Arnold
The second act on which Mr Arnold relies as disclosing misconduct by Mr Robinson is his failure to “promptly serve the subpoenas on Mr Arnold and the third respondent”, his waiting instead until 9 May 2013 to serve the subpoenas and, when Mr Robinson did so, serving the subpoenas by post rather than enquiring from Mr Arnold whether the subpoenas could be served by email.[51]
[51] Submissions on Costs, [17(b)]
Why this is said to constitute misconduct was not explicitly articulated in oral address. For that reason alone, this alleged act cannot be regarded as giving rise to a finding of misconduct on the part of Mr Robinson.
Why Mr Arnold claims this behaviour is improper, however, may have been left for insinuation. The possible insinuation is that Mr Robinson intentionally served the subpoenas late, and did so by using a means of service that was calculated to ensure Mr Arnold received the subpoenas with insufficient time for him to take steps to prevent the applicant from gaining access to the subpoenas. In my opinion, there is no evidence on which the Court could find that Mr Robinson served the subpoenas late for this purpose.
I find, therefore, that Mr Arnold has failed to make a prima facie case that Mr Robinson engaged in any misconduct on the basis of his serving the subpoenas on 9 May 2013, or by serving them by post, rather than by email.
Accessing documents without complying with r.15A.13
The third act is Mr Robinson’s seeking access to the documents produced in answer to the subpoenas purportedly under r.15A.13(1)(b) of the FCCR. Mr Arnold submits:[52]
Any person literate in English and reading that rule would understand that the rule could not apply given that the applicant’s solicitor had only put the subpoenas in the post to the respondents on 9 May 2013. The only explanation for such conduct by the applicant’s solicitor is gross negligence or deliberate misconduct (a solicitor is, prima facie, taken to know the law and understand the rules). Further, the application for access was made on an ex parte basis in circumstances where the applicant’s solicitor knew the respondents were not represented at that time.
[52] Submissions on Costs, [17(c)]
This allegation was expanded in Mr Arnold’s counsel’s “Outline of Submissions in Reply on Costs” as follows:[53]
[53] At [4]
(a)the form Mr Robinson signed (Ex A) specifically identified the rule pursuant to which he was seeking access;
(b)it can be inferred from his signature on that form that he read it and was aware of the existence of r.15A.13(1)(b);
(c)prima facie, a solicitor is taken to know the law . . . ;
(d)even if Mr Robinson did not read the rule (of which there is no evidence and no such inference ought be made), having signed the form Mr Robinson ought to [have] ensured he was aware [of] the contents of the rule.
These passages contain three allegations. Two relate to Mr Robinson’s having obtained access to the documents in circumstances where r.15A.13(1) of the FCCR did not authorise him to do so. The first of these two is the allegation that Mr Robinson knew he had no right to obtain access to the documents, yet he sought and gained access. That allegation, in turn, is based on the allegation that Mr Robinson actually knew the terms of r.15A.13 of the FCCR, and therefore must have known that he could not have gained access to the documents because he did not serve the subpoenas at least ten days before the return date of the subpoenas. The evidence on which Mr Arnold relies for these allegations is that Mr Robinson signed the form by which he sought to gain access, and the form referred to r.15A.13.
In my opinion, that evidence must be considered with other evidence. In particular, regard must be had to the information Mr Robinson recorded in the form by which he sought access. It accurately sets out the date the subpoenas were served on Mr Arnold by post, and the date of production. On the face of the form, the preconditions for gaining access to the documents pursuant to r.15A.13 were plainly not satisfied.
The question is: does this evidence provide a basis on which a Court could find that Mr Robinson sought access to documents knowing that he had no right to do so because the preconditions for the operation of r.15A.13 had not been satisfied? In my opinion, the evidence cannot provide any such basis. It is inherently unlikely that a solicitor, or any reasonable person, knowing that he or she had no right to gain access to documents under r.15A.13, would seek to obtain access by preparing a form that made it plain that he or she had no entitlement to gain access to the documents. The only hypotheses I can imagine that are consistent with a person applying for access in these circumstances is if the person believed that the fact that the preconditions for the rule had not been satisfied would be overlooked by the Court Registry, or if the person intended to mislead the Court as to whether the preconditions for access had been satisfied. And it is the case that Mr Arnold contends that Mr Robinson did attempt to mislead – indeed, did in fact “grossly” mislead – the Court Registry.
Mr Arnold made that allegation through his counsel’s “Outline of Submissions in Reply on Costs”:[54]
Further, by completing and presenting to the Registry on 17 May 2013 the Court’s form for access under rule 15A.13, Mr Robinson made the express representation to the Court on the face of that form that his application was “in accordance with Federal Circuit [Court] Rule 15A.13(1)(c)” (see bold heading under the party details on Ex A). That representation by Mr Robinson was grossly misleading. As the Court found, Mr Robinson’s breach of rule 15A.13 was “severe”.
[54] At [5]
This submission relies on a selective quotation of what is contained in the form by which Mr Robinson gained access; counsel quoted the words “in accordance with Federal Circuit Court Rule 15A.13(1)(c)” without including the words that immediately precede them, namely, “Notice of Request to Inspect”. Compounding this selective quotation is the replacement of the words “Notice of Request to Inspect” with the words “his application was”. This addition transforms the meaning of the text in which the words “in accordance with Federal Circuit Court Rule 15A.13(1)(c)” appear.
The words contained in the form on which counsel for Mr Arnold relied for conveying what she submitted was a “grossly misleading” representation to the Court simply formed part of the description of the form, namely, a “Notice of Request to Inspect in accordance with Federal Circuit Court Rule 15A.13(1)(c)”. The words did not convey, and cannot reasonably be regarded as conveying, any misrepresentation.
In my opinion, there is no evidence on the basis of which the Court could find that Mr Robinson knew the contents of r.15A.13 of the FCCR, and that he knew he could not under that rule legitimately obtain access to the documents; and yet, notwithstanding that knowledge, Mr Robinson sought access to the documents either by intending to mislead the Registry or by hoping or expecting the Registry would not notice that he was not entitled to access.
This brings me to the second allegation relating to Mr Robinson’s gaining access to the documents in breach of r.15A.13. This allegation, which is premised on Mr Robinson being ignorant of r.15A.13, is that Mr Robinson ought to have been aware of the rule. In the passage from Mr Arnold’s “Submissions on Costs” dated 26 November 2013, the allegation is one of gross negligence. In Mr Arnold’s “Outline of Submissions in Reply on Costs”, the allegation is simply one of negligence. I will consider both allegations, even though I have held that “negligence” as it appears in r.21.07 means “serious or gross negligence”.
It appears that Mr Arnold relies on two matters for submitting he has a prima facie case that Mr Robinson’s ignorance of r.15A.13 constitutes gross negligence. The first is Mr Robinson’s ignorance of the existence or terms of the rule. The second is the affidavit Mr Arnold made on 3 September 2013.[55] In that affidavit, Mr Arnold deposes that during hearings in relation to the mediation of his opposition to access held on 18 July and 15 August 2013 his “concerns surrounding the issuing of these subpoenas by the applicant with court process not been [sic] followed sec. 15a.13(b) was met with resistance”. Mr Arnold also deposes that at the hearing before the Registrar on 4 September 2013, he raised the “10 day rule” to which Mr Arnold recalled Mr Robinson saying: “There is no requirement for this 10 day rule. It’s something my friend has made up”.[56]
[55] Affidavit of K B Arnold, 11.10.13, annexure “KA9”
[56] Affidavit of K B Arnold, 19.02.14, [3]
This evidence must be considered with other evidence relevant to whether Mr Robinson’s ignorance of r.15A.13 constituted gross negligence. Mr Arnold sought and obtained legal advice in relation to the applicant’s having obtained access to the documents produced on subpoenas. He obtained legal advice from three sets of lawyers. The first was Gillis Delaney Lawyers who provided legal services on 21 and 22 May 2013, for which they charged $1,320. The second set of lawyers was Bainbridge Legal who provided legal services to Mr Arnold from 6 June 2013 to 9 September 2013, and for which they charged $13,562. And the third set of lawyers is Clinch Long Letherbarrow who commenced to provide legal services to Mr Arnold on 10 September 2013. Their fees and disbursements up to 22 November 2013 were $20,593.45. In addition, counsel was retained to advise. Counsel first provided services for which she charged on 4 July 2013. Counsel’s fees, up to 5 November 2013, totalled $16,417.50.
There is no evidence that any of the solicitors Mr Arnold retained asserted to Mr Robinson that the applicant had gained access to the documents in breach of r.15A.13 of the FCCR and that, for that reason, Mr Arnold had a ground for reclaiming the documents from the applicant. The first occasion lawyers for Mr Arnold addressed a demand to Mr Robinson in relation to the documents was the letter dated 9 July 2013 from Mr Bainbridge to which I refer in paragraph 28 of my earlier reasons.[57] That letter (which may have been settled by counsel[58]), although it referred to r.15A.06(b) of the FCCR, did not refer to r.15A.13. The first occasion the evidence reveals Mr Arnold’s lawyers were aware of r.15A.13, or at least the potential relevance of that rule, is on 6 September 2013 when counsel completed a memorandum of advice.[59] In that memorandum, counsel advised that “[g]iven the pre-condition in Rule 15A.13(1)(b) – being service on our clients at least 10 days before the return date – FCB Workplace Law ought not to have been allowed by the Court to inspect and copy the documents produced in response to subpoena”. Notwithstanding that advice, Mr Arnold’s lawyers did not consider that the applicant’s not complying with r.15A.13 was a ground for claiming an order for the destruction of the documents. The ground on which Mr Arnold claimed an order for the destruction of the documents was that the subpoenas were an abuse of process, and that the order for destruction was premised on the Court granting an order for the setting aside of the subpoenas. Mr Robinson was first criticised by any lawyer about his failure to comply with r.15A.13 on the application for an order for costs under r.21.07.
[57] Robinson v Blackheart Industries Pty Ltd (In Liq) & Ors [2013] FCCA 1829
[58] Annexure “DJW7” to the affidavit of Mr Woodbridge is a copy of counsel’s memorandum of fees dated 6 September 2013. The work which the memorandum describes as having been performed on 4 July 2013 is “Review instructions and documents and draft letter re confidential information and subpoena (1 hr 15 mins)”. The memorandum of fees dated 25 July 2013 issued by Bainbridge Legal, however, does not refer to counsel drafting the letter, but refers to the drafting of the letter.
[59] Affidavit of K B Arnold, 19.02.14, annexure “KA2”
During the hearing, counsel submitted that the reason Mr Arnold did not rely on r.15A.13 was that Mr Arnold and his lawyers did not know how Mr Robinson gained access:[60]
We did not know how the applicant got access. His [i.e., Mr Robinson’s] submissions identified that he got access through court orders. So we had no idea how he actually got access, but what we know he must have known, or was competent to read, is that when he filled in this form, it says Federal Circuit Court Rule 15A.131C. He knew exactly which rule he was relying on to get access.
[60] 18.12.13, T12.25
Counsel made this submission at the hearing of 18 December 2013. There was not then before the Court the extract from counsel’s memorandum of advice to which I refer in paragraph 72 of these reasons. That extract was annexed to the affidavit of Mr Arnold made on 19 February 2014. Counsel’s memorandum of advice refers to r.15A.13(1)(b) of the FCCR. That indicates that as at 6 September 2013 counsel was aware that Mr Robinson gained access to the documents purportedly under that rule, not a court order, and that those who read counsel’s advice would have become aware of that fact when they read the memorandum of advice, which it is reasonable to infer they did on or shortly after 6 September 2013. In these circumstances, I cannot accept that, at least as at and after 6 September 2013, the applicant and his lawyers “did not know how the applicant got access” and “had no idea how” Mr Robinson gained access to the documents. Nor is there any basis for submitting, to the extent it was intended to be submitted, that Mr Robinson misled Mr Arnold or his lawyers about how Mr Robinson gained access to the documents.
In my opinion, this evidence shows that Mr Robinson was not the only lawyer who was unaware of the substance of r.15A.13, or of the significance of obtaining access to documents purportedly pursuant to that rule when the conditions provided by that rule had not been satisfied. In those circumstances, Mr Robinson’s ignorance of the substance of r.15A.13 is incapable of constituting by itself a prima facie case that Mr Robinson was grossly or seriously negligent. Even if Mr Robinson’s ignorance of the rule is assessed without reference to the ignorance of other lawyers, that by itself would not constitute a prima facie case of gross or serious negligence. The mere ignorance of a rule of court does not constitute a prima facie case of gross or serious negligence.
Assuming, contrary to what I have found, that “negligence” in r.21.07 has the meaning given in Ridehalgh v. Horsefield, I next turn to whether there is a prima facie case that by gaining access to the documents in ignorance of r.15A.13 Mr Robinson was negligent in the sense of failing to “act with competence reasonably to be expected of ordinary members of the profession”. In my opinion, Mr Arnold has established a prima facie case. Legal practitioners who conduct litigation on behalf of their clients are expected to do so in accordance with the rules of court. That imports an obligation on legal practitioners to acquaint themselves with whatever rules of court are relevant to the particular business they are instructed to undertake.
Finally, I turn to the third allegation made against Mr Robinson in connection with his obtaining access to the documents; and that is “the application for access was made on an ex parte basis in circumstances where the applicant’s solicitor knew the respondents were not represented at that time”.[61] This allegation cannot constitute any distinct ground of misconduct. Rule 15A.13(1)(c) provides that access may be gained by the filing of “a notice of request to inspect in an approved form”. That is what Mr Robinson did. Further, he did give notice, although not the notice he was required to give under the rule.
[61] Submissions on Costs, [17(c)]
Failure to acknowledge lack of entitlement to retain documents
The fourth act Mr Arnold submits constitutes misconduct is Mr Robinson’s taking advantage of his breach of the Court’s rules by failing to promptly acknowledge that he ought not to have kept and retained the documents produced in answer to the subpoenas.[62] In support of that allegation, counsel for Mr Arnold submitted:[63]
On 22 May 2013, only six business days after receipt of the subpoenas, the issue was raised before the Court and the applicant’s solicitor surprisingly said “this is a little bit too little too late”. There was clearly no proper basis for the applicant’s solicitor to have made that statement to the Court. The statement was misleading, particularly having regard to [the] finding that the breach of r.15A.13(1)(b) was “severe”.
[62] Submissions on Costs, [17(d)]
[63] Submissions on Costs, [17(d)]
Mr Robinson’s statement must be placed in the context in which it was made. It was made at a directions hearing before Judge Lloyd Jones. The solicitor for Mr Arnold, Ms Latofski, asked for a two-week adjournment, predominantly to deal with subpoenas Ms Latofski, believed were returnable before Judge Lloyd Jones on the previous day.[64] Ms Latofski said that Mr Arnold and Mr Arnold’s mother (Mrs Arnold) took issue with the schedules to three subpoenas, those issued to Telstra Corporation, Inspiron, and The Great Aussie Surf Shop. Ms Latofski said that Mr Arnold and Mrs Arnold did not receive notice of the subpoenas until 14 May 2013, and they did not have an opportunity to consider the subpoenas and obtain legal advice. Ms Latofski further said that access had been granted to documents in response to the subpoenas issued to Telstra Corporation and The Great Aussie Surf Shop, although Inspiron had not produced any documents. Ms Latofski said that the purpose of the two-week adjournment was to “provide the second and third respondents an opportunity to bring any application and the appropriate application in relation to the ambit of the documents that have been produced”.[65]
[64] Affidavit of B A Arnold, 11.10.13, annexure “F”
[65] Affidavit of B A Arnold, 11.10.13, annexure “F”, T3.10
Mr Robinson opposed the application for an adjournment. He submitted that the subpoenas had been properly issued and properly served.[66] He said that he and his client had accessed “all the information produced by . . . Telstra and also by The Great Aussie Surf Shop”.[67] A little later, Mr Robinson said:[68]
I understand that the second and third respondents instructed new solicitors last night or yesterday afternoon. I had a phone call yesterday afternoon where the issue of the subpoenas was raised. I would suggest that this is a little bit too little, too late.
[66] Affidavit of B A Arnold, 11.10.13, annexure “F”
[67] Affidavit of B A Arnold, 11.10.13, annexure “F”, T3.40
[68] Affidavit of B A Arnold, 11.10.13, annexure “F”, T3.30-T3.35
I have set out the conversation Mr Robinson had with Mr Arnold’s new lawyers in paragraphs 17-19 of my earlier reasons.
Ms Latofski then took issue with the submission Mr Robinson made about the subpoenas having been served properly. Ms Latofski said:[69]
My friend just said that the subpoenas have been served properly. I reject that. The subpoenas were not received until 14 May and the second and third respondents’ letter boxes were checked on 13 May. So they haven’t been served in accordance with the Rules.
[69] Affidavit of B A Arnold, 11.10.13, annexure “F”, T4.30
Later in the hearing, Mr Robinson said:[70]
This is evidence from the bar table. That the documentation was served – or the material on the opponents was served under as [sic] letter from my office. I say that unless my friends have any suggestion to say that I have acted inappropriately in service of these materials, then that’s something that my friends can raise by way of some sort of interlocutory application as to the Inspiron documentation. It is what it is. We say that my client’s houses are in order, and if my friend wishes to raise it, this is an ancillary issue to the programming of the matter.
[70] Affidavit of B A Arnold, 11.10.13, annexure “F”, T4.45-T5.1
Mr Arnold’s solicitor responded with the following:[71]
Just to be clear, there isn’t any allegation of inappropriateness. The submission that was made is that the subpoenas weren’t served until 14 May.
[71] Affidavit of B A Arnold, 11.10.13, annexure “F”, T5.5
Later in the hearing, Ms Latofski said she was “not certain of the orders made in relation to that subpoena yesterday” and then asked whether “my friend can help me as to whether or not that subpoena was stood over”.[72] Mr Robinson responded as follows:[73]
Your Honour, under the Court rules, and under the functions of the court, there is no return of subpoena. The documentation is produced subject to whether or not any objection is raised, ordinary access is granted, and I understand ordinary access has been granted by the court in the usual course, such as there is no in fact formal mention of the matter before the registrar or the court . . .
[72] Affidavit of B A Arnold, 11.10.13, annexure “F”, T5.35-T5.40
[73] Affidavit of B A Arnold, 11.10.13, annexure “F”, T5.40-T5.45
After his Honour asked whether the matter was before the Registrar, Mr Robinson said that he assumed that was the case and that he “understood it to be dealt with in chambers”.[74] Ms Latofksi then said that the “second and third respondents will make appropriate enquiries in light of that, your Honour”.[75] His Honour concluded that his Honour “will leave it to you to make any enquiries that you wish”.[76]
[74] Affidavit of B A Arnold, 11.10.13, annexure “F”, T6.5
[75] Affidavit of B A Arnold, 11.10.13, annexure “F”, T6.10
[76] Affidavit of B A Arnold, 11.10.13, annexure “F”, T6.15
I do not accept that Mr Robinson’s suggestion that it was “too little, too late” was misleading. The statement could only reasonably have been viewed by the Court for what it was – a submission. Further, Ms Latofski was not misled. She did not accept any submissions Mr Robinson made. She indicated that Mr Arnold and Mrs Arnold proposed to make an application in relation to the width of the schedules to the subpoenas; and she said that Mr Arnold and Mrs Arnold would make inquiries in relation to the accessing of the documents. Nor could it be said the Court was misled. All the Court had before it was two competing submissions the Court was not called on to resolve, and which it did not resolve. Finally, Mr Robinson invited Ms Latofski to allege that Mr Robinson “acted inappropriately in service of these materials” if that is how Ms Latofski viewed Mr Robinson’s conduct in gaining access to the documents. Ms Latofski disavowed any such suggestion.
Misleading statements to the Court either on 22 May or 31 October 2013
The fifth act Mr Arnold submits constitutes misconduct is Mr Robinson’s having made a misleading statement to the Court, either on 22 May 2013 or in an affidavit Mr Robinson made on 24 October 2013 and on which he relied at the hearing of 31 October 2013. The potentially misleading statement Mr Robinson made on 22 May 2013 is said to have been that he had “already accessed and so have my clients, all the information produced . . . so in that respect, any arguments that are raised are simply just . . . waived in terms of privilege and sensitivity of those materials”.[77] The potentially misleading statement it is said Mr Robinson made in his affidavit is that he had not read any privileged material.[78] The ground on which counsel submits this statement was misleading is the contention that Mr Robinson’s statement that privilege had been waived implied that Mr Robinson must have read the material, which is inconsistent with Mr Robinson’s having deposed he did not read the privileged material.
[77] Affidavit of B A Arnold, 11.10.13, annexure “F”, T3.40
[78] Submissions on Costs, [17(e)]
In my opinion, this does not afford a prima facie case of Mr Robinson having made any misleading statement to the Court. Mr Robinson’s submission to the Court on 22 May 2013 that privilege has been waived was unambiguously based on his assertion that he and the applicant had accessed the documents. That can only be taken to mean that Mr Robinson and the applicant had gained access to the documents. Gaining access to documents, and reading them, are different things.
Statements made in Mr Robinson’s letter of 11 July 2013
The sixth act Mr Arnold submits constitutes misconduct is statements Mr Robinson made in a letter dated 11 July 2013 to Mr Arnold’s solicitor that allegations made against Mr Robinson were “fundamentally baseless, ill-informed and ought to be retracted” and that “despite being reasonably served” the respondents had taken “no steps” to lodge their objections and that “all such claims” to privilege had been “waived”.[79] Mr Arnold submits that these statements “are plainly wrong with respect to rules and misleading if his evidence to this Court about not having read the privileged material is believed”.[80]
[79] Submissions on Costs, [17(f)]
[80] Submissions on Costs, [17(f)]
This allegation does not specify the rules with respect to which Mr Robinson’s statements were “plainly wrong”. The only rule referred to in the letter to which Mr Robinson’s letter responds is r.15A.06(2) of the FCCR which provides that the party issuing a subpoena “must serve by ordinary service a copy of the subpoena on each other party, any interested person and any independent children's lawyer in the proceeding within a reasonable time before attendance or production under the subpoena is required”. Mr Robinson arranged to send the subpoenas by post to Mr Arnold on 9 May 2013. Given that the return date of the subpoenas was 16 May 2013, it could not be said, whether on a prima facie basis or otherwise, that it was “plainly wrong” for Mr Robinson to claim he had complied with that rule. That is so even if a Court were to ultimately disagree with such a claim.
There is also no prima facie case for finding that Mr Robinson made a misleading statement assuming the Court believes Mr Robinson did not read privileged material. For the reasons I set out above, even if Mr Robinson were to be believed that he did not read privileged documents, his assertion that privilege was waived could not be regarded as misleading.
Misleading statement to the Registrar on 4 September 2013
The seventh act Mr Arnold submits constitutes misconduct is the submission Mr Robinson made to the Registrar on 4 September 2013 that the applicant “has taken the liberty of access to those materials and closely scrutinised them. Any attempt to challenge the legitimacy of the Subpoenas . . . via an objection process is fruitless in that access has already been granted and undertaken”.[81] Counsel for Mr Arnold submits that this statement is misleading if Mr Robinson’s “statement to this Court about not having read the privileged material is true”.[82]
[81] Affidavit of K Arnold, 29.10.2013, annexure “KA4”, page 41, at [22]
[82] Submissions on Costs, [17(g)]
It is unclear in what respects it is claimed that the statement Mr Robinson made to the Registrar was misleading, assuming Mr Robinson is believed that he did not read privileged material. It appears the allegation is that the statement “closely scrutinised” means “read”, and that Mr Robinson read all the documents, including privileged documents. If, however, Mr Robinson is believed that he did not read privileged documents, his stating that he “closely scrutinised” the documents could not be taken to be inconsistent with his statement that he did not read the privileged documents.
The eighth act Mr Arnold submits constitutes misconduct is statements Mr Robinson made to the Registrar on 4 September 2013. These were that the respondents had “failed to lodge any objection” and that there had been “a manifest failure to account for any delay in lodge [sic] an objection”; and that on 16 May 2013 “access orders were made by this Honourable Court in relation to the materials produced by the Great Aussie Surf Shop Pty Ltd”.[83] These passages are taken from written submissions Mr Robinson submitted to the Registrar.[84]
[83] Submissions on Costs, [17(h)]
[84] Affidavit of K Arnold, 29.10.13, annexure “KA4”, page 41, at [22] and [23]
Mr Robinson was incorrect in submitting that access orders were made. But there is no evidence on the basis of which a Court could accept counsel’s submission that at the time he made that statement to the Registrar Mr Robinson “was aware” that he had obtained access under r.15A.13(1)(b). As I have already found, the evidence is not such from which a Court can reasonably find that Mr Robinson obtained access to the documents knowing of the existence of the terms of r.15A.13 and of his not being entitled to obtain access to the documents under that rule.
Is there a prima facie case that the alleged misconduct caused Mr Arnold to incur costs?
I have already concluded that counsel’s acknowledgement that “it is not possible for the Court to determine whether the statutory test is satisfied in relation to each and every component of the costs claimed” means that Mr Arnold cannot demonstrate a prima facie case that Mr Robinson is liable to an order under r.21.07. In this section of my reasons, I consider whether, notwithstanding counsel’s acknowledgement, Mr Arnold has proved on a prima facie basis that he incurred costs as a result of Mr Robinson’s alleged misconduct. I will consider this question on the assumption that Mr Arnold has established a prima facie case of misconduct against Mr Robinson.
The evidence of the costs Mr Arnold claimed on 22 November and 18 December 2013 he incurred as a result of Mr Robinson’s alleged misconduct is contained in the affidavit of Mr Woodbridge. At the hearing on 18 December 2013 I understood counsel for Mr Arnold to have submitted that Mr Robinson caused all of the costs Mr Arnold incurred after 17 May 2013, being the date on which Mr Robinson gained access to the documents.[85] The basis of that submission is that the abusive subpoena “itself started this chain of events”.[86] Given that the only evidence of the costs Mr Arnold claims he incurred are those identified in the affidavit of Mr Woodbridge, the issue I must consider is whether Mr Arnold has made a prima facie case that those costs were incurred by Mr Arnold because of the alleged misconduct of Mr Robinson.
[85] 18.12.13 at T17.4: “HIS HONOUR: You’ve got to identify the costs - - - MS FRANCOIS: Okay . . . . 17 May 2013 is the basis upon which - that’s the date upon which the first act of negligence occurs, which is obtaining these documents in breach of the court rules. HIS HONOUR: And you’ve got to identify to me the costs which you say that that is causally relevant. MS FRANCOIS: Flow from that. We say everything flows from that.”
[86] 18.12.13, T34.20
Before I consider that question, it would be useful to summarise in broad terms the costs identified in the affidavit of Mr Woodbridge. These may be summarised as follows:
a)Costs in the amount of $1,320 referred to in a tax invoice dated 31 May 2013 issued by Gillis Delaney Lawyers to “BlackHeart Industries Pty Ltd”. The costs relate to work undertaken on 21 and 22 May 2013. The work appears to relate to the subpoenas that had been issued at the request of Mr Robinson, and a court appearance on 22 May 2013.
b)Costs totalling $13,562 claimed in five invoices issued by Bainbridge Legal Pty Limited to Mr Arnold. The costs relate to the provision of legal services from 6 June 2013 to 9 September 2013. They relate to a number of matters. These include services provided in connection with the mediation to which I refer in my earlier reasons,[87] attendances on an administrator or liquidator or both, some contracts for sale, and in relation to the subpoenas.
c)Costs totalling $20,593.45 claimed in an invoice dated 18 November 2013 issued by Clinch Long Letherbarrow Lawyers to Mr Arnold. The work covered by that invoice appears to relate to work undertaken in connection with the application that I heard on 31 October 2013.
d)Costs totalling $16,417.50, being counsel’s fees.
[87] Robinson v Blackheart Industries Pty Ltd (In Liq) & Ors [2013] FCCA 1829 at [26]-[32]
There are a number of matters to note. First, the costs identified in the affidavit of Mr Woodbridge include costs that could not be regarded as having been caused by any alleged misconduct of Mr Robinson. These include costs incurred in relation to attendances on the liquidator of the first respondent, and costs in relation to a contract for sale. The amounts charged for these matters appear to represent a very small proportion of the overall costs identified in the affidavit of Mr Woodbridge.
Second, the first respondent, not Mr Arnold, incurred the fees claimed by Gillis Delaney Lawyers. It cannot be said, therefore, that Mr Arnold incurred these costs, even if Mr Arnold could otherwise show that they were incurred because of the misconduct of Mr Robinson.
Third, neither Gillis Delaney Lawyers nor Bainbridge Legal has ever been on the record in the proceedings. In that regard, I have been referred to the decision of McInnis FM in Diners Club Pty Ltd v Wakim[88] where his Honour set aside a Registrar’s order requiring the applicant creditor to pay the respondent’s costs on the ground that the respondent did not have a lawyer on the record. His Honour said:[89]
As a result of a request to attend Court, the solicitor for the Petitioning Creditor appeared before a Registrar . . . . It is of some interest to note that on that date a solicitor from a firm Piper Alderman purported to appear on behalf of the Respondent Debtor. I indicate purported to appear on behalf of the Respondent Debtor as there is nothing on file to indicate that the solicitors ever placed themselves on the record in these proceedings pursuant to the Rules of the Court. . . .
Curiously, an Order was also made on 7 June 2006 that the Creditor pay the Respondent’s costs. In circumstances where there is no solicitor on record and where there was no appearance for the Respondent properly recorded, it is difficult to see how a solicitor would then have an entitlement to costs save perhaps upon giving an undertaking to provide the appropriate notice of address for service or an indication that the solicitor was then acting for the Respondent Debtor.
[88] [2006] FMCA 1038
[89] [2006] FMCA 1038 at [7] and [9]. See also Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd(No.2) [2010] FCA 1224 where Logan J refused to make an order for costs in favour of a petitioning creditor who was purportedly represented by a solicitor who was not on the record.
Thus, even if Mr Arnold can establish on a prima facie basis that all costs charged by Gillis Delaney Lawyers and Bainbridge Legal were costs he incurred because of Mr Robinson’s alleged misconduct, Mr Arnold would be unable to show that these costs had been incurred by him in connection with any step in the proceeding.
Fourth, the basis on which Mr Arnold claimed an order for the destruction of documents was that Mr Robinson issued impermissibly wide subpoenas in abuse of the process of the Court. Mr Arnold did not, however, obtain an order for destruction on that ground. He obtained the order on the ground that Mr Robinson had gained access to the documents purportedly pursuant to r.15A.13 of the FCCR when the preconditions for obtaining access to the documents under that rule had not been satisfied. And this ground was one that I raised with the parties after the hearing of 31 October 2013. This raises the question of whether I can be satisfied on a prima facie basis that the actual costs Mr Arnold incurred as set out in the affidavit of Mr Woodbridge were reasonably incurred by Mr Arnold given that Mr Arnold did not obtain the order for destruction on the grounds on which he in fact relied. In my opinion, I can only be so satisfied if I can be satisfied on a prima facie basis that Mr Arnold would have incurred the same or at least substantially the same costs had Mr Arnold applied for an order for destruction on the ground on which I made the order.
Counsel for Mr Arnold submitted, in effect, that the costs Mr Arnold actually incurred in applying to set aside the subpoenas are the same as the costs Mr Arnold would have incurred had he applied on the ground on which I ordered that the documents be destroyed. That is so because the order I made relied on a finding that the subpoenas constituted an abuse of process. As counsel submitted, it “was plainly necessary for the second respondent to demonstrate that the subpoenas were an abuse of process in order to obtain the relief that . . . was ultimately granted”.[90] In my opinion, however, I cannot be satisfied Mr Arnold has made out a prima facie case that the costs Mr Arnold would have incurred had he made the application on the ground on which he actually succeeded would have been the same as the costs he actually did incur, as identified in the affidavit of Mr Woodbridge. On the contrary, the circumstances before me suggest otherwise.
[90] Outline of Submissions in Reply on Costs, [11]
Had the lawyers for Mr Arnold applied for an order for destruction on the ground on which I made that order, the application would have been a simple affair. If Mr Arnold’s lawyers did not know how Mr Robinson gained access to the documents, they could have made an enquiry of the Registry about it – as they did on 4 November 2013, after I invited the parties to make submissions in relation to r.15A.13.[91] The application for relief based on non-compliance with r.15A.13 would then simply have been supported by an affidavit from Mr Arnold attaching the abusive subpoenas (for their abusive nature was evident from their terms alone), specifying when and how he received notice of the subpoenas, and identifying the privileged and commercially sensitive documents that had been produced in answer to the subpoenas and to which the applicant had gained unauthorised access. It is difficult to imagine that an application made on this basis would have resulted in Mr Arnold reasonably incurring the costs of $1,320 charged by Gillis Delaney Lawyers, the costs of $13,562 charged by Bainbridge Legal Pty Limited, the costs of $20,593.45 charged by Clinch Long Letherbarrow, and the fees of $16,417.50 charged by counsel.
[91] See letter dated 4 November 2013 from Clinch Long Letherbarrow to the Court requesting “[a]ny application form filled in by the Applicant or the Applicant’s legal representatives, FCB Workplace Law, or notes made by the Court, in relation to access granted on 17 May 2013 to the Applicant or FCB Workplace Law to documents produced under a subpoena by the Great Aussie Surf Shop” (affidavit of K B Arnold, 19.2.14, annexure “KA6”).
For these reasons, I am not satisfied that Mr Arnold has made out a prima facie case that the costs referred to in the affidavit of Mr Woodbridge are costs Mr Arnold incurred because of the alleged misconduct of Mr Robinson.
Other matters
There are two other matters I wish to address. The first concerns the following submission made by counsel for Mr Arnold:[92]
In summary, the applicant’s solicitor’s conduct listed above was productive [of] significant delay and expense. Rather than promptly admitting that he ought not to have had access and allowing a process whereby the respondents could promptly have their objections heard to the subpoenas, there was a farcical process between May to October 2013 in which the applicant’s solicitor’s conduct caused a great waste of the Court’s time and resources and those of the second respondent in relation to what, if he had behaved properly, ought to have been a short application to set aside clearly abusive subpoenas.
[92] Submissions on Costs, [18]
In my opinion, the delay in having Mr Arnold’s claims in relation to the documents properly dealt with by the Court, and what counsel describes as a “farcical process” that lasted until 14 October 2013 when Mr Arnold filed his application to set aside the subpoenas, were not caused by Mr Robinson. They were the product of the choices Mr Arnold made.
As I note above, the issue of the late service of the subpoenas was raised before the Court at the directions hearing on 22 May 2013. Mr Arnold’s solicitor, Ms Latofski, informed the Court that Mr Arnold and Mrs Arnold would make inquiries about the circumstances in which Mr Robinson gained access to the documents produced on subpoena. Ms Latofski also indicated Mr Arnold and Mrs Arnold required time to make an “application in relation to the ambit of the documents that have been produced”.
No such application was made until 14 October 2013. In the meantime, Mr Arnold pursued a procedure that had been commenced on 21 May 2013 with the filing of a “Notice of Objection – Subpoena” in relation to each of the two subpoenas Mr Robinson had issued.[93] The “Notice of Objection” was a form for objecting to the production of documents called by a subpoena or to the inspection of documents that had been produced on subpoena. This was a futile procedure for dealing with the applicant’s unauthorised access to the documents produced on subpoena. By 21 May 2013, when the notices of objection were filed, the documents called for by the subpoenas had already been produced, and the applicant had already gained access to the documents. By then it was too late to object to the production and access. The only option that was available to Mr Arnold to reverse the access was to file an application, which he ultimately did on 14 October 2013, and even then without relying on r.15A.13. Yet Mr Arnold persisted with the “Notice of Objection” procedure until it failed, as it was bound to fail, before the Registrar on 4 September 2013.
[93] Affidavit of B A Arnold, 11.10.13, annexures “D” and “E”
Further, I cannot accept counsel’s submission that had Mr Robinson “behaved properly”, there “ought to have been a short application to set aside clearly abusive subpoenas”. First, as I concluded in my earlier reasons, the appropriate remedy for the applicant’s unauthorised access was not the setting aside of the subpoenas. Second, it was open to Mr Arnold by 22 May 2013 to apply for an order for destruction of documents on the ground on which I ultimately made such an order on 8 November 2013.
The second matter I wish to address is the serious and, so I have found, unfounded imputations counsel for Mr Arnold directed to Mr Robinson. Counsel asserted, implicitly if not explicitly, that Mr Robinson issued the subpoenas for the purpose of obtaining commercially sensitive and privileged documents to benefit the applicant’s commercial interest. Counsel also asserted that Mr Robinson was actually aware of r.15A.13 of the FCCR at the time he gained access to the documents, and he was actually aware that the preconditions for gaining access to the documents under that rule had not been met, yet he persisted to obtain access to the documents. These are allegations of grave misconduct. In addition, counsel made other imputations concerning Mr Robinson. In her written submissions, counsel asserted that Mr Robinson exhibited “a gross inability to understand relevant legal principles”[94] and “gross negligence or deliberate misconduct”;[95] Mr Robinson made misleading statements to the Court[96] and engaged in “continued misleading conduct”;[97] and Mr Robinson made a representation that “was grossly misleading”.[98] During the hearing, counsel asserted that Mr Robinson “flagrantly breached the rule that he knew he must have applied under because he filled in the form”,[99] and liberally employed the word “misleading” to describe much of Mr Robinson’s conduct.
[94] Submissions on Costs, [17(a)(ii)]
[95] Submissions on Costs, [17(c)]
[96] Submissions on Costs, [17(d)-(f)]
[97] Submissions on Costs, [19]
[98] Outline of Submissions in Reply on Costs, [5]
[99] 18.12.13, T47.35
The making of these assertions, unfounded as I have held them to be, was foreign to the purposes of the hearing of 18 December 2013 and 21 February 2014. The purpose of the hearing was to determine whether Mr Arnold had a prima facie case for the making of an order against Mr Robinson under r.21.07. The question I had to determine was “not whether on the evidence as it stands the defendant [in this case, Mr Robinson] ought to be convicted [in the case of Mr Robinson, ought to be found to have acted improperly], but whether on the evidence as it stands he [i.e., Mr Robinson] could lawfully be convicted [i.e., found to have acted improperly]”.[100] The nature of the issue I had to decide meant that counsel should have gone no further than submitting, to the extent there was a proper basis for doing so, that there was evidence on the basis of which the Court could lawfully conclude that Mr Robinson engaged in conduct that fell within r.21.07 of the FCCR.
[100] May v O’Sullivan (1955) 92 CLR 654 at page 658
Can r.21.07 be engaged in proceedings under the FW Act?
I now turn to the question that logically I should have addressed first. Is it the case, as counsel for Mr Robinson submits, that the Court does not have power to make an order for costs under r.21.07 of the FCCR against Mr Robinson because the proceedings in which the application for costs is made is a proceeding in relation to a matter arising under the FW Act?
On analysis, counsel’s submission is based on the following premises:
a)The only sources of this Court’s jurisdiction to award costs is s.79 of the FCCA Act, or some other Act or valid regulation that confers jurisdiction on the Court to award costs in a proceeding before it.
b)Subsection 79(2) confers jurisdiction on the Court to “award costs in all proceedings before the [Court] . . . other than proceedings in respect of which any other Act provides that costs must not be awarded”. Because of s.79(1), however, the jurisdiction conferred by s.79(2) does not apply to, among other things, “proceedings in relation to a matter arising under the” FW Act.
c)Nevertheless, the Court does have jurisdiction to award costs in proceedings in relation to a matter arising under the FW Act; and that jurisdiction is conferred by s.570 of the FW Act. Section 570 of the FW Act empowers the Court to order a “party to proceedings . . . in a court . . . to pay costs incurred by another party to the proceedings”, but only in the circumstances prescribed in s.570(2) of the FW Act.
d)The generality of any Rules of Court that have been made pursuant to s.86 of the FCCA Act in relation to “the costs of proceedings in the Federal Circuit Court of Australia”, such as r.21.07, must be read in the light of s.81(2) of the FCCA Act, which provides:
Rules of Court have effect subject to any provision made by another Act, or by rules or regulations under another Act, with respect to the practice and procedure in particular matters.
e)Section 570 of the FW Act is a provision “with respect to the practice and procedure in particular matters”, namely, the payment of costs in proceedings in relation to a matter arising under the FW Act. Therefore, in such proceedings, r.21.07 has effect subject to s.570, which means that r.21.07 will not apply to the extent it is inconsistent with s.570.[101] And r.21.07 is inconsistent with s.570 because r.21.07 provides for the making of a costs order against a person who is a lawyer, whereas s.570 only provides for the making of a costs order against a party.
[101] See Harding v Coburn [1976] 2 NZLR 577 at page 582 where Cooke J said that making one statutory provision “subject to” another provision is “a standard way of making clear which provision is to govern in the event of conflict.”
If the only sources of the Court’s jurisdiction to award costs in a proceeding brought under the FW Act are s.79 of the FCCA Act and s.570 of the FW Act, I would feel bound to accept counsel’s submission. The question, however, is whether these two provisions are the only relevant sources of the Court’s jurisdiction to order costs in proceedings under the FW Act.
Counsel for Mr Arnold submitted that these two provisions are not the only sources of jurisdiction. Counsel relied on a passage from the reasons for judgment of Flick J in Veolia Transport Sydney Pty Ltd v Mifsud[102] where his Honour said that s.570 of the FW Act only serves to protect a “party” to a proceeding and there “is thus no express limitation upon the power of the Court to order – in an appropriate case – costs against a non-party”. This passage, however, does not identify what that source of power might be.
[102] [2012] FCA 1472 at [37]
Counsel for Mr Arnold identified two sources of jurisdiction for the Court making a costs order against a solicitor. First, counsel referred to the power that was found in Knight v FP Special Assets Ltd[103] to support the making of an order for costs against a non-party. Second, counsel referred to s.86 of the FCCA Act and s.2K of the Acts Interpretation Act 1901 (Cth) (Interpretation Act). Section 86 of the FCCA Act provides that the Rules of Court may make provision for or in relation to the costs of proceedings in this Court. And s.2K(1) of the Interpretation Act provides that in “any Act, rules of court, in relation to any court, means rules made by the authority having for the time being power to make rules or orders regulating the practice and procedure of such court”.
[103] (1992) 174 CLR 178
In my opinion, there is no power available to this Court equivalent to the power that was held in Knight v FP Special Assets Ltd to authorise the making of an order for costs against a non-party. The source of the power considered in Knight v FP Special Assets Ltd was Order 91 r.1 of the Rules of the Supreme Court of Queensland, which provided as follows:[104]
Subject to the provisions of the Judicature Act and these Rules, the costs of and incident to all proceedings in the Court, including the administration of estates and trusts, shall be in the discretion of the Court of Judge . . .
[104] Knight v FP Special Assets Ltd (1992) 174 CLR 178
Mason CJ and Deane J (with whose reasons Gaudron J agreed) held:[105]
It is preferable to interpret the words of the rule according to their natural and ordinary meaning as conferring a grant of jurisdiction to order costs not limited to parties on the record and ensure that the jurisdiction is exercised responsibly.
[105] Knight v FP Special Assets Ltd (1992) 174 CLR 178 at page 190
And Dawson J said:[106]
True it is that the rule does not expressly say that the discretion extends to determining who shall pay the costs as does the English Act of 1890. But no limit is imposed upon the discretion conferred and in the absence of any implied limit there is no justification for confining the jurisdiction with regard to the persons against whom costs may be awarded.
[106] Knight v FP Special Assets Ltd (1992) 174 CLR 178 at pages 202-203
Subsection 79(3) of the FCCA Act is similar to the rule considered in Knight v FP Special Assets Ltd. Unlike that rule, however, s.79(3) is subject to s.79(1) which provides that s.79 does not apply to “proceedings in relation to a matter arising under the” FW Act.
Nor does s.86 of the FCCA Act or s.2K of the Interpretation Act afford an independent source of power. Section 86 only provides that the Rules of Court that may be made under s.81 of the FCCA may make provision for or in relation to the matters specified in s.86, including “the costs of proceedings in the” Court. And s.2K(1) of the Interpretation Act only provides a definition of “rules of court”.
In my opinion, however, there is a source of power other than, or in addition to, s.79 of the FCCA Act that supports the making of r.21.07; and that is the implied incidental power of “a federal court to regulate the conduct of legal practitioners appearing before it to the extent necessary to ensure the observance of their duties to the court and the integrity of its procedures is an implied incidental power”.[107] The nature and source of this power was considered by French J (as his Honour then was) in De Pardo v Legal Practitioners Complaints Committee:[108]
Like the power of the court to punish for contempt, even if such power is not to be found in some express statutory provision, it has its source in Chapter III of the Constitution. Like the power to deal with contempts, it is “inherent” and is “a power of self protection or a power incidental to the function of superintending the administration of justice” - Re Colina; Ex parte Torney(1999) 73 ALJR 1576 at 1580-1581; 166 ALR 545 at 551-552 (Gleeson CJ and Gummow J citing Porter v The Queen; Ex parte Chin Man Yee (1926) 37 CLR 432 at 443, see also McHugh J at 558 and Hayne J at 579-580).
[107] De Pardo v Legal Practitioners Complaints Committee (2000) 97 FCR 575 at pages 595, [53]
[108] (2000) 97 FCR 575 at pages 595-596, [53]. This part of his Honour’s reasons was referred to with approval by Gummow J in APLA Limited v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at page 396, [186]
The existence of an implied incidental power is referred to or at least assumed in s.81(1)(b) of the FCCA Act which provides that “Rules of Court” may be made:
making provision for or in relation to all matters and things incidental to any such practice or procedure [prescribed by rules made under s.81(1)(a)], or necessary or convenient to be prescribed for the conduct of any business of the Federal Circuit Court of Australia.
In my opinion, s.81(1)(b) of the FCCA Act is broad enough to empower the Judges of the Court to make rules that specify the circumstances in which the Court may make an order for costs against a lawyer appearing before it. The power to order costs against lawyers that appear before the Court is a matter that is incidental to the practice and procedure of the Court fixed by rules made under s.81(1)(a); it is “a power of self protection or a power incidental to the function of superintending the administration of justice”. And r.21.07 is a rule that regulates the circumstances in which the Court may make an order for costs against a lawyer appearing before it.
Accordingly, an order under r.21.07 of the FCCR may be made against a lawyer who represents a party in proceedings in relation to a matter under the FW Act. The source of the rule is not, or at least is not only, s.79 of the FCCA; the source or part of the source of the rule is the implied incidental power of the Court that includes the power to regulate legal practitioners who appear before the Court.
Conclusions and disposition
My conclusions may be shortly stated as follows:
a)The Court has power to make an order for costs against Mr Robinson under r.21.07 of the FCCR.
b)A precondition to the Court making an order for costs under r.21.07 is that the person claiming the order must prove the costs which he or she claims he or she incurred or which were thrown away because of the lawyer’s “undue delay, negligence, improper conduct or other misconduct or default”.
c)Mr Arnold abandoned any intention to prove on a prima facie basis the costs he says he incurred because of the alleged misconduct of Mr Robinson; and he conceded that the Court cannot see from the evidence of the costs he did adduce the sufficiency of the connection between the alleged misconduct of Mr Robinson and the costs Mr Arnold claims he incurred. For those reasons alone, Mr Arnold has failed to establish a prima facie case for the making of an order for costs against Mr Robinson under r.21.07 of the FCCR.
d)Mr Arnold has not established a prima facie case that Mr Robinson engaged in any conduct that could properly be characterised as serious or gross negligence, improper conduct, misconduct, or default; nor has Mr Arnold established a prima facie case that Mr Robinson was guilty of undue delay. These findings by themselves have the consequence that Mr Arnold has failed to establish a prima facie case for the making of an order for costs against Mr Robinson under r.21.07 of the FCCR.
e)Mr Arnold has not established a prima facie case that the costs identified in the affidavit of Mr Woodbridge are the costs Mr Arnold incurred because of the alleged misconduct or negligence of Mr Robinson. This finding by itself has the consequence that Mr Arnold has failed to establish a prima facie case for the making of an order for costs against Mr Robinson under r.21.07 of the FCCR.
I accordingly propose to dismiss Mr Arnold’s application against Mr Robinson for an order under r.21.07 of the FCCR.
I do not propose to make any order as to costs. I will direct that if either Mr Arnold or Mr Robinson wishes to apply for a costs order, he or they must do so by filing and serving within fourteen days an application in the case together with any supporting affidavits.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 27 June 2014
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