Sheehan v Brett-Young
[2016] VSC 53
•25 FEBRUARY 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2014 05772
| MARSHALL SHEEHAN | Plaintiff |
| v | |
| MICHAEL BRETT-YOUNG & ORS | Defendants |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 11 FEBRUARY 2016 |
DATE OF RULING: | 25 FEBRUARY 2016 |
CASE MAY BE CITED AS: | SHEEHAN v BRETT-YOUNG & ORS (No. 4) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 53 |
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PRACTICE AND PROCEDURE – Pleadings – Application for leave to file and serve a further amended statement of claim – Claims for damages for malicious prosecution and misfeasance in public office – Pleading of mental state required to establish a tenable claim – Whether causes of action pleaded have any real prospect of success – s 63 Civil Procedure Act 2010.
COSTS – Application for gross sum costs order – Principles applying – s 65C Civil Procedure Act 2010, r 63.07 Supreme Court (General Civil Procedure) Rules 2015.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G McCormick appeared amicus curiae | |
| For the First, Second, Third, and Eleventh Defendants | Mr S Hay | Lee and Lyons |
| For the Fourth and Fifth Defendants | ||
| For the Sixth, Seventh, Eighth, Ninth, Tenth, and Twelfth Defendants | Mr R Gipp | Victorian Government Solicitor’s Office |
HIS HONOUR:
Introduction
The plaintiff seeks leave to file and serve a second substitute proposed statement of claim which is undated, but served pursuant to my leave granted on 2 February 2016 (PSOC). This is not the plaintiff’s first application to file and serve an amended state of claim. I recited the history of this proceeding in Sheehan v Brett Young & Ors (No 2)[1] and I will refer further to relevant events later in these reasons.
[1] [2015] VSC 651.
In Sheehan v Brett Young & Ors (No 2) the plaintiff’s proceeding against the fourth and fifth defendants was dismissed. The remaining defendants, the first to third and eleventh defendants (the regulatory parties) by summons filed on 22 October 2015 and sixth to tenth and twelfth defendants (the State parties) by summons filed on 21 October 2015, applied for summary judgment.
The plaintiff has now discontinued claims against all defendants, save for the third and eleventh defendants, and the twelfth defendant. The plaintiff claims damages for misfeasance in public office against the regulatory defendants. The plaintiff claims damages for malicious prosecution against the State. The plaintiff cannot cast his claim in defamation, as it is clearly statute barred.[2] He does not articulate a claim in negligence.
[2] See Limitation of Actions Act 1958, s 5 (1AAA).
The regulatory and State defendants contested the plaintiff’s application for leave to file and serve the PSOC and maintain their applications for summary judgment, or alternatively, dismissal of the proceeding on the basis that by reason of the sustained failure of the plaintiff in the proceeding to date to identify a viable cause of action there is no maintainable claim against any of them.
The remaining parties contended that each of the proposed misfeasance in public office and malicious prosecution claims identified in the PSOC has ‘no real prospect of success’ within the terms of s 63 of the Civil Procedure Act 2010 and should not be permitted,[3] and the application for leave to file the pleading should be refused. Further, this is not a case in which the Court should exercise the residual discretion in s 64 of the Civil Procedure Act 2010 (Vic) and decline to give summary judgment because of the ‘interests of justice’ or because only a full hearing on the merits is appropriate. They submit that the plaintiff cannot demonstrate any tenable basis to permit any further attempt at pleading his causes of action.
[3]Citing Matthews v SPI Electricity Pty Ltd (No 6) [2012] VSC 70, [33]-[34], which was overturned on appeal. See Utility Services Corporation Ltd v SPI Electricity Pty Ltd (2012) 35 VR 628 and Taha v Shaq Industries Pty Ltd [2012] VSC 30, [14].
In Sheehan v Brett Young & Ors (No 3),[4] I ruled that the remaining claims pleaded by the plaintiff in this proceeding were not assigned to the plaintiff’s trustee in bankruptcy by the operation of ss 58 and 116 of the Bankruptcy Act 1966 and, subject to the other issues yet to be determined in respect of the content and form of the pleading, such claims may be maintained by the plaintiff in this proceeding.
[4][2016] VSC 39.
Issues
The primary issue remaining after my last ruling was whether the proposed pleading disclosed an arguable cause of action. Some of the defendants’ objections were substantive and some were procedural. Of great significance were the submissions that the plaintiff had not, and could not allege and particularise, the necessary mental element required for each cause of action.
When the applications were first argued on 2 February 2016, the plaintiff was represented by counsel. Mr McCormick submitted that he sought to properly plead and particularise the plaintiff’s remaining claims now that he had heard the defendants’ counsel articulate their objections to the proposed pleading, and I granted leave to the plaintiff to prepare a further amended statement of claim in a final attempt to obtain leave.
There were also a number of questions in respect of costs. The solicitors for the regulatory defendants, particularly those defendants against whom the plaintiff had discontinued his proceeding, sought a lump sum assessment of certain costs ordered in the proceeding to date, and a stay of the proceeding pending payment of those costs. The State sought a lump sum assessment on costs orders in its favour in the event that leave was granted to amend the pleading and a stay of the proceeding pending payment of costs was granted. In other circumstances, the State sought an order for its costs on the standard basis.
Plaintiff’s claims
As stated above, the plaintiff’s extant claims were, first, brought against the regulatory parties alleging misfeasance in public office against each of the Law Institute of Victoria (LIV) and Ms O’Shanassy (a delegate of the Legal Services Commissioner), and second, brought against the State of Victoria alleging malicious prosecution. Although I have summarised the allegations being made in earlier rulings, it is convenient to restate those allegations in the context of the issues currently under consideration. I have noted the ways in which the plaintiff has added to the allegations by his most recent proposed pleading.
The plaintiff seeks the same loss and damage in respect of each claim under three categories, being damage to reputation, loss of income, and legal expenses. These claims are particularised as follows:
a.Damages to reputation. The plaintiff had been in practise [sic] in the Borders region since 1985. He particularly had a reputation as a criminal defence solicitor and solicitor advocate regularly appearing against the Police in Victoria and New South Wales to defend prosecutions. The laying of the charge, the publicity that followed, the no practising certificate investigation, the Lacey investigation and the Cox investigation, the inquiries made of the Registrar of the Finley Local Court damaged that reputation in as much as he was then tarred with the brush of practising contrary to law.
b.Lost income. The Plaintiff’s annual gross earnings in the year ended 30 June 2008 were circa $300,000. From the arrest on 21 April 2009 the Plaintiff’s gross income diminished by about 90%. Further particulars will be provided on discovery.
c.Costs and expenses of defending the charges and responding to the no practising certificate investigation, the Lacey investigation and the Cox investigation. Further particulars will be provided on discovery.
The plaintiff also seeks aggravated and exemplary damages.
Misfeasance in public office - LIV
The plaintiff asserted that at all relevant times he was an Australian Legal Practitioner and held a Victorian Local Practising Certificate, an assertion contradicted by a certificate issued on 26 February 2009 by the LIV that certified that the plaintiff did not hold a practising certificate enabling him to engage in legal practice from 1 July 2008.
The plaintiff alleged that on 21 April 2009, when he attended Wodonga Magistrates Court to represent a client, a police prosecutor challenged his right of appearance. The plaintiff left the courtroom and was arrested by Wodonga police in a media glare. He was charged with nine charges of engaging in legal practice without a practising certificate, 14 charges of obtaining property by deception and one charge of attempting to obtain property by deception. Subsequently, on 7 March 2011 at the Melbourne Magistrate’s Court, the prosecutor withdrew all the charges.
The plaintiff alleged the LIV issued a certificate under s 7.2.5(1) of the Legal Profession Act, 2004 (Vic), to the effect that the plaintiff did not hold a practising certificate as of 30 June 2008 (referred to as the ‘February 09 Certificate’ in the PSOC). The plaintiff alleged that contrary to what was certified in the February 09 certificate, his practising certificate remained in force. The plaintiff alleged that subsequent certificates issued by the LIV continued to incorrectly certify that the Plaintiff did not have a practising certificate in the period commencing 1 July 2008 and ending 29 April 2009.
To understand what the plaintiff is attempting to allege, I will set out part of s 2.4.5 of the Act,
2.4.5 Duration of local practising certificate
(1)A local practising certificate granted under this Act is in force from the date specified in it until the end of the financial year in which it is granted, unless the certificate is sooner suspended or cancelled.
(2)A local practising certificate renewed under this Act is in force until the end of the financial year following its previous period of currency, unless the certificate is sooner suspended or cancelled.
(3) If an application for the renewal of a local practising certificate has not been finally determined before 1 July in the year in which it was made, the certificate remains in force, unless suspended or cancelled sooner, until the application has been finally determined.
(4) For the purposes of subsection (3), an application is finally determined—
(a) by the renewal of the certificate; or
(b) by the exhaustion of all rights of review in relation to a decision to refuse to renew the certificate.
The plaintiff contended that in the circumstances set out in his pleading, he had applied for renewal of his practising certificate before 1 July 2008, his certificate was neither suspended nor cancelled in the meantime, and the application for renewal of it was finally determined by its renewal on 30 April 2009. The principal issue affecting the plaintiff’s application was his delay in paying the premium for his professional indemnity insurance. In substance, the construction of the statute put by the plaintiff’s counsel to the police prosecutor when the charges against him came on for hearing resulted in a decision taken by the prosecutor, after discussions with the LIV and O’Shanassy, to withdraw the charges.
The plaintiff alleged against the LIV that, at all material times and by reason of a delegation from the Legal Services Board, the LIV was the holder of a public office, and that the renewal by the LIV of the plaintiff’s local practising certificate and the act of certification by the February 09 certificate under s 7.2.5(1) of the LPA were incidents of that public office. The plaintiff alleged that at the time of issue of the February 09 certificate, during the periods that were the subject of the charges, and at the time of his arrest on 21 April 2009, he held a local practising certificate and had held that certificate from 1 July 2008. The plaintiff then alleged -
50.The LIV at all material times owed a duty to the plaintiff, in his capacity as an Australian legal practitioner subject to regulation under the LPA, to:
a.Not state that the plaintiff did not have a local practising certificate when in fact he had one;
b.Issue a certificate under section 7.2.5(1) that was correct as to the periods that the plaintiff had a local practising certificate;
c.Not issue a certificate that was incorrect as to the periods that the plaintiff had a local practising certificate;
d.Ensure that the Victoria Police as the prosecuting authority were correctly informed as to the periods that the plaintiff had a local practising certificate;
e.Not to incorrectly inform the Victoria Police as to those periods;
f.Ensure that the 11th defendant was correctly informed as to the periods that the plaintiff had a local practising certificate;
g.Not to incorrectly inform the 11th defendant as to those periods.
The plaintiff alleged that in breach of that duty, the LIV issued the February 09 certificate, informed the prosecutor on 21 April 2009 that the plaintiff did not have a local practising certificate, informed Ms Simpfendorfer that the plaintiff did not have a local practising certificate and thereafter assisted the police in the prosecution of the plaintiff. Then, the LIV issued the July 10 certificate and informed the 11th defendant that the plaintiff did not have a local practising certificate. The LIV was obligated in performing the delegated functions to comply with the provisions of the Act and to act in accordance with those provisions.
Further, the plaintiff alleged that he was under investigation by the Law Society in New South Wales for alleged breaches of the Legal Profession Act 2004 (NSW). The allegations included that the plaintiff had misled or attempted to mislead the LIV, trust account operation breaches, overcharging, preferring his own interests to those of clients, and attempting to mislead the Law Society. The Law Society had sought from the Administrative Decisions Tribunal of New South Wales a recommendation that the LIV suspend the plaintiff’s practising certificate. The investigation of these breaches had become protracted but following the determination of the tribunal, from 24 May 2012 the plaintiff was removed from the NSW Roll of Local Lawyers. The plaintiff alleged that he was blamed for the delays in this investigation, the details of which were well known to the LIV.
The plaintiff alleged that a key document was the witness statement prepared by James Leach (formerly the second defendant), an employee of the LIV, and that this document described the plaintiff’s dealings with the LIV and the regulatory regime in operation but made no mention of s 2.4.5. Further, the plaintiff alleged that the risk of harm to him from the LIV incorrectly stating that he did not have a local practising certificate was foreseeable.
For present purposes, the critical allegation is that of malice. Although the regulatory defendants did not concede that the plaintiff was able to establish the other necessary elements of the tort, they accepted that the issues which arise are properly matters for trial.
The plaintiff’s allegation that the LIV acted maliciously is in the following terms.
52.The LIV acted with complete disregard to the provisions of the LPA insofar as pursuant to those provisions the plaintiff had a local practising certificate in the period 1 July 2008 to 29 April 2009, further or alternatively the LIV acted with reckless indifference to those provisions.
52ABy reason of the matters aforesaid, the LIV acted maliciously in the issuing of the February 09 certificate and the July 10 certificate.
53.By reason of the matters aforesaid, the LIV damaged the reputation of the plaintiff, caused the charges to be laid, caused the arrest of the plaintiff, caused his cessation of practice from 21 April 2009 until 30 April 2009, assisted the no practising certificate investigation, the Lacey investigation and the Cox investigation, resulted after that latter date in a considerable reduction in his practice and thereby caused him to suffer loss and damage.
The manner in which the plaintiff put the allegation of malice confused the material allegations of fact and the particulars provided of them. Ordinarily I would refuse leave, preserving a further opportunity, to enable the plaintiff to regularise the form of the pleading. However, the plaintiff has had innumerable opportunities to propound an acceptable pleading, both when self-represented and with the assistance of counsel. I am not persuaded that, given any further opportunity, the plaintiff can allege the mental element required for this tort to plead a claim with real prospects of success.
Understanding from counsel’s submissions and the particulars provided precisely how this allegation could be put, notwithstanding the material allegations set out in paragraph 52, I understand the plaintiff to be asserting malice against the LIV in two alternative ways.
(a) The LIV intentionally acted with complete disregard for the provisions of the Act because it saw an opportunity to deny the plaintiff the right to practice in Victoria and intended to avail itself of that opportunity notwithstanding the provisions of the Act.
(b) Alternatively, the LIV foresaw the risk of harm to the plaintiff from statements that he did not have a local practising certificate and recklessly indifferent to the requirements of s 2.4.5 (3) & (4) of the Act, certified that the plaintiff did not have a practising certificate during the relevant period.
The first difficulty arises from the form of the pleading. Paragraph 52 pleads two distinctly different claims, intentional or deliberate action and that the LIV acted with reckless indifference, but provides a common set of particulars. This form of pleading is productive of obscurity and is embarrassing. The High Court recently stated in Fortescue Metals Group Ltd v Australian Securities and Investments Commission & Anor[5] that one of the fundamental requirements for a fair trial is that a party making allegations of contravention of law must identify the case which it seeks to make and do that clearly and distinctly. The material facts and supporting particulars for each distinct allegation must be unambiguously clear in order that the defendants understand how it is to be inferred that they acted deliberately and how it is to be inferred that they acted with reckless indifference. Putting that objection to one side in view of the numerous opportunities that have been afforded to the plaintiff to plead his case, I have accepted counsel’s submissions in explanation of the pleading about how the plaintiff’s case is being put, to identify the most generous interpretation of it in the plaintiff’s favour. As I will explain, it would be both futile and inconsistent with the overarching purpose to be achieved in civil litigation to grant a further indulgence to the plaintiff to rectify this defect in form.
[5][2012] HCA 39, [25].
The states of mind of the LIV are to be inferred and the material facts alleged to support both alternative inferences are particularised to be the following.
(a) There is no reference in a witness statement prepared by Mr Leach (an LIV employee) on 27 August 2009 for the police prosecution which states that the plaintiff did not have a local practising certificate in the relevant period to s 2.4.5 (3) & (4) of the Act.
(b) The LIV is obliged to know the law in respect of the statutory regulation of the legal profession as the delegate of the Legal Services Board with statutory obligations. Leach’s statement to police describes the relevant communications between the plaintiff and the LIV and the regulatory regime that applied and without reference to s 2.4.5 (3) & (4) of the Act states that the plaintiff’s renewal application for his practising certificate could not take effect because he did not have professional indemnity insurance.
(c) The effect of s 2.4.5 (3) & (4) of the Act is obvious on a plain reading of the sections and the omission of any reference to those provisions in an analysis of the state of the plaintiff’s practising certificate is so egregious as to warrant an inference of intentional omission both from Leach’s statement and from the three certificates issued by the LIV.
(d) The plaintiff sets out in the pleading that his conduct was under investigation in New South Wales for alleged breaches of the Legal Profession Act 2004 (NSW) that included misleading or attempting to mislead the LIV, trust account irregularities, overcharging, conflict of interest, and attempting to mislead the Law Society of NSW. Further, in an application before the Administrative Decisions Tribunal of NSW, the Law Society sought a recommendation to the LIV that it suspend the plaintiff’s practising certificate. The plaintiff delayed those investigations, which became protracted but, to the knowledge of the LIV, the Administrative Decisions Tribunal in May 2012 ordered the removal of the plaintiff from the NSW Roll of Local Lawyers.
(e) In this context, the plaintiff’s continuing right to practice in Victoria was of concern to the LIV, as was the plaintiff’s conduct in delaying that investigation. Because of those concerns, the plaintiff alleged that –
if the LIV saw any opportunity to deny the plaintiff the right to practice in Victoria, it would avail itself of that opportunity even if in doing so the LIV might not comply with the requirements of the LPA, in particular sections 2.4.5 (3) & (4).
(f) The risk of harm to the plaintiff, in particular from the LIV saying he did not have a local practising certificate when he did have one, was a foreseeable risk.
The pleading invited the reader to speculate as to how to infer from these facts either that the LIV intentionally acted to deny the plaintiff the right to practice other than in compliance with the Act or acted with reckless indifference to those provisions.
There is debate about whether a coherent and justifiable basis for this cause of action has been identified by the common law.[6] It is unnecessary to enter into that debate. For the purposes of identifying the principles of law applicable in respect of the mental state of the tort, I agree with Gleeson J’s analysis of the cases in respect of pleading this tort in Lock v Australian Securities and Investment Commission.[7] Gleeson J summarised what a pleading of misfeasance in public office requires, stating -
[6]Mark Aronson, Misfeasance In Public Office: A Very Peculiar Tort, (2011) 35 MULR 1, Jim Davis, Misfeasance In Public Office, Exemplary Damages And Vicarious Liability (2009) AIAL Forum No. 64, 59.
[7][2016] FCA 31. See also Pharm-A-Care Laboratories Pty Ltd v Commonwealth of Australia (No.3) [2010] FCA 361, [65]-[70], [97]-[101].
Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld: Federal Commissioner of Taxation v Futuris Corporation. In Leinenga v Logan City Council, at [64], Mullins J said:
... the tort of misfeasance in public office is not easily established. It depends on the impugned act being committed by the public officer with the requisite state of mind both in committing the act and in holding the requisite intention to cause the loss or damage that is alleged to flow from the impugned act. It is a very serious allegation to be made against a person who holds public office. It cannot be made in a broad brush way. It requires particularity in setting out the facts that can, if proven, establish the cause of action.
See also Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 3).
As for fraud or dishonesty, the tort of misfeasance in public office must be distinctly alleged and sufficiently particularised, and it is not sufficiently particularised if the facts pleaded are consistent with innocence or honest incompetence: Three Rivers District Council v Governor and Company of the Bank of England (No 3) (“Three Rivers”); Danthanarayana v Commonwealth; Streeter v Western Areas Exploration Pty Ltd (No 2). It is not sufficient to allege unlawful conduct: it is necessary to plead the primary facts that will be relied upon to justify any inference of unlawfulness: Three Rivers at 292; NRMA Insurance v Flanagan.[8]
(Citations omitted)
[8][2016] FCA 31, [124]–[126].
The plaintiff’s allegations fell well short of what is required. In particular, what is absent from the pleading are material facts that, if proved at trial, would establish that the conduct of the LIV was not consistent with innocence or honest incompetence. The absence of references to s 2.4.5 of the Act cannot sustain an inference of the presence of a state of mind that is inconsistent with an honest attempt by a person exercising a public office to perform the functions of the office. The absence of those references in conjunction with all of the other matters referenced in the particulars, when considered in totality, likewise cannot support an inference that the LIV had either of the states of mind alleged.
The plaintiff’s contention that the omission of that reference in an analysis of the state of the plaintiff’s practising certificate was so egregious as to warrant an inference of the relevant intention, rose no higher than a general, or broad-brush, allegation and failed to identify precisely how it will be said that the LIV’s certification was deliberately calculated to injure the plaintiff or recklessly indifferent to that prospect. The pleading failed to identify the primary facts that could support the alleged state of mind.
The same criticism must be made of the allegation that with the knowledge of what had occurred in the NSW investigation, the LIV took the opportunity, either deliberately or with reckless indifference to its statutory obligations and to the consequences for the plaintiff, to achieve, in a summary way, termination of the plaintiff’s right to practice as a solicitor in Victoria. Accepting as capable of proof at trial the material allegations made about the NSW investigation and the LIV’s knowledge of it, those matters cannot constitute primary facts that might justify inference of either mental state alleged.
Bearing in mind that allegations of this nature are not lightly to be made or upheld, I cannot be persuaded that the plaintiff is able to identify the material facts that arguably could establish a claim that has a real prospect of success at trial. I refuse leave to the plaintiff to file and serve the PSOC on the LIV.
Misfeasance in public office – Ms O’Shanassy
The claim against O’Shanassy is of the same nature, but arising out of different, although related, circumstances and thus differently framed from the claim against the LIV. The plaintiff alleged that by reason of a delegation from the Legal Services Commissioner, pursuant to s 6.3.12 of the Act, to O’Shanassy to investigate disciplinary complaints, O’Shanassy was the holder of public office and that a number of investigations that she conducted arising out of the certified lack of a practising certificate were incidents of that public office. She allegedly knew that the prosecution had been withdrawn because the plaintiff in fact had a local practising certificate.
As with the claim against the LIV, the plaintiff alleged that O’Shanassy owed him a duty arising under the statutory regulatory scheme that she breached when she acted with complete disregard to the provisions of the Act and/or acted with reckless indifference to those provisions. The plaintiff claimed that O’Shanassy’s conduct damaged his reputation and caused a considerable reduction in his practice and caused him loss and damage.
The plaintiff alleged that the duties that O’Shanassy owed to the plaintiff arising from the public office included an obligation to be familiar with the provisions of the Act and to act in accordance with those provisions. The plaintiff also relevantly alleges that a specific aspect of O’Shanassy’s duties included that she not inform the Registrars of the Finley and Albury local courts that the plaintiff was under investigation for practising when he was not entitled to do so. The plaintiff alleged that the risk of harm to him from information that O’Shanassy provided to the local Court registrars that he was under an investigation of that nature was a foreseeable risk.
The key allegation that O’Shanassy was actuated by malice is pleaded in like terms to the allegation made against the LIV. It suffers the same defects of form. The plaintiff alleges that O’Shanassy acted in deliberate disregard of the fact that he had a practising certificate at material times. Alternatively, O’Shanassy was recklessly indifferent to whether the provisions of the statute preserve the plaintiff’s right to continue practising.
These states of mind of O’Shanassy are to be inferred and the material facts alleged to support both alternative inferences are particularised to be the following.
(a) Because of her participation in the discussions that led to the decision of the prosecutor to withdraw the charges that were based upon a submission by the plaintiff’s counsel as to the proper effect of s 2.4.5, O’Shanassy knew that the plaintiff had a local practising certificate at the times relevant to her investigations.
(b) This knowledge constituted ‘proof to the contrary’ that denied presumptive acceptance of the matters certified in the certificates issued by the LIV.
(c) Notwithstanding this knowledge, she persisted with those investigations.
(d) It may be inferred from these matters, in conjunction with O’Shanassy’s obligation to know the law and/or the contents of various letters from the LIV, that she acted with reckless indifference to the practical consequences of s 2.4.5.
(e) Because the absence of any reference to the unambiguous simplicity of the terms of s 2.4.5 is so egregious, the only inference that is open is that O’Shanassy deliberately omitted to consider or explain that the plaintiff was entitled to continue practising.
(f) The court may infer that O’Shanassy was recklessly indifferent to the risk of harm to the plaintiff from the existence of that risk.
The plaintiff continues by alleging that ‘by reason of the matters aforesaid’ O’Shanassy damaged the plaintiff’s reputation, causing a considerable reduction in his practice.
The apparent causal relationship between damage and the alleged misfeasance directed attention to the plaintiff’s allegation about the enquiries made by O’Shanassy of the registrars of the local courts. The plaintiff contended that in respect of some investigations the complainant provided information about representations made by the plaintiff concerning his right to practice. In other investigations, the information that O’Shanassy had that the plaintiff had been practising as a solicitor came from information provided to her by the local Court registrar. In particular, the plaintiff alleged, without particulars –
44I The information from the Registrar of the Finley Local Court had been obtained by the 11th Defendant as a result of inquiries she made of the Registrar in which she informed the Registrar that the Plaintiff was under investigation for practising when not entitled to.
The plaintiff alleged that a local Court registrar discharges the function of assisting accused persons to seek legal assistance and that the enquiries made by O’Shanassy caused the registrar to tell accused persons that the plaintiff was under investigation for not having a practising certificate. Again, no particulars have been provided of this allegation. Nevertheless, I expect that counsel has a proper basis to make these allegations. The pleading invited the reader to assume a causal link between the conduct of the registrar and the damage to the plaintiff’s reputation. Further, the reader was invited to assume a causal link between the conduct of the registrar and O’Shanassy’s conduct. These inferences are invited by reference to a broad, non-specific, notion of foreseeability.
While these possible inferences may not be fanciful, the thrust of the plaintiff’s allegations against O’Shanassy was that she acted maliciously in directing or encouraging the local Court registrars to inform potential clients of the plaintiff that he was not entitled to practice as a solicitor. The plaintiff must allege not that that O’Shanassy disregarded those provisions of the statutory scheme that preserved the plaintiff’s right to practice, but that she did so deliberately intending to inflict harm or, alternatively, with reckless indifference as to whether her disregard for those provisions would inflict such harm. O’Shanassy is entitled to know how the plaintiff puts that she had that deliberate intention or that reckless indifference as her state of mind when conducting herself as the plaintiff alleged. The difficulty that the plaintiff failed to confront is that O’Shanassy’s contact with the local Court registrars was ostensibly to ascertain whether, and to what extent, the plaintiff was engaged in legal practice at the relevant time. The plaintiff’s allegations are not inconsistent with an honest discharge by O’Shanassy of her statutory duties for a proper purpose.
Again, what is absent from the pleading are material facts that, if proved at trial, would establish that the conduct of O’Shanassy was not consistent with innocence or honest incompetence. The absence of allegations about the instructions or directions given by O’Shanassy to local Court registrars results in the absence of material facts that could support the inference of a state of mind of dishonesty in the investigation in the sense of an intention to cause harm to the plaintiff through the use of her office or an inference of disregard for the plaintiff’s statutory rights combined with a state of mind of perceiving the likely consequence that the plaintiff would suffer harm and not caring that those consequences would befall the plaintiff.
The plaintiff’s contention that the omission of any reference in an analysis of the state of the plaintiff’s practising certificate to s 2.4.5 was so egregious as to warrant an inference of either of the relevant intentions, rose no higher than a general, or broad-brush, allegation and failed to identify precisely how it will be said that the O’Shanassy’s apparent statements to the registrars were deliberately calculated to injure the plaintiff or recklessly indifferent to that prospect.
There is nothing in these allegations against O’Shanassy that identifies that she had a state of mind that was inconsistent with an honest attempt by a person exercising a public office (assuming that to be so) to perform the functions of the office. I am not persuaded that there is any real prospect of a court concluding based on the allegations pleaded, unchallenged and assumed, that the statutory powers exercised by O’Shanassy have been exercised corruptly or with deliberate disregard to the scope of those powers. The allegations fell short of charging O’Shanassy with a dishonest purpose, detrimental to the plaintiff, in her dealings with the local court registrars. It is sufficient to conclude that his prospects of success in establishing that O’Shanassy caused him loss and damage by misfeasance in public office are fanciful.
I refuse the plaintiff leave to file and serve the PSOC on O’Shanassy.
Allegations against the State
It is settled that there are four elements to be established by the plaintiff to succeed in a claim of malicious prosecution:
(a) proceedings of a kind to which the tort applies were initiated against the plaintiff by the defendant;
(b) the proceedings terminated in favour of the plaintiff;
(c) the defendant acted without reasonable and probable cause; and
(d) the defendant, in initiating or maintaining the proceedings, acted maliciously.
The State objects that the plaintiff cannot plead material facts in respect of the third and fourth of the elements that will sustain a claim with a real prospect of success.
Establishing that the defendant acted without reasonable and probable cause depends upon the nature of the case. Where the defendant may be supposed to know where the truth lies,[9] the plaintiff must allege primary facts that permit the inference that the informant did not believe that the plaintiff was guilty. Where the defendant acts on evidentiary material provided by others, the plaintiff must allege primary facts that permit the inference either that the informant did not honestly form the view that there was a proper case for prosecution or that the informant formed that view on an insufficient basis.[10] Where the plaintiff challenges the objective sufficiency of the basis for the informant’s belief, the plaintiff must allege primary facts that permit the inference that an objective person with reasonably sound judgment, on the material known to the defendant at or before the institution of the prosecution, would not have regarded that material as sufficient to establish reasonable and probable cause.[11] The objective assessor will usually seek legal advice.[12]
[9]As was the case with private prosecutions that were commonplace when the tort was developing.
[10]A v State of New South Wales (2007) 230 CLR 500, 528 [80].
[11]Beckett v State of New South Wales [2015] NSWSC 1017, [131].
[12]Abbott v Refuge Assurance Company [1962] 1 QB 432, 434, A v State of New South Wales (2007) 230 CLR 500, 503, [3].
The plaintiff relevantly alleged against the State that the charges upon their withdrawal on 7 March 2011 terminated in favour of the plaintiff and that Ms Simpfendorfer had, at the time of their laying, no reasonable or probable cause for prosecution of such charges because over the period of the charges the plaintiff held a local practising certificate. The LIV certificate was wrong on its face by virtue of s 2.4.5, and that section provided ‘proof to the contrary’ precluding presumptive reliance because an informant, acting reasonably, would be familiar with the terms of the Act or would take legal advice. Even if Simpfendorfer had an honest belief in the plaintiff’s guilt, the February 09 certificate did not provide reasonable grounds for that belief. Neither the information provided by the LIV to the police prosecutor, nor the information received by Simpfendorfer from the LIV afforded reasonable or probable cause.
These are not allegations of primary facts that would support an inference that Simpfendorfer did not honestly form the view that there was a proper case for prosecution. The suggestion that Simpfendorfer, or a higher ranking officer who may have approved the prosecution or given advice in respect of it, would determine, by a close analysis of the provisions of the Act, that the LIV certificate could not be accepted at face value and could not be presumed to prove the matters that it stated cannot establish any dishonest motive on the part of Simpfendorfer.
However, the allegation that such a process of analysis supports an inference that an objective person with reasonably sound judgment, on the material known to the defendant at or before the institution of the prosecution, would not have regarded that material as sufficient to establish reasonable and probable cause may have more than a fanciful prospect of acceptance. That said, there remains the final element to be pleaded namely malice.
Malice cannot be conflated with reasonable and probable cause. It is a separate element to be established by proof of a relevant motive or intention – to use the court process, in this case criminal proceedings, not to secure the proper enforcement of the criminal law but for an improper purpose. There may be cases where an absence of reasonable and probable cause properly permits an inference of malice. The plaintiff may allege the primary facts that support the inference of the defendant’s malicious motive, which may include spite, ill will, or vengeance, or the inference that the prosecution can only be accounted for by imputing to the prosecutor an improper motive, such as the prosecution’s collateral purpose.[13] Malice will be present where the dominant purpose motivating the prosecutor is an illegitimate or oblique motive other than the proper invocation of the law.[14]
[13]A v State of New South Wales (2007) 230 CLR 500, 531, [91], Nye v State of New South Wales [2003] NSWSC 1212, Trobridge v Hardy [1955] HCA 68, (1955) 94 CLR 147, 163–5, 174.
[14]Beckett v State of New South Wales [2015] NSWSC 1017, [580].
The plaintiff alleged that the laying of the charges was actuated by malice on the part of Simpfendorfer and the Victoria Police and gives the following particulars in support of that allegation.
(a)There was no reasonable and probable cause for laying the charges. The certificate from the LIV did not afford reasonable or probable cause because it was wrong on its face and could not stand as proof of the matters certified because there was, to the knowledge of the police, proof to the contrary. Alternatively, if Simpfendorfer had an honest belief in the plaintiff’s guilt, it was not based on reasonable grounds;
(b)The first intimation that the plaintiff had that he was the subject of an investigation was given in open court on 21 April 2009 when the plaintiff was appearing for Mr Draber;
(c)The plaintiff’s arrest was then outside of court in public, the media having been forewarned;
(d)Simpfendorfer than gave the interview on 22 April 2009 publicising the plaintiff’s arrest and the possible laying of charges;
(e)Simpfendorfer then gave the further interview on 6 July 2008 publicising the actual laying of the charges;
(f)Preventing the plaintiff from acting for Mr Draber deprived Mr Draber at the start of the hearing of his legal representative;
(g)Preventing the plaintiff from acting also prevented the plaintiff appearing in any other criminal matters brought by the police;
(h)Further particulars will be provided after discovery between the parties.
The plaintiff alleged that this conduct damaged his reputation, caused his cessation of practice from 21 April 2009 until 30 April 2009, resulted after April 2009 in a considerable reduction in his practice, and thereby caused him to suffer loss and damage.
This is not a case where an arguable suggestion that Simpfendorfer’s honest belief in the plaintiff’s guilt could not have been formed on reasonable grounds could properly permit an inference of malice. The crux of the plaintiff’s contention must be that Simpfendorfer’s dominant motive was an illegitimate collateral purpose and the only purpose that might meet that description is buried in the particulars. It is that Simpfendorfer’s purpose was to prevent the plaintiff from continuing to act for a client, Mr Draber, in a high profile prosecution, leaving Draber unrepresented at the trial of criminal charges against him to the advantage of the police. The plaintiff does not plead any primary facts on which he would rely, as is necessary, to invite the inference that Simpfendorfer’s purpose was that illegitimate collateral purpose of achieving an inappropriate forensic advantage in the Draber prosecution. All that the plaintiff has done is make a general allegation that might constitute an illegitimate purpose. That is insufficient to identify for the benefit of the defendant how the plaintiff alleges malice.
There is no allegation of any involvement of Simpfendorfer in the prosecution of Draber and no allegation of any improper relationship between Simpfendorfer and those who were concerned with the prosecution of Draber. Such facts as are alleged in support, including the absence of reasonable grounds for reasonable and probable cause and circumstances such as advance notice to the media and media interviews, taken at their highest and viewed in totality, cannot establish a circumstantial case that Simpfendorfer was acting maliciously. Those primary facts cannot establish spite, ill will, or vengeance.
Accepting the plaintiff’s uncontradicted allegations, the available inference is that Simpfendorfer received information in the form of the LIV certificate, or to that effect, and acted, as she was empowered to do under the Act, to enforce the statutory law in respect of legal profession regulation. Much earlier iterations of the plaintiff’s claim, prepared by the plaintiff himself, suggested possible improper motives on the part of others who may, or may not, have provided information to Simpfendorfer before charges were laid. These allegations have not been maintained, presumably because counsel was not satisfied that there is a proper basis for them, or because they are irrelevant to establish Simpfendorfer’s motives.
For these reasons, the PSOC does not allege a malicious prosecution claim against the State that has any real prospect of success and I refuse the plaintiff leave to plead that claim against the State.
Conclusion on the pleading
I have concluded that this proceeding should be dismissed on the basis that the plaintiff is not reasonably able to prosecute the claims that he has identified. There will be summary judgment for the defendants for the following reasons. Since it was issued on 5 March 2014 in the New South Wales Supreme Court, this proceeding has had an unfortunate and protracted history. There has been voluminous correspondence between the plaintiff and the solicitors for the defendants, which has repeatedly, and in some detail, identified the defects in the plaintiff’s pleadings that have caused the defendants’ concern. As a result, the plaintiff although self-representing for a large part of the time, has been well informed of the issues raised against his pleading.
During that time, the court has given the plaintiff numerous opportunities to revise his proposed pleading as a brief recital of the history of the plaintiff’s statement of claim demonstrates. The first pleading was filed on 3 April 2014. On 20 August 2014, an application was made to transfer the proceeding to this court. By 10 September 2014, all of the defendants now remaining in the proceeding had served defences. On 20 October 2014, the proceeding was transferred to this court and listed for directions on 12 December 2014. In the interim, the parties exchanged correspondence in which the plaintiff’s pleading was alleged to be embarrassing and/or to failed to disclose a cause of action. At the directions hearing, the plaintiff sought, and was granted, leave to serve a further proposed amended statement of claim by 22 December 2014. On 5 February 2015, the proposed further amended statement of claim (the second pleading) was served. Almost immediately, the defendants objected to leave being granted for the filing of this pleading and the grounds of the defendant’s objections was stated in correspondence.
On 13 February 2015, I refused the plaintiff leave to file the second pleading. By this directions hearing, the police defendants were seeking summary dismissal, summary judgment, or a strike out of the plaintiff’s first pleading. Ahead of the next directions hearing on 1 April 2015, the plaintiff served a proposed further amended statement of claim (the third pleading). Other matters were dealt with at that directions hearing and the proceeding was adjourned for further directions to 8 May 2015, with the costs of the day awarded against the plaintiff.[15] I strongly recommended to the plaintiff that he obtain legal advice in relation to his pleadings before the next directions hearing.
[15]Sheehan v Brett-Young & Ors, 1 April 2015, unreported (John Dixon J).
Another judge conducted the directions hearing on 8 May 2015 and struck out the first pleading. That judge directed that the plaintiff serve a document identifying the main points of his claim and that, with legal representation, he meet with the defendant’s legal representatives and endeavour to narrow the issues between the parties in relation to the pleadings. The plaintiff was granted leave to serve an amended pleading by 19 June 2015 following on this conference between legal representatives. The plaintiff was also ordered to pay the defendants’ costs occasioned by the striking out of the first pleading. Although the plaintiff then served points of claim and a meeting between the parties’ legal representatives occurred, issues remained.
The plaintiff filed a proposed amended statement of claim on 19 June 2015 (the fourth pleading). There was no sign in this pleading that the plaintiff had the benefit of independent legal advice. When the proceeding returned before me for case management on 31 July 2015, I struck out the plaintiff’s fourth pleading and granted him leave to serve, by 31 August 2015, a proposed further pleading together with an affidavit identifying the facts that the plaintiff contended could probably be proved and which, if proved, would support the general allegations in his proposed pleading. The plaintiff duly served a proposed amended statement of claim (the fifth pleading) and an affidavit affirmed on 31 August 2015. The affidavit was wholly inadequate in demonstrating a proper basis for the allegations that the plaintiff was seeking to make.
During September 2015 the defendants again outlined in writing the grounds for their objections to leave being granted for the plaintiff to file the fifth pleading and on 15 October 2015 I dismissed the plaintiff’s application for leave to file that pleading and ordered that he pay the defendants’ costs of that application. At that time, I entered judgment in favour of the fourth and fifth defendants dismissing the plaintiff claims against them.[16]
[16]Sheehan v Brett-Young & Ors (No.2) [2015] VSC 651.
Shortly thereafter the remaining defendants applied for summary dismissal or summary judgment, the present applications, and the plaintiff responded by an affidavit exhibiting a further proposed amended statement of claim (the sixth pleading). It was apparent that the plaintiff had received some professional assistance in the preparation of this pleading. During November 2015, the solicitors for the remaining defendants outlined in writing the grounds of their objections to the plaintiff’s application for leave to file the sixth pleading.
When the proceeding returned to court for directions on 2 December 2015, the proceeding was dismissed against the first, second, sixth, and eighth to tenth defendants and costs orders were made in their favour. Arising out of discussions in court that day, I granted the plaintiff leave to substitute yet another proposed pleading and he did so on 18 December 2015 (the seventh pleading). Again, the solicitors for the remaining defendants outlined in writing their objections to the application for leave to file this pleading. That application was heard on 2 February 2016 but could not be completed that day. The parties invited the court to rule on a legal issue arising out of the plaintiff’s bankruptcy[17] and the further hearing of the application was stood over to 11 February 2016. As noted above, I granted leave to Mr McCormick of counsel, appearing as an amicus on behalf of the plaintiff, to prepare a further amended pleading (the eighth pleading). This pleading is the subject of analysis in these reasons.
[17]Sheehan v Brett-Young & Ors (No.3) [2016] VSC 39.
On at least the last three occasions on which the plaintiff has proffered a revised proposed pleading, counsel has assisted him. Counsel too has had the benefit of the detailed articulation by the defendant’s legal representatives of the perceived flaws in the pleading. I would add that counsel does not appear to have been properly instructed by a solicitor on the record and I am satisfied that the predominant explanation for the deficiencies that remain in the pleading of the plaintiff’s proposed claims is the quality of the instructions being provided by the plaintiff. It is equally plain the plaintiff seeks damages for reputational injury and is seeking to cast his claims beyond the tort of defamation, a cause of action that has not been available to him for some time.
In August 2015, I directed the plaintiff to file an affidavit that identified the evidentiary sources for the allegations being made in the proposed pleading under consideration at that time. In so doing, I was seeking to identify whether the plaintiff had a proper basis for the allegations being presented. No satisfactory affidavit was produced, although from that time the plaintiff appeared to be assisted by counsel in the preparation of his pleading. Because this case has been managed by me in the Major Torts List I am familiar with all of the plaintiff’s prior efforts to plead a claim and with the unsatisfactory attempts to identify the evidentiary sources that might be drawn upon to establish his claims at a trial. Further, having closely analysed all of the allegations that the plaintiff has presented and questioned his counsel about the basis for his claims, I am satisfied that the plaintiff has proffered his best effort to identify his causes of action. It would be futile to extend any further opportunities to the plaintiff.
The defendants have appeared on eight prior occasions before the court seeking from the plaintiff an intelligible pleading that disclosed arguable causes of action. Notwithstanding that he is a solicitor by occupation, the plaintiff has been unable to advance his claim. Further, he had the benefit of detailed written objections from the defendants identifying the issue and legal principles that were relevant to it. His failure in eight attempts to identify a claim with a real prospect of success has exposed the defendants to substantial expense and significant delay in resolving the very serious allegations that have been levelled at them. There is no basis for any expectation that the defendants can recover any costs thrown away.[18] The defendants have suffered this prejudice while the court has permitted the plaintiff to search for a tenable pleading.
[18]Based on the affidavit of the plaintiff sworn 29 January 2016.
Bearing in mind the overarching purpose of civil litigation, the time has arrived to cease extending further indulgences to the plaintiff who continues to vex the defendants with serious allegations that he cannot properly articulate forcing them to incur unrecoverable costs and to continue to face delays in resolving serious allegations made against them. The just determination of this proceeding will not be achieved if I offer a further opportunity to the plaintiff. Balancing the considerations set out in s 9 of the Civil Procedure Act2010 in reaching this conclusion, I am satisfied that the remaining defendants are entitled to summary judgment in the proceeding on the grounds that the plaintiff’s claims have no real prospect of success. I will dismiss the proceeding.[19]
[19]Knorr v CSIRO & Ors [2014] VSCA 84, [54], Pham Ex parte Drakopoulos [2013] VSCA 43, [43], and I refer to my earlier observations in Sheehan v Brett Young & Ors (No 2) [2015] VSC 651, [67]-[73].
Costs
In the event, it is unnecessary to consider the State’s submission for a gross sum costs order in respect of costs ordered in its favour on prior occasions. I will order that the plaintiff pay the State’s costs of the proceeding, including the costs of the summons filed on 21 October 2015 and any reserved costs, on a standard basis.
The regulatory parties seek a gross sum costs assessment of their costs of the proceeding under the court’s power to do so found in r 63.07(2)(c) of the Supreme Court (General Civil Procedure) Rules 2015. Rule 63.07 states as follows:
63.07 Taxed or other costs provision
(1)Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to a party, that party shall be entitled to taxed costs.
(2)Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to –
(a)a portion specified in the order of taxed costs;
(b)taxed costs from or up to a stage of the proceeding specified in the order;
(c)a gross sum specified in the order instead of taxed costs;
(d)a sum in respect of costs to be determined in such manner as the Court directs.
Croft J identified the object of a gross sum costs order in lieu of taxed costs under this rule in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3).[20] Croft J stated –
[20][2012] VSC 399, [84]. Followed by Wood AsJ in ACN 074 971 109 (as trustee for the Argo Unit Trust) & Anor v National Mutual Life Association of Australasia Limited [2013] VSC 137 and cited with approval by Judd J in Primebroker Securities Ltd v Lomas [2013] VSC 22, McMillan J in Smoel v Morris [2013] VSC 291, and Beach JA in Wieland v Texxcon Pty Ltd [2015] VSCA 305.
(i)The purpose of the sub-rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation.
(ii)An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place. On the contrary, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62.
(iii)The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed.
(iv)Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis. These include the principles contained in O 62 r 19 (embodying the ‘necessary or proper’ test) and those stated in Stanley v Phillips, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause).
(v)Although the methodology permitted by O 62 r 4(2)(c) initially involves a broader approach than on a normal taxation, the provisions of O 62 and Sch 2 provide assistance in fixing an appropriate gross sum.
(Citation omitted).[21]
[21]See also Love v Thwaites & Anor (No 5) [2012] VSC 636.
In ACN 074 971 109 (as trustee for the Argo Unit Trust) & Anor v National Mutual Life Association of Australasia Limited,[22] Wood AsJ discerned a number of further propositions from the cases.
[22][2013] VSC 137, [8], [12].
(a) Complex cases are especially suitable for the application of the rule, particularly cases where it is the taxation that would be complex.
(b) The discretion can be exercised at any stage of the proceedings, or after the conclusion of the proceedings, and even where orders previously made envisage that costs would be taxed.
(c) There may be occasions on which the judge will make a discount on the figures produced to him, although there is no statutory obligation to do this and care should be taken not to cause injustice to the party entitled to costs. The cases reveal significant variation in gross sum costs orders allowed as a percentage of the sum claimed.
(d) Where the liability for costs may be expected to be large and a taxation complex and expensive, the financial position of the party liable is a matter relevant to be taken into account in exercising the discretion.
I approach the regulatory defendants’ application bearing these principles in mind.
In addition, s 65C of the Civil Procedure Act is relevant. It states –
65C Other costs orders
(1)In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.
(2)Without limiting subsection (1), the order may—
(a)make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding;
(b)order that parties bear costs as specified proportions of costs;
(c)award a party costs in a specified sum or amount;
(d)fix or cap recoverable costs in advance.
(3)An order under subsection (1) may be made—
(a)at any time in a proceeding;
(b)in relation to any aspect of a proceeding, including, but not limited to, any interlocutory proceeding.
Following his review of the authorities, Wood AsJ stated –
It is a given that the quantification of costs is invariably the result of a full taxation if the parties do not resolve the matter. A precise figure that represents the liability of the losing party is then arrived at in the taxation process. A gross sum is, just that. It is not arrived at with the same rigour and precision. It is a rare event when an unsuccessful party is not afforded the opportunity to participate in a full taxation. As the cases make clear there needs to be sufficient justification for the less precise option to be adopted, and the application of arbitrary discounts is not permitted if a gross sum exercise is selected as the option of quantification.[23]
[23]ACN 074 971 109 (as trustee for the Argo Unit Trust) & Anor v National Mutual Life Association of Australasia Limited [2013] VSC 137, [15].
The regulatory defendants have put, on affidavit, a substantial and detailed assessment made by an expert costs consultant, Ms E M Harris. I accept Ms Harris’ qualifications and experience to express expert opinion about the costs incurred in the proceeding by the regulatory defendants. The plaintiff did not challenge her report either by engaging his own costs consultant or by cross-examining Ms Harris. This is unsurprising.
For the purpose of this application, I am satisfied that the plaintiff has neither the means to contest the application for a gross sum costs order nor the means to pay the costs ordered. While that is a factor of considerable significance in the exercise of my discretion, it does not mean that the defendants might not be further vexed by incurring considerable expense in a taxation process and is a matter that can influence in either way the outcome of this application. It involves a balancing exercise.
In summary, Ms Harris opined that a taxing officer would allow the costs of the proceeding in favour of the regulatory defendants in the following sums.
Professional Fees
$97,957.02
Counsel’s Fees
$26,250
Other Disbursements
$19,323.82
Total
$143,530.84
Ms Harris explained, in some detail, the methodology that she adopted as the ‘Ausmaq’ methodology which Wood AsJ described as -
favoured where costs are to be assessed on hourly rates. This involves actual costs incurred, identifying work that falls outside the scope of the costs order, and then breaking the figure down to costs and disbursements. As a next step appropriate hourly rates are determined and then a final calculation is made on the basis of the hourly rate options, the cost reduction for unreasonable work and the addition of disbursements. [24]
[24]Ibid, [34]. This methodology was adopted by the New South Wales Supreme Court in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23.
I have carefully considered Ms Harris’ report, and taking into account that it was neither reviewed by another costs expert, nor subject to cross-examination, I accept her opinions. The key aspects of her conclusions about the likely response of a taxing officer to the costs claimed by the regulatory defendants can be summarised as follows.
(a) It was reasonable for the regulatory defendants to continue to instruct solicitors in New South Wales after the proceeding was transferred to Victoria. Taxation in accordance with the scale of costs would be limited to work undertaken in Victoria with the balance to be assessed in accordance with the New South Wales regime where costs assessments are conducted by court appointed assessors.
(b) The value of the actual costs incurred by the regulatory defendants were calculated to be $155,247.03.
(c) There were no adverse costs orders or work that was not costs of the proceeding that should be excluded.
(d) No adjustment was required to the professional costs from any adjustment to charge out rates, because the actual rates charged were substantially less than the loaded scale hourly rate.
(e) Analysis of a time spreadsheet and WIP report demonstrated that a taxing officer would be satisfied that the allocation of staffing to the matter by the solicitors was proper and reasonable. Substantial reductions on taxation on a standard basis would be unlikely. Ms Harris assessed that a taxing officer would allow recovery of between 75%–80% of the claimable hours and she adopted the lower figure, which resulted in an assessment of total professional costs for work done, WIP, and future anticipated work[25] of $97,957.02.
(f) The reliance on counsel in the matter was not unusually high and would satisfy the standard test. A reduction of 10% was made to take a conservative position and allow for the prospect of reduction on close examination at a taxation.
(g) On her assessment of the non-counsel disbursements, Ms Harris concluded that the sums claimed had been reasonably incurred.
[25]To the conclusion of this application on the assumption that the regulatory defendants were successful.
The regulatory defendants submitted that the proceeding was complex in that the causes of action pursued by the plaintiff were uncommon. I am not persuaded that this is a significant factor in favour of the defendants’ position. However, although the defects in various iterations of the pleading were obvious, the defendants’ legal representatives had to deal with a self-representing solicitor plaintiff and, in my view acted responsibly and consistently with their obligations to the court under the Civil Procedure Act in their research and analysis of the claims that the plaintiff was attempting to present. The plaintiff himself received the benefit of detailed and reasoned objections to his proposed pleadings, while the court was assisted by comprehensive submissions. I would not significantly reduce the costs to which the defendants are entitled on the basis that they could simply have objected to the form of the pleading deferring objections to its substance to a later time. Rather, I accept, in this instance, that the work performed by the solicitors and counsel was proper and reasonable.
I am satisfied that Ms Harris has provided a sound basis upon which I can assess gross sum costs that are logical, fair and reasonable. It is not possible to accurately assess the further costs that might be incurred by the regulatory defendants if required to proceed to taxation. There is a prospect that such costs could easily increase the debt by 25–35% of the sum currently claimed. However, no estimate of these prospective costs has been provided.
I bear in mind that ultimately resolution of the quantum of recoverable costs will not be a debate between experienced and well-credentialed experts. Both the history of this litigation and the prospective reaction to an order for taxation suggest that the process could become protracted and expensive. It is likely that the plaintiff will face further bankruptcy proceedings once a certain sum has been fixed. There is clearly a prospect that the delay of a taxation process could motivate the plaintiff to further litigate in the Costs Court.
I also bear in mind that the assessment that I make, even though based upon expert evidence, is necessarily more broad brush than a taxation. Exercising my discretion in favour of a gross sum assessment ultimately denies to the plaintiff the opportunity to carefully assess every detail of the defendants’ bill of costs. In providing the regulatory defendants with a sum certain and denying the plaintiff that opportunity, a further discount is appropriate for the vicissitudes and exigencies inherent in that future assessment. To do so is not to make an arbitrary assessment. As the review of the authorities by Sackville J in Seven Network Ltd v News Ltd[26] demonstrates, most awards of gross sum costs seem to fall broadly within the range of 60 to 70% of total costs and disbursements. The precise discount to be allowed is a matter for judgment in the circumstances of the particular case.
[26][2007] FCA 2059, [33].
On this application, I must take account of the careful assessment prepared by Ms Harris. I am satisfied that a number of the factors that would constitute future exigencies in a taxation process have been assessed in the plaintiff’s favour by the conservative assessment that she has adopted. To achieve an assessment that is logical, fair and reasonable to both parties, I will discount the sum assessed by Ms Harris by a further 20%. In my view, the discounted sum seems proportionate to the work involved in the defence of the proceeding.
In the present case, although the taxation would not, in my view be particularly complex, the quantum of the costs claimed is relatively modest. The prospect of costs of a taxation being a substantial proportion of the costs sought cannot be discounted. The scope of the gross sum assessment is confined, and Ms Harris explained many points that might be contentious on a taxation. Her assessment informed the process of gross sum assessment in a principled way. The plaintiff’s financial position suggests that the costs debt may not be recovered let alone the costs of taxation and there may be a motive for delay and expense in a taxation process. The defendants may continue to be vexed in the same manner as has occurred to date. These factors militate in favour of a gross sum order, avoiding the additional cost of taxation. It is not only the cost burden to the parties that should be taken into account. The burden on court resources is also important. On the other hand, the plaintiff loses the opportunity to secure a precise and rigorous assessment of his costs liability.
In balancing all of the factors relevant in the exercise of the discretion, I am persuaded that this is a proper case for the court to order gross sum costs.
I assess the regulatory defendants’ costs of the proceeding on a gross sum basis to be $114,824.67 and I will specify those costs in that sum in the court’s final order.
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