The Council of the Law Society of the Australian Capital Territory v Hoyle (No 2)

[2020] ACTSCFC 4

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
FULL COURT

Case Title:

The Council of the Law Society of the Australian Capital Territory v Hoyle (No 2)

Citation:

[2020] ACTSCFC 4

Hearing Date:

On the papers

DecisionDate:

10 December 2020

Before:

Murrell CJ, Burns J and Elkaim J

Decision:

See [19]

Catchwords:

LEGAL PRACTITIONERS – COSTS – Alternate Costs Order – Whether each party should bear its own costs – whether impecuniosity or futility is a basis for a costs order – defendant to pay the plaintiff’s costs of the proceedings 

Legislation Cited:

Legal Profession Act 2006 (ACT) s 27

Cases Cited:

The Council of the Law Society of the Australian Capital Territory v Hoyle [2020] ACTSCFC 3
Gray v Richards(No 2) [2014] HCA 47; 315 ALR 1
Hoyle v The Queen [2018] ACTCA 42
Northern Territory v Sangare [2019] HCA 25; 265 CLR 164

Parties:

The Council of the Law Society of the Australian Capital Territory (Plaintiff)

Arthur Marshal Hoyle (Defendant)

Representation:

Counsel

D A Moujalli (Plaintiff)

No appearance (Defendant)

Solicitors

McInnes Wilson Lawyers (Plaintiff)

File Number:

SC 299 of 2020

THE COURT:

1. The following orders were made by this Court on 13 November 2020 (The Council of the Law Society of the Australian Capital Territory v Hoyle [2020] ACTSCFC 3 at [24]):

1 The name of Arthur Marshall Hoyle be removed from the roll of persons admitted to the legal profession maintained by the Supreme Court of the Australian Capital Territory pursuant to section 27 of the Legal Profession Act 2006 (ACT).

2      The defendant is to pay the plaintiff’s costs of the proceedings.

3The defendant has leave to request an alternate costs order but must do so, in writing and including submissions, within 14 days of these orders.

4If the defendant does make a request for an alternate costs order the plaintiff is to file any written submissions within 7 days of receipt of the defendant’s request. Any issue on costs will then be decided on the papers.

1. Pursuant to order 3 the defendant has filed written submissions seeking an alternative costs order. It is his submission that each party should bear its own costs.

1. The plaintiff’s response is that the original costs order should remain.

1. The defendant provided three reasons for his suggested order:

(a)He is 70 years of age, unemployed and living on the age pension. In addition, he is in debt to a bank for almost $500,000. The debt arose from a loan taken out by his family to meet his legal expenses (presumably related to his criminal proceedings).

(b)He was an academic. He has never practised law and this was known to the law society. In addition, the Law Society’s briefing of counsel was unnecessary because he had told the Law Society that he would not contest the proceedings. Accordingly, a good deal of the Law Society’s legal costs was expended unnecessarily.

(c)He suffers from “identified brain damage” which, although the appeal was unsuccessful, was accepted by the Court of Appeal in the appeal from his conviction (Hoyle v The Queen [2018] ACTCA 42). The expert evidence placed before the Court highlighted developing dementia which has since further deteriorated.

1. Because of the three reasons set out above the defendant says that “any order requiring me to pay the Law Society’s costs would be unfair and indeed impossible for me to satisfy, and is inappropriate in all the circumstances”.

1. There is no doubt that the Court has a wide discretion in respect of costs. In Gray v Richards(No 2) [2014] HCA 47; 315 ALR 1 the High Court described the discretion concisely, at [2]:

The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

(Citations omitted)

1. Notwithstanding this general statement of the discretion, the High Court has also said that impecuniosity is not a valid reason for exercising the discretion against a successful party.

1. In Northern Territory v Sangare [2019] HCA 25; 265 CLR 164, the High Court was dealing with an appeal from the Court of Appeal of the Northern Territory in which that Court made “no order as to costs” because:

18The respondent is most unlikely to be compensated even if an award of costs was made in its favour. In the circumstances, it seems to us that the court should not make a futile order or orders as to costs.

(Citations omitted)

1. The High Court observed that the above order was derived from the sole consideration that a costs order in favour of the successful party “was likely to be futile because of the respondent’s impecuniosity”.

1. Commencing at [24] the High Court first of all made some general comments about the discretion as to costs:

24It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion "cannot be narrowed by a legal rule devised by the court to control its exercise", the formulation of principles according to which the discretion should be exercised does not "constitute a fetter upon the discretion not intended by the legislature". Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.

25A guiding principle by reference to which the discretion is to be exercised – indeed, "one of the most, if not the most, important" principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", that might have been taken into account to justify refusing the appellant an order for its costs.

(Citations omitted)

1. The High Court then went on to deal with impecuniosity or futility as a basis for a costs order relieving an unsuccessful party from being ordered to pay costs. As to impecuniosity, the High Court said, at [32]:

32Whether a party is rich or poor has, generally speaking, no relevant connection with the litigation. It may be said, by way of qualification to that general proposition, that a party's financial position may be relevant to the extent that it may inform the structure of a costs order. For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order. That said, any such qualification was not invoked in the present case.

(Citations omitted)

1. Then, at [34] and [35], as to futility:

34It was erroneous for the Court of Appeal to decline to make the order sought because it perceived that the award would be futile. The making of an order for costs is no occasion to invoke the concern of the Court of Chancery that equity not act in vain. That concern is a consideration attending the exercise of the discretion to grant equitable remedies. In stark contrast, the courts do not regard the impecuniosity of a defendant wrongdoer as a reason for declining to order the payment of damages found to be due to an injured plaintiff. Likewise, the favourable exercise of the statutory power to award costsis not the grant of an equitable remedy in respect of which a likely failure of compliance is a relevant consideration.

35In any event, as a matter of authority, the courts have consistently rejected the suggestion that a costs order should not be made against an impecunious party because it would be futile to do so. The circumstance that a person may not presently, or even foreseeably, be able to meet an order for costs has not been regarded as a reason to regard the creation of the debt as an exercise in futility. The very existence of the debt created by the order is a benefit to a creditor. The successful party is better off with the benefit of the order than without it. It simply cannot be assumed that the respondent will never have the means to pay the debt in whole or in part or that it might not otherwise be turned to valuable account by the appellant.

(Citations omitted)

1. Thus far it is apparent that the defendant’s submissions, to the extent that they were based on his impecuniosity, should be rejected. However impecuniosity (including futility) are not the sum of his submissions. As set out above there are two other factors that he wishes to include, namely he was an academic who never practised law and he is now suffering from worsening dementia.

1. The principles stated by the High Court, as set out above, do not exclude a variety of factors being relevant to a costs order. However those factors should be relevant to the litigation and have played a part in the successful party incurring costs. The defendant’s mental health condition played no part in the litigation.

1. In relation to the defendant’s submission that he was only ever an academic, the only possibly relevant part to the litigation is his suggestion that there was no need to engage counsel when he had told the plaintiff that he would not oppose the application.

1. The submission may have had some merit if consent to the application would have, of itself, led to the granting of the orders sought. However that was not the case. An application for the removal of a practitioner from the Roll must be decided by the Court regardless of whether or not there is consent. No doubt consent is a factor that might be taken into account, but nevertheless the Court must itself be satisfied that the orders sought should be made.

1. This was recognised by the Court, at [10], in stating:

10Notwithstanding the defendant’s position, however, it is incumbent upon the court to satisfy itself that the defendant’s name should be removed from the roll.

1. Ultimately it is the view of this Court that the factors relied upon by the defendant are not sufficient to justify an order other than that originally made. It may be that the plaintiff will never recover any costs. Nevertheless, it is entitled to the order in its favour.

Orders

1. The order made on 13 November 2020 that the defendant pay the plaintiff’s costs is confirmed.

I certify that the preceding nineteen [19] numbered paragraphs are a true copy of the Reasons for Judgment of their Honours Chief Justice Murrell, Justice Burns and Justice Elkaim.

Associate:

Date: 10 December 2020