PRACTICE AND PROCEDURE – Costs – order by trial judge that non-party pay indemnity costs – whether discretion miscarried – whether error of principle – whether failure to take into account material consideration – whether outcome unreasonable and unjust – whether indemnity costs order supported by evidence.
IAN FRANCIS YATES v JOHN BOLAND, THEODORE SIMOS AND JOHN WEBSTER
NG 717 OF 1997
O’LOUGHLIN, NORTH & WEINBERG JJ 21 DECEMBER 2000 MELBOURNE (VIA VIDEOLINK TO SYDNEY)
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 717 OF 1997
BETWEEN:
IAN FRANCIS YATES APPELLANT
AND:
JOHN BOLAND FIRST RESPONDENT
THEODORE SIMOS SECOND RESPONDENT
JOHN WEBSTER THIRD RESPONDENT
JUDGE:
O'LOUGHLIN, NORTH, WEINBERG JJ
DATE OF ORDER:
21 DECEMBER 2000
WHERE MADE:
MELBOURNE (VIA VIDEOLINK TO SYDNEY)
THE COURT ORDERS THAT:
1.The appeal is dismissed.
2.The appellant is to pay the respondents’ costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 717 OF 1997
BETWEEN:
IAN FRANCIS YATES APPELLANT
AND:
JOHN BOLAND FIRST RESPONDENT
THEODORE SIMOS SECOND RESPONDENT
JOHN WEBSTER THIRD RESPONDENT
JUDGE:
O'LOUGHLIN, NORTH, WEINBERG JJ
DATE:
21 DECEMBER 2000
PLACE:
MELBOURNE (VIA VIDEOLINK TO SYDNEY)
REASONS FOR JUDGMENT
THE COURT:
This is an appeal against a judgment given by Branson J on 14 August 1997 (Yates Property Corporation Pty Limited v John Boland & Ors(No. 2) (1997) 147 ALR 685). Her Honour ordered that the appellant, Ian Francis Yates, was jointly and severally liable with Yates Property Corporation Pty Ltd (YPC) to pay the costs of the respondents, John Boland, Theodore Simos, and John Webster, of the proceedings which had concluded before her Honour.
BACKGROUND
The issue raised in this appeal comes at the end of very extensive litigation undertaken by YPC. For the purposes of this appeal it is sufficient to describe the litigation broadly. YPC purchased land in the Darling Harbour area with a view to developing a retail market there. In 1985 the land was acquired by the Darling Harbour Authority and YPC became entitled to compensation by reason of the acquisition of land for public purposes under the Public Works Act 1912 (NSW).
YPC engaged Abbott Tout Russell Kennedy as solicitors for the purposes of conducting the compensation claim before the Land and Environment Court of New South Wales. Mr Boland, the first respondent, is sued in his capacity as representative of Abbott Tout Russell Kennedy.…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Yates v Boland [2000] FCA 1895
Case
[2000] FCA 1895
Decision Date
CaseChat Overview and Summary
In the case of Yates v Boland, the Full Court of the Federal Court of Australia dismissed an appeal brought by Ian Francis Yates against a judgment given by Branson J on 14 August 1997. The judgment ordered that Yates was jointly and severally liable with Yates Property Corporation Pty Ltd (YPC) to pay the costs of the respondents, John Boland, Theodore Simos, and John Webster, of the proceedings which had concluded before Branson J. The appeal concerned the extensive litigation undertaken by YPC, including its compensation claim before the Land and Environment Court of New South Wales for the acquisition of land in the Darling Harbour area.
The legal issues the court was required to decide included whether the appellant, Yates, was correct in his submission that there was inconsistency in finding that YPC was unreasonable in pursuing the litigation when a full bench of the Federal Court had upheld its claims. Additionally, the court had to consider the Full Court's view on the undesirability of leading expert evidence in a claim for negligence against a legal practitioner. The court also needed to determine whether the evidence led in the case was admissible under s 80 of the Evidence Act 1955 (Cth), and if so, what the appropriate use of such evidence should be.
The court's reasoning and outcome were as follows: The court found that there was no inconsistency in the judgment, and the Full Court's view on expert evidence in negligence claims against legal practitioners was valid. The court also found that the evidence led in the case was admissible under s 80 of the Evidence Act 1955 (Cth) and should be used to confirm the court's views on particular issues rather than to inform those views. The appeal was dismissed with costs.
The final orders were as follows:
1. The appeal is dismissed.
2. The appellant is to pay the respondents’ costs of the appeal.
Orders
Orders of the court
1. The appeal is dismissed.
2. The appellant is to pay the respondents’ costs of the appeal.
Background
Background to the litigation
This is an appeal against a judgment given by Branson J on 14 August 1997 (Yates Property Corporation Pty Limited v John Boland & Ors(No. 2) (1997) 147 ALR 685). Her Honour ordered that the appellant, Ian Francis Yates, was jointly and severally liable with Yates Property Corporation Pty Ltd (YPC) to pay the costs of the respondents, John Boland, Theodore Simos, and John Webster, of the proceedings which had concluded before her Honour.BACKGROUND The issue raised in this appeal comes at the end of very extensive litigation undertaken by YPC. For the purposes of this appeal it is sufficient to describe the litigation broadly. YPC purchased land in the Darling Harbour area with a view to developing a retail market there. In 1985 the land was acquired by the Darling Harbour Authority and YPC became entitled to compensation by reason of the acquisition of land for public purposes under the Public Works Act 1912 (NSW). YPC engaged Abbott Tout Russell Kennedy as solicitors for the purposes of conducting the compensation claim before the Land and Environment Court of New South Wales. Mr Boland, the first respondent, is sued in his capacity as representative of Abbott Tout Russell Kennedy. The second respondent, Theodore Simos, was senior counsel engaged by YPC to conduct the case before the Land and Environment Court, and John Webster, the third respondent, was junior counsel in the case. The hearing before the Land and Environment Court lasted eight weeks and concluded with a determination that the value of the land was $22,334,500.00. YPC appealed to the Court of Appeal of New South Wales and the Darling Harbour Authority cross-appealed. The Court of Appeal found that the Land and Environment Court had erred and remitted the matter for further hearing to that Court. After the consideration of further evidence the Land and Environment Court fixed the compensation for the resumption of the land in the sum of $22,551,944.00. YPC again appealed to the Court of Appeal and this appeal was compromised by the Darling Harbour Authority agreeing to pay YPC an additional $1.25 million. Following the settlement of the proceedings in the Land and Environment Court, YPC commenced proceedings in the Federal Court against the respondents, its legal advisers. It asserted that it had suffered financial loss because the respondents had failed to adequately present the “special value” aspect of the claim for compensation and the failure amounted to a breach of professional duty by each of the respondents. On 5 June 1997 Branson J dismissed the application against all respondents. In a separate decision given on the 14 August 1997 her Honour ordered YPC to pay the respondents’ costs of the action on an indemnity basis as from 22 March 1996. Mr Yates was jointly and severally liable with YPC to meet those costs. The orders provided as follows:“1. The applicant pay:(a)the taxed costs, including reserved costs (if any), of each of the respondents up to and including 22 March 1996; and(b)the costs, including reserved costs, of each of the respondents thereafter in a sum to be ascertained on the basis that such sum is to comprise all costs except so far as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, each respondent will be completely indemnified by the applicant for his costs.2.Ian Francis Yates be jointly and severally liable with the applicant to meet the costs ordered to be paid by the applicant by par 1 of this order.3.No respondent is entitled to take steps to recover his costs pursuant to par 1 of this order from Ian Francis Yates until the expiration of forty two clear days from the date when his costs are taxed or agreed.
Evidence
Evidence Before The Court
The final factor considered by her Honour also concerned the evidence called on behalf of YPC. Her Honour observed that the substance of YPC’s case was that it incurred wasted costs before the Land and Environment Court by pursuing a case which did not include the “head start” element of special value of the land in question to YPC. Her Honour said at 692:“Crucial to the applicant's claim to have suffered ‘head start’ damages was that it was, as it pleaded in para 42 of its further amended statement of claim, in a position as at the date of resumption immediately to start building markets on the subject land. In para 25 of the further amended statement of claim, the applicant pleaded that in August 1983 financing for its markets proposal was confirmed in a letter of acceptance received by the applicant from a nominated banker. Mr Yates gave affidavit evidence in support of this plea. The evidence called at trial showed both the plea and Mr Yates' affidavit evidence in this regard to be false, and that Mr Yates either knew or ought to have known that it was false. Moreover, no challenge was mounted by the applicant to the evidence given by a solicitor who was acting for the applicant as at the resumption date that, at about that time, the title to the subject land was ‘cluttered with caveats and there was a great deal of negotiating with all the parties involved’. In my view the applicant persisted with a claim that it was in a position as at the date of resumption immediately to commence building on the subject land when the evidence that was, or ought to have been, available to it established to the contrary. As to the claim for special value based upon the proposed unit trust, again the evidence failed to support crucial allegations set out in the further amended statement of claim. Again it was apparent, in my view, that Mr Yates knew or ought to have known that such allegations were false.( Underlining added) Her Honour concluded at 693 as follows:“The fact that the applicant persisted with the proceeding without apparent regard to significant deficiencies in the evidence available to be called to establish its case is sufficient, in my view, to enliven the discretion of the Court to make orders for costs on a basis other than a party and party basis.”ARGUMENT ON APPEAL The appellant submitted that there was some inconsistency in finding that YPC was unreasonable in pursuing the litigation when a full bench of the Federal Court had upheld its claims (see Yates Property Corporation v Boland (1998) 85 FCR 84). As to her Honour’s finding that YPC failed to call expert evidence that the respondents were negligent in failing to advance the “head start” basis for valuation, the appellant relied upon the following view expressed by the Full Court at 110-11:Although no point was taken in this Court that the expert witnesses should not have been called we wish to express our own view on the undesirability of leading this type of evidence in a claim for negligence against a legal practitioner. In Midland Bank at 402 Oliver J said: ‘I must say that I doubt the value, or even the admissibility, of this sort of evidence, which seems to becoming customary in cases of this type [sic]. The extent of the legal duty in any given situation must, I think, be a question of law for the Court. Clearly, if there is some practice in a particular profession, some accepted standard of conduct which is laid down by a professional institute or sanctioned by common usage, evidence of that can and ought to be received. But evidence which really amounts to no more than an expression of opinion by a particular practitioner of what he thinks that he would have done had he been placed, hypothetically and without the benefit of hindsight, in the position of the defendants, is of little assistance to the Court; whilst evidence of the witnesses' view of what, as a matter of law, the solicitor's duty was in the particular circumstances of the case is, I should have thought, inadmissible, for that is the very question which it is the Court's function to decide.’ See also Permanent Trustee Australia Ltd v Boulton (1994) 33 NSWLR 735; Ergopex Pty Ltd v Meerkin & Apel (1996) V Con R 66, 542 at 66,555-66,556. It may be, as was suggested during the course of argument, that evidence of the type that was led in this case is now admissible under s 80 of the Evidence Act 1955 (Cth) by which opinion evidence is not inadmissible only because it is about a fact in issue or an ultimate issue. We do not express any opinion on whether the evidence would be admissible under that section. But what we wish to point out is that we regard such evidence of little assistance for the reasons expressed by Oliver J. We think that a court is well placed to determine the liability in negligence of a legal practitioner without the aid of such evidence where questions of particular practices do not arise. Moreover, a court runs a real risk of falling into error when it places principal reliance on the expert testimony of witnesses instead of forming its own view of the applicable principles of law, the duties owed by barristers and solicitors and the appropriate standards in accordance with which those duties must be performed. As we have said, no point about the evidence was taken in this case. Indeed, no party was in a position to make any complaint for the reason that each side tendered and relied upon the expert testimony of senior counsel. But we would wish to discourage the leading of such evidence in future cases. It has a tendency to distract the court from a proper adjudication of the issues that fall for determination in a negligence action. If by reason of s 80 of the Evidence Act such evidence is tendered then the only appropriate use to which the evidence should be put is to confirm the views of the court on a particular issue rather than to inform those views.”
Decision
Reasons for decision
Finally, on the question of the giving of false evidence by Mr Yates, the language used by her Honour goes beyond the finding that the evidence was given negligently. It is a finding that the evidence was deliberately false or, at least, recklessly false. On this basis there can be no doubt that her Honour was correct in regarding that matter as relevant to the exercise of her discretion.CONCLUSION As a result the appeal is dismissed with costs.
Ratio Decidendi
Legal Principle Established
Her Honour then addressed the question of the interests of justice as follows:“Subject to consideration of a matter to which I turn below, the above factors suggest that it would be contrary to the interests of justice for Mr Yates to be able to be shielded by the applicant from any liability for the respondents’ costs of the proceeding.The matter to which I refer is the failure of the respondents, or any of them, to apply for security for costs in the proceeding. In my view, such failure is a matter which, along with other matters, may appropriately be taken into account on an application of this kind. Where a company which is apparently without means to pay an order for costs in favour of a respondent initiates litigation, the appropriate course will ordinarily be for such respondent to seek an order for security for costs (see Knight’s Case per Dawson J at 204). Those who stand behind the company may then make a decision, ordinarily at an early stage, as to whether to make the financial commitment necessary to allow the litigation to proceed.The evidence before me discloses that the respondents did from time to time during the course of the proceeding give consideration to applying for an order or orders for security for costs. In doing so they had regard to the annual returns of the applicant filed with the Australian Securities Commission. Such returns showed the applicant to have significant shareholders’ equity. The solicitors for the first respondent on two occasions sought from the solicitors for the applicant more detailed financial information concerning the applicant than was disclosed by the Australian Securities Commission returns. Such information was not provided to them. In the circumstances I do not consider that it was unreasonable for the respondents not to have made application for an order or orders for security for costs.”CONSIDERATION All parties to the appeal accepted that this appeal was governed by the well known principles enunciated in House v The King (1936) 55 CLR 499 at 504-5 as follows:“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”