FEDERAL COURT OF AUSTRALIA

Hughes trading as Beesley and Hughes Lawyers v Hill (No 2) [2021] FCAFC 1

ORDERS

THE COURT ORDERS THAT:

1.    The Appellant pay the Respondent’s costs of the appeal on an indemnity basis.

2.    Any amount payable by the Appellant to the Respondent under a certificate of taxation or costs assessment have deducted from it any amount that the Respondent has received from the Appellant’s former lawyers.

3.    The Registrar release to the Respondent the $10,000 paid into Court under the orders of 7 August 2019.

4.    Pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth) the Appellant pay interest at the rates prescribed by Federal Court Rules 2011 (Cth) r 39.06 on the judgment sum from 24 May 2019.

5.    The Appellant pay the Respondent’s costs of the interlocutory application as taxed, assessed or agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    The principal question now before the Court is whether the Appellant should pay the costs of the Respondent and if so on what basis. The Full Court delivered judgment on 24 July 2020: Hughes trading as Beesley and Hughes Lawyers v Hill [2020] FCAFC 126; 382 ALR 231. At that time the Court deferred consideration of the question of costs. On 17 August 2020 the Respondent filed an interlocutory application seeking, relevantly, an order that the Appellant pay her costs of the appeal on an indemnity basis. Prior to this the Respondent had filed an affidavit by her solicitor, Mr Nathan Job, dated 6 August 2020 and a set of written submissions. The Appellant filed brief written submissions in response on 21 September 2020.

2    The Respondent put her entitlement to an award of indemnity costs on the basis that the appeal had wholly lacked merit and had been conducted in a delinquent fashion. It was also submitted that the Appellant had rejected a Calderbank offer unreasonably.

3    In our view, the first of these contentions should be accepted and the balance need, therefore, not be addressed. This first basis, that the Full Court found that the appeal was devoid of merit, perhaps understates what the Court found. At [17] Perram J (with whom Collier J and Reeves J agreed) said this:

In my opinion, the trial judge was correct to condemn the Appellant’s conduct of the trial as, in effect, a continuation of his harassment of the Respondent. This appeal is devoid of merit and I would infer was pursued for the same purpose. Some of the submissions were, in my opinion, insulting. It should not have been brought and, in my opinion, should be emphatically dismissed.

4    Indeed, the finding that the appeal had been pursued to further the Appellant’s harassment of the Respondent has the consequence that the appeal was, as the Respondent correctly submitted, an abuse of the Court’s processes. The pursuit of a meritless appeal for the ulterior purpose of harassing the Respondent is more than sufficient to warrant an order that the costs be paid on an indemnity basis: Colgate Palmolive v Cussons (1993) 46 FCR 225 at 233 per Sheppard J. Conducting a proceeding in this manner breaches the duty parties have to act consistently with the overarching purpose of the Court’s civil procedure provisions: see Federal Court of Australia Act 1976 (Cth) (‘the Act’) s 37M and s 37N(1). In exercising the discretion to award costs, s 37N(4) of the Act requires the Court to take into account any failure to comply with this duty: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [3] per Jagot, Yates and Murphy JJ.

5    In his written submissions, the Appellant did not respond to this aspect of the Respondent’s submissions, beyond asserting that the appeal had some prospects of success. In that circumstance, the order the Respondent seeks should be made. It is not therefore necessary to consider the alternate basis for the order either flowing from the Appellant’s failure to accept a Calderbank offer or the alleged delinquency in the conduct of the appeal.

6    The Appellant did submit, however, that the amount of any costs order made against him needed to be reduced. The nature of this reduction requires some explanation. When the Respondent initially filed her interlocutory application she had sought orders against the Appellant’s solicitor and counsel. A case management hearing took place and those lawyers, who by this point were no longer acting for the Appellant, either appeared in person or were represented. Subsequently, the Respondent and the Appellant’s former lawyers appear to have reached an agreement which resulted in the making of consent orders dismissing the claim for relief against the former lawyers with no order as to costs. We say that they appeared to have reached an agreement because, although the Court was provided with a set of consent orders, the Court was told via email only that ‘a resolution’ had been reached ‘as between the Respondent and the legal representatives’. Beyond this statement there is no material throwing any light on the nature of that agreement or on whether there was any more to it than appears in the consent orders.

7    The Appellant submits that the costs he must pay should be reduced by the amount that the Respondent recovered from his former lawyers. It follows from the preceding paragraph that it is unclear whether there was any such payment. Nevertheless, to the extent that the Respondent has received any portion of her costs from the Appellant’s former lawyers, the Respondent should have a credit towards whatever the amount of the indemnity costs ultimately transpires to be. For example, if the Respondent has recovered $500 then there should be a credit towards the amount due under any certificate of taxation (or assessment) of $500.

8    There are some other matters which require resolution. The Respondent sought an order that the $10,000 which the Appellant paid into Court pursuant to an order made by Greenwood J on 7 August 2019 be paid to her forthwith. This sum was paid into Court as a condition Greenwood J imposed upon the Appellant as the price to obtain the grant of a stay of orders, made by Judge Vasta at first instance in Hill v Hughes [2019] FCCA 1267; 287 IR 86, pending the determination of the appeal. His Honour also imposed as a further condition that the Appellant undertake not to encumber some land owned by him in Bangalow. The stay expired under its own terms once the appeal was determined. The final form of the undertaking in fact proffered also extended to an obligation not to deal with this land.

9    Neither the Appellant nor the Respondent developed any submission on this topic. From the reasons of Greenwood J it appears that the money to be paid into Court was intended as a ‘measure of protection’ for the Respondent who had been successful at first instance: Hughes trading as Beesley and Hughes Lawyers v Hill [2019] FCA 1234 at [21]. Although it is possible this could be a reference to security for the costs of the appeal, on balance we think it is more likely that his Honour intended to relieve the Appellant from the burden of having to pay any money under the orders made by Judge Vasta but required a portion of that money that he otherwise would have had to pay to be paid into Court. So viewed, it is a form of security in relation to the judgment sum. In that circumstance, and in the absence of any apparent opposition, it seems appropriate to order that it be released to the Respondent.

10    The Respondent also sought an order that the undertaking proffered by the Appellant, as a condition of the stay he had successfully sought, should be continued against him until he had paid all damages and costs awarded against him. The undertaking was in evidence before this Court on the present application. It is in these terms:

I, Owen Maldwyn Hughes, hereby undertake to the Court that I will not encumber or cause to be encumbered by way of mortgage or charge or in any other way deal with, the property located at 16 Byron Street, Bangalow in the State of New South Wales without the consent of Catherine Mia Hill first had and received or alternatively, without the leave of the Court first had and received.

I agree to be bound by this Undertaking pursuant to its terms and I acknowledge that:-

 (a)    the nature and the terms of the Undertaking have been explained to me; and

 (b)    I promise the Court that I will comply with the terms of the Undertaking; and

 (c)     the Undertaking has the same effect as an Order of the Court; and

(d)     if I breach the Undertaking, I may be guilty of contempt of the Court and may be punished by a fine or imprisonment.

11    This is not expressed to expire at any time. On the other hand, the stay which it was proffered to secure expired on 24 July 2020 under its own terms. We do not think the Court has the power to order that an undertaking, which is after all a voluntary act, be extended. On the other hand, because of the way the undertaking is in fact framed it does not require extension since it remains in effect. Under its terms the Appellant may not encumber or deal with the Bangalow property without the Respondent’s permission or the leave of the Court.

12    If the Appellant eventually applies to be released from the undertaking it will be necessary to consider what purpose the undertaking serves in circumstances where the stay has expired. However, that issue has not yet arisen. Accordingly, it is not appropriate to make the order sought by the Respondent to extend the undertaking.

13    Finally, the Respondent sought an order that the Appellant pay interest at the rates prescribed by Federal Court Rules 2011 (Cth) (‘FCR’) r 39.06 on the judgment sum from 24 May 2019, being the date it was delivered. The Appellant did not submit that such an order ought not to be made, and it appears an ordinary incident of the litigation. The order should therefore be made.

14    As a matter of substance, the Respondent has obtained most but not all of the relief which she sought against the Appellant in the interlocutory application. The relief she has not obtained, however, was refused only because it was unnecessary where the undertaking remained in place. In that circumstance, the Respondent should have her costs of the interlocutory application. The following orders should be made:

(1)    The Appellant pay the Respondent’s costs of the appeal on an indemnity basis.

(2)    Any amount payable by the Appellant to the Respondent under a certificate of taxation or costs assessment have deducted from it any amount that the Respondent has received from the Appellant’s former lawyers.

(3)    The Registrar release to the Respondent the $10,000 paid into Court under the orders of 7 August 2019.

(4)    Pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth) the Appellant pay interest at the rates prescribed by FCR r 39.06 on the judgment sum from 24 May 2019.

(5)    The Appellant pay the Respondent’s costs of the interlocutory application as taxed, assessed or agreed.

Associate:

Dated:    15 January 2021