CATCHWORDS
COSTS - withdrawal of proceedings where success unlikely -defendants ultimately successful on principal proceedings - whether defendants' conduct added to expense of proceedings
Customs Act 1901 s 243B (Cth)
Costs in Criminal Cases Act 1967 (NSW)
Australian Conservation Foundation & Ors v Forestry Commission & Ors [1988] 81 ALR 166
Hughes v Western Australian Cricket Association (Inc) & Ors [1986] ATPR 40-748
Commissioner of the Australian Federal Police v Love & Ors (Pincus J unreported 31 May 1991)
X & Y (by her Tutor X) v Pal & Ors (Mahoney, Clarke, Meagher JJA unreported 7 June 1991)
COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE v MALCOLM JAMES LOVE & ORS
No. G 430 of 1987
EINFELD J
SYDNEY
15 DECEMBER 1995
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. G430 of 1987
GENERAL DIVISION )
Between: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
Applicant
And: MALCOLM JAMES LOVE
First Defendant
BRENT RICHARD PETERS
Second Defendant
DOUGLAS WILLIAM ALLARD PETERS
Third Defendant
KIM HEATHER PETERS
Fourth Defendant
NIWURO PTY LIMITED
Fifth Defendant
VICTOR CHARLES PARSONS
Sixth Defendant
PAULINE PARSONS
Seventh Defendant
VICTOR BENJAMIN PARSONS
Eighth Defendant
ANITA FLORENCE PARSONS
Ninth Defendant
GAICLIMB PTY LIMITED
Tenth Defendant
KATHLEEN MARIE PETERS
Eleventh Defendant
MINUTE OF ORDERS
1. The applicant's motion of 2 September 1994 for the dismissal of his application of 3 September 1987 is allowed and the application is dismissed.
2. The applicant's motion of 2 September 1994 is otherwise dismissed.
3. The tenth defendant's motion of 6 May 1994 is allowed in part.
4. The applicant will pay 50% of the costs of the second, tenth and eleventh defendants.
Note: Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.
EINFELD J
SYDNEY
15 DECEMBER 1995
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. G430 of 1987
GENERAL DIVISION )
Between: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
Applicant
And: MALCOLM JAMES LOVE
First Defendant
BRENT RICHARD PETERS
Second Defendant
DOUGLAS WILLIAM ALLARD PETERS
Third Defendant
KIM HEATHER PETERS
Fourth Defendant
NIWURO PTY LIMITED
Fifth Defendant
VICTOR CHARLES PARSONS
Sixth Defendant
PAULINE PARSONS
Seventh Defendant
VICTOR BENJAMIN PARSONS
Eighth Defendant
ANITA FLORENCE PARSONS
Ninth Defendant
GAICLIMB PTY LIMITED
Tenth Defendant
KATHLEEN MARIE PETERS
Eleventh Defendant
REASONS FOR JUDGMENT
EINFELD J SYDNEY 15 DECEMBER 1995
This matter,
which has been before the Court since 1987, is complete with respect to all
issues except costs. These are
disputed between the applicant, who applies for an order that there be no order
as to costs, and the second, tenth and eleventh defendants, who seek orders
that the applicant pay their costs.
The basic facts
On 25 August 1987, the first, second and eleventh defendants were arrested and charged with certain narcotics offences. By application filed in this Court on 3 September 1987 the applicant sought pecuniary penalties against the first and second defendants under section 243B of the Customs Act 1901 for dealings with narcotics (the penalty proceedings). The application also sought orders vesting the property of those defendants in the Official Trustee in Bankruptcy. On the same day interlocutory orders were made by Justice Wilcox under section 243E of the Customs Act directing the Official Trustee to take custody and control over certain assets of the defendants, including land, gold and money, said by the applicant to have been derived by them from extensive heroin dealing. Similar orders were made in respect of the property of the tenth defendant on 19 September 1990 (the restraining orders).
The application was amended on 9 October 1990 to include the eleventh defendant, who is married to the second defendant, in both the pecuniary penalties and restraining orders. Other defendants were joined on their own motions. Interlocutory proceedings secured orders for the examination of various defendants and other people which took place between 1988 and 1990.
The penalty proceedings were heard before Justice Pincus over eight days in February 1991. At their commencement the proceedings against the first defendant were adjourned by consent but his Honour took evidence in the proceedings against the other defendants, despite an application that they be similarly adjourned. At the same time his Honour heard several applications on the motion of the defendants, including applications by the second and other defendants for the release from the restraining orders of two properties at Cobbity and North Bondi, an application by the second defendant that the restrained property be released as necessary to pay the legal expenses of his defence, and applications by the tenth defendant for a declaration that its property is the subject of a trust for the benefit of the children of the second and eleventh defendants and for an order that it also be released from the restraining orders.
On 31 May 1991 Justice Pincus dismissed the applications by the defendants for the release of the Cobbity and North Bondi properties, and the application of the tenth defendant, and adjourned the penalty proceedings until the conclusion of criminal proceedings that were then pending against the first and second defendants for the narcotics offences. His Honour ordered that the Official Trustee make payments from the restrained property, up to $70,000, for the legal costs of the second and eleventh defendants. By various consent orders the gold has since been returned to the tenth defendant.
The first, second and eleventh defendants, and another person called Shane Heffernan, went to trial on two counts relating to dealing with heroin in the District Court before Judge Nash and a jury in February 1992. They were found not guilty by direction of his Honour of the first charge in the indictment in August, and were acquitted by the jury, after a very long trial, of the remaining count in November 1992. On 29 April 1993 in an application for the costs of the trial, Nash J found after reviewing the evidence in the trial, that (page 23 of the judgment, annexure A to affidavit of B Brassil 4 July 1994):
had the prosecution had possession of all the relevant facts it would not have been reasonable for it to institute proceedings for the offences alleged in the indictment.
On that basis his Honour issued the defendants with a certificate under the Costs in Criminal Cases Act 1967 (NSW) for payment of the costs of their defence.
The costs applications
Presumably on the basis of the result of the criminal proceedings the
applicant has applied by motion filed on 2 September 1994 for the application
for pecuniary penalties to be dismissed.
The motion also sought orders vacating the restraining orders, which
I granted on 27 October 1994, and an order that there be no order as to costs.
On the first return of that motion I ordered that the defendants who wished to oppose that order could make submissions for another order. In consequence submissions were received from the second and eleventh defendants. Meanwhile, by motion filed 6 May 1994 the tenth defendant sought a number of orders all of which have been disposed of with the exception of an order seeking costs against the applicant.
The arguments
The applicant argued that as the defendants were in many respects unsuccessful before Justice Pincus, it is appropriate that there be no order as to costs. The applicant pointed to a number of features of the litigation which he said justify a departure from the general rule that costs follow the event. Principally, he asserted that the second, tenth and eleventh defendants failed on a series of applications that took up considerable time before Justice Pincus, and dominated both the hearing and his Honour's judgment. It was the submission of the defendants that following the general principle that costs follow the event, they should recover their costs of all these proceedings.
Pincus J went into some detail of the evidence surrounding the ownership
and control of the Cobbity and North Bondi properties, and resolved these
matters against the defendants. In forming
his conclusions in this regard, his Honour took an adverse view of the credit
of the second defendant and other witnesses for the defendants. The tenth defendant also failed in its
application for a declaration and release of its property. Furthermore, the defendants failed on a wide
range of individual factual issues, many of them concerning matters within
their exclusive knowledge. Thus, for
example, Justice Pincus rejected the account given by the second defendant
about the source of various moneys used to purchase the properties or to fund
the tenth defendant. A great deal of his
evidence, and of the evidence of his solicitor, Ms Freeman, was disbelieved or
rejected.
Certainly a reading of Justice Pincus' judgment gives the strong impression that the defendants failed on every seriously tried point, but that his Honour was unwilling as a matter of law to decide on any pecuniary penalty while criminal proceedings were pending. His Honour said (Commissioner of the Australian Federal Police v Love & Ors Pincus J unreported 31 May 1991 at page 36):
The claim under section 243B for an order that pecuniary penalties be paid is pursued, although there has been no conviction of any relevant offence; subsection 3 contemplates that this may happen. In my view, however, the Court would not ordinarily determine the question of pecuniary penalty where criminal proceedings are pending against the defendants, if to do so would be likely substantially to prejudice the defence of the criminal proceedings ...
To decide in civil proceedings an important issue awaiting
determination in criminal proceedings is an unusual course. I was initially inclined to take that course
in this case but have, in the end, decided to stand over the decision of the
application for pecuniary penalties. My
present view is that the application, which should be treated as part heard,
should not be brought on again until the determination of the relevant criminal
proceedings.
On the other hand, the present motions arose out of the initial penalty proceedings, and although that matter has not been pursued, the outcome of the criminal trial from Pincus J's point of view and from Judge Nash's comments in his judgment on costs, provides a strong reason for believing that any attempt to obtain a pecuniary penalty against these defendants would have been doomed to failure.
The appropriate principles to be applied in a costs application were declared by Justice Toohey in Hughes v Western Australian Cricket Association (Inc) & Ors [1986] ATPR 40-748, a judgment which was adopted by the New South Wales Court of Appeal in X & Y (by her Tutor X) v Pal & Ors (unreported Mahoney, Clarke, Meagher JJA 7 June 1991) where they were summarised at page 3 in the following terms:
Costs are in the discretion of the court. This discretion must be exercised judicially. The principles which bear on its exercise are generally: (1) Ordinarily, costs follow the event; (2) In particular circumstances it may be reasonable to require that a litigant who has succeeded only upon a portion of his claim should bear the expense of litigating the other portion or portions; and (3) Circumstances may dictate that a successful party who has failed on certain issues may not only be deprived of the costs in those issues but may be ordered as well to pay the other party's costs of them.
It is not necessarily decisive that the defendants failed on many
issues. They were vigorously defending a
serious action brought
by the applicant. As Justice Burchett
said in Australian Conservation Foundation & Ors v Forestry Commission
& Ors [1988] 81 ALR 166 at 169:
A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril as to costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately the question is one of discretion and judgment.
In an application for pecuniary penalty such as that faced by these defendants, a defendant is undoubtedly entitled to seek to extricate assets not properly the subject of restraining orders. The fact that in this case these arguments were unsuccessful does not necessarily, in light of the final result, disentitle them to their costs. However, there must also be taken into account here that the claims made were not merely dismissed by Pincus J, they were found to have been quite unmeritorious and supported by dubious testimony.
Conclusion
There are thus a number of factors relevant to the exercise of my discretion
in this matter. The applicant instituted
proceedings where were ultimately unsuccessful.
He did not insist on proceeding to a final hearing but discontinued when
the conclusion of the criminal proceedings made success unlikely although
theoretically possible. The hearing
before Justice
Pincus was largely taken up with applications by the defendants to extricate
assets from the restraining orders.
Justice Pincus disbelieved the evidence led in support of these
contentions and dismissed them. The defendants
were, however, successful in getting some of this property released for their
legal expenses. Later the tenth
defendant had its gold returned.
In the circumstances I am unwilling to accede to the defendants' request for all their costs. Even though they were ultimately vindicated on the principal matter, their conduct in bringing what were found to be unmeritorious claims added significantly to the expense of the proceedings. I believe the correct balance is to order the applicant to pay one half of the defendants' costs.
I add a note of explanation as to why I have not treated the tenth defendant separately from the second and eleventh defendants, notwithstanding its separate legal representation and the efforts of its lawyer to persuade me otherwise. Although the tenth defendant was ultimately vindicated by the withdrawal of these proceedings, it also failed in its applications before Justice Pincus, again largely as a result of conclusions reached by his Honour concerning the credit of the second defendant. In my view the same considerations apply to all three defendants.
The applicant's application dated 3 September 1987 as amended will be
dismissed. As to the applicant's motion
of 2 September 1994 and the tenth
defendant's motion of 6 May 1994, I order that
the applicant pay 50% of the costs of the second, tenth and eleventh
defendants.
For the applicant Mr C O'Donnell instructed by Commonwealth Director of Public Prosecutions
The tenth defendant Mr Brassil of Bernard D Brassil & Co
The second and eleventh Mr B Furlong as agent for
defendants John Bettens & Co
Date of Hearing 29 March 1995
Date of judgment 15 December 1995
