FEDERAL COURT OF AUSTRALIA

Kuek [2012] FCA 494

THE COURT ORDERS THAT:

1.    The application for leave to appeal be dismissed.

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

REASONS FOR JUDGMENT

1    This is an application for leave to appeal from a judgment delivered by Gray J on 19 March 2012, in which his Honour ordered the applicant, Gabriel Kuek of “Access Law”, personally to pay the costs which his then client, Luke Modra (“Modra”) (by his next friend, Ellen Modra) had been ordered to pay in a proceeding commenced by him against the State of Victoria, in which unlawful discrimination under the Disability Discrimination Act 1992 (Cth) had been alleged. Leave is required because s 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides that an appeal shall not be brought from an interlocutory judgment unless the court or a Judge gives leave to appeal. In awarding costs against the applicant, Gray J exercised the discretion arising under s 43(3)(f) of the Federal Court Act. The circumstances giving rise to Gray J’s order against the applicant arose wholly out of Modra’s failure to file an Amended Statement of Claim which complied with the requirements of the rules of court, and with specific orders which his Honour had made.

2    The proceeding had been commenced on 1 October 2010, but no Statement of Claim was then filed. The proceeding was referred by consent for early mediation, and, in the absence of settlement by that means, it returned to Gray J for directions on 10 March 2011. At that time, specific submissions were made on behalf of the then respondent with respect to the requirements of a Statement of Claim. In the result, Gray J made a specific order, in the following terms (in which, and in other orders made by his Honour to which I refer below, Modra was “the applicant”):

1.    On or before 21 April 2011 the applicant file and serve a statement of claim setting out:

(a)    All acts, omissions and practices alleged to constitute or give rise to the unlawful discrimination the subject of the application;

(b)    The department or agency alleged to be responsible for each such act, omission or practice;

(c)    The provision or provisions of the Disability Discrimination Act 1992 (Cth) pursuant to which each act, omission or practice is alleged to constitute unlawful discrimination; and

(d)    The remedy claimed in respect of each act, omission or practice;

and containing full particulars.

3    On 27 April 2011, a Statement of Claim was filed. In his Honour’s reasons of 19 March 2012, Gray J made the following observations about that pleading:

It failed utterly to comply with the order made on 10 March 2011. It contained a catalogue of generalised complaints, accompanied by references to the numbers of sections in the Disability Discrimination Act. The elements of the definitions of discrimination in ss 5 (discrimination by less favourable treatment) and 6 (discrimination by requirement or condition) were set out. No attempt was made to plead facts that would demonstrate how each allegation was said to fit within any provision. In some cases, the definitions in ss 5 and 6 were pleaded in the alternative in relation to a particular allegation. After I had read this statement of claim, I instructed my associate to communicate with the solicitors for the respondent, to advise them that they should not file a defence to this statement of claim.

4    The matter returned to Gray J for further directions on 15 June 2011. There was then a further discussion about the inadequacies of the Statement of Claim, and his Honour suggested to the applicant that he consider engaging senior counsel with experience in the relevant area, in order to plead Modra’s case properly. His Honour warned that, if this was not done, he would consider awarding costs against the applicant personally. His Honour made orders in the following terms:

1.    On or before 12 September 2011, the applicant file and serve an amended statement of claim.

2.    To the extent to which the applicant alleges discrimination as defined in s 5 of the Disability Discrimination Act 1992 (Cth) the amended statement of claim:

(a)    specify each act or omission (including any omission to make reasonable adjustments) alleged to constitute less favourable treatment of the applicant;

(b)    in respect of each such act, specify when and where each such act is alleged to have occurred and by whom each such act is alleged to have been performed;

(c)    in respect of each such omission, specify each measure or adjustment alleged to have been required to remedy the omission and state when, where and by whom each such measure or adjustment is alleged to have been required to be taken;

(d)    in respect of each such act or omission, identify the person or persons with whom the applicant alleges comparison should be made; and

(e)    set out each fact and circumstance by reference to which it is alleged that each such act or omission constituted less favourable treatment.

3.    To the extent to which the applicant alleges discrimination as defined in s 6(1) of the Disability Discrimination Act 1992 (Cth) the amended statement of claim:

(a)    specify each requirement or condition with which the respondent is alleged to have required the applicant to comply;

(b)    in respect of each such requirement or condition, specify when, where and how the applicant was required to comply;

(c)    in respect of each such requirement or condition, set out each fact and circumstance by reason of which it is alleged that the applicant did not, or was not able to, comply; and

(d)    in respect of each such requirement or condition, set out each fact or circumstance by reference to which it is alleged that the requirement or condition had, or was likely to have, the effect of disadvantaging persons with the disability or disabilities the applicant is alleged to have.

4.    To the extent to which the applicant alleges discrimination as defined in s 6(2) of the Disability Discrimination Act 1992 (Cth) the amended statement of claim:

(a)    specify each requirement or condition with which the respondent is alleged to have required the applicant to comply;

(b)    in respect of each such requirement or condition, specify when, where and how the applicant was required to comply;

(c)    in respect of each such requirement or condition, set out each adjustment it is alleged the respondent could have made in order that the applicant complied, or would have been able to comply, and which is alleged not to have been made by the respondent; and

(d)    in respect of each such requirement or condition, set out each fact or circumstance by reference to which it is alleged that the requirement or condition had, or was likely to have, the effect of disadvantaging persons with the disability or disabilities the applicant is alleged to have.

5.    To the extent to which the applicant alleges breach of duty or trespass, the amended statement of claim:

(a)    specify each act or omission alleged to constitute breach of duty and each act alleged to constitute trespass;

(b)    in respect of each such act, specify when and where each such act is alleged to have occurred and by whom each such act is alleged to have been performed; and

(c)    in respect of each such omission specify each act required for compliance with the duty and state when, where and by whom each such act is alleged to have been required to be performed.

6.    The amended statement of claim contain all necessary particulars.

5    The times set out in Gray J’s orders of 15 June 2011 were subsequently extended by consent, and it was not until 17 October 2011 that an Amended Statement of Claim was filed. However, the then respondent’s solicitors still had concerns about that pleading, and they raised them with the applicant by letter dated 2 November 2011. In the opening paragraph of that letter (to the extent set out in his Honour’s reasons of 19 March 2012), those solicitors said:

We are currently considering our position in relation to the ASOC and have not yet made any final decisions about our response, including whether to apply to strike out parts of the pleading. We are particularly concerned that the following four deficiencies in the ASOC mean that any trial of the allegations contained in the ASOC will not be inexpensive or efficient.

The letter then addressed particular shortcomings in the Amended Statement of Claim, as those solicitors then perceived them.

6    By letter dated 4 November 2011, the applicant responded to the respondent’s solicitor’s letter of 2 November 2911. He made no response at all to the specific concerns which had been expressed in the letter of 2 November, but said only:

We refer to your remark that your client is considering its position in relation to the ASOC. This case is listed for Directions Hearing on 9 November 2011.

In view of the above, our client would be agreeable to the Directions Hearing being adjourned to allow your client more time to consider its position.

By letter in reply dated 7 November 2011, the then respondent’s solicitors said that they did not seek an adjournment of the directions hearing which had been listed for 9 November 2011, but they expected to receive a response from the applicant in relation to the other matters which had been raised in their letter of 2 November 2011.

7    Of the pleading filed on 17 October 2011, Gray J made the following observations in his reasons of 19 March 2012:

Although a substantial improvement on the original statement of claim, the amended statement of claim did not comply with the orders made on 15 June 2011. The most serious omission was the failure to provide particulars. Attached to the amended statement of claim were two documents marked as annexures “A” and “B” respectively. They consist of lists of dates and summaries of incidents involving the applicant over two overlapping periods between 17 February 2003 and 16 October 2009. Paragraph 73 of the amended statement of claim contains an allegation that, in 2003 and 2004, the Department of Education & Early Childhood Development on numerous occasions subjected the applicant to physical force causing him injury. The particulars to this allegation are “The Applicant refers to DEECD’s incident reports set out in Annexure A hereto.” The summaries in Annexure A appear to be mostly of incidents in which the respondent’s staff restrained the applicant on the ground for some minutes, after he had acted violently towards staff members, or had attempted to escape from where he was supposed to be. Three of those incidents are said to have occurred in 2005. In respect of one incident on 12 August 2003, the summary includes the report “Restraint not used.” One summary dated 20 August 2003 indicates that the applicant scaled a courtyard fence, tried to hit a staff member with a stick, threw the stick at another and kept running. Staff talked him into returning to the courtyard for lunch. There is no indication that any violence was used. In essence, the matters found in Annexure A are not particulars. If anything, some of the incident reports may be evidence, by way of admissions made on behalf of the respondent.

There are references to Annexure B in the particulars to paras 86 and 91. These paragraphs relate to allegations about what occurred during two separate periods at two separate places of accommodation. In the case of the period from late February 2004 until July 2005, at a place called Greenock it is alleged that the applicant was confined to certain parts of the house and denied access to the backyard and other parts of the house, including the bathroom, toilet and kitchen; was denied access to his possessions and toys or equipment; and was regularly subjected to physical violence, causing him injuries. The second period, from July 2005 until 28 February 2010 is said to relate to accommodation at The Crescent. Again, it is alleged that the applicant was confined to part of the house, separated from other residents; prevented from going into the backyard; given food on a tray passed through a locked door; denied furniture, toys and equipment except the television behind a perspex screen; and regularly subjected to physical violence, causing him injuries. It is necessary for the reader to go to the summaries in Annexure B (which cover only the period between 1 March 2004 and 16 October 2009) and attempt to determine which of them are said to relate to the various allegations they purport to particularise. In some cases, it is impossible to do so. For instance, in relation to 4 June 2004 it is reported that the applicant smashed his fist into a toilet bowl, opening an existing cut to his left hand. There are several records of occasions on which the applicant is said to have been hitting himself, making threats to people and banging his head on windows. Again, this is not particulars. To the extent to which it relates to allegations against the respondent, it is, if anything, evidence.

Finally, there are numerous paragraphs alleging that the applicant has suffered loss and damage. In each case, the particulars refer to physical injuries, psychological injury, pain and suffering and medical expenses, and state that full particulars will be provided before trial. Even if it would be necessary to update particulars prior to the trial, the complete failure to provide any indication of any loss or damage related to any particular allegations against the respondent is a serious omission.

8    When the proceeding came before Gray J for directions on 9 November 2011, Modra was represented by counsel. His Honour raised the question of the deficiencies in the Amended Statement of Claim, and senior counsel for the then respondent raised the matters which had been set out in his client’s letter of 2 November 2011. There was a discussion about a timetable for the filing and service of a Further Amended Statement of Claim, this time complying with the orders made on 15 June 2011, and subsequent pleadings.

9    The discussion then moved to the questions of the costs thrown away by reason of Modra’s amendments, and of the costs of the directions hearing on 9 November 2011. His Honour raised the question whether the applicant should be required to pay those costs personally. The matter was then stood down until the afternoon, at which time the applicant himself appeared by counsel. He sought an adjournment of so much of the hearing as related to his liability to pay costs personally. Granting that adjournment, Gray J made orders which included the following:

1.    On or before 7 December 2011, the applicant file and serve a further amended statement of claim, complying with paragraphs 2 – 6 of the order made on 15 June 2011.

2.    The applicant pay the costs thrown away by reason of the order in paragraph 1.

…

6.    The applicant pay the costs of today.

7.    The question whether the applicant’s solicitor be ordered to pay the costs that the applicant has been ordered to pay by paragraph 2 and paragraph 6 of this order be adjourned to 28 November 2011 at 10.15am.

8.    The applicant’s solicitor have leave to file an affidavit or affidavits on the question referred to in paragraph 7 of this order.

9.    Any affidavit filed in accordance with paragraph 8 of this order:

(a)    be filed on or before 18 November 2011; and

(b)    be served on the applicant’s next friend on or before 18 November 2011; but

(c)    not be served on the respondent.

10    Pursuant to the orders made by his Honour on 9 November 2011, the question of the applicant’s liability personally to pay the costs which his client had been ordered to pay, by paragraphs 2 and 6 of those orders, came before his Honour again on 28 November 2011. By then, Modra had himself filed an application for leave to appeal from the orders made on 9 November 2011. The applicant, therefore, applied for an adjournment of the costs aspect pending the outcome of that leave application. The application for leave by Modra was heard on 1 December 2011, and dismissed on 2 December 2011. Accordingly, Gray fixed 12 December 2011 for the hearing of the question whether the applicant should pay the costs ordered to be paid by Modra on 9 November 2011. It was the determination of the matters heard on that day which was involved in his Honour’s judgment of 19 March 2012, the subject of the present application for leave to appeal.

11    In his Honour’s reasons of 19 March 2012, Gray J identified para (f) of s 43(3) of the Federal Court Act as the source of power for the making of an order that a solicitor should pay the costs ordered to be paid by his client. There is no suggestion that his Honour was mistaken in this perception of the source of power which he ultimately exercised.

12    His Honour then considered the traditional jurisprudence as to situations in which a legal practitioner might be ordered to pay costs. His Honour referred to the judgment of Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, 229-231. Gray J said that there were “two salient principles” which had emerged from Goldberg J’s analysis, namely, that the power to order a legal practitioner to pay costs personally is compensatory, not punitive, and that a serious dereliction of duty or serious misconduct on the part of a legal practitioner would be required before an order of that kind would be made. His Honour noted that Goldberg J had also accepted the proposition (156 ALR at 242) that “the retainer of counsel and reliance on counsel’s advice, of itself, does not absolve [the solicitor] from responsibility … [or provide the solicitor] with a defence to the allegations made against [him or her]”. However, retention of and reliance upon counsel was a significant matter to be taken into account in determining whether there was a breach of duty on the part of the solicitor. Gray J also referred to Medcalf v Mardell [2003] 1 AC 120, where it had been held that a court should not make an order that a practitioner pay costs when the practitioner was unable to reveal his or her instructions, and other relevant material, because of legal professional privilege which his or her then client had not been to prepared to waive, unless the court was satisfied that there was nothing that the privileged information could show that would absolve the practitioner.

13    According to Gray J, the traditional approach had been significantly affected by the enactment of the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth), inserting as it did ss 37M and 37N into the Federal Court Act. His Honour set out those sections, save for subs (3) of s 37N, in full. Specifically, s 37N(1) imposes upon the parties to a civil proceeding a new duty to conduct the proceeding in a way which is consistent with the “overarching purpose” set out in s 37M, which includes the facilitation of the just resolution of disputes according to law, and as “quickly, inexpensively and efficiently as possible”; and subs (2) of s 37N provides as follows:

(2)    A party’s lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party’s behalf:

(a)    take account of the duty imposed on the party by subsection (1); and

(b)    assist the party to comply with the duty.

With respect to these provisions, Gray J said:

In truth, the impact of those sections on the obligations of legal practitioners practising in this Court is significant. Section 37N(2)(b) requires a legal practitioner to assist the party on whose behalf he or she acts to comply with a duty to conduct a proceeding in a way that is consistent with the overarching purpose to which s 37M refers. That overarching purpose has objectives that include efficiency, timeliness and economy, as well as justice. It may be accepted that costs can only be ordered against a legal practitioner in the event of that practitioner’s serious dereliction of duty, but it must be recognised that the content of the duty has been changed by legislation.

The orders made on 15 June 2011 were designed to ensure the just determination of the applicant’s proceeding. The just determination of any case will be impeded dramatically by the inclusion of complaints and allegations that are extraneous to the legislation on which a party relies. A pleading lacking in precision places upon the judge an extra burden of attempting to ascertain whether there are issues on which the party can rely lawfully. There is a risk that, without the assistance of precise pleadings, the judge will fall into error in that respect. An imprecise pleading adds to the expense of a proceeding. The opposing party will have a great deal more work to do than would normally be the case, in determining whether to gather evidence to meet all that is said in the deficient pleading. The trial is likely to be longer than if the claim were pleaded properly. Thus, a failure to plead a claim correctly will impact not only on justice, but also on timeliness, efficiency and expense.

On the present application, no suggestion was made that Gray J was wrong in his perception of the consequences of the introduction of ss 37M and 37N into the Federal Court Act upon the exercise of the discretion for which s 43(3)(f) of that Act provides.

14    Giving practical content to the principles to which he had referred in the context of the case before him, Gray J then said:

Orders of the kind made on 10 March 2011 quoted in [12] above, are unusual. It is generally only necessary to order that a party file and serve a statement of claim, without specifying what that statement of claim is to include. The discussion at the directions hearing, to which I have also referred in [12] above, caused me to make those orders as a precaution. It is obvious that little or no attention was paid to them. The orders that I made on 15 June 2011, set out in [16] above, are unprecedented in my experience. They were made in an endeavour to provide a guide on which Mr Kuek and counsel for the applicant could rely to ensure that the amended statement of claim met the ordinary requirements of pleading. The result was that Mr Kuek filed an amended statement of claim that did not comply with those orders.

Unless the deficiencies in the amended statement of claim, which I have detailed in [18]-[21] above were remedied, there would be an impact on the just determination of the proceeding. The sorts of consequences to which I have referred in [32] above would result. The impact on efficiency and timeliness is obvious. The filing and service of a statement of claim by 7 December 2011, in accordance with para 1 of the order made on 9 November 2011, would have the result that what should have been accomplished by 21 April 2011, in accordance with para 1 of the order made on 10 March 2011, was not done until more than seven months later. The effect on efficiency and expense of the proceeding is obvious. Directions hearings have been wasted in an endeavour to ensure compliance with earlier orders. Most importantly, the applicant, a disabled person, or his mother, who is his next friend, have incurred liability for costs thrown away by reason of the non-compliance.

The applicant is obliged by s 37N(1) of the Federal Court Act to conduct this proceeding consistently with the overarching purpose laid down in s 37M. Mr Kuek had a duty pursuant to s 37N(2)(b) to assist the applicant to comply with that duty. That he has failed to do. Section 37N(4) requires the court to take into account any such failure to comply with the duty.

The failure to comply with the duty is a serious one. The discussions with Mr Kuek at the directions hearings on 10 March and 15 June 2011 were such as to make it clear to any legal practitioner that full attention to the pleading was required. The assurances given by Mr Kuek that he understood this were not borne out by the quality of the later statement of claim and the amended statement of claim. Further, when the letter from the respondent’s solicitors, dated 2 November 2011, came to Mr Kuek’s attention, his reaction to the points made in it about the amended statement of claim was one of complete indifference. His failure to address the points made, to give the respondent’s solicitors assurances that they would be remedied, and to take action to remedy them before the directions hearing of 9 November 2011 is the most serious aspect of his conduct.

15    To this point in his reasons, it is clear that Gray J took the view that a case had been made for the applicant to pay the costs which Modra had been ordered to pay under the orders made on 9 November 2011. However, there were two particular considerations, upon which the applicant had apparently relied, to which Gray J finally gave attention. The first related to the role of counsel, and to the extent to which the engagement of counsel to file a Statement of Claim ought to have made inappropriate the conclusion that the applicant himself was guilty of a serious dereliction of duty in the respects to which his Honour had referred. The second related to the inability of the applicant to rely upon documents and communications which were privileged, in circumstances where his client had declined to waive legal professional privilege.

16    With respect to the role of counsel, Gray J said:

It is true that Mr Kuek did engage senior counsel to settle the amended statement of claim. It is also true that senior counsel told the Court that he took responsibility for any deficiencies in that document. This does not absolve Mr Kuek of responsibility altogether. It was he who filed the document. It was he who signed the certificate that is required by r 8.05(1)(a) and Form 17 of the Federal Court Rules 2011 (and not any longer by O 11 r 1B and Form 15B of the Federal Court Rules as Mr Kuek seems to have supposed). In view of Mr Kuek’s intimate association with the directions hearings that had been held, and his knowledge of the orders made on 15 June 2011, it was unsafe for him to assume that counsel had done everything to comply with the orders. Mr Kuek would not have had to search long and hard to ascertain that there was no such compliance. The failure to provide particulars other than by general referral to Annexure A and Annexure B, and the failure to provide any particulars of alleged loss and damage, were obvious. Mr Kuek should have drawn the attention of counsel to those failures and taken steps to remedy them before filing the document. Responsibility for the dereliction of duty remained with him.

17    With respect to Modra’s refusal to waive privilege, Gray J said:

Counsel for Mr Kuek attempted to argue that I should not make an order for costs against Mr Kuek personally because of the absence of any waiver of the applicant’s legal professional privilege. I am unable to understand what it is that could have been changed if legal professional privilege had been waived. Either Mr Kuek failed to provide counsel with material on which counsel could have drawn proper particulars (and obviously he did provide Annexure A and Annexure B) or he provided such material and failed to check that counsel had not had recourse to it in drawing the amended statement of claim. Either way, responsibility lies with Mr Kuek. In relation to the absence of particulars of loss and damage, it is inconceivable that no attention has been paid to ascertaining what the consequences of the matters complained of in this proceeding for the applicant had been. It may be the case that any particulars of loss and damage would need to be supplemented before the trial. Even so, to neglect such particulars entirely in an amended statement of claim, after a mediation has been conducted, and specific directions for particulars had been given, cannot be condoned.

Even more importantly, communications between Mr Kuek and his client could have no bearing on Mr Kuek’s failure to act on the points raised by the letter of the respondent’s solicitors dated 2 November 2011. Responsibility for his indifference and inaction lies entirely with him.

18    In conclusion, Gray J expressed the view that it was “clear” that he should exercise his discretion in relation to costs by ordering the applicant personally to pay the costs which had been ordered to be paid by Modra on 9 November 2011.

19    To succeed on the present application, the applicant must show that the order made by Gray J is attended by sufficient doubt to warrant the appellate intervention of the Full Court, and that substantial injustice would result if leave to appeal were refused, supposing his Honour’s decision to be wrong: Décor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397, 398-399. In considering the first of these requirements, it must be remembered that his Honour’s decision was made in the exercise of a judicial discretion, and will be reversed on appeal only if attended by error of the kind referred to in House v R (1936) 55 CLR 499, 505. Further, costs is a matter of practice and procedure, in which setting an appellate court will exercise particular caution before overturning the exercise of a judicial discretion at first instance: Adam P. Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177; Cement Australia Pty Ltd v Australian Competition and Consumer (2010) 187 FCR 261, 267; Hogan v Australian Crime Commission (2010) 240 CLR 651, 665.

20    On the present application, counsel for the applicant centred their case upon Gray J’s finding that the applicant had failed to assist Modra to comply with s 37N(1) of the Federal Court Act, as required of him by s 37N(2)(b). It was submitted that there was no evidence before his Honour that would have sustained such a finding. Neither, in submissions made on behalf of the applicant, was it open to his Honour to infer a lack of assistance on the part of the applicant by reason of his failure to lead any evidence on the subject, since, at least in relation to the Amended Statement of Claim filed on 17 October 2011, the applicant was subject to the inhibition that Modra had refused to waive privilege. That had the result, so it was said, that the applicant was unable to give evidence of the instructions he had received from Modra, of the instructions which he had given to counsel who settled that pleading, and of the advice, if any, which counsel had given in that regard. Indeed, not only was this a case in which the applicant had instructed counsel to settle the amendments to Modra’s Statement of Claim, this was a case in which, as noted by Gray J in his reasons, senior counsel had taken full responsibility for such deficiencies as remained in that pleading. Having regard to all of these circumstances, it was not open to Gray J, it was submitted, to make a finding, which his Honour did, that the applicant had been guilty of a serious dereliction of duty, constituted by his failure to assist Modra to put the Statement of Claim in a condition that would comply with the rules of court, and with the orders that had been made by his Honour. Since this was the essence of the applicant’s case on the present application, it was said that the purely discretionary stage of the decision under s 43(3)(f) of the Federal Court Act should never have been reached, and that House v R had nothing to do with the matter.

21    I should commence my consideration of the application by pointing out that I have had access neither to the pleading of 17 October 2011 (or, for that matter, to any of Modra’s pleadings) nor to the transcript of any of the occasions when the matter was before Gray J (which is not to imply that a transcript of any such occasion exists). Consistently with this state of affairs, counsel for the applicant did not venture any criticism of Gray J’s observations with respect to the deficiencies in the Amended Statement of Claim that was filed on 17 October 2011.

22    The importance of pleadings, and their significance to the achievement of the purpose to which s 37M of the Federal Court Act refers, was identified by Perram J in Stewart v Deputy Commissioner of Taxation (2010) 267 ALR 637, 646 [35]:

Pleadings are succinct statements of a case designed to inform court and foe alike of what is said and how it will be put. Properly done, they promote the identification of the issues in dispute and, by so doing, their more prompt and efficient resolution. So much has always been so. The enactment of provisions such as s 37M of the Federal Court of Australia Act with its injunction to the expeditious and inexpensive resolution of proceedings gives added impetus to these considerations. It follows that a pleading which departs from its principle purpose of affording procedural fairness to the opposing party is a pleading which confounds the ends of justice. It engenders expense, delay and the wastage of public resources; it is not to be countenanced.

With respect, I agree with this assessment of the inutility of pleadings which have deficiencies of the kind that Gray J identified in the present case. If there were a dereliction of duty constituted by the applicant’s failure to provide the assistance required by s 37N(2)(b), on any view it was to be regarded as a serious one; indeed, I did not understand counsel for the applicant to submit otherwise.

23    With respect to so much of the applicant’s case as relied on the engagement of counsel to settle the Amended Statement of Claim, as Goldberg J made clear in White Industries, and as Gray J himself pointed out in the present case, that did not absolve the applicant of responsibility, particularly in circumstances where it was he who signed the certificate required by r 16.01(c) of the rules of court. Gray J obviously took the view that, in circumstances where it was the applicant himself who had the carriage of the case and who had an “intimate association with the directions hearings that had been held”, the professional responsibility remained on him to ensure that the pleading, even if settled by senior counsel, complied with the rules of the court and with the orders which had been made by his Honour. Undoubtedly this involved a particular perception of the relative roles of solicitor and counsel, and a judgment as to the most likely locus of the ultimate responsibility, as between the two, for what was on any view, a deficient pleading in the present case. His Honour, a very experienced Judge of the court, was (questions of privilege aside for the moment) better placed to make that judgment than almost anyone else; and certainly better placed than the members of the Full Court would be, assuming that the matter went on appeal. As docket judge, Gray J had a close familiarity with, and an understanding of, the dynamics of the proceeding over an extended period during which the applicant himself had been personally and exclusively responsible for previous shortcomings in the way his client’s case was articulated as a matter of pleading. The way his Honour broached the question of relative responsibility as between solicitor and counsel involved questions of assessment and judgment and, if not strictly within the formulation of the rule in House v R, is at least such as would give rise, in my view, to a high level of reluctance to interfere on the part of the Full Court, being instructed, as their Honour’s undoubtedly would be, by the Adam P. Brown line of authority to which I have referred.

24    With respect to Modra’s refusal to waive legal professional privilege, counsel for the applicant relied strongly upon an authority to which Gray J had in fact referred, Medcalf v Mardel [2003] 1 AC 120. That case arose under s 51 of the Supreme Court Act 1981 (UK), subss (6) and (7) of which read as follows (to the extent set out in the judgment of Lord Bingham) ([2003 1 AC at 129]:

(6)    In any proceedings mentioned in subsection (1), the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of the court.

(7)    In subsection (6), ‘wasted costs’ means any costs incurred by a party – (a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or (b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay …”

The Court of Appeal had ordered counsel representing one of the parties to pay certain costs because of what was considered to be a breach of para 606 of the Code of Conduct of the Bar of England and Wales, which provided as follows ([2003] 1 AC at 128):

A practising barrister must not devise facts which will assist in advancing his lay client’s case and must not draft any originating process pleading affidavit witness statement or notice of appeal containing …(c) any allegation of fraud unless he has clear instructions to make such allegation and has before him reasonably credible material which as it stands establishes a prima facie case of fraud … provided that nothing in this paragraph shall prevent a barrister drafting a pleading affidavit or witness statement containing specific facts matters or contentions included by the barrister subject to the lay client’s confirmation as to their accuracy.”

The question was whether counsel had drafted a notice of appeal containing an allegation of fraud in the absence of “clear instructions to make such allegation and … reasonably credible material which as it stands establishes a prima facie case of fraud …”

25    The main speeches in Medcalf v Mardell were given by Lord Bingham and Lord Steyn. Essentially, their Lordships held that, because the barristers’ clients had not waived the privilege, the barristers were unable to defend themselves against the allegation of breach of para 606 of the Code, they being entitled to the benefit of any doubt which existed on the question whether they had, at the time of drafting the notice of appeal, clear instructions to make the allegation of fraud, and reasonably credible material which established a prima facie case of fraud. Lord Bingham said ([2003] 1 AC at 136):

Where a wasted costs order is sought against a practitioner precluded by legal professional privilege from giving his full answer to the application, the court should not make an order unless, proceeding with extreme care, it is (a) satisfied that there is nothing the practitioner could say, if unconstrained, to resist the order and (b) that it is in all the circumstances fair to make the order.

In the present case, Gray J referred to Medcalf v Mardell and, as I have set out above, recognised that the principle to be derived from it is that a legal practitioner should not be required to pay costs, in circumstances where his or her instructions and other relevant material could not be revealed because of legal professional privilege, unless the court was satisfied “that there is nothing that the privileged information could show that would absolve the practitioner”.

26    In Medcalf v Mardell, the factual uncertainty as to the instructions which were given to the barristers, and as to the material that was before them when they drafted the notice of appeal, lay at the centre of the controversy. Although nominally concerned with the way in which a notice of appeal was expressed, the case had the potential at least to open up areas of factual substance, presumptively known only to the parties concerned and their practitioners, which were protected by privilege. The case before Gray J was of a rather different character. It was concerned with the technical sufficiency of the applicant’s pleading as a document. The question was not whether the applicant was sufficiently instructed, in point of fact, to make the allegations which he did, but whether those allegations were expressed in a way which complied with the rules of court and the orders previously made by his Honour; and, most importantly as his Honour pointed out, whether they were supported by proper particulars. In effect, his Honour held that, regardless of the state of the applicant’s instructions (or, for that matter, the content of such communications as may have been had with counsel), the Amended Statement of Claim of 17 October 2011 simply should not have been filed as a document, as it did not comply.

27    In the nature of things, Gray J was better able, by a considerable degree, to assess the extent to which Modra’s refusal to waive privilege provided any practical, as distinct from purely theoretical, justification for the patent insufficiency of the Amended Statement of Claim. His Honour carefully reasoned how things might have been otherwise, and was clearly incapable of appreciating how any kind of communication as between the applicant and Modra, and how any kind of advice provided by counsel, could have absolved the applicant of ultimate responsibility for the pleading filed on 17 October 2011. It is here that I am at a considerable disadvantage (or, more accurately, counsel for the applicant, in seeking leave to appeal, were at a considerable disadvantage), since the Amended Statement of Claim itself was not put before the court on the present occasion. I must, therefore, take Gray J’s observations about that pleading at face value. In my view, the state of affairs which appears from those observations is one which unambiguously bespeaks a dereliction of duty, specifically with respect to the obligation arising under s 37N(2)(b) of the Federal Court Act.

28    Counsel for the applicant sought to deflect a conclusion of this kind by challenging the Court, in effect, to contemplate circumstances in which, as between the three relevant players – the applicant, Modra and counsel – there might well have been acts, omissions or communications, and the order and timing of them might well have been such, as to produce the result that the Amended Statement of Claim was filed on 17 October 2011, with all of its deficiencies, without yet there having been any failure on the applicant’s part to assist Modra in terms of s 37N(2)(b). If so, according to counsel, in the absence of privilege having been waived, every possible doubt should be resolved in favour of the applicant, consistently with Medcalf v Mardell. In my view, this is to take the principles articulated in that case too categorically and too universally, and to pay insufficient attention both to the nature of the problem exemplified by the inadequate pleading of 17 October 2011 and to the extensive procedural history, which was so well understood by his Honour. The present was a very particular case. In the ways to which I have referred above, it was a case which particularly lent itself to the approach which Gray J took. That approach was not, in my view, satisfactorily deflected by theoretical contemplations as to the content of the communications which the applicant was unable to disclose.

29    In my view, Gray J’s judgment of 19 March 2012 is not attended by sufficient doubt to warrant consideration by the Full Court.

30    As to the question of substantial injustice, counsel for the applicant emphasised the gravity of a finding that he had been seriously derelict in a performance of his duty to the Court under s 37N(2) of the Federal Court Act. This was, it was submitted, a graver, and more permanent, detriment for the applicant than the requirement to pay the costs involved, as such. I accept that submission. Had I taken the view that the judgment of Gray J was attended by sufficient doubt, I would have granted leave to appeal.

31    In the result, the application for leave to appeal shall be dismissed.

32    I should note that, when the present application was heard on 24 April 2012, the applicant was represented by senior and junior counsel, who appeared pro bono. The court was much assisted by the submissions which they made.

Associate:

Dated:    16 May 2012