FEDERAL COURT OF AUSTRALIA

Young v Hughes Trueman Pty Ltd (No 3) [2017] FCA 235

ORDERS

IN THE INTERLOCUTORY APPLICATIONS:

THE COURT ORDERS THAT:

1.    The applications to stay the special costs application be dismissed with costs.

2.    The hearing of the special costs application proceed as scheduled on 27 April 2017.

3.    The procedural orders for the hearing of the special costs application made on 13 December 2016 be confirmed.

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

REASONS FOR JUDGMENT

BROMWICH J:

1    A special costs application is brought by the successful respondents in Young v Hughes Trueman Pty Ltd [2016] FCA 1176, by which an application for an extension of time to file a notice of appeal from a decision of the Federal Circuit Court of Australia was refused. The primary judge dismissed an application to set aside a bankruptcy notice: Young v Hughes Trueman Pty Ltd & Anor [2016] FCCA 989.

2    The special costs application is brought by respondents against:

(1)    the unsuccessful applicant in this Court, Ms Young;

(2)    the two solicitors who acted for Ms Young, Mr Newell and Mr Muriniti; and

(3)    Mr Muriniti’s law firm, L.C. Muriniti & Associates.

It is convenient to refer to Mr Newell, Mr Muriniti and L.C. Muriniti & Associates as the Solicitors.

3    The special costs application is listed for hearing before me on 27 April 2017.

4    On 9 December 2016, an application was filed in the High Court on behalf of Ms Young for an order to show cause in relation to both the antecedent decision of the primary judge (Young v Hughes Trueman Pty Ltd & Anor [2016] FCCA 989) and my decision refusing the grant of an extension of time in which to appeal from his Honour’s orders (Young v Hughes Trueman Pty Ltd [2016] FCA 1176). That is, Ms Young seeks to overcome the adverse outcome both before the Federal Circuit Court and before this Court in relation to the bankruptcy notice issued against her. She seeks to achieve this by way of the obtaining of constitutional writs, rather than by the more conventional approach of applying for special leave to appeal from the decision in this Court. That decision on the pathway taken in the High Court is of some importance to the outcome of these stay applications because of the more limited ambit of constitutional writs in respect of decisions of the federal judiciary as opposed to decisions of the federal executive.

5    Based upon the show cause application pending in the High Court, Ms Young and the Solicitors apply by separate interlocutory applications, both dated 16 December 2016, for a stay of the special costs application. Ms Young and the Solicitors were represented separately, albeit that Mr Muriniti was both one of the applicants in the Solicitors’ application and appeared for Ms Young in relation to her application. Mr Muriniti on behalf of Ms Young adopted the submissions of counsel for the Solicitors (including himself).

6    In simple terms, the case for the Solicitors for the grant of a stay, adopted on behalf of Ms Young, turned on the mere existence of the pending High Court show cause application, rather than relying on its strength or viability. The reason for this stance was that it was asserted that so long as the show cause application remained outstanding, there was a possibility, unsupported by any evidence on the point, that opposing the special costs application may be impeded or compromised by the problem of any relevant communications between Ms Young and her lawyers not being available by reason of legal professional privilege. It was, however, quite properly conceded by counsel for the Solicitors that this issue of extant legal professional privilege, if it existed and had substance, may well exist irrespective of the fate of the show cause application because of other outstanding litigation involving Ms Young as the client and the Solicitors as the legal representatives, including litigation still on foot in the New South Wales Land and Environment Court (NSWLEC).

7    Counsel for the respondents argued that the mere existence of the show cause application was not sufficient for the grant of a stay. Rather, regard needed to be had to the merits and therefore prospects of success of the show cause application as a relevant consideration in deciding whether that should be the reason, or part of the reason, for granting or refusing a stay of the special costs application. It was also argued on behalf of the respondents that the legal professional privilege aspect of the case advanced by the Solicitors, and adopted by Ms Young, was speculative and of doubtful application.

8    Counsel for the respondents also asserted that once the legal professional privilege issue was found to be wanting or otherwise put aside, there was no identifiable prejudice in proceeding to hear and determine the special costs application. I note in this regard, that even if the special costs application was to succeed, an order to that effect would not be irreversible or of itself cause any lasting prejudice. Other remedies may be available if required to avoid that point being reached, if a sufficient case can be advanced at that time.

9    Contrary to the thrust of the submissions on behalf of the Solicitors, an assessment of the merits and therefore prospects of success of the show cause application is unavoidable. That is because, if the show cause application is objectively viewed as having poor prospects of success, then it provides either a weak basis or no basis at all for the stay being granted. That would also mean that the existence of the show cause application would be unlikely, as a practical matter, to have any bearing on the asserted legal professional privilege argument, even if that argument had been supported by evidence. In that situation, it would be as though the show cause application did not exist. Conversely, if the show cause application is objectively viewed as having good prospects of success, consideration of the impact of legal professional privilege may be required.

10    During the course of the hearing of the stay applications, I enquired of Mr Muriniti as to why the case Ms Young had brought in the High Court was by way of a show cause application for constitutional writs rather than an application for special leave to appeal. Mr Muriniti indicated that Mr Newell had been primarily responsible for the decision to proceed in that way. Mr Newell was not in Court due to having cataract surgery on the day of the hearing of the stay applications, as explained in Young v Hughes Trueman Pty Ltd (No 2) [2017] FCA 87. However, Mr Muriniti understood that Mr Newell was of the view that an application for special leave to appeal was not available.

11    It is not clear how or why Mr Newell formed the opinion that an application for special leave to appeal was not available, if in fact that was his opinion. While an application for special leave to appeal in relation to an unsuccessful interlocutory application involving no apparent particular point of general principle or wider public interest might have very poor prospects of success, I am not aware of any reason why such an application cannot be made in respect of a decision of a Judge of this Court exercising appellate jurisdiction.

12    As was raised during the course of the hearing of the stay applications, constitutional writs are directed to jurisdictional error, not errors within jurisdiction, on the part of the primary judge and on the part of this Court. It is often hard enough to establish jurisdictional error made by a tribunal exercising federal executive power. It is ordinarily even more difficult to do so in respect of decisions made by a member of the federal judiciary.

13    A common form of jurisdictional error asserted in relation to executive tribunals is an alleged denial of procedural fairness. Many such allegations fail; some succeed. However when it comes to decisions made by members of the federal judiciary, a denial of procedural fairness, including even bias, is more likely to be an error within jurisdiction, correctable on appeal but not by constitutional writ: see Allsop CJ in SZUWX v Minister for Immigration and Border Protection [2016] FCAFC 77; (2016) 238 FCR 456 at 459 [20], citing Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 (see in particular 208-9 [31]); see also Re Refugee Review Tribunal; ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at 101 [42].

14    Even a relatively cursory analysis of the show cause application reveals that, even taken at its highest, most of the complaints made either do not on their face entail any allegation of jurisdictional error at all or only entail alleged errors within jurisdiction such as by way of asserted actual or apprehended bias by a member of the federal judiciary. For the reasons set out above, grounds of asserted actual or apprehended bias by members of the federal judiciary are most unlikely to result in the issuing of constitutional writs.

15    A limited number of claims are made asserting different forms of jurisdictional error, but when examined reveal that they appear to be factually or legally misconceived. Read generously, the show cause application at [8], [9] and [14(b)] asserts a failure to exercise jurisdiction and related complaints. However the paragraphs of the judgment in Young v Hughes Trueman Pty Ltd [2016] FCA 1176 to which these aspects of the show cause application relate, namely [34]-[35], reveal that rather than failing to deal with the issue raised and therefore jurisdiction sought to be exercised, an assumption was made in relation to that question in favour of Ms Young.

16    Contrary to what is asserted at [8] of the application to show cause, the “threshold question” (in fact referred to in the reasons for judgment at [34] as a “threshold argument”), which was assumed in Ms Young’s favour, was not addressing the part of Ms Young’s case by which she made allegations of conspiracy, but rather the question of whether or not there was a material difference between what she would in fact be obtaining as a result of the settlement of proceedings in the NSWLEC and what she thought she was obtaining. The asserted difference was assumed in Ms Young’s favour to be established in order to consider the balance of her case, including the allegations of conspiracy.

17    Similarly, [15] of the show cause application asserts that there was a jurisdictional error by way of misconstruing duty or jurisdiction, when in fact the judgment at [21] was simply making the point that the proceedings which gave rise to the costs order upon which the bankruptcy notice under consideration was based had been unsuccessfully appealed to the New South Wales Court of Appeal and special leave to appeal to the High Court had been refused. In those circumstances it was thought (by me) at the time of judgment that the costs order could not be further challenged because the decision upon which it was based could not be further challenged.

18    At the time of hearing the present stay applications it appeared that the conclusion in the judgment at [21] may have been premature, because there was by then pending a second application for special leave to appeal to the High Court by Ms Young. However, on 1 March 2017, the High Court refused the second application for special leave to appeal with costs: Margo Young v Brian Keith Hones & Ors [2017] HCASL 27. It follows that the point made in the judgment at [21] as to finality is now correct in any event. As a second special leave application has now been refused, the proceedings which gave rise to the costs order, previously thought to have been at an end, have now unambiguously reached that point. Indeed the second High Court special leave reasons state at [3] that there was “no identified basis for the Court to grant special leave to appeal and it is not otherwise in the interests of justice to do so”.

19    A further consideration in assessing the merits and prospects of success of the show cause application so far as it concerns the primary judge’s decision upheld on appeal is that it is rare to obtain judicial intervention, let alone intervention by the High Court, in relation a decision of a penultimate or earlier decision-maker when there exists an avenue of review or relief such as by way of an intermediate appeal court such as in this case. The part of the show cause application seeking to impugn the Federal Circuit Court decision is inherently unlikely to succeed simply by reason of not being entertained at all by the High Court.

20    A further point made by counsel for the respondents was that the show cause application was apparently well out of time in respect of the decision of the Federal Circuit Court and out of time at least as to the mandamus aspect sought to be advanced in relation to the decision of this Court. For that reason, arguably at least part of the show cause application is incompetent by reason of being out of time. In the circumstances of this case, the question of being out of time does not have much of a separate life to the question of the underlying merit of the show cause application. That is because an extension of time will more readily be granted when there is a viable underlying case. Conversely, if the underlying case is weak or substantially non-existent, then refusal of an extension of time simply becomes the practical mechanism by which the application is dismissed because granting an extension of time will be futile.

21    While the High Court may well take a different view for reasons that are not presently apparent, the show cause application on its face appears to be misconceived, erroneously drafted and most unlikely to succeed. In those circumstances its mere existence affords no proper reason to stay the special costs application. For completeness, even if that was not the correct conclusion and even if the mere existence of the show cause application could give rise to concerns about the special costs application fairly and properly proceeding by reason of impediments arising from legal professional privilege, there is no evidence that any such impediments exist or indeed even that there are any relevant communications which would be the subject of such privilege.

22    Even if there were relevant communications protected by privilege, as is entirely possible and perhaps even likely, the state of the law is that the applicants for a special costs order, the present successful respondents in this Court and in the Federal Circuit Court, are those most likely to be prejudiced in successfully prosecuting their special costs application by such a communication being kept from the Court. That is because, where a court is precluded by such privilege from knowing the full circumstance as to why a lawyer proceeded with a case in the way that they did, the lawyer must have the full benefit of any doubt in order to avoid unfairness: see NA & J Investments v Minister Administering the Water Management Act 2000 (No 2) [2011] NSWLEC 98 at [131]-[132], citing Medcalf v Mardell [2003] 1 AC 120 at [23] and other like authority.

23    In NA & J Investments it was said that in such circumstances, a court must proceed with extreme care and not make a wasted costs order unless it was satisfied that there was nothing the lawyer could say, if unconstrained, to resist the order or on the question of discretion. This means that where legal professional privilege is shown to have intervened, the scope for making a wasted costs order is very limited. Of course, there needs to be evidence that such relevant privileged communications exist, even if their precise content remains unknown. The presence of such legal professional privilege does not necessarily preclude such a costs order being made, but it may require a relatively extreme case to be established. On any view, these principles indicate the extent to which relevant privileged communications are more likely to operate to the disadvantage of the respondents in applying for a special costs order than to the disadvantage of Ms Young or the Solicitors.

24    It follows from all of the foregoing that an insufficient basis has been made out for any stay being granted in relation to the special costs application. The stay applications must therefore be dismissed with costs. The hearing of the special costs application will proceed as scheduled on 27 April 2017.

Associate:

Dated:    10 March 2017