Federal Court of Australia

Stradford (a pseudonym) v Judge Vasta (No 2) [2023] FCA 1364

ORDERS

THE COURT ORDERS THAT:

1.    The respondents pay the applicant’s costs of the proceeding, excluding the costs referrable to the fees and disbursements paid to Ms Julia Bossert in respect of the preparation of her expert report dated 31 August 2021 and supplementary report dated 22 October 2021, and her fees, if any, in respect of her attendance at court to give evidence.

2.    Pursuant to rr 41.03, 41.11 or 36.08(2) of the Federal Court Rules 2011 (Cth), s 23 of the Federal Court of Australia Act 1976 (Cth) or the implied powers of the Federal Court, and upon the respondents giving the usual undertaking as to damages, execution of the costs order be stayed until the appeal (being proceeding number ACD54/2023), is heard and determined.

3.    There be no order as to costs in respect of the interlocutory applications filed by the respondents in October 2023 regarding costs.

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

REASONS FOR JUDGMENT

(Revised from transcript)

WIGNEY J:

1    On 30 August 2023, I handed down a judgment in favour of the applicant, Mr Stradford (a pseudonym), and ordered the respondents, a judge of the then Federal Circuit Court of Australia (Judge), the Commonwealth of Australia and the State of Queensland, to pay a sizable award of damages to Mr Stradford for having falsely imprisoned him: see Stradford (a pseudonym) v Judge Vasta [2023] FCA 1020 (J). I also ordered the parties to confer in relation to costs and to relist the matter if no agreement was able to be reached in relation to an appropriate costs order. The matter has now been relisted to hear argument in relation to the appropriate costs order.

2    In my judgment, I indicated that “I [was] unable to see any reason why the Judge, the Commonwealth and Queensland should not be ordered to pay Mr Stradford’s costs”: J at [852]. Mr Stradford was, after all, the successful party, and the usual order in respect of costs is that costs follow the event. Costs ordinarily follow the event because the guiding principle in respect of costs is that “costs are available to compensate a litigant for his or her time and trouble in participating in litigation”: see Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 at [33] and Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [25].

3    The Court does, however, have a broad discretion in relation to costs under s 43 of the Federal Court of Australia Act 1976 (Cth) and pt 40 of the Federal Court Rules 2011 (Cth) and may depart from the usual order in an appropriate case. One such circumstance is “where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome”: see Sangare at [25].

4    The parties in this matter were in broad agreement that a costs order should be made in favour of Mr Stradford. The Commonwealth, however, contended that there should be a limited departure from the usual order that costs in their entirety follow the event. The departure that was urged upon the Court in that regard was that the Commonwealth should not be ordered to pay the costs associated with the evidence of an expert witness who gave evidence in Mr Stradford’s case, and that Mr Stradford should pay the Commonwealth’s costs associated with the evidence of an expert witness called by it and the other respondents. The Judge and Queensland supported the Commonwealth’s position, albeit somewhat belatedly, and sought similar carve-outs in the costs orders relating to them.

The trial and the reasons for judgment

5    It is regrettably necessary to provide a little more detail concerning the trial and my reasons for judgment in order to comprehend the positions taken by the respondents.

6    The main issue at trial was undoubtedly whether the Judge’s judicial immunity extended to afford him protection from liability in the circumstances of the case. That issue was resolved against the Judge.

7    There were two other significant issues that went to the respondents’ liability. The first was whether the order made by the Judge which resulted in Mr Stradford’s imprisonment was valid until set aside. That issue was also resolved against the respondents. The second was whether the Commonwealth and Queensland had available to them a defence based on the fact that their respective officers who detained Mr Stradford pursuant to the Judge’s order had no reason to doubt the validity of that order because it appeared regular on its face. That issue was also determined adversely to the respondents. Those issues concerning liability were perhaps the main focus of the case, at least in terms of the parties’ ultimate submissions the applicable law.

8    Some considerable time at trial was, however, also devoted to the question of damages. That issue turned out to be quite factually complex and difficult. Mr Stradford sought an award of general and aggravated damages for deprivation of liability against each of the respondents. His claim in that regard was successful, though the award was not as high as he submitted it should be. Mr Stradford also successfully claimed an award of exemplary damages for deprivation of liability against the Judge.

9    Perhaps the most contentious issue in respect of damages, however, was Mr Stradford’s claim for damages for personal injury. There were, effectively, two components to that claim. The first component was that Mr Stradford be compensated for psychiatric injury suffered as a result of his imprisonment. I ultimately awarded fairly modest damages for Mr Stradford’s injury, primarily because of the constraints imposed by the Civil Liability Act 2003 (Qld) and the Civil Liability Regulation 2014 (Qld). The second component was that Mr Stradford be compensated for loss of earning capacity resulting from that psychiatric injury. That turned out to be perhaps the most difficult and hard-fought issue at trial insofar as damages was concerned.

The competing expert evidence concerning economic loss

10    In support of his economic loss claim, Mr Stradford called an accountant, Ms Julia Bossert, who gave expert opinion evidence concerning the calculation of the economic loss suffered by Mr Stradford arising from his injury and the consequent loss of earning capacity. She calculated the economic loss based on certain instructions and assumptions concerning Mr Stradford’s past and anticipated future earnings. The figure for economic loss that Ms Bossert calculated based on those instructions and assumptions was very large indeed.

11    The respondents countered Mr Stradford’s claim for economic loss, and Ms Bossert’s evidence in that regard, by calling their own expert witness, Mr Stuart Benjamin. Mr Benjamin also expressed an opinion concerning the calculation of Mr Stradford’s economic loss. He adopted a similar methodology to Ms Bossert, but came up with a significantly lower figure than Ms Bossert. That was primarily because Mr Benjamin’s instructions, assumptions, or opinions in respect of Mr Stradford’s past and anticipated future earnings were different to those employed by Ms Bossert.

12    I should also note that Mr Stradford filed a “supplementary” report of Ms Bossert. That came about because documents subpoenaed by the respondents prior to the trial revealed flaws in the instructions and assumptions upon which Ms Bossert had expressed her opinions in her original report. That did not completely deter Mr Stradford or, it appears, Ms Bossert. Ms Bossert was asked to make further assumptions the effect of which was to blunt the impact of the subpoenaed material.

13    I ultimately did not accept the evidence of either Ms Bossert or Mr Benjamin in respect of Mr Stradford’s economic loss. The problem with their evidence was not so much with their methodology, but rather the inputs they fed into their formula for calculating the loss, primarily those in respect of Mr Stradford’s past and anticipated future earnings. As already noted, those inputs were based almost entirely on instructions and assumptions and, in some respects, differences of opinion.

14    The problem with Ms Bossert’s evidence turned out to be that her instructions and assumptions concerning Mr Stradford’s past earnings, including his earnings during the period between the date of his imprisonment the commencement of the trial, turned out to be unsupported by, if not contrary to, the evidence which was adduced at trial. Indeed, Ms Bossert’s instructions and assumptions turned out to be very wide of the mark indeed. The problems with Ms Bossert’s reports and evidence in that regard were particularly exposed in the course of the cross-examination of Mr Stradford concerning his past and current earnings, and by documents that had been obtained by the respondents on subpoena. It should perhaps be noted, however, that Ms Bossert’s evidence was not entirely above criticism or reproach. Her unquestioning and unfailing acceptance of the reliability and integrity of some of the information and assumptions upon which she relied left a lot to be desired.

15    The failings with Ms Bossert’s evidence were such that, in his final submissions, Mr Stradford effectively abandoned any reliance on Ms Bossert’s reports and evidence. He proffered an entirely different and significantly lower figure for his economic loss based on entirely different figures for his past and anticipated future income.

16    For their part, the respondents submitted that Mr Stradford’s revised submissions concerning economic loss should be rejected. Interestingly, however, they also did not submit that the figure or figures which Mr Benjamin had come up with in his report should be accepted. The Commonwealth went so far as to submit that Mr Stradford should not be awarded any damages for economic loss. The other respondents submitted that no more than a nominal figure should be awarded.

17    I ultimately did not accept any of the parties’ submissions concerning damages for economic loss. Not surprisingly, I did not accept Ms Bossert’s evidence. Nor did I accept the figure that Mr Stradford proffered in his final submissions, nor Mr Benjamin’s evidence, nor the Commonwealth’s submission that there should be no award of damages for economic loss arising from Mr Stradford’s injury. Rather I awarded Mr Stradford $50,000 in respect of future economic loss, effectively, as a buffer. I accepted that his psychiatric injury may cause him a loss of earning capacity in the future, though it was extremely difficult to calculate a definitive amount reflecting that loss given the many uncertainties.

The rival contentions

18    Mr Stradford contended that there was no sound reason for departing from the usual order that costs follow the event. He submitted that he had succeeded in respect of all the issues at trial. As for damages, he recovered an award of damages in respect of each of the “heads” or categories of damages he had sought to recover.

19    The respondents contended that while Mr Stradford was entitled to a costs order in his favour, they should not be required to pay the costs associated with Ms Bossert’s evidence. That was because Mr Stradford eventually abandoned any reliance on her evidence. They also contended that Mr Stradford should pay the costs associated with Mr Benjamin’s evidence. That was because Mr Benjamin’s evidence was responsive to Ms Bossert’s evidence.

20    There was no dispute between the parties that it was open to the Court in the exercise of its discretion to make an order of the sort contended by the respondents. The only issue was whether the circumstances of the case justified or warranted such an order.

Should Mr Stradford be required to pay costs associated with Mr Benjamin’s evidence?

21    I will deal first with the costs of Mr Benjamin’s evidence as the resolution of that issue is relatively straightforward.

22    I reject the contention that Mr Stradford should pay the respondent’s costs associated with Mr Benjamin’s evidence. It is true that Mr Benjamin’s evidence was largely responsive to Ms Bossert’s evidence. It was not, however, entirely responsive. Mr Benjamin’s report did not simply contain a critique of Ms Bossert’s report. He also arrived at his own calculation of Mr Stradford’s economic loss based on different instructions, assumptions and opinions regarding Mr Stradford’s past and anticipated future income. I ultimately rejected Mr Benjamin’s opinion evidence in that regard.

23    In any event, the mere fact that the respondents may have retained Mr Benjamin to respond to Ms Bossert’s report does not support the order sought by the respondents. The respondents were not required to, and did not necessarily need to, file an expert report responsive to Ms Bossert’s report. They could have made the forensic decision to challenge the instructions and assumptions underlying Ms Bossert’s report without retaining their own expert. My reasons for rejecting Ms Bossert’s evidence also ultimately had little, if anything, to do with Mr Benjamin’s evidence and opinions. Rather, the rejection of Ms Bossert’s evidence largely flowed from the fact that Ms Bossert’s instructions and assumptions were undermined by the documentary evidence and Mr Stradford’s own evidence during cross-examination. Nor did I accept Mr Benjamin’s evidence in respect of the calculation of Mr Stradford’s economic loss.

24    In those circumstances, I see no good reason for requiring Mr Stradford to pay the respondents’ costs associated with Mr Benjamin’s evidence.

Should Mr Stradford be denied costs associated with Ms Bossert’s evidence?

25    The issue concerning the costs associated with Ms Bossert’s evidence is a little more difficult.

26    While I accept that it was not unreasonable at all for Mr Stradford to call expert evidence in support of his claim for economic loss, Mr Stradford ultimately abandoned any reliance on Ms Bossert’s report and evidence. As events transpired, that turned out to be a sensible and reasonable forensic decision because I would, in any event, have wholly rejected that report: see J at [764]. As I have already made clear, the main reason Mr Stradford was effectively driven to abandon any reliance on Ms Bossert’s evidence was that the instructions and assumptions given provided to Ms Bossert were inaccurate and did not reflect the reality of Mr Stradford’s position. The fault in that regard lay almost entirely at the feet of Mr Stradford. He no doubt provided certain information and instructions to his lawyers. That information and those instructions no doubt provided the basis for the assumptions that Ms Bossert was asked to make for the purpose of providing her expert report. The instructions and information that Mr Stradford provided concerning his earnings before his injury turned out to be incomplete, inaccurate and unreliable. The same can be said concerning the information and instructions concerning the income he earned following his injury and up to the commencement of the trial.

27    Does that circumstance justify a costs order which carves-out all costs associated with Ms Bossert’s evidence?

28    Mr Stradford submitted that it did not. He emphasised that he had succeeded on all issues at trial, including in respect of damages. He was awarded damages in respect of each of the heads of damage that he claimed, including damages for economic loss. The fact that he was ultimately awarded a lower figure for economic loss than he had claimed because Ms Bossert’s evidence was not accepted was, he submitted, of no great moment. While Mr Stradford implicitly accepted that courts can, and do occasionally, make costs orders in favour of the successful party which carve-out the costs in respect of issues on which that party was wholly unsuccessful, this was not, in his submission, a case where it could be said that he wholly failed in respect of any issue.

29    Mr Stradford pointed out that it is not uncommon for plaintiffs to receive an award of damages less, often significantly less, than the award sought by them. It was also not uncommon for the evidence of expert witnesses in respect of damages to be rejected, in whole or part, because the assumptions underlying their evidence were not made out at trial. In his submission, neither circumstance justified a costs order which excised the costs associated with the expert evidence concerning damages.

30    Mr Stradford also emphasised that at no point prior to the trial did the respondents make any attempt to bring to his attention the flaws in Ms Bossert’s instructions and assumptions. Instead, they made the forensic decision to reserve those points for exposure during the trial.

31    Mr Stradford ultimately submitted that the real issue was whether any act or omission by him in respect of the conduct of the trial was such as to disentitle him to the costs associated with the evidence of Ms Bossert. I agree. I also agree that it is somewhat unusual for a party to be deprived of the costs associated with the evidence of a witness, including an expert witness, simply because their evidence was ultimately not accepted, or wholly accepted, once tested at trial. It would be equally unusual for a party to be deprived of their costs associated with a witness on the basis that the witness’s evidence ultimately did not have any real bearing on the conclusions ultimately reached by the Court. As Bromwich J said in Australian Competition and Consumer Commission v GlaxoSmithKline Consumer Healthcare Australia Pty Ltd (No 2) [2020] FCA 724 at [74], the problem with that approach to costs is that:

…except in the clearest of cases it is at best difficult, and at worst impossible, to divine precisely what subtle contribution particular evidence may have had to the conclusions reached, especially without resort to hindsight reasoning.

32    This case, however, was and is unique and unusual in many respects, including in relation to the evidence concerning the loss and damage suffered by Mr Stradford as a result of his false imprisonment. As I have already said, the fundamental problem for Mr Stradford in respect of Ms Bossert’s evidence and his claims for economic loss generally was that the instructions and information he gave to Ms Bossert were incomplete, inaccurate, and unreliable. Even when the unreliability of some of Ms Bossert’s instructions and assumptions was exposed, to a certain extent, prior to the trial, that simply prompted Mr Stradford to instruct Ms Bossert to provide a supplementary report based on further assumptions. The assumptions which underlay the supplementary report turned out to be almost as unreliable as those that informed Ms Bossert’s original report. As indicated earlier, Ms Bossert’s unfailing and unquestioning acceptance of what turned out to be fairly dubious and unreliable instructions did not reflect well on her or her reliability as an independent expert witness. To make matters worse, Mr Stradford’s own evidence concerning the information and assumptions which had been provided to Ms Bossert, including his pre-injury and post-injury earnings, was also found to be unreliable and to lack credibility.

33    The inaccuracy and unreliability of the instructions and assumptions provided to Ms Bossert and Mr Stradford’s evidence relating thereto is emphasised in numerous places in my judgment: see J [565], [570], [572], [761], [763], [764] and [796] to [808].

34    I have ultimately concluded that Mr Stradford’s conduct in providing what turned out to be incomplete, inaccurate and unreliable instructions to Ms Bossert was sufficiently unreasonable to disentitle him to the costs in respect of the preparation of Ms Bossert’s reports and her attendance at court. I do not consider that it would be just and equitable to require the respondents to pay the costs of Ms Bossert’s reports and her attendance at court in all the circumstances.

35    This is not a case where the opinions of an expert witness called by the losing party in respect of damages were simply preferred to the opinions of the expert witness called by the successful party. Nor is it a case where the opinions of an expert witness called by the successful party in respect of damages were discounted or given less weight because the evidence adduced at trial did not support, or wholly support, the assumptions given to the expert. Rather, this was a case where the expert’s evidence was abandoned, and would in any event have been wholly rejected, because the party responsible for retaining and calling the expert provided the expert with wholly incorrect and unreliable information and assumptions. As Queensland submitted, the abandonment of an expert report during the trial, or in final submissions, is really no different to obtaining an expert report but not tendering it at trial. A party could scarcely expect to be entitled to obtain the costs associated with an expert report which was never relied on or tendered at trial. It is also not entirely unusual for a costs order in favour of a successful party to excise costs associated with an affidavit which was not read at trial. GlaxoSmithKline was such a case.

36    In my view, however, it would not be appropriate or reasonable to deprive Mr Stradford of all of the costs associated with Ms Bossert’s evidence. That was the effect of the order sought by the respondents. Disentangling the costs associated with Ms Bossert’s evidence from the costs associated with Mr Stradford’s damages case generally would inevitably turn out to be a complex, difficult and time-consuming exercise. That exercise would also not be warranted in the circumstances of this case. I do not consider that Mr Stradford’s conduct was sufficiently unreasonable to disentitle him to all the costs associated with Ms Bossert’s evidence. In my view, the excision or carve out from the costs order should be limited to the amount paid to Ms Bossert for the preparation of her expert reports and her attendance at court to give evidence. I propose to make an order in those terms.

Costs of the application in respect of costs

37    Each party has had some measure of success in respect of the application concerning costs. In those circumstances, the appropriate order is that there be no order as to costs of the respondents’ interlocutory applications concerning costs.

Associate:

Dated:    2 November 2023