Federal Court of Australia

Hillier v Martin (No 21) [2024] FCA 546

ORDERS

THE COURT ORDERS THAT:

1.    The fourth to sixth respondents pay 80% of the applicant’s costs of and incidental to the applicant’s interlocutory application filed 15 August 2023.

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

REASONS FOR JUDGMENT

O’SULLIVAN J:

1    On 8 March 2024, I delivered judgment in Hillier v Martin (No 19) [2024] FCA 210. That decision dealt with two matters:

(a)    An interlocutory application filed by the applicant (Mr Hillier) on 15 August 2023 for orders that documents claimed by the fourth to sixth respondents (together NW Parties) to be the subject of legal professional privilege in favour of the first respondent (Ms Martin) and any entity or entities simply described as “Nordburger” are not the subject of the privilege (Iniquity Application); and

(b)    An application by Ms Martin filed 24 November 2023 seeking orders that, amongst other things, I recuse myself from hearing the interlocutory application and the matter generally (Recusal Application). The Recusal Application had been filed after argument on the Iniquity Application had concluded and the decision reserved.

2    I determined that the documents claimed by the NW Parties as being the subject of legal professional privilege in favour of Ms Martin and any entity or entities to be described as “Nordburger” are not the subject of legal professional privilege on the basis that there is prima facie evidence of iniquity such as to displace the legal professional privilege on the part of Ms Martin. I also declined to recuse myself.

3    Orders 3 and 4 made on 8 March 2024 provided:

3.    Subject to order 4, the fourth, fifth and sixth respondents are to pay the costs of and incidental to the applicant’s application filed 15 August 2023, such costs to be agreed or taxed.

4.    The fourth, fifth and sixth respondents have liberty to apply within seven days of the date of publication of these reasons for any variation to the order for costs made in order 3 herein.

4    On 15 March 2024, the NW Parties filed submissions in which they sought a variation to order 3 made on 8 March 2024.

5    Mr Hillier filed submissions in response to the NW Parties submissions on 21 March 2024 and after being granted extensions of time within which to file written submissions, Ms Martin filed submissions on the issue of costs on 10 May 2024.

6    In summary, the NW Parties do not contend that Mr Hillier is not entitled to a costs order arising out of the Iniquity Application, but rather that they should not pay costs on the basis that it is unjust and does not properly reflect the role of the NW Parties having regard to the circumstances of the Iniquity Application.

7    The NW Parties seek an order that the first and second respondents pay the applicant’s costs of and incidental to the Iniquity Application, alternatively that the first and second respondents pay 90% of the applicant’s costs of and incidental to the Iniquity Application and the NW Parties pay 10% of those costs.

8    There is no issue as to the applicable principles. An award of costs is in the discretion of the Court: s 43(2) of the Federal Court of Australia Act 1976 (Cth). The discretion must be exercised judicially and in the absence of special circumstances, costs follow the event: Hughes v Western Australian Cricket Assn Inc [1986] FCA 465; (1986) 19 FCR 10; [1906] ATPR 40-748 at 48,136. An award of costs is compensatory in nature and not punitive: Hockey v Fairfax Media Publications Pty Ltd (No 2) [2015] FCA 750, [37] (White J).

9    It is for the reasons which follow that there will be an order reducing the amount of the applicant’s costs payable by the NW Parties to 80% of those costs. It is for the avoidance of doubt that those costs do not include the costs thrown away of the adjourned hearing before a Registrar on 6 September 2023.

The parties’ submissions and consideration

10    The NW Parties seek a different order as to costs on four grounds.

11    First, they submitted the Iniquity Application was inevitable irrespective of the position they took because it was required due to the maintenance of a claim of privilege by the first and second respondents and their opposition to the Iniquity Application.

12    On that basis, and regardless of the position adopted by the NW Parties, argument was inevitable such that the applicant’s costs of the Iniquity Application are not referable to any conduct of the NW Parties.

13    Whereas I accept that argument on the Iniquity Application was inevitable, nonetheless the role the NW Parties took, contrary to what they submitted, was to actively oppose the application notwithstanding their initial position of neutrality.

14    Second, the NW Parties submitted that the length of the hearing (some two and half days) was as a result of the applicant bearing the burden of satisfying the Court of the existence of prima facie evidence of iniquity.

15    They submitted that in the absence of the first and second respondents appearing at the hearing, it was appropriate and necessary for the NW Parties to address and assist the Court in relation to such matters, including by reference to the Protocol that had been reached between the NW Parties and the first and second respondents: ninth affidavit of Fiona Mary Errington sworn and filed 31 August 2023, annexure FME 7.

16    The NW Parties submitted that the application took longer than originally listed because of the length and complexity of the applicant’s submissions, and in particular the applicant’s challenge to the particulars of the claims for privilege of the first and second respondents on the face of the NW Parties’ list of documents.

17    I accept those submissions. However, the NW Parties went further than taking a position of neutrality and argued actively against the application.

18    The NW Parties submitted further that given the seriousness of a finding that legal professional privilege did not arise in circumstances where there is an allegation of a dishonest plan involving the fourth respondent, the applicant’s counsel was obliged to consider the material at length to establish prima facie evidence to give colour to the charge of iniquity. They submitted that given such an approach was warranted, the time taken for the hearing was a necessary consequence of the nature of the application and not a consequence of the NW Parties’ involvement at the hearing. In the overall context, the time taken by the NW Parties was significantly less than that taken by the applicant.

19    I accept the submission that the applicant’s counsel was obliged to consider the material at length however, as I explain below, the position taken by the NW Parties was not neutral.

20    Further, as I read the Protocol, there was no obligation on the part of the NW Parties to contest on behalf of the first and second respondents the claim that there was no legal professional privilege applicable to the documents in question because of an iniquity. On the contrary, the Protocol expressly records common interest privilege on the part of the NW Parties and the first and second respondents. Still further, the allegation of iniquity necessarily impacts on the allegations of knowing assistance made against the NW Parties in the fifth amended statement of claim. The consequence of those matters is that the NW Parties had an interest in the outcome of the Iniquity Application.

21    Third, the NW Parties submitted that there were two particular matters which warranted the involvement of the NW Parties at the hearing. First, the use of a “script” email by the applicant over which privilege was claimed and which the NW Parties contend was disclosed in error and second, allegations of criminal blackmail.

22    Ultimately, the Court determined it was unnecessary to have regard to the applicant’s allegations in relation to the “script” and criminal blackmail and gave both allegations no weight when determining the Iniquity Application.

23    I also accept that the applicant’s contentions concerning the use of a “script” and criminal blackmail were matters that were necessary for the NW Parties to address that time was spent necessarily on these matters and that the Court gave no weight to them in determining the Iniquity Application.

24    The NW Parties submitted these matters gave context to the Court’s observations at [170] of the judgment that:

The NW Parties submitted initially that they took a neutral position on the application and submitted that they had no onus but took the role of a contradictor. Nonetheless, as the argument progressed it became readily apparent that they argued, substantially, against the application.

25    Fourth, to the extent that any costs of the Iniquity Application were thrown away as a result of the first respondent’s late opposition to the Iniquity Application being heard before a Registrar, those costs fall on the first respondent and are not in any way the consequence of any conduct by the NW Parties who were prepared to argue the application before the Registrar on 6 September 2023.

26    I accept that submission.

27    Ms Martin provided written submissions in which she submitted that the appropriate order was costs in the cause.

28    As I understand the submissions, that is because at trial, the Court will determine the allegations of iniquity after hearing evidence. Ms Martin contends that is a superior basis upon which to determine any issues of costs arising from the Iniquity Application.

29    With respect, that misunderstands the nature of the inquiry on an application such as the Iniquity Application. The authorities are clear (and set out in the judgment) that rather than proof at trial, what is required is sufficient material to give “colour to the charge of iniquity”.

30    The applicant’s submissions in response to the NW Parties submissions observed that the NW Parties argued against nearly every submission made by the applicant.

31    The applicant refers to the 20 pages of submissions filed by the NW Parties, list of authorities, reference to several affidavits, as well as chronologies and an aide-memoire.

32    The applicant submitted that the inevitable consequence was that it was compelled to answer numerous complaints made by the NW Parties, which contributed to a protracted hearing.

33    The applicant submitted further that the NW Parties were not neutral and referred to the observations in [186] and [187] of the judgment that:

[186]    Without doing any disservice to the NW Parties’ comprehensive submissions, rather than submitting that the material upon which Mr Hillier relies to give rise to a prima facie case fails to do so, the NW Parties seek to challenge the material relied upon by Mr Hillier by contending to the contrary. To that extent, the effect of the NW Parties’ submissions is that Mr Hillier has not established iniquity to the required standard of proof that applies at a civil trial.

[187]    This approach by the NW Parties pervades the entirety of its submissions, including, without being tested in cross-examination, challenges to the reliability and credibility of Mr Hillier’s evidence.

34    I accept those submissions hence the observation at [170] of the judgment.

35    The NW Parties opposed the Iniquity Application and argued comprehensively against it in its entirety. Nonetheless, I have accepted that the allegations relating to the use of a “script” and criminal blackmail were matters they were obliged to address and matters to which ultimately, the Court gave no weight.

36    So too, I accept that the NW Parties are not responsible for any costs thrown away by reason of the removal of the Iniquity Application from the Registrar on 6 September 2023.

37    Ms Martin played no active role in the Iniquity Application. The submissions she sought to file were only provided once the hearing of the Iniquity Application had commenced and were not taken into account because she was in breach of the Court’s orders requiring the filing of any written submissions. Save for the very late application to remove the Iniquity Application from a Registrar and the consequent costs thrown away, it cannot be said that anything Ms Martin did, other than her formal opposition to the application, contributed to the time required to prepare for and hear the Iniquity Application.

38    It was necessary to argue the Iniquity Application because of the attitude taken to it by both the first respondent and, in my view, the NW Parties. Ultimately, the NW Parties were unsuccessful in their opposition save for the “script” issue and the criminal blackmail issue.

39    In the circumstances, there is no reason why costs should not follow the event subject to an adjustment for the above two issues.

Conclusion

40    There will be an order reducing the amount of costs payable by the NW parties to the applicant to reflect their partial success on the questions of the “script” and criminal blackmail to 80% of the applicant’s costs of and incidental to the Iniquity Application.

41    For the avoidance of doubt, the costs of and incidental to the Iniquity Application payable by the NW Parties do not include the costs thrown away of the adjourned application before the Registrar which was listed for 6 September 2023. Those costs are reserved.

Associate:

Dated:    24 May 2024

SCHEDULE OF PARTIES