FEDERAL COURT OF AUSTRALIA Martens v Stokes [2016] FCA 1010 File number: QUD 1029 of 2015 Judge: LOGAN J Date of judgment: 22 August 2016 Catchwords: COSTS – indemnity basis – where respondents have not confronted their obligations either as model litigants or litigants – failure to file amended defence or complete discovery and make related claims for privilege within times ordered – consequential need for adjournment of trial – Federal Court of Australia Act 1976 (Cth) s 37M Legislation: Federal Court of Australia Act 1976 (Cth) s 37M Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 Colgate-Palmolive Co v Cussons Pt Ltd (1993) 46 FCR 225 Date of hearing: 22 August 2016 Registry: Queensland Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 13 Counsel for the Applicant: Mr A Morris QC with Mr G Houston Solicitor for the Applicant: Pointons Lawyers Counsel for the Respondents: Mr R Anderson QC with Mr S McLeod and Mr G Del Villar Solicitor for the Respondents: Australian Government Solicitor ORDERS QUD 1029 of 2015 BETWEEN: FREDERICK ARTHUR MARTENS Applicant AND: TANIA ANN STOKES First Respondent COLIN BROEKHUYSE Second Respondent LEISA JAMES Third Respondent JUDGE: LOGAN J DATE OF ORDER: 22 AUGUST 2016 THE COURT ORDERS THAT: 1. Within seven (7) days, the solicitors for the respondents are to provide to the solicitors for the applicant a response regarding discovery of each document or category of documents listed in the proposed "Schedule D" previously supplied by the applicant's solicitors, including in respect of each document which the respondents do not intend to discover the reasons therefore. 2. By not later than close of business on 1 October 2016, the respondents must file and serve their Amended Defence. 3. In the event of default with respect to Order 2, the respondents' solicitor must file and serve an Affidavit to explain, in the fullest detail possible, the reasons for such default. 4. By not later than the close of business on 17 October 2016, the respondents are to file and serve the following: (a) an Affidavit by a senior and appropriate officer of the AFP as to: (i) the adequacy of the AFP's discovery; (ii) the adequacy of, and the fullest detail possible of, the AFP's search for relevant documents; (iii) any claim for Legal Professional Privilege, providing the fullest detail possible for the grounds for such claim; (iv) any claim for Public Interest Immunity, providing the fullest detail possible of the grounds for such claim; and (v) any claim for any other form of privilege or immunity from discovery, providing the fullest detail possible of the grounds for such claim; (b) a like Affidavit by a senior and appropriate officer of the CDPP; and (c) like Affidavits by a senior and appropriate officer of each department, instrumentality, agency or office of the Commonwealth which holds or may hold documents relevant to the issues in this proceeding. 5. The trial dates allocated for this matter in the period commencing 17 October 2016 are vacated. 6. This matter is listed for trial for four (4) weeks to commence on 3 April 2017, excluding 26, 27 and 28 April 2017. 7. This matter is listed for an interlocutory hearing on 7 and 8 November 2016 for; (a) further directions; and (b) any application notified in writing by the solicitors for either party to the other. 8. The respondents are to pay the applicant's costs on an indemnity basis: (a) of and incidental to today's directions hearing; and (b) thrown away by reason of the adjournment of the trial, such costs to be taxed and paid forthwith. 9. The respondents' application for leave to appeal Order 8 is refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) LOGAN J: 1 On 3 August 2016 I made the following orders in the course of the case management of this proceeding: 1. On or before Wednesday 17 August 2016 the respondents are to: (a) file and serve such amended Defence (if any) as they may be advised; (b) file and serve an affidavit or affidavits from suitable senior deponents deposing to the adequacy of the respondents' discovery and the reasonableness of the search or searches undertaken in that regard giving details thereof; (c) file and serve such affidavits (if any) relating to such claims of privilege, including legal professional privilege, public interest immunity, or any other form of privilege or immunity from discovery, (if any) as the respondents' may be advised; (d) give notice by letter to the solicitor for the applicant of such claims of privilege; (e) give notice by letter to the solicitor for the applicant of any application to adjourn the trial, and file and serve any affidavits relied upon in support of such application. 2. The applicant then is to give notice by letter to the respondents' solicitors on or before Saturday 20 August 2016 as to any contested claims with respect to privilege or the adequacy of discovery or search. 3. The following matters are to be returned for hearing at 10.15am on Monday 22 August 2016: (a) any proposed application for adjournment of the trial; (b) any contested claims with respect to discovery or privilege; and (c) such further issues (if any) as may be notified by letter from one party to the other. 4. As to the taking of any evidence in or from Papua New Guinea for the purposes of the trial: (a) before Monday 22 August 2016, the respondents are to: (i) investigate the feasibility of the reception of that evidence via videolink from the Australian High Commission in Port Moresby or other suitable premises as the respondents may identify; and (ii) confer with the solicitor of the applicant in relation to the reception of such evidence; (b) the applicant is to identify to the respondent and the respondent is to identify to the applicant witnesses whose evidence is proposed to be taken in or from Papua New Guinea and the extent to which any such evidence could not conveniently be received via videolink if such a facility is available. 5. The parties are granted liberty to apply. 6. Costs reserved Those orders were a sequel to earlier case management orders and, in particular, to difficulties which the respondents apprehended and had come to experience in respect of a completion of discovery, including the making of claims for privilege, notably legal professional privilege and public interest immunity privilege. 2 There is a history in this matter in relation to discovery, which is an unhappy one. It extends back to April this year and, notably, also to a directions hearing in May 2016. In May 2016, the circumstances were such that, exceptionally, rather than reserving costs, I made then, an order for costs in favour of the applicant. 3 The position reached today, in relation to discovery and claims for privilege, is revealed by the submissions for the respondents. They also reveal that, contrary to the position which had prevailed earlier this month, the respondents are not yet in a position to file an amended defence. Nor are they yet in a position to complete the survey of documents, so as to formulate a comprehensive claim in respect of public interest immunity privilege. 4 Today was to be the date upon which such claims were to be heard. The consequence of the respondents not complying with earlier orders in respect of the filing of an amended defence and completion of discovery and resolution of privilege claims has not, with all due respect, been confronted directly as it should have been by the respondents. That consequence is that the time frame within which they apprehend these tasks will be completed will necessarily leave the applicant in a position where he cannot prepare his case for trial responsibly, including by way of advance filing of affidavits. 5 The truly disappointing feature of this case is not so much that the respondents, in my view, have not approached the task of discovery and related public interest or other privilege claims with the expedition required. Rather, it is the absence of confronting the consequence of that so far as the trial dates are concerned in a way, that conforms both with the obligations of a model litigant and, more generally, those enshrined in s 37M of the Federal Court of Australia Act 1976 (Cth) (the Act). In my view, a model litigant faced with the need to observe and honour questions of public interest immunity and appreciative of the time which is entailed in that would have volunteered, firstly, that the trial ought to be adjourned and, secondly, to pay costs. It is most unfortunate that that has not occurred on behalf of respondents who represent the Commonwealth of Australia. It is inevitable that the trial must be adjourned. 6 That there is a disparity of resources between the applicant and the respondents is a given. The applicant has had, if nothing else, his life disturbed, his business life included in that, by the experiencing of a period of imprisonment in respect of charges which ultimately came to be the subject of convictions which were quashed. Whether or not that particular experience resonates in any claim for damages is a matter for resolution at trial. He is though entitled to bring a claim and, that claim having been brought, it needs to be confronted with all of the attendant obligations of a respondent party, and a government respondent party at that, in litigation. 7 The prospect of a trial in the latter half of this year was canvassed, albeit in a general way, as early as December last year. That the trial would be in October 2016 was fixed without demur on the part of the respondents in April this year. It is, as I have said, unfortunate that discovery has taken as long as it has. I am far from persuaded that that is just the result of the size of the task as opposed to an absence of confronting fully the responsibilities that fall on a litigant. 8 It is a given, in terms of an exercise of discretion, that the respondents must pay the costs of today and those of and incidental to the trial which have been thrown away. In the ordinary course of events, for all of the reasons explained by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 226 – 229 (Colgate-Palmolive v Cussons), those costs would be costs on a party and party basis. Further, they would not, in the ordinary course, fall for taxation and payment or perhaps set off until the conclusion of proceedings. 9 In this particular case though, the applicant has always been in a position where he faced, until today, a trial in October 2016 and prepared and made arrangements with counsel and solicitors accordingly. Through the fault of the respondents, that will no longer occur. Instead, the trial will not be until April 2017. 10 It is settled and Colgate-Palmolive v Cussons offers reminder enough of that, that the making of an order in respect of costs on an indemnity basis, is a departure from the ordinary but the categories in respect of which costs on such a basis may be ordered are not closed. Sheppard J makes that plain along with highlighting examples of categories in which, in the past, costs on that basis has been thought fit in Colgate-Palmolive v Cussons at 232 - 234. 11 One such occasion can be where, through misconduct, there is a loss of time to the Court and the other parties. In modern times, Parliament has thought fit to enact, materially, s 37M of the Act. Misconduct might be thought to have a pejorative element, whereas to breach s 37M may not entail moral turpitude, as opposed to nothing more or less than an absence of confronting one's responsibilities to the Court and to the other parties when one is a litigant. 12 Having case-managed this case from its inception and been indulgent in relation to the allowing of additional time for a defence as well as expanded times for discovery, I am of the view that the respondents have not to date confronted fully their responsibilities. That has occasioned particular expense to fall on the applicant. My firm view is that the applicant ought not to await the end of the proceedings to have the benefit of a costs order in respect of the consequences of the failure to file an amended defence and to complete discovery, including privilege claims, by the respondents. It is also my firm view that that, in the circumstances related, the respondents' conduct is such as to warrant an indemnity costs order. 13 These reasons for judgment having been delivered and the orders in respect of costs having been pronounced, the respondents forthwith sought from me leave to appeal against those orders. I refused to grant leave on the basis that the orders were the result of an interlocutory value judgment in respect of a matter of practice and procedure: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate: Dated: 24 August 2016