New South Wales Supreme Court CITATION : Morris v Hanley [2003] NSWSC 523 HEARING DATE(S) : 5 and 12 June 2003 JUDGMENT DATE : 12 June 2003 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Application to make motion for costs against legal practitioners returnable at same time as argument of costs of proceedings inter parties refused. CATCHWORDS : PROCEDURE [551] - Costs - Jurisdiction - Persons not parties to proceedings - Solicitors for parties - Barristers - Improper conduct - Whether improper conduct could be inferred on material presented. LEGISLATION CITED : Supreme Court Rules 1970 Part 52A rr 43(1) & 43A(1) CASES CITED : Pinebelt Pty Ltd v Bagley [2000] NSWSC 655 Wentworth v Rogers [1999] NSWCA 403 Janine Morris (P) Jack Norman Hanley (D1) Geoffrey Donald Reid (D2) Lynda Maree Cole (D3) Christine Valmae Hayward (D4) PARTIES : Anthony Bodycote (D5) Robyn Janelle Haydon (D6) Daphne Olive Boyd (D7) Beverley Joy Armfield (D8) Gayle Hanley (D9) Cecil Bellchambers (D10) Mariani Holdings Pty Limited (D11) FILE NUMBER(S) : SC 2650/97 COUNSEL : In person (P) P T Taylor (D1-11) SOLICITORS : In person (P) Parker & Kissane (D1-11) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J THURSDAY, 12 JUNE 2003 2650/97 JANINE MORRIS v JACK NORMAN HANLEY & ORS JUDGMENT - On leave to file Motion for Orders for Costs against Legal Practitioners 1 HIS HONOUR: This is an application by the plaintiff in these proceedings for leave to file a motion and make it returnable before me on the day to which I have adjourned the argument concerning the costs of these proceedings. That argument is being hard fought, which is not surprising. An estimate has been given that the costs of both sides after the trial exceed $1 million and I should be surprised if that estimate is not true. What is claimed by the motion now sought to be filed and made returnable before me is orders in relation to the costs of the proceedings against four named legal practitioners who have, during the course of the proceedings, acted for the defendants. Those four legal practitioners are: David Stack of counsel, who formerly appeared for the defendants; Michael Harper and Peter Walsh, who are members of the solicitors' firm which now acts for the defendants; Philip Taylor of counsel, who held the brief for the defendants at the trial and for a long period before then. 2 The way in which the application arises is as follows. In the Written Submissions laid before me on the plaintiff's behalf when I commenced hearing the costs application various allegations were made of misconduct of legal practitioners representing the defendants. I did not, however, at first perceive that orders in respect of costs were actually being sought against those legal practitioners. When, in the course of argument, Mrs Morris made it plain to me that she desired to claim costs orders against those practitioners, I indicated to her that that could not be done without their being given the opportunity to answer the allegations and opposing the orders and that the appropriate course was that a notice of motion be taken out in the proceedings naming them as respondents to the application and seeking the orders for costs against them. Mrs Morris indicated to the Court that she only wished to do so if there was some prospect of the Court, on the available material, making orders against them. I told her that the Court could not advise her as to that. She indicated herself agreeable to the course that an application should be made to me today for leave to file a notice of motion and make it returnable before me when the costs argument as between the plaintiff and the defendants resumes. I directed that full particulars be given of the allegations of misconduct made against the practitioners. I indicated that, if on the basis of those particulars I was of the view that there was no arguable case against the legal practitioners, I should refuse leave for the motion to be filed and made returnable before me. The plaintiff indicated herself agreeable to this course. 3 The relevant rubric is misconduct. This is one of the bases on which the costs of proceedings may be ordered against solicitors or barristers: see Part 52A rr 43(1) and 43A(1) of the Supreme Court Rules 1970; and see the judgment of the Court of Appeal (Handley and Stein JJA and Sheppard AJA) in Wentworth v Rogers [1999] NSWCA 403 and my judgment in Pinebelt Pty Ltd v Bagley [2000] NSWSC 655. 4 Mrs Morris has brought to Court this morning a 16 page document entitled Particulars of Misconduct and that has been marked as an exhibit on the application before me. She has also tendered various correspondence by solicitors referred to in the Particulars of Misconduct and these also have been marked as an exhibit on the application. Out of court I have read carefully the Particulars of Misconduct and that correspondence. The general nature of the claims of misconduct made against the legal practitioners are summarised in pars (a) to (l) on the first two pages of the Particulars of Misconduct. I do not think it does the plaintiff's case injustice if I say that the misconduct alleged essentially falls into three categories. First it is said that the legal practitioners "agreed to attempt to delay the matter and maximize costs to the plaintiff with the duel [sic] purpose of exhausting her resources and exhausting the commitment of her contingency representatives." It was suggested that in pursuance of that agreement they made denials of facts they knew to be true and put forward arguments they knew to be spurious. In particular, the various motions to introduce cross claims were designed to delay and complicate the matter. Secondly, it is said that the motion for security for costs was knowingly based on the false premise that the plaintiff's case had no merit and was primarily being run as an harassment by the plaintiff's husband. Thirdly, it is alleged that Mr Walsh misconducted himself by writing various threatening letters as a tactic to hinder the effective prosecution of the case. It was said that, in short, all of this conduct was part of a coherent scheme to pervert the course of justice. 5 Certain salient facts should be recorded. They include that the plaintiff's claims were totally unsuccessful at trial and there was judgment for the defendants generally. So far as the security for costs application is concerned, that application was dealt with by the now Chief Judge in Equity. His Honour made an order for security. It should be said that this occurred shortly before the matter was fixed for trial, although the proceedings had been long on foot. The Court of Appeal overturned His Honour's judgment and refused the application for security for costs. This was substantially on the ground that His Honour's judgment, although discretionary, was flawed by insufficient weight being given to the lateness of the application and it was that lateness that led the Court of Appeal to dismiss the application for security. The defendants applied to the High Court of Australia for special leave to appeal against the decision of the Court of Appeal. Despite an application for expedition, that application was still pending when the proceedings came on for trial. I made it plain that I should not vacate the trial date by reason of the pending application in the High Court and the trial proceeded, with the result that I have already indicated. 6 After the general summary of the grounds at the commencement of the Particulars of Misconduct, the Particulars descend to detail of the allegations made against the various practitioners. I do not propose to deal in these reasons for judgment with each and every allegation, although I have considered them all. The allegations against Mr Stack of counsel are said to be of negligence only rather than impropriety, the negligence being in making certain statements to the Court that were false and which he would have known were false had he diligently investigated their basis. Those allegations were principally made in his submissions on the application for security for costs. I cannot see that it is established or likely to be established that the allegations are false. The plaintiff has a propensity to characterise as false any factual statement with which she does not agree. I cannot see that Mr Stack was under a duty to investigate their basis. In any event, the security for costs application was unsuccessful, so that the plaintiff lost nothing in the end either on that application or in the trial as a result of anything said by Mr Stack in his submissions. I do not think there is an arguable case for costs against Mr Stack. 7 The complaints against Mr Harper, Mr Walsh and Mr Taylor are dealt with essentially in a rolled up fashion. Some of the specific matters are as follows. The plaintiff alleges false traverses in the defence; she alleges that the motion to set aside the trial date was improper; she alleges that the presentation of documents was late and made in an unhelpful and disorderly fashion. It should be borne in mind, looking back to the summary at the start of the Particulars of Misconduct, that all these matters are said to go to establishing that they were part of a coherent scheme to pervert the course of justice by delaying and complicating the trial. 8 The plaintiff suggests that the defendants destroyed documents to prevent them being discovered or used and that the legal practitioners involved knew of this. The destruction is said to be an inference arising from cross references in documents which were discovered to documents which could not be found. From that the submission proceeds as follows: "It appears that the defendants may well have employed somebody to go through the company records to cleanse them, a decision ultimately to be made by the Court if it decides it can look at the evidence in view of the opportunity to get away with perjury which the absence of these documents created for them. In the overall circumstances when the Court has looked at the evidence it considers admissable [sic] it will be open to the Court to decide that Mr Walsh was aware of these documents which should have been made available to the Plaintiff." As somebody who became very familiar with many of the documents that were retained by the eleventh defendant, and who has seen the documents of many other companies on and off the Bench, I do not think one could draw from the fact that some documents were missing the inference that they were deliberately destroyed. 9 Particular criticisms were made of the way in which Mr Taylor conducted the trial as to taking what were said to be technical objections and taking various other steps said to evidence a deliberate campaign to string the trial out to greater length. I can only say, as the trial Judge, that I did not have any perception of Mr Taylor doing anything inappropriate or improper in this regard. In so far as there was some suggestions that this was an inherently simple case which was made long and complex, I should make it plain that one of the terrible dangers of this case was that, in relation to comparatively small amounts of money (as against the enormous body of costs now incurred), the case was always one of great factual and legal complexity and one in which there were likely to be incurred costs disproportionate to the subject matter. Equally, in so far as it is a theme of the Particulars of Misconduct that Mrs Morris had inadequate representation at the trial, I should say that the conduct of the matter by Mr John Maxwell, solicitor of Lismore, and Mr Jonathon Priestley of counsel did not appear to me inadequate. It was clear that they had had less time to prepare than the defendants' representatives, but to my observation the plaintiff's case was conducted in a sterling manner. 10 The other aspect of the Particulars of Misconduct to which I was specifically referred is that arising from the solicitors' correspondence which has been put into evidence and the suggestion that these letters evidence misconduct by threatening and seeking to intimidate the plaintiff or her advisers. I do not think that that conclusion can be drawn from the correspondence. It must be borne in mind that this case was conducted in a robust way and that it involved conflicts within a country town community, and in some instances within families, that caused high emotional reaction. In some cases the suggestion of misconduct is quite fanciful, as in respect of a letter written by Mr Harper on 20 September 1996, where he answered a letter before action by replying that on instructions "you were not a qualified person at the appropriate time and therefore no money is due." Some of the later letters may be closer to the bone, but when they are read overall I do not see any improper attempt to preclude the plaintiff from obtaining the evidence of other persons who were employees of the company. There were complaints in some instances that particular contacts with them were inappropriate, but Mr Walsh acknowledged in the letters the principle that there was no property in witnesses and there should be proper opportunity for the plaintiff to interview anyone willing to be interviewed. I do not see any trace, on the material before me, of Mr Walsh saying one thing on the record and attempting to act otherwise off the record. Certain threats of litigation against both plaintiff and solicitor were made at the end of 1997. However, those were specifically threats to sue for defamation or for loss of the bargain if statements made to a prospective purchaser of the company caused the purchase to go off. In the context of this whole matter I do not see anything that could be characterised as misconduct in that correspondence in any event. And I do not see how, even if it were misconduct in relation to the prospective transaction of sale of the business in 1997, it could be said to have affected the plaintiff's incurring of liability for costs in these proceedings. 11 As I have said, I have not traversed in this judgment every detail of the plaintiff's Particulars of Misconduct. I am aware, as she has emphasised to me this morning, that not every piece of evidence is set out in that document. However, by reference to all the allegations contained in that document and the evidence foreshadowed in it, I am of the view that realistically there is no arguable case in favour of an order for costs against any of the four legal practitioners named. The application for leave to file a motion in that regard and make it returnable before me to be heard together with the costs applications in the proceedings is, therefore, refused. ********** Last Modified: 07/14/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.