An opening address is not an argument, but that does not mean it should not be persuasive.
As an advocate if you are not engaging when you speak, you have lost an opportunity to advance your case. An opening address should feel like story telling at its best, if for no other reason than you have a captive audience. However, within that context an opening should be factual, it is not the place for rhetorical flourishes.
As the prosecutor, your opening address is your first opportunity to speak and engage with the decision maker, whether that is a Judge sitting alone or jury – for consistency we will refer to a jury as convenient synonym for both.
An opening should provide the jury with an outline of the evidence they will hear and what issue or issues are expected to arise for determination in the trial. It is an opportunity to focus their minds on what is important and the evidence that answers those issues in your favour. A simple and known mnemonic is your opening should focus on the who, the what, the where, the when and the why.
A simple and known mnemonic is your opening should focus on the who, the what, the where, the when and the why.
To achieve that goal in the most engaging way, you should consider how it is you are going to tell your story, especially if there are a lot of moving parts to it. You do not want to oversimplify the case, but equally you want to make sure its easily digestible and that the important parts are remembered. To that end you should consider how much detail is required, and if it is, why. For example, it is unlikely to be important to your opening address that the curtains in the room were blue with pink flowers, but it may be important that the curtains were closed each time the offender snuck into the complainant’s room.
There are different ways you might wish to start your address. A straightforward way could be to set the scene and introduce the jury to the witnesses they will hear from in the trial. It Is timely to remember that by opening your case you are inviting the jury into someone else’s life. You want them to be invested and engaged. To assist in their understanding – consider aids to demonstrate the story and characters involved – whether it be photographs of a scene, maps, or a family tree. The use of such items requires skill and organisation, so that your opening is not interrupted by technical issues or unpreparedness by those who might need to assist in that process.
You should also speak to your counterpart in advance and ensure nothing you intend to rely upon is controversial.
Do not open on a piece of evidence without being able to explain why it is admissible and relevant. If you think something may be particularly controversial, then it is incumbent upon you to discuss it with opposing counsel in advance. There is nothing more embarrassing than causing a mistrial because of your opening address.
In outlining the case to be presented, it is important not to overstate the Crown case. Hopefully juries will recall consistencies with the key points you have raised in your opening address as the evidence unfolds, but they will certainly remember failings or inconsistencies. Nothing will result in you, or your case, to ‘lose face’ with the jury quicker. You can also be confident that your opponent will remind the jury of such inconsistencies in their closing address.
Nothing will result in you, or your case, to ‘lose face’ with the jury quicker.
Although the opening address is the first thing you will present, it is often the last thing you will (or should) prepare. It is only once you have read and digested the brief, formulated a cohesive case theory and set about preparing what you require from your witnesses in evidence-in-chief (and concessions you may expect in cross examination) that you will be able to condense what is important for the jury. It is at the end of your preparation that you can be most confident as to what the jury ought to know at the start of your presentation of the case before them.
Having engaged in that task it will be apparent to you what the uncontested facts are, what the strong parts of your case are, and what are the weaknesses. While you should not ignore the latter, this understanding will help you articulate how the story is told and where the emphasis should lie. Tone and pace will assist in delivering that message.
The opening address and its detail become even more important when you are appearing in a regional setting. You should ensure that any names of places or people involved are pronounced properly. Nothing is more off putting than a jury correcting you, or sniggering, during your opening address as a result of the mispronunciation of local names. The areas of Booval, Ebbw Vale, Aratula and Berserker (and more) in their respective court regions are time and time again the subject of entertainment as juries watch visiting practitioners attempt to pronounce them properly. We have all heard national news broadcasters mispronounce Queensland cities, towns or regions – try and make that not be you.
Use plain language when you speak to the jury, and limit the extent to which you might talk about the law when opening the case for the Crown. The clearer your story the better. For example, it is likely the Judge in their opening comments has identified to the jury the reception of pre-recorded evidence in your trial and will do so again when it is played. It will ordinarily be unnecessary for you to go through the elements of the offence the jury need to be satisfied of in their deliberations. You can only hold the attention of your jury for so long, and you may be losing valuable time by rehashing something that has already been raised and will be again.
You can only hold the attention of your jury for so long …
Opening addresses in a Judge alone trial will likely be different and the best advice is be flexible. Some Judges might simply require particulars of the offending and a summary of your witness list and how they are relevant to the Crown case. Other Judges may require a very brief, no-nonsense summary of the evidence. In any event, by the time you stand up to present your opening, you will know your brief and case theory back to front, and will be able to address the Judge’s particular requirements appropriately.
There is a slight variance between the opening in defence and that of a prosecution. This reflects the difference in their relative positions. A defence opening can occur at two points in a trial.
The first point in a trial where the defence will open is after the prosecution. This is a more recent but useful practice. The purpose of a defence opening statement is quite different from the purpose of a prosecution opening. It is an opportunity to identify the issues in contention and is not to be a wide-ranging discussion of the law.
You must never open facts that will not be led as evidence in the prosecution case. If you are in any doubt as to the contents of your opening, raise it with the prosecutor beforehand. If you are concerned about losing a forensic advantage by forewarning the prosecutor prior to their opening, telegraph this issue with the prosecution and the Judge. There would be no disadvantage in providing a copy of your opening statement to the prosecutor after they conclude their opening. At that stage they may raise any issues contained in it and, if required, those issues can be raised with the Judge in the absence of the jury.
A defence opening statement should be short and focussed. If done effectively, it can frame the parameters of the defence case and hone the jury onto the real issues in dispute.
A defence opening statement should be short and focussed.
The second point in a trial where the defence will open is when your client elects to give and/or call evidence. You should open the defence evidence with sufficient detail that it is comprehensible to the jury, but no higher. There are two reasons for this, firstly, if your witnesses do not come up to proof, your case will lose credibility in the eyes of the jury and secondly, as the defendant is in court at all times – you do not wish to appear to be coaching them as to the evidence they will imminently be giving.
Finally, whether you are opening as a prosecutor or in defence, you must practice, practice, practice. You must know your case. While you might have notes available to prompt you or make sure you properly relay quotes, you do not want to be seen to be reading your opening address. The jury needs to have confidence in you, and the way they have confidence in you and your case, is at least thinking you know it back to front. Because, as is emphasised in this series, you should.
In a paper delivered to the Commercial Bar Association of Victoria, Insurance & Professional Negligence Section on 19 February 2024, the Honourable Justice Ian Jackman outlined five “limits” on the duty of utmost good faith – which requires parties to exercise their powers reasonably and not arbitrarily.
In April 2020, Richard Pusey shocked the public when he taunted four dying police officers at the site of a significant crash in Melbourne and recorded the dying Leading Senior Constable Lynette Taylor, pinned to the back of Pusey’s car and begging for help. He responded by filming her and exclaiming: ‘There you go, amazing, absolutely amazing. All I wanted to do was go home and have some sushi and now you fucked my fucking car….’ Subsequently, Pusey was charged and convicted of the – arguably archaic- common law offence of committing an act that outrages public decency. This article examines the capricious, evil and anti-social individuals that have been recognised as acting contrary to our societal standards; exemplified where a dying police officer in her last few moments on Earth is begging for help but is met with Richard Pusey’s odious retort of a hedonistic desire to eat sushi. The devil drives a hard bargain; to convict someone of their antisocial behaviour presents a moral dilemma of convicting antisocial people to stamp out their behaviour to ensure our comfort in society.
InChou v Metstech Pty Limited[2023] FCAFC 205 (Yates, Downes and Jackman JJ, 22 December 2023), a decision of the Full Court of the Federal Court of Australia, their Honours considered an appeal from a decision of a single judge of the Court.
In very broad terms it could be described as a claim by the applicants for ownership of certain literary and artistic works authored by a former employee in pursuance of his contract of employment with the applicant parties. It was pleaded initially however as a “tortious conspiracy” and not pleading the usual elements of a copyright infringement claim under the Copyright Act1968 (Cth).
After several iterations of the pleaded case in the initiating process, including at trial, some of the cardinal concepts, as their Honours identified them, were addressed. On appeal, an issue raised challenging the declaratory relief ordered by the primary judge, was the primary judge’s error claimed by the appellants in ordering declaratory relief in the absence of a Taiwanese manufacture being a party to the proceeding. The appellants claimed that the manufacture was the “designer” of the works and that its rights in relation to the works were in rem. It followed according to the appellants, that the declaratory relief ordered should be set aside.
Background
The area of industry involved in the proceeding was the designing and distributing of telecommunications systems for use in underground mines. At [6] their Honours referred to the applicants’ (Metstech, or Metstech parties), summary of the Metstech System in closing submissions at the trial:
“… the Metstech System is a system pursuant to which two-way radio (VHF and UHF) and mobile telephone (LTE) signals can be transmitted and received along underground tunnels. It is a “leaky feeder” system, in that the signals are transmitted and received through leaky coaxial cables, such that the entire length of each cable functions as an antenna. The cables connect to the various devices through “N-Type” connectors. It is a “dual band” system, in that it can transmit and receive radio frequency (RF) signals in two different bands (such as VHF and LTE) simultaneously. It is a “duplex” system in that signals can be sent and received in two directions simultaneously.”
Their Honours noted that the primary judge had identified the “central factual dispute” as being whether Metstech’s products had been designed by the first appellant (Mr Chou), who was at relevant times, Metstech’s employee: [3]. The Act provides that, subject to any exclusion or modification by agreement, “[w]here a literary, dramatic or artistic work …or a musical work, is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work by virtue of this Part”: the Act s 35(6).
The statement of claim filed by the Metstech parties pleaded a number of causes of action but did not plead copyright infringement. In an amended summons the Metstech parties pleaded allegations of copyright subsistence and ownership but the amended summons contained no prayers for relief based on those copyright pleadings. On the third day of the trial the Metstech parties filed a further amended summons and a commercial list statement, which introduced further allegations of copyright subsistence and ownership and sought amongst other things, declaratory relief as to subsistence and ownership in relation to certain works: [19].
The Chou parties – defined in their Honours’ reasons for judgment as Mr Chou and Welldesign Electronics Pty Limited – did not admit copyright subsistence or ownership in certain works. They claimed that the final designs were carried out by manufacturers for the Metstech parties domiciled in Taiwan.
At trial, the Metstech parties alleged that the various respondents were involved in a “tortious conspiracy” to injure the Metstech parties and the thirteenth defendant, Metstech IP Pty Ltd (Metstech IP), by transferring business and assets of Metstech and Metstech IP to other entities, resulting in the Metstech parties having a lesser or no interest in the Metstech business:[2]. The various parties, both individuals and corporations, are identified in [1] of the reasons.
The declaration
In relation to copyright, the primary judge had found that Mr Chou designed the Metstech’s Products as a result of considering the conspiracy case advanced at trial, and had made consequential findings in relation to copyright subsistence and ownership: [4]. These findings and the works were reflected in the following declaration made by the primary judge:
“The Court Declares that:
1 Copyright subsists in the following works in respect of the Products and the Metstech System, and any revisions thereof, and such copyright is held by Metstech:
(a) the Metstech PCB Assemblies;
(b) concept designs;
(c) printed circuit board schematics and layouts;
(d) firmware source code (save for the source code relating to the Raspberry Pi Software);
(e) functional specifications;
(f) test results;
(g) bills of materials;
(h) data sheets; and
(i) manufacturing files.”
Mr Park and the Martin parties each denied that Mr Chou designed certain works. They also denied subsistence in respect of one of the works claimed by Metstech and ownership of that product and other claimed Metstech works: [29].
Copyright claims – an unusual approach
Their Honours’ set out in their reasons at [33] – [40], some “cardinal concepts” in copyright. The Full Court further noted that the Metstech parties did not before the primary judge, identify and prove the existence of specific literary and artistic works and addressing Mr Chou’s authorship (if any), to those identified works by reference to the Copyright Act.
Instead, the Metstech parties called on a consulting electrical engineer, who, in his report, discussed generalities including the tasks that are typically undertaken as part of electrical design and prototype manufacturing processes; the tools and software that would be required to build the Metstech System; and the role of original component, equipment and design manufacturers. The electrical engineer’s report included a view on copyright ownership of documents which were likely to be produced in the design and manufacturing process”: [41].
The Full Court considered that plaintiffs advanced their copyright case on the incorrect basis that Mr Chou was the alleged designer of electrical components and products. The correct basis was to plead and present evidence on authorship based on Mr Chou’s alleged creation of specific works that were either original literary works or artistic works within the meaning of the Copyright Act rather than “generalised categories of possible works”: [44]. In addition, the items over which Metstech claimed copyright were unusually not before the Court: [45].
The Full Court referred also to a number of general findings on credit made by the primary judge. These included that her Honour approached the evidence of Mr Chou with some caution as it appeared to her Honour that Mr Chou had not complied with the orders for disclosure: [49].
The declaration was in issue on appeal by Grounds 1 and 2. Relevantly, on publishing her reasons for judgment, the primary judge directed the parties provide proposed orders reflecting her Honour’s reasons. The plaintiffs proposed orders included the declaration. The Chou parties, Mr Park and the Martin parties each responded to the plaintiff’s proposed orders by providing written submissions. However, those submissions failed to address the proposed declaration. The Full Court therefore understood that failure, given the primary judge’s findings and reasons, as being an acceptance by the defendants that there was no impediment to the declaration being made.
The Chou parties however contended on appeal in Grounds 1 and 2, that the primary judge erred in making the declaration because, in essence, the Chou parties submitted, the Taiwanese manufacturer referred to as “Yokao” was not notified of the proceeding or joined to the proceeding as a necessary party. Grounds 1 and 2 are reproduced at [63] of the reasons.
The submission followed from the Chou parties’ argument that as the declaration affected Yakao’s rights in rem, Yakao’s joinder to the proceeding was necessary. It followed by the failure to join Yakao, the declaration should be set aside: [64]. The Full Court did not consider the declaration was an order in rem, but rather an order affecting the interests of the immediate parties: [75].
Somewhat unremarkably, Mr Park and the Martin parties supported Mr Chou’s submission saying that if this submission was accepted on appeal, then the other orders should be set aside.
The Full Court also had to consider whether these grounds could be raised now as no such objection had been raised before the Primary Judge: [66]. In deciding not to allow the Chou parties to raise the objection on appeal, the Full Court noted at [68]: “The Chou parties informed the primary judge that they did not ‘seek to be heard’ on this subject”, except to contend that “Mr Chou did not create or design these products nor prepare the documentation” (references to the primary judge’s reasons omitted)
The Full Court emphasized that the case before the primary judge was about the work Mr Chou in fact carried out as a Metstech employee and whether that work was pursuant to the terms of that employment: [70]. The defensive case that Mr Chou did not carry out the relevant design work (or work of original significance) was a factual case only. Metstech directed its case to the work Mr Chou did as an employee, and by reason of that, there was no possibility that Yakao’s rights could be affected: [73].
The Full Court saw no reason why the declaration could not be varied to make clear that Yakao’s rights were not affected. That variation took the form that the declaration could be prefaced by the words: “As between the plaintiffs and the defendants …”: [80]. On the final day of hearing the appeal, the Chou parties accepted that if the declaration was varied as suggested, Grounds 3-10 of the appeal fell away: [89].
The Chou parties raised similar arguments to the order for delivery up. The Full Court did not accept those arguments, on the basis that the order for delivery up had “effect according to its own terms”: [90].
Other grounds of appeal included that there was no evidentiary basis for an order for an inquiry into damages and an appeal as to costs at first instance. The Metstech parties cross appealed on grounds that the primary judge did not deal breaches of duties owed to Metstech as directors, officers and employees, however during the appeal, Metstech accepted these matters were academic if the declaration and other orders were undisturbed.
The appeal and cross-appeal were dismissed.
Iris Broadbeach Business Pty Ltd V Descon Group Australia Pty Ltd & Anor [2023] QSC 290
Introduction
InIris Broadbeach Business Pty Ltd v Descon Group Australia Pty Ltd & Anor[2023] QSC 290, the court was asked to consider, in detail, the mechanism contained in s.79 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) which, if correctly engaged, commences the process of the adjudication of a disputed claim. The respondent before the court was Descon Group Australia Pty Ltd (Descon), being the claimant under the BIF Act. The successful applicant before the court was Iris Broadbeach Business Pty Ltd (Iris), being the respondent to the BIF claim.
There are two ways in which a claimant can lodge an application for adjudication of a payment claim pursuant to the BIF Act; electronically, via the Queensland Building and Construction Commission’s (QBCC) website, or physically, at the registry of the QBCC.
Whichever method is adopted, s. 79(2)(a) of the BIF Act requires an adjudication application to be accompanied by the “approved form” and s. 79(3) of the BIF Act requires a copy of the “adjudication application” – including a copy of the “approved form” – to be given to the respondent. The courts have long held that a claimant must strictly comply with the requirements of s.79(2) and (3) to avail itself of the rights which are then available under the legislation.[1]
The “approved form” is a template document. It provides details of, for example, the identity of the applicant and the respondent, the contract in dispute and details of the payment claim in respect of which the applicant seeks adjudication.
If a claimant elects to lodge an application for an adjudication physically, at the registry of the QBCC, there is a “manual copy” of the “approved form” to be completed by the applicant, and submitted with its adjudication application.
However, if a claimant elects to lodge an application for adjudication application online, using the QBCC’s website, the applicant is directed to fill out information regarding their application via an online “portal”. The process mirrors the type of information that would be provided if the applicant had elected to complete the “manual copy” of the “approved form”.
At the completion of lodgement of an adjudication application online, the applicant is sent (via email from the QBCC) an automatically generated form, entitled “electronic adjudication application”, hereafter the “PDF Form”. The PDF Form includes details of some, but not all, of the information that the applicant submitted when lodging the adjudication application via the online portal.
Two of the key issues in dispute[2] in Iris were (a) whether the PDF Form was the, or an, “approved form” for the purposes of s. 79(2)(a) of the BIF Act and, (b) whether the Respondent had satisfied s. 79(3) of the BIF Act when it served the Applicant with a copy of the PDF Form, as a part of its purported service of an adjudication application.
Justice Williams answered both of those in the negative. The consequence of this finding is that (at least at the time of judgment) the PDF Form which an applicant receives electronically from the QBCC via email after the filing of an adjudication application online is not the “approved form” referred to in s. 79(2)(a) of the BIF Act, nor does the giving of the that document to a respondent satisfy the requirements of s. 79(3) of the BIF Act.
Why the Online Form was not the “approved form” referred to in s. 79(2)(a) of the BIF Act
Descon contended that the PDF Form was an approved form within the meaning of s. 79(2)(a) of the BIF Act. Descon identified that the PDF Form was entitled “electronic adjudication application – s. 79 & s. 198”. The reference to “s. 79” was taken to be a reference to the BIF Act. The reference to “s. 198” was taken to be a reference to s. 198 of the BIF Act, which provision is entitled “Approved Form” and provides, inter alia, that “the chief executive or commissioner may approve forms for use under this Act”. Descon also identified that the PDF Form included much of the information that it had submitted when lodging its adjudication application via the QBCC’s online portal.
Justice Williams considered sections 48 and 48A of the Acts Interpretation Act 1954 (Qld) with respect to Descon’s contentions. Relevantly, those provisions provide that “the approval or availability under an authorising law of a form, or a new version of a form, must be notified in the gazette on a relevant website” (s. 48(5)) and “if a form is prescribed or approved under an Act, strict compliance with the form is not necessary and substantial compliance is sufficient (s. 48A)). Descon contended that the “deeming provision” in s. 48A of the Acts Interpretation Act 1954 (Qld) in respect of substantial compliance is not displaced by the language of the BIF Act, when regard is had to the purpose of the BIF Act.
Justice Williams noted that there are no gazetted forms under the BIF Act, although there had been under the previous acts.[3] Accordingly, it was necessary for her Honour to consider both the “manual form” (i.e. the form an applicant would lodge with the QBCC registry in person) and the PDF Form. There were significant differences between the two, discussed in more detail below. For the present discussion, it was noteworthy that the PDF Form is only available as completed for a particular application and is not otherwise available on the QBCC’s website in generic format.
Justice Williams found that:
(a) s. 79(1) of the BIF Act defines an “adjudication application” to be a claimant’s application to the registrar for adjudication of a payment claim. Subparagraph (a) requires that the application be in the approved form (at [54] and [55]);
(b) the “approved form” is, therefore, the form approved for the purpose of a claimant applying to the registrar for an adjudication of a payment claim. That is the document which the claimant lodges, either electronically or in hardcopy (at [57]);
(c) logically, the “approved form” could not be a document provided by the QBCC after lodgement of an adjudication application (i.e. the PDF Form), because it is the adjudication application itself which is to be in the approved form, not a document created after submission of the adjudication application (at [58]); and
(d) Descon’s reliance upon s. 48A of the Acts Interpretation Act 1954 (Qld) had the result that there would potentially be multiple approved forms in existence at the same time – the PDF Form and the “approved form” (at [84]).
As such, the PDF Form was not the “approved form” for the purposes of s. 79(2)(a) of the BIF Act. This, however, was not the end of the argument. A question remained as to whether Descon nevertheless satisfied s. 79(3) of the BIF Act (i.e. the requirement to “give” a copy of the adjudication application to the respondent) by giving Iris a copy of the PDF Form.
Why the giving of the PDF Form did not satisfy s. 79(3) of the BIF Act
Iris contended that it was not given a copy of the adjudication application lodged by Descon with the QBCC, but some other document – being the PDF Form. Therefore, s. 79(3) of the BIF Act had not been complied with because that provision requires the “giving” of a copy of the document actually lodged.
The PDF Form was not a “copy” of the document actually submitted by Descon because there were several differences between that Form and the information submitted by Iris, when lodging its adjudication application online via the QBCC’s online portal. Specifically, the PDF Form appeared to be a subset or summary of the information actually provided by Descon when submitting its adjudication application via the online portal because:
(a) the PDF Form did not identify the supporting documentation relied upon in support of the adjudication application, whereas this information was identified by Descon when lodging its adjudication online (see [76(a)];
(b) the PDF Form did not include the information in respect of “Adjudicator Fees”, including the fees that may be payable to the nominated adjudicator, whereas this information was included as a part of Descon’s online adjudication application (see [76(b)]); and
(c) the PDF Form did not include a declaration that is required to be completed by a person when lodging an adjudication application online. The declaration requires the person lodging the adjudication application to declare that they have read and understood the application form and the attachments, that the application must be made within the prescribed timeframes and that they “must give a full copy of this application to the respondent” (see [76(c)]).
Iris submitted that these differences were not trivial, but substantive (for the reasons why, see [77]). Descon, on the other hand, contended that the differences were trivial and that the PDF Form was an approved form (for the reasons why, see [81]).
Justice Williams found that Descon’s submission can only be understood on the basis that if the PDF Form is not the approved form, it is an approved form, thereby complying with s. 79(2)(a) of the BIF Act (at [83]). Justice Williams found that the difficulty with this argument (see above) is that it would result in there being multiple “approved” forms in existence at the same time, each with different content. Moreover, the PDF Form lacked precision in material respects, which is inconsistent with a statutory regime that demands the need for precision (see [84]).
Ultimately, Justice Williams found that the PDF Form was not a copy of the adjudication application that Descon had lodged with the QBCC registry, and it therefore did not satisfy s. 79(3) of the BIF Act when it gave to Iris the PDF Form only (see [85] to [89] and [98]).
For these reasons, Justice Williams found[4] that because Descon had not satisfied s. 79(3) of the BIF Act, the adjudicator did not have jurisdiction to decide the adjudication application. The adjudicator’s decision was therefore declared void and set aside.[5]
[1] See the cases referenced in the Decision at [66]-[69].
[2] The court was also asked to determine the factual dispute as to when service of the purported adjudication application took place, and whether the payment claim satisfied the requirements of s.69(1)(a) of the BIF Act.
[3] The transitional provisions of the BIF Act did not result in the previously gazetted forms as being relevant to the BIF Act (see [41]).
[4] On the parties’ agreement as to the consequence.
[5] Each of the matters stated in this article were, to the best of the Applicant’s knowledge, correct at the time of hearing of the proceeding the subject of this article. Procedures and processes may have changed since the publication of judgment in the proceeding.
In Karpik v Carnival plc [2023] HCA 39 the High Court considered whether the Unfair Contract Terms (“UCT”) provisions of the Australian Consumer Law would apply to a contract made outside of Australia, and if so, whether a contractual clause purporting to waive an ability to participate in class actions would be rendered void as an UCT. The High Court unanimously answered ‘yes’ to those questions. Further, the High Court unanimously declined to enforce a contractual clause which purported to give exclusive jurisdiction to certain Californian courts, finding that there were strong reasons not to enforce such a clause in this case – including for reasons of access to justice, and to avoid the fracturing of proceedings.
Background
In March 2020, the cruise ship Ruby Princess departed Sydney. During the voyage there was an outbreak of COVID-19, causing the cruise to be cut short, and resulting in the deaths of some passengers. [1]. The appellant, Ms Karpik, commenced representative proceedings against the cruise providers (Carnival plc, and its subsidiary Princess Cruise Lines Ltd), seeking remedies on account of alleged torts and breaches of the Australian Consumer Law (“ACL”). [2].
This appealed concerned an interlocutory application made by Princess, seeking a stay of the claims in the representative proceedings insofar as they related to a Mr Ho – a Canadian passenger on the cruise, whose contract was made outside Australia. [3]. Princess sought the stay on the basis that: (1) there was a “class action waiver clause” in Mr Ho’s contract; and (2) there was an “exclusive jurisdiction clause” in Mr Ho’s contract, which provided for claims to be made only in California, in the United States. [4].
Related to the application for a stay, there were essentially three issues in dispute in the courts below, and on this further appeal to the High Court:
whether the ‘Unfair Contract Terms’ (“UCT”) provisions of the ACL applied extraterritorially to Mr Ho’s contract (which was made outside of Australia);
if the UCT provisions did apply to Mr Ho’s contract, whether they operated to render void the “class action waiver clause” relied on my Princess in support of its application for a stay; and
whether the “exclusive jurisdiction clause” should be enforced, so that Mr Ho could only seek redress in Californian courts.
At first instance, a single judge of the Federal Court held that the UCT provisions applied to Mr Ho’s contract and would render void the class action waiver clause. Further, that the exclusive jurisdiction clause should not be enforced. [7]. On appeal, the Full Federal Court did not decide on the extraterritorial application of the UCT provisions, but held that the class action waiver clause was not in any event an ‘unfair contract term’. Further, that the exclusive jurisdiction clause should be enforced. [8].
In this further appeal, the High Court unanimously held in favour of the appellant in relation to each of the three issues outlined above – endorsing the primary judge’s conclusions and consequent rejection of Princess’ stay application. [9].
Why the UCT provisions applied extraterritorially
The High Court noted that whether the UCT provisions (in Part 2-3 of Ch 2 of the ACL) applied to Mr Ho’s contract, being a contract made outside of Australia, involved a question of statutory construction. [18]. Although there is a common law ‘presumption’ against extraterritoriality, it is an interpretive principle only, and a statute may expressly or impliedly rebut it. [19].
In this case, the critical provision was s 5 of the Competition and Consumer Act 2010 (Cth), which extends the ACL (including its UCT provisions) to “engaging in conduct outside Australia by … bodies corporate incorporated or carrying on business within Australia”. [36]. As the High Court said, “[i]f a corporation carries on business in Australia, then a price of doing so” is being subject to the ACL’s protections for consumers. [38]. There was no basis for any “additional territorial” limits governing the application of the UCT provisions, as Princess had alleged. [44]-[45], [49].
For the purposes of the appeal, there was “no dispute that Princess was carrying on business in Australia selling and marketing cruises”, including the Ruby Princess voyage the subject of the proceedings. [42]. Accordingly, the UCT provisions applied to Mr Ho’s contract.
Why the UCT provisions rendered the class action waiver clause void
The High Court held that the Full Federal Court had erred in concluding that the class action waiver clause was not void as an unfair contract term (as defined by s 23 of the ACL). [51].
Section 23 of the ACL operates to render void a term of a ‘consumer contract’ or ‘small business contract’ if the term is ‘unfair’, and the contract is a ‘standard form contract’. Here, the contract was relevantly a ‘consumer contract’(because it was a contract for the supply of services to an individual, per s 23(4)), and a ‘standard form contract’ (as defined by s 27).
Section 24 of the ACL provides that a term will be ‘unfair’ in circumstances which may be summarised as where:
the term would cause a “significant imbalance in the parties’ rights and obligations” under the contract;
it is “not reasonably necessary in order to protect the legitimate interests” of the party advantaged by the term, and;
it would “cause detriment (financial or otherwise) to a party” if it were applied or relied on. [27].
A court must also take into account whether the term is “transparent” (i.e. expressed in plain language and presented clearly and readily, per s 24(3)). [28].
Applying those considerations, the High Court concluded that the class action waiver clause was relevantly ‘unfair’, and rendered void by s 23 of the ACL. [51]. In particular, that was because it:
(a) “imposes limitations on passengers but in no way restricts the operations of the carrier”;
(b) would have the effect of “preventing or discouraging passengers from vindicating their legal rights”;
(c) Princess had not explained or provided any evidence as to why the clause was reasonably necessary to protect its legitimate interests; and
(d) it would cause detriment if relied on, in that “Mr Ho would be denied the benefits” of the representative proceedings. [53]-[57].
Why the exclusive jurisdiction clause was not enforced
The High Court observed that courts retain a “discretion whether to stay a proceeding the subject of a foreign exclusive jurisdiction clause” (citing Akai (1996) 188 CLR 418). [66]. Generally, absent strong countervailing reasons, the existence of such a clause will warrant a stay of proceedings not within the exclusive jurisdiction. [66].
However, in this case the High Court considered that there were strong countervailing reasons for not granting a stay. These were essentially that:
there was a “strong juridical advantage” for Mr Ho in remaining part of the class action. Enforcement of the exclusive jurisdiction clause may deny him (and others in his position) “access to justice as well as the associated benefits of a class action”. [68]; and
enforcement of the exclusive jurisdiction clause would “fracture the litigation”, forcing Mr Ho (and others in his position) to “commence individual proceedings in the United States when essentially identical claims for the vast majority of passengers will be heard in the class action in the Federal Court [of Australia]” – which would waste parties’ resources and run the risk of conflicting decisions which could bring the administration of justice into disrepute. [69].
In the result, because the class action waiver clause was void as an UCT, and because the exclusive jurisdiction clause would not be enforced, “Mr Ho’s claims against Princess in the Federal Court of Australia should not be stayed”. In other words, the interlocutory relief sought by Princess was denied. [70].
Note: This is an amended version of a case note which first appeared in the Queensland Law Reporter.
On 13 March 2024 the High Court handed down the decision ofRedland City Council v John Michael Kozik & Ors [2024] HCA 7.
The plurality of Gordon, Edelman and Steward JJ – Gageler CJ and Jagot J dissenting – dismissed the appeal.
The claim was a class action by the plaintiff ratepayers levied by the defendant local authority with and paid invalidly raised special charges. The plurality found against the appellant authority in respect of the respondent ratepayers’ claim in restitution at common law.
The plurality said (at [179] – [181]):
Unjust enrichment
In Australian common law, unjust enrichment has a “taxonomical function referring to categories of cases in which the law allows recovery by one person of a benefit retained by another”.[170] During the historical period in which cases were pleaded by forms of action, these categories of case were forced, by the use of fictions, into forms (rather than causes) of action, including counts of money had and received, quantum meruit and quantum valebat.[171] Today, as causes of action, the categories include unjustified payments of money or performance of services that benefit another in circumstances where the benefit was the result of mistake, undue influence, duress, or an absence or failure of consideration.[172] Since unjust enrichment expresses only the conclusion that follows the exposed process of reasoning within these categories of case, it has repeatedly been said in this Court that “unjust enrichment” is not a premise that is capable of direct application.[173]
At a high level of generality it can sometimes assist when considering the boundaries of a particular category of case to structure a common law enquiry into whether a defendant has been unjustly enriched by asking what benefit a defendant has received, whether the benefit is at the plaintiff’s expense, whether the circumstances render the provision of that benefit unjust, and whether any defences apply.[174] But these well-known concepts such as “benefit” or “unjust” are not to be applied in the abstract, divorced from the rules that have been developed in particular categories of case.[175] In this category of case, the relevant benefit is the receipt of money by the Council and the “injustice” arises because the payments by the respondents and other group members were made by mistake of law and without obligation to do so. Those matters were not controversial in this Court.
The issue that arises consequent upon the respondents’ prima facie claim at common law is whether the Council has a defence of good consideration based on the Council’s performance of the relevant works. In short, the Council submits that it can resist restitution because: (i) the “consideration” or basis for its receipt of the payment was that it confer a corresponding benefit upon the respondents and group members, and (ii) that it did so. As will be seen, both submissions are wrong. It is convenient to begin with the concept of “benefit” and the concept of “consideration” in the context of failure of consideration as a ground for a prima facie claim for restitution of unjust enrichment before considering “good consideration” as a defence to restitution.
As to the Council’s defence of good consideration, the plurality said (at [204] – [212]):
There are three independent reasons why the Council’s defence of good consideration must fail. First, restitution of the special charges by the Council would not cause any failure of the basis upon which the relevant works were performed by the Council. Secondly, the particular individual respondents and other group members did not benefit from the relevant works in the sense in which the concept of benefit operates in the law of unjust enrichment. Thirdly, to recognise a defence of good consideration based on a benefit to the respondents would stultify the operation of the Local Government Act.
(1) No failure of the basis for the relevant works
The Council’s defence does not satisfy the requirement for the defence of good consideration that restitution of the special charges must cause the basis of the Council’s performance of the relevant works to fail. At certain points in the submissions of the Council and the State of Queensland this requirement was accepted, and described as being a requirement that the relevant works were “correlate[d]” with or provided “in exchange for” the payment.
The Council’s performance of the relevant works was not done objectively on the basis that the works would be funded by the special charges because, as explained in the background section above, it was admitted at trial that the Council was obliged by statute to perform the relevant works. The Council’s obligation to perform the works was independent of the levying or receipt of special charges. On this appeal, the Council ultimately accepted that this admission had been made at trial and did not seek to re-open the admission. Indeed, as also explained above, for each of the Aquatic Paradise works, Sovereign Waters works and Raby Bay works the special charges had only been used to defray, respectively 66 per cent, 78 per cent, and 26 per cent of the cost.
At one point in oral submissions, the Council appeared to deny any requirement for the defence of good consideration that the performance by the Council was in “exchange” for, or on the basis of, the payment of the special charges. The acceptance of that submission would require recognition of a different defence, or an adaptation of the defence of good consideration by reference to a broad notion of counter-restitution. However, even if the requirement were not one of exchange but were more broadly one of sufficiently close connection,[237] it was common ground that the defence would still require that the respondents or group members obtained a benefit in the sense recognised by the common law. They did not.
(2) No benefit to the respondents or group members
It may be accepted, consistently with the primary judge’s unchallenged finding, that the respondents and other group members, or their land, “specially benefit[ed]” from the relevant works within the meaning of that phrase in the Local Government Act. But the relevant works did not benefit the respondents or other group members in the sense in which benefit must be established to satisfy a defence of good consideration. As explained above, it is usually sufficient for a benefit that a person merely performed non-gratuitous services that the other party had requested, or for which the other party freely accepted a liability to pay.[238] Conversely, it is not generally a benefit to receive a service that is not requested and is not freely accepted with an opportunity to reject.[239] As Pollock CB said in argument in Taylor v Laird,[240] “One cleans another’s shoes; what can the other do but put them on? … The benefit of the service could not be rejected without refusing the property itself.”
Perhaps due to the absence of any request for, or free acceptance of, a liability to pay for the relevant works by the respondents, the Council submitted that the benefit to the respondents and other group members was not the value of the service but was, effectively, a net accretion to the wealth of the respondents and group members by an asserted increase in the value of their land by one to two per cent. Apart from the problem that this misunderstands the relevant meaning of benefit, the Council’s submission is factually inaccurate. As explained in the background section of these reasons, the relevant works were performed on public land. The evidence was that any incidental benefit for the land of the respondents and group members was not an increase in the value of that land but an avoidance of a diminution in value on the basis that no work was carried out. Even then, the enhancement was not uniform and the evidence was that objectively quantifying the enhancement was not possible for any individual respondent or group member. Even assessed by reference to the colloquial, and incorrect, meaning of “benefit” as a net accretion to the wealth of a recipient, no individual respondent or group member was shown to have benefited.
Furthermore, the Council could not justify the law of unjust enrichment treating as a benefit an increase in the value of an owner’s land and dwelling, in circumstances in which the owner has no intention to sell the land or to use it in order to obtain a loan. It was not suggested, for example, that the Council should be limited to a lien over the land of each respondent or group member, realisable only upon sale of the land.[241]
(3) A defence of good consideration would stultify the operation of the Regulations
The final reason that the Council has no defence of good consideration is that the application of such a defence would stultify the operation of the Regulations, just as the joint judgment and Brennan J in David Securities considered that allowing the bank a defence of good consideration would stultify the purpose of the statutory provision that rendered void any contractual obligation that required a borrower to pay withholding tax.[242]
The Resolutions to levy the special charges were invalidbecause the Resolutions did not comply with the requirement in the Regulations to identify an overall plan which stated the estimated cost of carrying out, and the estimated time for carrying out, the overall plan. As the respondents submitted, the purpose of these cost and time safeguards in a plan is to ensure that care is taken by a local council before incurring substantial costs that will ultimately be borne by a section of the community. In the course of allowing a claim for restitution in Kiriri Cotton Co Ltd v Dewani,[243] a case to which the joint judgment referred on this point in David Securities,[244] the Privy Council said that “[t]he duty of observing the law is firmly placed … on the shoulders of the landlord for the protection of the tenant”.[245] So too, in this case, the duty of compliance with the Regulations in respect of the cost and time safeguards in a plan is firmly placed on the shoulders of the Council for the protection of those members of the community within its area of government. The common law defence of good consideration, if it applied here as a defence to restitution of the payments, would need to be excluded to avoid undermining the purpose of the Regulations.
[170]Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 516 [30].
[171] Bullen and Leake, Precedents of Pleadings in Personal Actions in the Superior Courts of Common Law, 3rd ed(1868) at 35-37, 44-50. See Baker, “The History of Quasi-Contract in English Law”, in Cornish et al (eds), Restitution: Past, Present and Future (1998) 37 at 37-56.
[172] See Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 at 673; David Securities Pty Ltd v Commonwealth Bank of Australia[1992] HCA 48; (1992) 175 CLR 353 at 374, 379; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 156 [150]-[151]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 516 [30].
[241] Mitchell, Mitchell and Watterson (eds), Goff & Jones on Unjust Enrichment, 10th ed (2022) at 97-98 [4-39]; Cooney, “Restitution for Unrequested Improvements to Land” (2023) 139 Law Quarterly Review 179 at 183.
This article, published 1 February 2024 by Julie Cheeseman and Evelyn Park, provides an excellent overview of the matters considered when deciding whether open justice demands that a proceeding be livestreamed, as well as the potential impacts of such livestreaming – such as a potentially amplified impact on the mental health of witnesses and the invitation to conduct by some viewers may amount to contempt of court.
Bruce Lehrmann’s defamation trial was of substantial public interest in Australia late last year, with thousands of viewers accessing the livestream of the trial and widespread reporting of the parties’ arguments and evidence each day. In this series of articles, we reflect on some of the civil procedure takeaways from the hearing. This first article considers how open justice was considered in the trial and the role of this fundamental principle in the modern (Australian) courtroom.
Australia’s Federal Court has an established practice of livestreaming proceedings of sufficient public interest to the world at large on the Court’s YouTube channel. This practice is consistent with the need to facilitate and encourage public access to justice and recognises that persons interested in a proceeding may be unable to attend Court physically, and that facilities for large numbers to observe hearings in person are limited.
Two interlocutory rulings in the defamation proceeding brought by Mr Lehrmann against Network Ten and journalist, Lisa Wilkson, have considered the appropriateness of livestreaming in circumstances where the subject matter of the proceeding has received significant prior public attention (including intrusive, offensive, and distressing social media content directed at trial participants) and where there are concerns for a particular witness’s mental health.
The Federal Court’s rulings that livestreaming was appropriate in both contexts (albeit with some additional protections in the case of the witness) emphasises the primacy of the open justice principle when questions of procedural management, such as confidentiality and witness support, arise. The rulings are also consistent with a line of recent judgments in which Australia’s Federal Court has deprecated an apparent persistence by some parties to seek swingeing suppression and non-publication orders and make clear that mere embarrassment and stress are not enough to warrant the making of such an order.
Livestreaming of the Lehrmann defamation trial generally
Notwithstanding that all prior interlocutory hearings in Mr Lehrmann’s defamation proceeding against Network Ten and Ms Wilkinson had been livestreamed, Network Ten raised an objection to the livestreaming of the trial and sought alternative orders that would impose a regime whereby journalists, instructing solicitors and other interested persons may be granted access to the livestream upon making an application to the Court, and providing an undertaking not to disseminate or record the proceeding.
Network Ten’s submissions applauded the Court for its practice of livestreaming appropriate trials of matters of public interest and acknowledged that such livestreams serve to enhance open justice and public scrutiny of the administration of justice. However, Network Ten submitted that livestreaming is not appropriate in every case of public interest and livestreaming of this trial would not serve the administration of justice for the following four reasons:
First, the circumstances to be examined during the trial had received an inordinate amount of public attention over several years, including on social media, which was ‘deeply intrusive, offensive and …distressing’ to its targets, and it was foreseeable, if not inevitable, that the public would breach the Court’s prohibition on making recordings or screenshots of the proceeding. The mere concern that this prohibition might be breached was apt to have a distorting effect on participants in the trial, including the applicant, witnesses, and counsel.
Secondly, the subject matter of the proceeding was an alleged sexual assault. In a criminal context, vulnerable persons would be afforded special procedures, such as taking the evidence of a complainant in camera (e.g. s 291(1) of the Criminal Procedure Act 1986 (NSW)), but such protections were not available in the civil context.
Thirdly, there was an ‘inherent risk’ that an uncontrolled livestream of the trial could prejudice Mr Lehrmann’s right to a fair trial in any future criminal proceedings, with Network Ten relying on charges that were currently before the Queensland criminal courts.
Fourthly, the trial was not a case in which, in the absence of a livestream, the public would not be properly informed of developments, as the trial was likely to be extensively reported and scrutinised by the media.
Network Ten’s application that the Court not adopt its usual course of livestreaming all hearings in the defamation proceeding brought into sharp relief two competing considerations: the principle of open justice; and the interests of justice demanding that witnesses feel comfortable to give full, frank, candid and unvarnished evidence.
Despite the arguments advanced by Network Ten, Lee J decided to allow the livestreaming of the trial to proceed. His Honour’s reasons, outlined below, emphasise the primacy to be given to the open justice principle and how it can be facilitated in the modern courtroom:
First, His Honour considered that Network Ten’s submission that the public would inevitably breach prohibitions on recording and screenshotting the livestream assumed the worst. The Court, at the very least initially, was entitled to operate upon the assumption that members of the public will obey the law. If, however, that expectation was dashed, his Honour observed that ‘the law is amply equipped to respond’ via the law of contempt which ‘provides protection for those who have duties or functions to perform in relation to the administration of justice’ ([19] – [20]).
Secondly, the practices in criminal trials concerning an alleged sexual assault had no direct application as this was a civil trial. Although Lee J stated that considerations informing such practices were relevant, the transparency of open justice should be the primary consideration. Moreover, his Honour reasoned that it was not disputed that Ms Higgins and others had ‘specifically volunteered to give evidence in support of a truth case’, did not maintain anonymity in the aborted criminal proceedings and had ‘engaged in extensive publicity in relation to the factual substratum of the proceeding’.
Thirdly, Network Ten’s asserted concern for Mr Lehrmann’s right to a fair trial was misdirected given Mr Lehrmann’s express preference for the hearing to be livestreamed. Furthermore, Mr Lehrmann had not been committed to stand trial in relation to the charges the subject of the Queensland matter, and there was no suggestion by prosecuting authorities that livestreaming the defamation trial may interfere with the orderly progression of those charges in the Queensland criminal justice system.
Fourthly, the practical effect of Network Ten’s proposed orders would be to privilege access to the proceedings by journalists and those in a position to attend in person. Justice Lee stated that ‘[t]he public interest in facilitating a fair and accurate report of proceedings in court is not enjoyed by journalists to the exclusion of other members of the public’ [29]. Unlike the Roberts-Smith defamation proceedings, the trial would not give rise to considerations relating to the potential revelation of national security which justified prophylactic measures such as limited access to real-time livestreaming subject to appropriate undertakings. Although Network Ten’s proposed regime would allow for “any other person” upon application to the Court to be treated like journalists, it was “not the role of the Court in the usual course to ask people for their identity if they wish to observe the workings of the Court”.
Accordingly, the Court refused the orders proposed by Network Ten and found it was appropriate for the trial, which was of public importance, to be livestreamed and that this was a way of facilitating open justice in the modern court room. Justice Lee did however indicate that the Court would reconsider the issue of livestreaming for particular and limited aspects of the evidence upon application by a party or witness. This is further discussed below.
Justice Lee’s decision also makes plain that the default position of open access to all testimonial and documentary evidence (as reflected in Pt VAA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) in the trial would apply, subject to it being proven necessary to take a different course for any specific aspect of the evidence.
Livestreaming of a particular witness’s evidence
For one particular trial witness, former Liberal staffer, Fiona Brown, the Court adopted a different approach – rather than permitting livestreaming of Ms Brown’s evidence in ‘real time’, the Court made orders requiring the livestream of her evidence be delayed. The background informing this decision does however demonstrate the primacy of open justice in the modern courtroom and how competing interests concerning a witnesses’ mental health can be appropriately balanced.
The orders concerning Ms Brown’s evidence came about after the Court rejected an application by Ms Brown’s counsel to discharge her subpoena to attend to give evidence on the grounds of her medical condition. Justice Lee made an interim order to have the supporting medical reports by her treating psychiatrist (Dr Ian Harrison) and psychologist (Ms Josie) (medical evidence) suppressed whilst the relevant submissions were heard. His Honour acknowledged that the medical evidence was “quite strong”, however found that it did not meet the level of severity that would discharge the subpoena. To mitigate any further harm , Lee J allowed the shutdown of the public live streaming for the duration of Ms Brown’s evidence (allowing only counsel and media in attendance on the day), and made orders allowing for streaming of the recorded evidence the following day. Further, the Court ordered parts of the medical evidence to be suppressed for a period of 10 years on the grounds that suppression was necessary to prevent prejudice to the proper administration of justice and to protect the safety of a person (i.e., the grounds articulated in sub-ss 37(1)(a) and (c) of FCA Act).
Confidentiality orders
The facilitation of open justice in the modern court room is evidently not limited to the Court’s approach to livestreaming, but also extends to the Court’s approach to suppression orders. Whilst not new law, Lee J’s citation with approval of recent judgments deprecating the persistence of practitioners who seek suppression and non-publication orders on the grounds of mere embarrassment and stress placed on the parties is indicative of a consistent trend of the Australian Federal Court to require formal applications, supported by appropriate evidence, for orders under s 37AG of the FCA Act and strict application of s 37AE of that Act.
In Lehrmann v NetworkTen Pty Limited (Livestream) [2023] FCA 1452, Lee J cited John Fairfax Group Pty Ltd v Local Court of New South Wales (1991) 26 NSWLR 131 (John Fairfax Group), where Kirby P explained that despite sympathy for parties who may suffer embarrassment, invasions of privacy or even damage by publicity as facts come to light in open justice proceedings, such interests must be sacrificed to the greater public interest in adhering to an open system of justice. Further, these considerations have “never been regarded as a reason for the closure of courts, or the issue of suppression orders in their various alternative forms” (142-143).
The strict conditions and overriding requirement for the Court to have regard to this primary objective of the administration of justice is also demonstrated in the below judgments:
R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited (Administrators Appointed) (in liq) (Confidentiality Orders) [2022] FCA 1443 – Lee J rejected the application for almost all confidentiality orders sought by the applicants over details of estimated budgets of legal costs, respective litigation funding agreements and other information concerning the financial positions of the applicants, save for “war chest” information which, if revealed, had the ability to give forensic advantage to the respondents;
Deputy Commissioner of Taxation v State Grid International Australia Development Company Limited (Application for Non-Publication Orders No 2) [2022] FCA 719 – His Honour noted that “proper consideration should be given to whether there is a sound basis for the application and whether the application is supported by sufficient evidence”. The Court was not satisfied that it was necessary to make the further redactions sought in Mr De Zilva’s email as there was no evidence to support an implicit submission that the director’s mental health would be adversely affected. His Honour criticised the “increasingly common and increasingly informal applications” by parties for imposing a significant burden on other parties and the Court system, reminding that the party’s lawyer must take account of the duty imposed by s 37N(1) to conduct the proceeding that is consistent with the overarching purpose (s 37M(1)) and assist the party to comply with it (s 37N(2) of FCA Act).
The stringent approach was adopted when the Court dismissed applications by two media organisations for suppression and non-publication orders under s 37AG(1)(a) of the FCA with respect to the deeds of settlement they had respectively reached with Mr Lehrmann (full judgment here):
in each application, the media organisation applicant sought a suppression order on the grounds that it was necessary to prevent prejudice to the proper administration of justice. Citing Hogan v Australian Crime Commission [2010] HCA 21, Lee J observed that “necessary” is a “strong word”, meaning the order must be “required”, and it is not sufficient that the order sought is objectively sensible, or desirable, or appears to be fair or a good thing;
Justice Lee found that the applicants did not provide a compelling answer as to why suppression of the precise quantum of the amounts paid was necessary to prevent prejudice to the administration of justice;
further, whilst not determinative, in the case of one of the settlement deeds, there was a possibility that the amount would become public knowledge in any event (given the media organisation applicant was a statutory corporation which was the object of public scrutiny (including at Senate estimate hearings)).
In a separate application for a suppression order however, Lee J was satisfied that it was necessary to make a confidentiality order with respect to aspects of a deed of settlement and release entered into by the Commonwealth of Australia (Commonwealth) and Ms Brittany Higgins (deed) on the grounds articulated in ss 37AF(1)(b) and 37AG(1)(a) of the FCA. Justice Lee was satisfied that the entirety of parts relating to “Particulars of Disabilities” and “The Events Complained about” ought to be redacted on the basis of Ms Higgins’ intimate and highly personal medical information which was irrelevant to the disposition of the issues of the proceeding. In answering whether redacting the material was necessary to prevent prejudice to the proper administration of justice, Lee J reinforced that the Court must be mindful not to fetter the ability of parties to seek an extra-curial resolution of disputes, to engage in frank, full exchanges as to the medical conditions of persons seeking resolution of claims for personal injury to secure settlement, without fearing that personal information was going to be ‘published to all the world’. Justice Lee emphasised that public confidence in the administration of justice requires transparency to the extent that it can be provided, and that granting the application proposed by Ms Higgins’ counsel (when such information had ‘at best, marginal relevance’) did not detract from principles of open justice.
Prohibited conduct
Irrespective of whether a proceeding is heard in person or via remote access technology, the use of recording and transmission devices on the Court’s premises or in Court hearings without express approval of the Court is prohibited by r 6.11 of the Federal Court Rules 2011 (FCR) and ss 17 and 39 of the Court Security Act 2013 (Cth) (CSA) and would constitute contempt.
On 22 November 2023, Lee J made orders in the defamation proceeding that members of the public who attend the hearing via YouTube do so on the two conditions that they are permitted to observe and listen to the hearing but in no circumstance participate in the hearing, and are prohibited from making any recording or photographic record of the hearing or part thereof by any means whatsoever. Lee J advised that failure to observe these conditions may constitute a contempt of court and be punishable as such.
During the course of the trial, it became apparent that the Court’s orders had been breached by the publication of nine videos containing parts of evidence obtained during cross-examination on the ‘Feminism Debunked’ YouTube channel.
On 18 December 2023, Lee J ordered Google LLC (Google) to provide to the Principal Registrar subscriber registration information of the account holder who maintained the Feminism Debunked channel and associated IP logins.
On 28 December 2023, the relevant YouTube account owner, Mr Glenn Logan, was ordered to appear in person (either personally or by his legal representative) on 13 February 2024 to show cause as to why proceedings for contempt should not be instituted against him for an alleged contravention of the 22 November 2023 orders by his publication of the nine videos.
Following this appearance, the Court will determine whether proceedings for contempt should be instituted against him. If proceedings are instituted, penalties available under common law include imprisonment, fine, injunction, sequestration and award of costs. The nature and extent of any penalty will depend on the following:
nature and circumstances of the contempt, including whether the contemnor appreciated that a contempt was being committed or whether they subjectively intended to disobey any court order;
effect of the contempt on the administration of justice;
contemnor’s culpability and any financial gain made from the act of contempt;
need to deter the contemnor and others from repeating contempt;
absence or presence of a prior conviction of contempt;
contemnor’s financial means;
contrition and apology by the contemnor.
Recent examples where a contemnor who has published material contrary to orders of the Federal Court has been sentenced to imprisonment include:
Jones v Toben (No 2) [2009] FCA 477, where the contemnor was sentenced to three months’ imprisonment for wilful and contumacious contempt of court on 24 occasions by publishing material on the internet in breach of Court orders and an undertaking to the Court; and
Thunder Studios Inc (California) v Kazal (No 2) [2017] FCA 202, where the Court imposed a term of imprisonment for 18 months for conduct involving a defendant’s publication by internet and on the side of motor vans involving a defiance of court orders. The sentence was reduced on appeal to 12 months: Kazal v Thunder Studios Inc (California) (2017) 256 FCR 90; [2017] FCAFC 111 at [189].
In Berghofer v Wicks[2024] QSC 4 (10 January 2024), Burns J found the defendant to have acted in breach of an injunction enjoining him from conduct in relation to land he leased to the plaintiff and thereby in contempt of court. His Honour usefully canvassed the principles applicable upon an application for contempt. Some, but not all, of the particulars of contempt were found made out. The relevant portions of the reasons pertaining to the background facts, and the principles applied, are these:
[1] The plaintiff, Jacob Berghofer, applies to the court for orders pursuant to the provisions of Chapter 20 of the Uniform Civil Procedure Rules 1999 (Qld) that the defendant, Peter Wicks, be dealt with for contempt of an order of the court made on 23 December 2020. No less than 25 breaches of that order are alleged by way of charge in the application and, for the reasons that follow, I have found most of them to be proven to the required standard.
Background
[2] At all times material to this application, Mr Wicks was the registered owner of a grazing property known as Lochavon which is situated in Gordonbrook in the South Burnett region of Queensland. The property is comprised of 941 hectares in six contiguous parcels of land bounded by Wicks Road on the eastern side. …
[3] The parties first met in early 2015 when Mr Berghofer inspected Lochavon. This led to what seems to have been at first an informal arrangement whereby Mr Wicks allowed Mr Berghofer to move cattle onto the property and the pair worked co- operatively and for the common good until around the middle of 2019. In the meantime, and for much of 2017, the terms of a more formal arrangement were negotiated by the parties culminating in the execution of a written lease in February 2018.
[4] By the lease, and subject to only one qualification, the whole of the land comprising the six Lots was leased by Mr Wicks to Mr Berghofer along with the buildings, other structures and improvements on that land.1 The qualification — clause 19 — was in these terms:
EXCLUSION OF RESIDENCE/CURTILAGE/HORSE PADDOCK
19.1 The parties agree that the Lessor shall during the term or extended terms, be entitled to remain in occupation and possession of the residence, curtilage and horse paddock located on Lot 390 on CPFY805, and the Lessee shall have no responsibility to maintain or repair any of the improvements;
19.2 the Lessor shall (together with his invitees, agents and employees) have the right to traverse the other parts of the land for the purpose of accessing the area reserved under clause 19.1;
19.3 the Lessor in exercising his right under clause 19.1 shall not hinder or obstruct the Lessee’s use, business and enjoyment of the remainder of the land.” [Emphasis in original]
[5] Reference should also be made to clause 12.1:
QUIET ENJOYMENT: The lessor warrants that the lessee paying the rent hereby reserved and observing and performing the covenants, conditions and restrictions on its part herein contained shall and may peaceably hold and enjoy the demised premises during the said term without any interruption by the Lessor or by any person rightfully claiming through under or in trust for it.” [Emphasis in original]
[6] The lease was for a term of three years commencing on 1 January 2018 and expiring on 31 December 2020.2 There were two options to renew, each of three years’ duration, with the first option if taken up to commence on 1 January 2021 and expire on 31 December 2024.3 The permitted uses under the lease were cattle grazing and farming.4 Rental was agreed in the sum of $40,920 inclusive of GST for each year of the term,5 although clause 3.3 provided for additional rental to be payable by Mr Berghofer in the following circumstances:
ADDITIONAL RENT PAYABLE: The annual Rental shall be increased by $50.00 per annum for each hectare of the property which is planted by the Lessee under crops, on condition that the Lessee must apply appropriate amounts of fertiliser to any part of the land in which crops are grown. …” [Emphasis in original]
…
[13] Eventually, Mr Berghofer applied to the court for an injunction restraining Mr Wicks from “impeding, obstructing or acting in any way that is inconsistent with or in breach of his rights to peaceful occupation, possession and enjoyment as lessee” under the lease. The application came on before Davis J on 23 December 2020 when orders were made, paragraph 1 of which provided that Mr Wicks was, “until the resolution of these proceedings or further order”, restrained “from impeding, obstructing or acting in any way that is inconsistent with or in breach of [Mr Berghofer’s] rights to peaceful occupation, possession and enjoyment of” each of the lots the subject of the lease.
[14] As I will find, Mr Wicks was not deterred, acting in breach of the injunction within a fortnight of the order having been made. Then, after a string of breaches between January 2021 and November 2022, the subject application was filed on 24 January 2023.
Proceedings for contempt
[15] As I have previously observed,6 the jurisdiction of the court to punish for contempt is both inherent and provided for under Chapter 20 of the Uniform Civil Procedure Rules 1999 (Qld).7 Because the liberty of the subject is potentially at stake, it is well established that strict compliance with the rules of procedure is required in a proceeding for contempt.8 It is equally well settled, and for the same reason, that nothing short of proof to the criminal standard will suffice in order to make out such a case.9 Of course, although it has been observed that a proceeding for contempt is essentially criminal in nature, it is not a proceeding that can be equated with a trial on indictment.10 Rather, it is a proceeding in the civil jurisdiction of the court and, as such, the UCPR apply. In that regard, save for one thing, all of the requirements of the UCPR were met in this case and the deficiency — personal service of the application and supporting material — was cured before the substantive hearing got underway.
[16] When a party moves the court to punish someone for contempt, the onus is at all times on that party.11 That said, although all of the elements of a charge of contempt must be made out, the particulars of the charge do not need to be made out in their entirety; it is enough if those particulars which are established by the evidence are sufficient to constitute proof of the essential elements of the charge.12
[17] In order to prove a charge of contempt involving the breach of a court order, it must be established that “the order is clear and capable of compliance, that the alleged contemnor has knowledge of the terms of the order and has by his act or omission breached the terms of the order”.13 The ordinary rules of construction apply, it not being the case that an order cannot be enforced unless the language of the undertaking is unambiguous and certain. To the contrary, if the order “bears a meaning which the court is satisfied is one which ought fairly to have been in the contemplation of the person to whom the order was directed … as a possible meaning, the fact that that meaning results from a process of construction and involves a choice of possible meanings does not … preclude the court from enforcing the order … in the sense which the Court assigns to it”.14
[18] Under the general law, “the public interest requires that any disobedience more than casual, accidental or unintentional must at least be regarded as wilful”.15 As such, a deliberate act or omission which is in breach of an order will “ordinarily constitute wilful disobedience unless the alleged contemnor is able to show, by way of exculpation, that the default was casual, accidental or unintentional”.16 However, there must be “actual disobedience”, and that will not be so where the breach “occurs by reason of circumstances outside the control of the alleged contemnor”.17 Because of the way in which this case was litigated,18 it is unnecessary to determine whether a less onerous test applies when proceeding under Chapter 20 of the UCPR — and, in particular, rr 898 and 925 — to enforce an order of the court by means of an application for punishment for contempt.19 Instead, the approach I intend to take is to not find any of the charges proven unless I am satisfied beyond reasonable doubt that the breach alleged in each instance was wilful in the sense just discussed.
[19] In addition, because a finding that Mr Wicks was guilty of contempt will necessarily depend on the court’s willingness to draw an inference (in the case of each charge) that he acted wilfully, it is important to keep in mind that such an inference must not only be a rational inference from the proven circumstances but it must also be the only rational inference capable of being drawn.20 The same approach is required in the case of any finding that it was Mr Wicks and not some other unknown person who engaged in the alleged conduct.
[20] Rule 930 UCPR applies if the court decides that a contempt has been committed. In the case of an individual, the court may punish that individual by making any order that could be made under the Penalties and Sentences Act 1992 (Qld): r 930(2). The court may also make an order for punishment on conditions, including, for example, a suspension of punishment during good behaviour, with or without the giving of security: r 930(4). If the court orders that the contemnor be imprisoned, it must specify the prison at which he or she is to be imprisoned: r 931(1) UCPR. Costs are at the discretion of the court whether a specific punishment is imposed or not: r 932 UCPR.
…
[47] It is almost trite to state that an injunction must be strictly obeyed and remains binding on the parties unless and until it is discharged.21 Indeed, the court is entitled to assume that those to whom injunctions are directed will act in good faith and seek to comply with them.22 It therefore ill-behoves a person restrained by order of the court to act on a view, whether on advice or otherwise, that the restraint no longer applies because of some intervening circumstance. It can be no defence that the party doing the act honestly believed, or was wrongly advised, that he or she would not be in breach of the order, if the act was deliberately done.23 An interlocutory injunction such as the one ordered by Davis J in this case is capable of being dissolved or varied and an injunction granted at trial may be set aside on appeal, but for so long as an injunction stands it must be obeyed. As Sir William Page Wood, VC said in Spokes v Banbury Board of Health:24
[T]he simple and only view is, that an order must be obeyed, that those who wish to get rid of that or must do so by the proper course, an appeal. So long as it exists, the order must be obeyed, and obeyed to the letter and anyone who does not obey it to the letter is guilty of committing a wilful breach of it, ….25
13Construction, Forestry, Mining and Energy Union v Grocon Constructions (Vic) Pty Ltd[2014] VSCA 261 , [139].
14Australian Consolidated Press v Morgan (1965) 112 CLR 483 , 492.
15Construction, Forestry, Mining and Energy Union v Grocon Constructions (Vic) Pty Ltd[2014] VSCA 261 , [140].
16Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 , 111–112; Witham v Holloway (1995) 183 CLR 525 , 530–534, 538–542; Lade & Co Pty Ltd v Black[2006] 2 Qd R 531 , [26], [55]–[65] and [101]–[103].
In Court House Capital Pty Ltd v RP Data Pty Limited [2023] FCAFC 192 (8 December 2023) the Full Court of the Federal Court – Charlesworth, Sarah Derrington and Raper JJ – provided useful guidance as to the circumstances in which, under s 43 of the Federal Court of Australia Act 1976 (Cth) an order for costs may be made against a non-party – in this instance litigation funder of an applicant or plaintiff – in respect of whom the court concludes that an order for costs ought be made in favour of the respondent or defendant. The decision of the Full Court provides a useful analysis of the contrasting which might arise in the making, or refusing, of such an order. In particular, an applicant or plaintiff’s solicitor ought seek assurance that a funder is providing an indemnity against adverse costs order against the defendant, absent which a generous order for security for costs ought be sought. The decision at first instance, and on appeal, was successfully argued – for the respondent – by Mark Martin KC of the Queensland Bar. The Court wrote:
Charlesworth , Sarah Derrington and Raper JJ.
[1] The question in this appeal is whether the primary judge’s exercise of discretion miscarried when costs were awarded against a commercial litigation funder. The appellant, Court House Capital Pty Ltd, appeals from the judgment in Hardingham v RP Data Pty Ltd (Third Party Costs) [2023] FCA 480 ( primary judgment ), in which the primary judge ordered that Court House pay the costs of the respondent, RP Data Pty Limited, for proceedings commenced by funded parties against RP Data.
[2] Court House contends variously that the primary judge erred by “failing to soundly exercise” the Court’s discretion to award costs by giving no or insufficient weight to a variety of matters. Where an appeal involves an exercise of discretion, the Court will not interfere unless certain kinds of error exist: House v R (1936) 55 CLR 499 . For the reasons which follow, Court House has not established error and the appeal must fail.
[3] The relevant facts may be briefly stated as follows. Court House is a litigation funder that entered into a Funding Agreement with Mr Hardingham and Real Estate Marketing Australia Pty Ltd ( REMA ) on 20 June 2018. The primary judge described the commercial arrangements that formed the background to Mr Hardingham and REMA’s claim as follows (at J[4]):
The principal proceedings were commenced on 13 July 2018, a short time after the Funding Agreement was entered into. Mr Hardingham was a professional photographer. He was the sole director of REMA. REMA had been commissioned by various real estate agencies to produce photographs and floor plans for use in marketing campaigns for the sale or lease of properties, including by upload onto the realestate.com.au platform ( REA platform ). Mr Hardingham and REMA and the real estate agencies each knew that: (a) the photos and floorplans were maintained on the REA platform after completion of the sale or lease and were made available to subscribers; and (b) the photographs and floor plans were provided by REA under contract to RP Data for publication via its website, www.corelogic.com.au.
[4] Mr Hardingham and REMA brought proceedings against RP Data on the basis that the licence given to the agencies in respect of photographs taken and floor plans produced by REMA was limited, such that RP Data infringed copyright by publishing the photographs and floor plans on www.corelogic.com.au.
[5] The primary judge summarised the relevant terms of the Funding Agreement (with which no issue is taken on appeal) in the following way (at J[2]):
By clause 2 of the Funding Agreement, Court House agreed to provide funding for the applicants’ solicitors, senior counsel, junior counsel and disbursements.
By clause 3.1, Court House could provide further funding pursuant to a further funding agreement which could “include agreement to fund adverse costs orders”. The Funding Agreement did not provide for Court House to indemnify the applicants against an adverse costs order.
Clause 3.2 provided that Court House “is under no obligation to provide any further funding or indemnity”.
By clause 4, in the event of receiving an amount either by way of judgement or settlement, the applicants were required to repay the entire funding provided by Court House, together with an “additional sum” calculated as 15% of the “final amount”, being in essence the gross settlement or judgment amount.
By clause 6.3, it was acknowledged that the solicitors for the applicants would continue to be instructed by the applicants in all matters relating to the proceedings and the applicants had the right to direct, conduct and conclude the proceedings by way of settlement.
The entitlement in cl 6.3 was subject to clauses 6.4 and 6.5 which provided, in effect, that the applicants would consult with Court House on any issues arising from the conduct or progress of the proceedings and that they would not compromise the claim without prior consultation with and consent from Court House.
[6] The first instance judgment in the principal proceedings was handed down on 17 December 2019 ( Hardingham v RP Data Pty Ltd (No 2) [2019] FCA 2138 ) and included orders requiring Mr Hardingham and REMA to pay RP Data’s costs of the proceeding (excluding costs of a cross-claim filed by RP Data) on a party and party basis until 28 June 2019 and thereafter on an indemnity basis. Mr Hardingham and REMA appealed this decision to the Full Court and obtained a stay of the costs orders made at first instance: Hardingham v RP Data Pty Ltd (No 3) [2020] FCA 868 . The Full Court allowed the appeal on 8 September 2021: Hardingham v RP Data Pty Ltd [2021] FCAFC 148; 395 ALR 644 . The High Court reversed the Full Court’s decision on 14 December 2022: RP Data Pty Ltd v Hardingham [2022] HCA 39; 97 ALJR 40 . Following the High Court’s decision, the costs orders made on 17 December 2019 became operative.
[7] RP Data then made an interlocutory application, on 3 February 2023, seeking that Court House be ordered to pay RP Data’s costs on the basis ordered on 17 December 2019, and that Court House be jointly and severally liable with the applicants for such costs. The application was determined on the papers with the benefit of submissions and evidence. The primary judge, in exercise of the Court’s broad discretionary power under s 43 of the Federal Court of Australia Act 1976 (Cth) ( FCA Act ), found that Court House and its activities had a sufficient connection with the principal proceedings for it to be appropriate that a costs order be made against it: at J[33].
The grounds of appeal
[8] Court House advanced five grounds of appeal (not pressing at hearing the sixth ground), that the primary judge failed to soundly exercise his discretion by:
(1) giving no weight to RP Data’s failure to apply for security for costs;
(2) failing to sufficiently take account of his finding that, had RP Data made an application for security for costs after 25 March 2019, it was likely that security would have been ordered, Court House would have renegotiated its fee and increased its commission, noting that RP Data erroneously assumed (without adequate basis) that the Funding Agreement contained an indemnity against adverse costs orders;
(3) not sufficiently taking into account that, when the Funding Agreement was entered into, Hardingham and REMA only sought funding to prosecute the primary proceedings, their claim was bona fide and there was no evidence that Hardingham and REMA could not meet an adverse costs order, nor that Court House considered there to be a prospect that it would be ordered to pay RP Data’s costs;
(4) not sufficiently taking into account that Court House’s funding was limited to the fees of senior counsel when ordering that Court House meet the entirety of RP Data’s entitlement to recoverable costs, which was disproportionate to its connection with the proceedings and not fair; and
(5) failing to sufficiently take into account that Court House had no control over the conduct of the litigation and, but for the funding, the course of the proceedings would likely have been no different, having regard to the fact that Court House merely had the right to be consulted about the conduct of the proceedings, the funding provided was only in relation to the fees of senior counsel, and the appellate proceedings did not have the benefit of funding.
[9] At hearing, the appellant submitted that the primary judge’s discretion miscarried in two ways but without identifying how those two ways intersected with the appeal grounds as framed. Upon clarification from the Court, Court House maintained each ground of appeal (except ground six, as noted above) though did not address them in turn at the hearing. To the extent that we were able to decipher Court House’s argument, the two ways in which the primary judge’s discretion was said to have miscarried, were that the primary judge: (a) erred in law as to the degree of connection required as between the funder and fundee, such that there will be no relevant connection unless the funder “facilitated the proceeding” (which appears to arise in the context of ground four); and (b) erred in awarding costs where, because of RP Data’s assumption from the commencement of the proceedings that Court House had provided the applicants with an indemnity for an adverse costs order, RP Data made a forensic decision not to apply for security for costs (to which grounds one and two relate). Those issues are addressed in the context of the relevant grounds to which they appeared to relate.
Consideration
[10] Section 43 of the FCA Act empowers this Court with a broad, discretionary power to award costs where that discretion is to be “exercised judicially and in accordance with general principles pertaining to the law of costs” Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192 per Mason CJ and Deane J, citing Oasis Hotel Ltd v Zurich Insurance Co (1981) 124 DLR (3d) 455 at 462 per Lambert JA Whilst the usual order is made against a party and particularly an unsuccessful party, the power extends to making costs orders against non-parties. So much was uncontroversial below and remains uncontroversial. The primary judge correctly identified the issue: the power to order costs against a third party will only be exercised in circumstances where a non-party has a connection to the litigation which is sufficient to warrant the exercise of power, at J[19], citing Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; 200 FCR 154 at [89]; Skelin v Self Care Corporation Pty Ltd (No 2) [2022] FCA 50 at [21].
[11] Contrary to the implicit effect of a submission made by Court House, there is no rigid checklist of factors which may be taken into account. This is particularly so given that the determination of the nature and extent of the relevant connection will be informed by the character of the non-party. For example, whether the non-party is a receiver (see Knight at 192–3), a family member of a party (see Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498 at [22]–[23]; KSMC Holdings Pty Ltd v Bowden (No 3) [2020] NSWCA 158 at [45], [50]), a union (see, eg, Traynor v Cunningham [2017] WASCA 125 at [39]–[45]; see, eg, in the context of the tort of maintenance, Hill v Archbold [1968] 1 QB 686 at 695) or a commercial litigation funder (see Gore v Justice Corporation Pty Ltd [2002] FCAFC 354; 119 FCR 429 at [64]), the authorities reveal that different considerations arise in each case.
[12] The primary judge described the legal principles which inform the Court’s discretion in the following way:
19 It is not in dispute that the power under s 43 extends to making costs orders against non-parties: Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178 . Plainly enough, the power to order costs against a third party would only be exercised in circumstances where a non-party has a connection to the ligation [sic] which is sufficient to warrant exercise of the power: Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; 200 FCR 154 at [89]; Skelin v Self Care Corporation Pty Ltd (No 2) [2022] FCA 50 at [21].
20 One example of where a connection is typically insufficient is where family members provide financial support to an applicant in litigation in which the supporting family member has no commercial interest in the outcome; such assistance is founded in family or social ties and directed at facilitating access to justice for the purpose of vindicating rights — see, for example: Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498 at [22]; KSMC Holdings Pty Ltd (t/as Hubba Bubba Childcare on Haig) v Bowden (No 3) [2020] NSWCA 158 at [45]; Skelin at [20], [63] to [70].
21 It has been said that an “order for costs against a non-party is only made in exceptional circumstances”: Dunghutti at [90]; or that it is rare and exceptional: Vestris v Cashman (1998) 72 SASR 449 at 467; see also: FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [214]; PMWorks Pty Ltd v Management Services Australia Pty Ltd (t/as Peak Performance PM) [2018] NSWCA 168 at [39]. This is not intended as more than an observation that the costs consequences usually fall on the parties to the litigation or that such an order is outside of the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense — see: Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39 [2005] 4 All ER 195 at [25]; KSMC Holdings at [44]; Skelin at [19]. It is, accordingly, not particularly helpful to state that a third party costs order is rare and exceptional. When there is a sufficient connection between the litigation and a third party, and the circumstances are such that the making of a costs order is fair in all the circumstances, the making of a third party costs order is normal. Certainly, it is not exceptional to order costs against a litigation funder who facilitates litigation for their own commercial gain. Indeed, this has become increasingly common. As Hammerschlag J said in Mistrina Pty Ltd v Australian Consulting Engineers Pty Ltd — Costs [2020] NSWSC 633 at [26]:
… Dymocks was decided 16 years ago. Litigation funding is much more common now than it was then. It is an everyday feature of cases in this [Technology and Construction] List and the Commercial List in all types of claims, not only class actions. Applications of the present type are even less exceptional now than they were then.
22 There are many cases which recognise the fairness in ordering a party who funds litigation for their own commercial benefit to pay, if they fail, the successful party’s costs. This is so whether or not the funder has given an indemnity for the costs ordered against an unsuccessful applicant. Examples include: Dymocks Carborundum Abrasives Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757 ; Gore v Justice Corp Pty Ltd [2002] FCAFC 83 119 FCR 429; Mistrina. In Dymocks at [26], the Privy Council quoted from the unreported judgment of 19 May 2000 of Fisher J of the High Court of New Zealand in Arklow Investments Ltd v McLean at [21]:
… [I]t is wrong to allow someone to fund litigation in the hope of gaining a benefit without a corresponding risk that that person will share in the costs of the proceedings if they ultimately fail.
23 In the context of ordering security for costs against a non-party, Hodgson JA observed in Green v CGU Insurance Ltd [2008] NSWCA 148 67 ACSR 105 at [51] that “the court system is primarily there to enable rights to be vindicated rather than commercial profits to be made” and that “courts should be particularly concerned that persons whose involvement in litigation is purely for commercial profit should not avoid responsibility for costs if the litigation fails”. Those observations are equally applicable to the present circumstances.
24 The beginning and end point is the terms of s 43 of the FCA Act. The power to order costs is discretionary. It must be exercised judicially, not arbitrarily or capriciously or on grounds unconnected with the litigation, having regard to relevant principle and the justice of the case in all the circumstances: Minister for Immigration, Citizenship, Migrant Services & Multicultural Affairs v Mukiza [2022] FCAFC 105 at [4].
[13] We discern no error in this distillation of the principles.
Grounds one and two: RP Data’s failure to apply for security for costs
[14] By grounds one and two, Court House seeks to challenge the primary judge’s discretionary exercise of the power to award costs on the basis that “no weight” was given to RP Data’s failure to apply for security for costs, nor was “sufficient” account given to the consequences if RP Data had made an application for security for costs after 25 March 2019, this being the date when the involvement of Court House (as a litigation funder) became known to RP Data (at J[29]).
[15] On the question of security for costs, the primary judge, when dealing with the purported failure of RP Data to bring an application at the commencement of the hearing, held at J[28], that:
RP Data cannot be criticised for not bringing an application for security for costs at or around commencement of proceedings in circumstances where: (a) the participation of a litigation funder was not known; (b) there was no grounds for suspecting an inability to meet an adverse costs order; (c) one of the applicants was an individual against whom an order for security for costs was unlikely to be successful even if he was impecunious; (d) the claims of the corporate applicant entirely overlapped with those of Mr Hardingham such that an order for security against REMA was also unlikely: Brecher v Barrack Investments Pty Ltd [2018] FCA 472 at [28], [29]; [2020] FCA 1062 at [9]. The applicants’ claim was genuine, even if adventurous. Indeed, it found favour with a majority of the Full Court.
[16] Court House took issue with his Honour’s finding that the involvement of a litigation funder was not known to RP Data at or around the commencement of the proceedings. It submitted that this conclusion was contradicted by RP Data’s evidence before the primary judge where its solicitors had said, in correspondence on 10 March 2020, “[y]ou cannot seriously expect us to believe that … Mr Hardingham launched highly ambitious Federal Court proceedings without an indemnity for adverse costs orders”. This, Court House contended, suggested that, at all relevant times since the beginning of the proceedings, RP Data had understood that the applicants were funded by a litigation funder and should have made an application for security for costs.
[17] We do not accept the premise that underlies this submission. The primary judge found that the involvement of Court House was not known until 25 March 2019, two days before the mediation. We do not accept that inter party correspondence sent a year later, on 10 March 2020, proves knowledge prior to 25 March 2019. This was not Court House’s submission below. Indeed, from Court House’s chronology below, it could be inferred that there was no issue as between the parties that it was not until 25 March 2019 that RP Data knew about Court House’s involvement in the proceedings. Such a finding was open to the primary judge.
[18] We can discern no error in the evaluative exercise undertaken by the primary judge in determining that the absence of an application for security did not preclude the making of the costs order. The fact that Mr Hardingham and the corporate applicant, REMA, had done nothing to contribute to this misapprehension does not preclude the primary judge from making the finding he did.
[19] The primary judge considered the alleged failure to make such an application at two points in time: the commencement of the hearing and after the existence of the funder became known. As to the latter point in time, Court House has not satisfied this Court that any of the four factors identified by the primary judge, extracted at [15] above, can be impugned. As to the former, again the primary judge considered a range of factors, including that the litigation had substantially progressed, RP Data had assumed that the Funding Agreement included an indemnity for an adverse costs order based on what Court House represented on its website, in circumstances where the Funding Agreement had not been provided and bringing an application after the mediation would only have increased costs and delay: at J[29] – – [30].
[20] Court House’s submission that RP Data had taken no steps to ascertain its truth, save perhaps for a cursory review of Court House’s website, misdescribes the circumstances and is rejected. RP Data had written to the applicants’ legal representatives on 4 April 2019 requesting production of that agreement. No agreement was provided and it was not until the applicants were applying for a stay of the adverse costs order pending their appeal, in correspondence dated 10 March 2020, that the applicants disclosed that they did not have the benefit of an indemnity from Court House.
[21] The fact that the primary judge acknowledged that if RP Data had made a successful application for security, Court House would likely have sought different arrangements, probably by giving an undertaking for an adverse costs order and renegotiating its 15% fee, indicates that the primary judge took into account, as part of the requisite balancing exercise, a consequence of such an application being made, and demonstrates no error in his Honour’s attending to the task: at J[30].
[22] Court Housealso made the perplexing submission that insofar as RP Data had made a forensic decision not to apply for security for costs (based on a misapprehension of the funding arrangements between Court House and the applicants), this militated strongly against the making of a third party costs order against it, citing Vestris v Cashman (1998) 72 SASR 449 at 467 per Lander J, cited with approval in Dunghutti at [89].
[23] However, there was no evidence nor any finding by the primary judge that RP Data made a “forensic decision” to not apply. Rather, all there was evidence of was the fact that RP Data had assumed (after the mediation) incorrectly that the Funding Agreement included an indemnity: at J[29]. Court House’s submission is made entirely without factual foundation and the cited authorities do not assist. Vestris describes a number of matters which may be taken into account when making a non-party costs order, none of which are decisive, and does not stand for the appellant’s proposition. Similarly, contrary to Court House’s submission, the purported passage was not “cited with approval” in Dunghutti . In that case, the Full Court referred to the requirement of a connection between the non-party, the unsuccessful party and the litigation, which appears at 467 in Vestris .
[24] In addition,Court Housesubmitted that the jurisdiction to award costs against a non-party is limited to persons who effectively instigate and maintain litigation at their own expense, or where there has been an abuse of process, citing Dawson J in Knight at 202. They submitted that it is clear that it was not an abuse of process to enter into a funding agreement, and nor is the continued prosecution of proceedings by a plaintiff who is unable to meet an adverse costs order an abuse of process, citing Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43 239 CLR 75 at [37] and relying on FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 at [210]. The submission appears to be premised on a misconceived notion that a third-party costs order should only be made where the conduct of the litigation was unreasonable or improper or comprised an abuse of process.
[25] We accept that impropriety or an abuse of process may be a basis for the making of such an order. However, we do not accept it forms a pre-condition for a third-party costs order to be made. None of the authorities referred to support this proposition.
[26] Court House’s reliance on Jeffrey & Katauskas exposes an important change in the law that applied to non-party costs orders in New South Wales. In 2010, r 42.3 of the Uniform Civil Procedure Rules 2005 (NSW), which had operated to restrict the NSW Supreme Court’s power to make costs orders against non-parties (with limited exceptions including, relevantly, in cases involving abuses of process), was repealed. The effect of this change in NSW was that there is now no provision that restricts the making of costs orders against non-parties: Arena Management Pty Ltd (recs & mgrs apptd) v Campbell Street Theatre Pty Ltd [2011] NSWCA 128 80 NSWLR 652 at [25] per Campbell JA This change has no bearing on these proceedings, noting that they are brought in the Federal Court and take place several years after the repeal of r 42.3 of the UCPR. Nevertheless, it provides useful context to Court House’s reliance on Jeffery & Katauskas and FPM in these proceedings and, in particular, to submissions made about the necessity of impropriety or unreasonableness as a criterion for the imposition of non-party costs orders.
[27] In Knight , Mason CJ and Deane J conducted a review of the history of non-party costs orders awarded before the Judicature Acts . Their Honours concluded at 189–90 that:
Having regard to the variety and the nature of the circumstances in which an order for costs was made against a person who was not a party according to the record, we cannot accept that there was before the Judicature Acts a general rule that there was no jurisdiction to order costs against a non-party in the strict sense. It is plain enough that the courts from time to time awarded costs against a person who, not being a party on the record, was considered to be the “real party”. It may be that these cases are capable of being explained on various grounds, including the ground that the non-party ordered to pay costs was guilty of abuse of process, taking a very broad view of what constitutes an abuse of process, but to say that does not deny that there was jurisdiction to make an order for costs against a non-party even if the jurisdiction was exercised in limited circumstances only.
[28] Their Honours continued, at 192–3, holding that it was appropriate to recognise a category of cases in which orders for costs could be made against non-parties that did not appear to require a conclusion of abuse of process:
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.
[29] While the “unreasonable or improper” criterion has obvious overlap with the position that non-party costs orders can be available in cases involving an abuse of process, FPM and other cases in NSW and other jurisdictions show that it has continued to be acknowledged (but was never a pre-condition), even where non-party costs orders are not restricted by statute to cases involving (inter alia) abuses of process. In Vestris , decided before FPM , Lander J held at 467:
Whilst the circumstances to make an order for costs against a non-party will be both rare and exceptional such an order can be made without the moving party having to demonstrate any improper conduct of any kind on the part of the non-party. An order for costs against a non-party is not dependant upon any improper conduct on the part of any party. Of course in some cases improper conduct on the part of the non-party will be a relevant factor in the exercise of the discretion.
[30] In Brand2Content v Dalby [2019] NSWCA 16 , Simpson AJA observed at [66] that “[a]s expressed in FPM , the criterion is that ‘the conduct of the litigation was unreasonable or improper’. Generally speaking, in order to attract a non-party costs order, it would be necessary that the unreasonable or improper conduct be brought home to the non-party against whom the order is sought”. However, her Honour did not view the criterion as a necessary requirement before a non-party costs order could be made (at [71] and [84]):
71 There is no doubt that the obduracy demonstrated by the failure to cooperate in the security for costs request was the cause of additional expense incurred by Brand2. I would not categorise the conduct of the appellant companies as “unreasonable” or “improper”. However, as I have suggested above, those terms are not prescriptive. It is not necessary that Brand2 bring the conduct within that description before a non-party costs order can be made. As was stated in Knight, the task is to examine the whole of the conduct of the proceedings, in order to determine what is in the interests of justice. The manner in which the appellant companies, through Adam Dalby, dealt with the security for costs issue is one factor to take into account in evaluating the application. Alone, it would be insufficient to justify an order.
…
84 I do not consider the conduct of the appellant companies, or of Adam Dalby, attracts the description “unreasonable or improper”. Nor do I consider that conduct must satisfy the description before it can be taken into account on an application such as the present. It is conduct that has had the result of increasing costs, in circumstances where the parties bearing the primary obligation for payment of the costs, will be unlikely to be in a position to meet the costs. It is a factor in the overall consideration of what is in the interests of justice.
[31] These authorities demonstrate that unreasonable or improper conduct of proceedings is a relevant, but not necessary, criterion for the making of non-party costs orders and Court House’s submission in this regard must be rejected. Furthermore, and critically, these cases did not involve third-party costs orders against litigation funders, for which, as we advert to elsewhere in these reasons, different considerations arise.
Grounds three, four and five: Court House’s funding of and control over the principal proceedings
[32] Each of these grounds concerns Court House’s claimed lack of funding of, and degree of control over, the principal proceedings, such that Court House says the primary judge’s discretion miscarried in making a costs order against it.
[33] By ground three, Court House submitted the primary judge had failed to “sufficiently” take into account certain facts when Court House entered into the Funding Agreement, including that there was no evidence at the time that Court House entered into the Funding Agreement with the applicants that either of the applicants was impecunious. Ground three is buttressed by the four purported facts claimed to exist at the time Court House entered into the agreement, namely: (a) there was no evidence the applicants could not meet an adverse cost order; (b) the applicants sought funding only to prosecute the primary proceedings; (c) there was no evidence Court House considered there was a prospect that it would be ordered to pay RP Data’s costs if the applicants were successful; and (d) the applicants’ claim was bona fide. Court House put on no evidence as to its state of mind nor from the applicant to support any of these propositions before the primary judge. Accordingly, this ground is completely without foundation.
[34] The gravamen of ground four was that a funder will not have the requisite connection with and control over the proceedings unless it “facilitates” the proceedings. Court House submitted that the primary judge had erred in law in determining that for Court House to “facilitate” the proceedings, all that needed to be satisfied was that it “enabled” or made it “easier” when what was required, at law, was a finding that “but for” the funding, the proceedings would not have continued. Court House cited no authority supportive of this proposition and we reject that this reflects existing jurisprudence with respect to commercial litigation funding or is otherwise sound.
[35] The authorities have made clear that where a litigation funder has a commercial interest in proceedings, even if it has no control over the proceedings, the requisite connection may nonetheless be established and an adverse costs order made against the funder: Gore at [64]:
Justice Corporation, whilst not controlling the litigation, had a direct financial interest in the outcome of the case; it offered no explanation for its participation in the litigation and the only inference must be that it was a commercial investment. It was prepared to take a commercial risk, to meet Montague’s costs, to protect Montague against an order for costs in favour of Clayton Utz and, in return, it hoped to profit from its investment. No extenuating circumstances exist to save Justice Corporation from an order that it pay some of Clayton Utz’s costs. There was no question of it being involved through friendship or because of family ties; there was no question of public interest and no moral high ground that might have justified its involvement. It was a simple straightforward commercial arrangement. If Montague had been successful there was every likelihood that there would have been a costs order against Clayton Utz, thereby recouping to Justice Corporation much of what it had outlaid by way of expenditure on Montague’s costs. It seems to us, as a logical consequence of these circumstances, that in return for the chance of obtaining 8 per cent of the judgment debt and a recoupment of much of its outlay for costs, Justice Corporation should be expected to incur the risk of a costs order in the event of Clayton Utz being the successful party. Reaching that conclusion is made the easier because of the provision in the Litigation Agreement under which Justice Corporation agreed with Montague that it would pay Clayton Utz costs in the event of Montague losing the case. That factor should not, however, be treated as being the catalyst for the Court arriving at its decision. It was a matter of great significance that the existence of this clause was made known to Clayton Utz but it was still only one of the factors that has led this Court to its conclusion.
(Our emphasis added.)
[36] A similar argument to that raised by Court House was made in Wigmans v AMP Ltd (No 3) [2019] NSWSC 162 ; 366 ALR 594. In that case the funder had submitted that it was not a “real party” on the basis that it had not been entitled to control the conduct of the proceeding or give instructions, and was rejected, at [58]–[59]:
58 …In some circumstances, it may be that the mere fact that a non-party funds litigation is not a reason to make a costs order against them. Hypothetical examples in judicial commentary include circumstances where a family member provides funds out of affection (see Dymocks Franchise Systems at [34]) or a solicitor provides legal advice and services on a speculative basis (see the observations of Basten JA in FPM Constructions at [214]).
59 However, Therium’s interest went beyond the mere recovery of the funds it provided. It stood to make a significant profit from the fruits of the litigation. The same can be said about each of the litigation funders in this case.
[37] In any event, we do not accept the underlying premise that it could be inferred that the proceedings would have been prosecuted in any event, without Court House’s funding of senior counsel, as the case could have been presented by junior counsel. The Funding Agreement was entered into before the commencement of the proceedings and required Court House to fund all fees incurred by the legal representatives, senior counsel and junior counsel and disbursements. The fact that no-win no-fee arrangements were entered into with the solicitors and junior counsel which may reduce the potential funding says nothing about whether the proceedings would have been prosecuted in any event. Court House put on no evidence from the applicants to support this proposition before the primary judge. To the extent that it was also argued that it could be inferred that the proceedings would have continued, absent funding, given the applicants pursued subsequent appeals without senior counsel, this does not go to the issue that Court House is seeking to demonstrate — the proceedings to which the costs order relates, namely the initial trial not the subsequent appeals.
[38] Furthermore, we are of the view, in any event, that Court House did “facilitate” the litigation for its own personal gain. It agreed to fund the litigation and funded senior counsel’s fees. The applicants were required to consult with Court House on any issues arising from the conduct or progress of the proceedings and they could not compromise the claim without prior consultation with and consent from Court House. Consistent with the agreement, Court House attended the mediation.
[39] In addition, Court House contended, by ground five, that there was no such apparent facilitation of the proceedings because the funder only paid for senior counsel’s disbursements (a “bit part” in the proceedings) and the risk (of an adverse costs order against a funder) has to correspond with the degree of funding it provided. Court House relied upon no authority supportive of this proposition. The existence of such a mandate would offend the broad and discretionary power given to the Court under s 43.
[40] In response to this submission below, the primary judge observed (at J[32]):
…The point is that Court House decided to fund the litigation for its own commercial gain. The litigation was ordinary commercial litigation from the perspective of Mr Hardingham and REMA. It was plain from a statement of the essential facts that the claim was one which might well fail. It is fair that the [sic] Court House also wears the risk in seeking to profit from the litigation. Its level of funding was substantial. The Funding Agreement provided for Court House’s participation in settlement. A representative of Court House attended the mediation. There was no evidence to suggest that it was not consulted in relation to the circumstances giving rise to the indemnity costs order and the terms of the Funding Agreement suggest that it was.
[41] We can discern no error in his Honour’s reasons. Court House is a commercial undertaking which profits from, and sought in this case, to profit from litigation. Part of the suite of financial products it has offered on its website in 2020 included “complete funding for all legal and expert costs”, “security for costs funding” and “adverse costs fundings”. The level of funding it agreed to provide to the applicants in this case was substantial. It also sought to profit, not only by reimbursement of the funds it had outlaid in the proceedings but also for a 15% uplift on any damages obtained.
[42] We are of the view that there has been no miscarriage of the discretion to award costs in this case.
Conclusion
[43] For the foregoing reasons, the appeal must be dismissed with costs.
Order
The appeal be dismissed.
The appellant pay the respondent’s costs as agreed or taxed under r 40.12 of the Federal Court Rules 2011 (Cth).
