Garcia v Enright
[1997] QDC 50
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Garcia v Enright[1997] QDC 50
- Add to List
Garcia v Enright[1997] QDC 50
Garcia v Enright[1997] QDC 50
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND |
Before Brabazon Q.C. D.C.J.
[Fabio Benjamin Garcia v. Brian C. Enright]
Plaint No 263 of 1996
BETWEEN
FABIO BENJAMIN GARCIA | Plaintiff |
AND
BRIAN C. ENRIGHT | Defendant |
REASONS FOR JUDGMENT - JUDGE BRABAZON Q.C.
Judgment delivered: 11th April 1997
Catchwords:
Counsel: | Mr. M. Martin for plaintiff |
| Mr. K. Holyoak for defendant |
Solicitors: | Baker Johnson for plaintiff |
| McInnes, Wilson & Jensen for defendant |
Hearing Date: | 21 March 1997 |
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Plaint No 263 of 1996 |
Plaint No 263 of 1996
BETWEEN
FABIO BENJAMIN GARCIA | Plaintiff |
AND
BRIAN C. ENRIGHT | Defendant |
REASONS FOR JUDGMENT - JUDGE BRABAZON Q.C.
Delivered the 11th day of April 1997
This is a case where the plaintiff's action has been discontinued. The defendant now brings an application, asking that the solicitors for the plaintiff pay his costs of and incidental to the action, and the application, on an indemnity basis. Should they be paying any costs, and if so, should they be on an indemnity basis?
The Facts
On 17 October 1994 Mr Garcia was convicted in the New South Wales Supreme Court for what has been described as “money laundering”. He was sentenced to imprisonment for 10 years, to take effect from 3 April 1993. He is not eligible for parole until 2 April 1999.
On 25 January 1996 Mr Garcia's solicitors issued a plaint out of the District Court held at Brisbane, seeking the recovery of $100,000 from the defendant, Mr Enright. According to the plaint, Mr Enright lives in New South Wales.
The plaint alleges an arrangement dating from about May 1989, whereby Mr Garcia advanced $100,000 to Mr Enright, for the purposes of a certain business investment. It is alleged that the investment could not be made, and that the monies were repayable by Mr Enright on demand. A demand is asserted, and it is said that he has failed to repay the money.
That plaint was served on Mr Enright in New South Wales, on 31 October 1996. The plaintiff does not assert any connection between the District Court at Brisbane and Mr Enright which, on its face, would give this court jurisdiction to entertain the claim. The affidavits reveal that there has never been any Queensland connection in the relationship between them, with regard to this transaction. There is no evidence as to why the plaintiff's solicitors, who have their offices in Brisbane, thought it necessary or desirable or possible to sue in the District Court at Brisbane. It is not explained why the action was not commenced in New South Wales, when it appears all the transactions between the two men were made in that state.
Mr Enright's solicitors immediately asserted that there was no jurisdiction for this court to entertain the action. They demanded that it be withdrawn. On 26 November 1996 they entered a conditional appearance, protested about the claim to jurisdiction and requested particulars. In a further letter, on 23 December, they repeated their demands and warned that they would seek to make the plaintiff's solicitors personally liable to pay the costs of the action. They asserted that Mr Garcia had no money to pay an order for costs.
On 23 January 1997, the plaintiff's solicitors wrote to say that they were preparing further material and that they would be instituting proceedings shortly in New South Wales. They inquired whether or not the defendant's solicitors had instructions to accept service of that proposed action. The letter continued: “In the event that you do have authority to accept service on behalf of Mr Enright, we propose to immediately thereafter file a Notice of Discontinuance in relation to the Brisbane matter...In that respect, once service has been effected, we are instructed by our client to file a Notice of Discontinuance.”
On 13 February those solicitors wrote again, asking if the defendant's solicitors had authority to accept service. That prompted a reply, dated 17 February, saying that they had no instructions to accept service on Mr Enright, and again requesting that the Queensland proceedings be discontinued.
On 28 February, Mr Enright's solicitors filed this application, asking that the action be struck out, or stayed, and also asking that the plaintiff's solicitors pay his costs of the action and the application, on an indemnity basis. The summons also asserted another reason why the plaint was invalid - that Mr Garcia was incapable of commencing the proceedings because of the disabling effect of the Felons (Civil Proceedings) Act 1981 (N.S.W.) Under that Act, a felon cannot maintain any civil proceedings in a court except by the leave of that court. It is accepted that Mr Garcia is a “felon” within the meaning of the New South Wales legislation. That application was served on Mr Garcia's solicitors at 3.56 p.m. on 28 February. About a half an hour later, that firm served a Notice of Discontinuance on Mr Enrights' solicitors. On 15 March, the plaintiff's solicitors wrote and said that Mr Garcia was prepared to consent to an order that the action be struck out, and that he would pay the cost of the application. Mr Enright's solicitors have not been satisfied with that offer, and have pressed on with this application.
The Hearing
When the matter came on for hearing, Mr Enright's counsel relied on three grounds, in submitting that the Queensland proceedings were always demonstrably hopeless - the District Court of Queensland had no jurisdiction; there was no right for Mr Garcia to sue without leave; and the material showed that the proper plaintiff would have been one of Mr Garcia's companies (or a liquidator) in any case.
In my opinion, the identify of the plaintiff is not a clear cut consideration, for present purposes. Under the rules of court, it is relatively easy to substitute or add the appropriate plaintiff. The material does not show unequivocally that Mr Garcia does not have a personal claim. Lay people are often confused about the relationship between themselves, their companies, and third parties. It is not always clear to a legal practitioner who the actual parties to a transaction are.
The more clear cut objections are based on his being a prisoner, and this court having no jurisdiction. Each appears to be established. There is no need to resolve the extent of the operation of the New South Wales statute - it appears that it has the effect of creating a personal disability in Mr Garcia which extends beyond New South Wales. It was accepted before me that Mr Garcia is prohibited from suing without leave, which he has not obtained. Likewise, it is demonstrated that there has never been any possibility of this court having jurisdiction in the matter.
Mr Enright asserted that Mr Garcia has no money and probably would not pay any costs order against him. The evidence was inconclusive. However, there is no evidence that he could pay the costs, and the inference, in all the circumstances, is that he is unlikely to be able to do so.
Principles
The court has power to award costs, though the action has been discontinued. I was referred to two authorities, in support of the proposition that this court has power to order the solicitors for a plaintiff to personally pay the costs of legal proceedings. See Caboolture Park Shopping Centre Pty Ltd v. White Industries (Qld) Pty Ltd (1993) 45 F.C.R. 224, and Re: Bendeich (No. 2) (1994) 53 F.C.R 422.
In the first case, the Full Court of the Federal Court held that s.43 of the Federal Court of Australia Act gave jurisdiction to that court to award costs against a non-party, including the solicitors of one of the parties. It did not matter that the court had no immediate connection with the solicitors, such as the right to admit them to practice, or to debar them. It was pointed out that the Family Court of Australia, which has a similar power to award costs, has expressed the view that it has power to order costs against a solicitor. See In the Marriage of Collins (1985) 75 F.L.R. 84, and Jachimowicz v. Jachimowicz (1986) 81 F.L.R. 459. Those statutory powers were held sufficient to enable such an order to be made.
That approach was followed by Justice Drummond of the Federal Court in Bendeich. He also referred to the decision of the House of Lords in Myers v. Elman (1940) A.C. 282, which establishes that the English courts have the power to make a solicitor for a party liable to pay costs personally. He held that Myers v. Elman provided a sound guide to as to when an order might be made against solicitors. As the House of Lords put it:
“Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order. The primary object of the court is not to punish the solicitor, but to protect the client who has suffered and to indemnify the party who has been injured.It is not limited to misconduct or default, but expressly extends to costs incurred improperly or without reasonable cause, or which have proved fruitless by reason of undue delay in proceeding under a judgment or order. The jurisdiction to order the solicitor to pay costs to the opposite party is exercised on similar grounds. Many of the (decided cases) depend, in cases where the order as to costs has been made, on the negligence or mistake of the solicitor and in that sense only on his misconduct in the proceedings...It was made clear, in the House of Lords, that the availability of the jurisdiction does not depend upon the solicitor being guilty of disgraceful or dishonourable conduct, which generally involves some element of moral turpitude or fraud or dishonesty or a persistent and reckless disregard of the solicitors duty...but that it can be found in conduct related to the pursuit of the profession which would reasonably incur the strong reprobation of members of that profession of good repute and competence...It is exercisable where the solicitor is guilty of no more than ‘mere negligence of a serious character, the result of which is to occasion useless costs to the other parties’”.
As Justice Drummond observed, the power to award costs against a solicitor personally involves special considerations, and it is a jurisdiction which must be exercised with caution. He concluded by saying: “Lawyers should know that, so long as they are not guilty of either professional misconduct or gross, as opposed to mere, negligence in the way they conduct their client's case, they would not be exposed to any personal liability to pay either the costs of their own client or those of the opposing litigant.”
Here, the real question is whether or not this court has a similar power. The answer begins with the decision of the High Court of Australia in Knight & Another v. F.P. Special Assets Ltd (1992) 174 C.L.R. 178. That was a case involving the power of the Supreme Court to award costs against a third party - a receiver and manager of a company. The majority of the court held that the discretion to award costs under O.91 R.1 of the Rules of the Supreme Court was not confined to the parties to the proceedings. As the judges pointed out, the case was really about the construction and effect of the Supreme Court rule, which provided that:
“...The costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge...”.
It was pointed out that the words quoted did not limit the jurisdiction over costs to a person who was formally a party to proceedings.
It is therefore necessary to turn to the power of the District Court to award costs. That has been considered in Colburt v. Beard (1992) 2 Qd.R. 67 and Paterson-Walls v. F.A.I. General Insurance Co Ltd (1995) 1 Qd.R. 282, a decision of the Court of Appeal. Although the statutory power of this court to award costs was rather obscure, both decisions accepted that it could be inferred from the District Court Act. Since then, that Act has been amended by the addition of the provisions dealing with ADR procedures. Those additions make it clear that there is a power to award costs. See now ss. 98 and 101. (I should also have thought, though it is not mentioned in the above cases that s.69, providing for the general powers of a District Court in its civil jurisdiction, are arguably wide enough to include a power to award costs.)
R.363 of the District Court Rules deals with costs. It says that:
“Except where herein otherwise provided, the costs of any action or proceedings shall be paid or apportioned between the parties in such manner as the judge directs, and in default of a special direction, shall abide the event; and the costs may be recovered in like manner as a debt adjudged by the court to be paid can be recovered” (Emphasis added)
It might be said that the expression “between the parties” means that there is no power to award costs against a third party. However, in my opinion, the better view is that the rule is not meant to cover the field, so that there is room left for the operation of Rule 4. That is the rule which provides for the application of the Rules of the Supreme Court, when such a power is not provided for in the District Court Rules. It is not to be supposed that the framers of the rules meant, by the above words, to exclude a power which this Court would otherwise have had. The result is that O.91 R.1 applies here, so far as third parties are concerned.
In this case, it must have always been clear to the plaintiff's solicitors that this court had no jurisdiction to entertain Mr Garcia's claim. Questions of jurisdiction are familiar ones to any Australian solicitor involved in litigation - they arise frequently when plaintiff's and defendants are in different states. However, it may have been thought that there was some tactical justification to starting this action in Queensland. It is not unusual for a defendant to submit to the jurisdiction of a court. Also, I do not think that ignorance of the incapacity of a prisoner to sue without leave is in the category of gross negligence - other practitioners have overlooked that point before. (See Fitzpatrick v. Jackson (1989) 2 Qd.R 542)
However, in my opinion, the position changed when Mr Enright's solicitors made it clear that he would not submit to the jurisdiction of this court. They also made it clear that this action could not be used as a lever to force him to accept service of the threatened New South Wales proceedings - see their letter of 17 February. There was more than one request to discontinue the proceedings. The letter of 23 December threatened a personal liability for costs, if that was not done voluntarily. Plenty of time passed for Mr Garcia's solicitors to realise that the jurisdictional game was up. Mr Enright's solicitors did not issue this application until 28 February.
In short, it is clear on the material that Mr Garcia's solicitors persisted in trying to gain some tactical advantage out of the continuing existence of proceedings which were demonstrably untenable, and had been so for weeks before this application was filed. In my opinion, the conduct of the plaintiff's solicitors amounted to a deliberate refusal to withdraw proceedings which were hopeless, in the face of an application which had to succeed. In doing so, they have exposed themselves to a personal liability to pay the costs of this application.
It is submitted that they should pay the costs on an indemnity basis. It is fortunate that we now have the benefit of the decision of Justice Shepherd of the Federal Court in Colgate-Palmolive Company v. Cussons Pty Ltd (1993) 46 F.C.R. 225, where he reviewed the power of a court to order costs to be taxed on other than a party and party basis. He held that the power was not restricted, and that the Federal Court had a wide power to select an appropriate basis of taxation when costs are ordered to be taxed. This court has a similar power with respect to the level of costs - provided that an order does not go beyond that which is provided for in a scale of costs, which is part of the rules.
Justice Shepherd pointed out that costs are usually ordered on a number of scales - the party and party basis, the common fund basis, the trustee basis, the solicitor and own client basis, and the indemnity basis. He summarised his conclusions about the appropriate order for costs this way:
- The ordinary rule is that the costs of the party are to be paid by another party on the party and party basis.
- The court ought not to usually make an order for the payment of costs on some basis other than the party and party basis. There should be some special or unusual feature in the case to justify the court in departing from the ordinary practice.
- A departure will be justified, as a matter of discretion, when .... the proceedings were commenced...in wilful disregard of known facts or clearly established law, and when allegations are made, which ought never have been made, or a case has been unduly prolonged by groundless contentions, or by an imprudent refusal of an offer to compromise.
- The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
- The costs are always in the discretion of the trial judge.
In Bendeich, a solicitor was made to pay the difference between the party and party costs of an application, and the reasonable costs payable to a party's own solicitor. He had grossly neglected his clients affairs.
In the present case, it is my opinion that the facts of this case leads to the conclusion that the plaintiff's solicitors should pay the costs of and incidental to this application (not the action) on a solicitor and own client basis. The adoption of that basis rules out the possibility that an indemnity order might include costs which are surprisingly high. It also reflects the fact that the solicitors' groundless contentions needlessly prolonged the existence of the action, and the probability that the plaintiff cannot pay the costs.
Therefore, the orders of the court are these:
- (a)that this action be struck out;
- (b)that the plaintiff pay to the defendant the costs of and incidental to the action (not including this application) to be taxed on a party and party basis;
- (c)that the solicitors for the plaintiff pay the defendant's costs of and incidental to this application to be taxed on a solicitor and own client basis.