Nolan v Nolan (No 2)[2013] QSC 165

SUPREME COURT OF QUEENSLAND

ANN LYONS J

[1] On 7 February 2013, the plaintiff filed an application seeking, primarily:

1.    A declaration that documents numbered 1 to 17 in Part 2 of the schedule to the fourth further supplementary list of documents dated 18 December 2012 are not subject to legal professional privilege.

[2] Although the plaintiff’s application referred to 17 categories of documents, only five categories of documents remained in contention at the time the application was heard.

[3] On 12 April 2013, the second, third and fourth defendants (the “Defendants”) filed an application seeking:

1.   A declaration that those five categories of documents, namely documents numbered 1, 2, 5, 12 and 13 in Part 2 of the schedule to the fourth further supplementary list of documents, dated 18 December 2012 are privileged (the “Documents”).

2.    An order that the plaintiff provide to the solicitors for the second, third and fourth defendants, on or before Friday 26 April 2013, all copies and any originals of the Documents in her possession or control.

3.    An order that copies of certain identified documents be placed in a sealed envelope and marked “Not to be Opened Other Than by Court Order or Judge.”

[4] On 31 May 2013, I indicated that there should be a declaration that documents numbered 1, 2, 5, 12 and 13 in Part 2 of the schedule to the fourth further supplementary list of documents dated 18 December 2012 are not subject to legal professional privilege.

[5] The issue of the final form of the orders and costs remains.  Written submissions in this regard were provided by counsel for the Defendants on 7 June 2013 and by counsel for the plaintiff on 12 June 2013, along with an affidavit sworn by Mary-Anne Ole on 13 June 2013.

[6] Whilst accepting that, as a general rule, costs should follow the event and be assessed on the standard basis,[1] the Defendants submit that the Court should exercise its discretion to depart from this general rule because:

1. Allowance should be made for the Defendants succeeding on the issue of whether the Documents were prepared for the dominant purpose of obtaining legal advice and recording confidential communications.

2. The concessions made by the Defendants concerning certain documents did not obviate the need for a hearing and for the parties to incur the costs of and incidental to the application.  The real issue concerned the plaintiff’s use of the Documents at the hearing.

3. The plaintiff caused unnecessary costs by having the matter, which was originally to be heard in the applications list, adjourned and transferred to the civil list for the purpose of cross-examining Mr Nolan, in circumstances where the plaintiff ultimately failed to establish a proper basis to cross-examine Mr Nolan. Accordingly, the matter could have been properly and expeditiously dealt with in the applications list at an earlier date.

[7] The Defendants argue that in those circumstances a costs order in the plaintiff’s favour would not do justice between the parties and overlooks the measure of success which the Defendants had in the interlocutory application because the plaintiff’s desire to cross examine Mr Nolan was ultimately unsuccessful.

[8] It is argued that a just result would let the costs lie where they fall.

[9] In my view, however, there is no reason to depart from the usual rule that costs follow the event. The issue of privilege was one raised by the Defendants, which made it necessary for the plaintiff to apply for the Court to determine the question. Whilst I accept that the Defendants succeeded on one point, I do not consider that should deprive the plaintiff of her costs. The claim was initially raised by the Defendants' then solicitors Herbert Geer, many months after the documents had been provided. Accordingly, it was clear that both points, and particularly the waiver issue, were in contention from the outset. Clearly, the Defendants needed to succeed on both points in order to hold their claim of privilege.

[10] I agree with the plaintiff’s submission that the decision in Foxworth Pty Ltd v Polwood Pty Ltd (No 2)[2] is not an appropriate analogy because there the Court was assessing the costs of the whole litigation rather than an application with a single issue, namely a claim of privilege.

[11] I also note the Defendants’ vigorous assertions about sharp practice on behalf of the solicitors for the plaintiff. It was very clear, however, that by early November 2011 the solicitors for the plaintiff had indicated as follows:

1. the Documents were not privileged by application of the dominant purpose test;

2. in any event, privilege had been waived by the Defendants' conduct;

3. there was no sharp practice involved; and

4. any application for injunctive relief would be opposed, and an order for costs sought by reason of the matters raised in that letter.

[12] I also accept that the matters relied upon by the plaintiff as constituting a waiver of privilege had been clearly articulated in the letter from the plaintiff’s solicitors dated 4 November 2011. Furthermore, the Defendants were also on notice from that letter that the plaintiff would seek an order for costs if the Defendants pressed their claim for privilege. This warning as to costs was repeated in a letter dated 11 April 2012.

[13] On 11 December 2012, the plaintiff's solicitors sent a Rule 444 letter to the Defendants’ new solicitors Russells, in which the plaintiff demanded:

1. a list of documents properly claiming privilege in respect of the second and third defendants' wills and the Edgar & Wood documents;

2. an affidavit in respect of any claim for privilege; and

3. an affidavit as to the circumstances of the destruction of the wills and related testamentary documents.

[14] The Rule 444 letter gave further warning of seeking an order for costs.

[15] Russells responded on 18 December 2012, providing the fourth further supplementary list of documents, but maintaining the Defendants' claim of privilege, stating that any application for disclosure of the privileged documents would be "vigorously defended".

[16] In my view, the matter clearly had to be determined in advance of the trial since it would affect the course of evidence. I also note that the abandonment of the claim for privilege in respect of several of the documents claimed by the Defendants came after the application had been before the Court on 20 February 2013.

[17] The matter was properly placed for hearing on the civil list by order of Mullins J.  Accordingly, the reserved costs in respect of the hearing before Mullins J should properly be costs in the application. That is the consequence under Rule 698 of the Uniform Civil Procedure Rules 1999 (Qld) unless the Court orders otherwise. I can see no reason for departure from that rule in this case.

[18] I am not satisfied, however, that costs should be awarded on an indemnity basis as the Court requires some evidence of exceptional circumstances. In Grice v Queensland McMurdo P stated:

“…a court may order costs to be assessed on an indemnity basis. This would ordinarily be done only when there are circumstances warranting a departure from the usual order assessing costs on the standard basis. Before ordering costs on an indemnity basis, a court requires some evidence of unusual circumstances or unreasonable conduct: Di Carlo v Dubois & Ors.”[3]

ORDERS:

1.  Documents numbered 1, 2, 5, 12 and 13 in Part 2 of the Schedule of the Second, Third and Fourth Defendants’ Fourth Further Supplementary List of Documents dated 18 December 2012 are not subject to legal professional privilege.

2. The second, third and fourth defendants’ application filed on 12 April 2013 is dismissed.

3. The second, third and fourth defendants are to pay the plaintiff’s costs on the standard basis.