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Barry Lane
9 July, 2007  
Another legendary litigator takes a tumble

Peter “Ziggy” Ziegler’s $220 million forensic foray against Village Roadshow has come a cropper with an award of indemnity costs against him. Not only is the legendary litigator considerably lighter in the wallet, his folly has also put a dent in the public purse

imageWho’d have thought that when I mentioned Peter “Ziggy” Ziegler in dispatches on April 27, 2007 that the litigation he was involved in with Village Roadshow would result in him becoming my nominee for the Joe Guss Legendary Litigators Memorial Award for 2007?

You’ll recall that Ziggy was after something like $220 million from Village following what he regarded as a premature parting of the ways in March 2003.

On January 29, 2007, Justice David Habersberger of the Victorian Supreme Court handed down what he later described, somewhat tongue in cheek I thought, as “lengthy” (355 pages actually) reasons for judgment.

Ziggy’s claim was dismissed and Village got judgment on its counterclaim to the tune of $12,020,849 plus interest of $4,566,810.43 plus costs.

On June 15, 2007, HH delivered judgment on the costs application.

Unfortunately, things went from bad to worse for the Zigster and his corporate empire.

His action against Village was as ill-fated as Judge Roy Pearson’s “trouser” suit in the US. Central to HH’s determination on costs, which he awarded in Village’s favour as to 90 per cent, was an offer to settle contained in a Calderbank letter from Village’s lawyers. The letter, dated February 16, 2005, offered to pay Ziggy $4.5 million plus a profit share of one of the film schemes plus costs.

The offer, which was made about six weeks before the trial started on March 30, 2005, was open for 16 days. In HH’s opinion, informed by presiding over a trial which lasted 71 days, the offer was a “generous” one. Further, HH was of the opinion that Ziggy’s rejection of it was “quite unreasonable in the circumstances”. One of the circumstances HH thought relevantly unreasonable was that it was rejected 38 minutes after it was made!

No further offer was forthcoming from Village.

imageThe net result of the Calderbank offer was that Ziggy (centre with lawyers) became liable for indemnity costs after February 16, 2005. Ouch!!

Alas, the legendary litigator’s misery didn’t end there. Prior to trial he had, not surprisingly for a chap with a PhD in loopholes, gone to some lengths to ensure that his corporate alter ego, the plaintiff (Orrong Strategies Pty Ltd), would be able to insulate itself from any adverse order if it were unsuccessful and be able to pass on to Ziggy the fruits of any judgment if it were victorious.

As one might expect, Village and its advisers were ready for that little ploy by calling in aid Knight v FP Special Assets Limited.

In that case, the High Court spelled out some of the circumstances when it is permissible for a court to order costs against a non-party. HH noted that Village submitted that:

“Orrong was clearly a ‘man of straw’ and deliberately so. Mr Ziegler had given evidence that this $2 company, his corporate alter ego, had been deliberately left with no assets. Moreover, he had agreed that shortly before the trial commenced, he arranged for a charge to be granted to himself over the assets of Orrong, including the proceeds of any recovery from the proceeding, to ensure that he would receive the benefit of any judgment. Thus, Mr Ziegler was the person who stood to benefit in the event of a judgment in Orrong’s favour.”

Ziggy countered with a submission that Village should have applied for security for costs, but in the face of Knight’s case that didn’t cut much ice.

HH summed up:

“In my opinion, in circumstances where Orrong, Mr Ziegler’s corporate alter ago, had brought this extraordinarily large claim, where the claim concerned the work performed by Mr Ziegler for VRL, where Mr Ziegler was the person who stood to benefit from the claim, where Mr Ziegler had arranged Orrong’s affairs so that it had virtually no assets and was effectively ‘judgment proof’ despite being paid some $25 million over nine years by VRL, where Mr Ziegler as defendant by counterclaim stood to benefit from Orrong successfully pursuing its claim and where Mr Ziegler had played an extremely active part in the conduct of the litigation, the interests of justice are best served by making an order that Mr Ziegler also be liable for the costs of the claim.”

Game, set and match.

imageGod only knows what Village’s costs will pan out at but I’d be surprised if counsel’s fees (Jeff Sher QC [pic] and Nicholas Hopkins) for the trial would leave any change out of $1 million.

There was, of course, no consideration of what this vainglorious piece of litigation cost Victorian taxpayers. Again, and for the trial alone, a conservative estimate of $700,000 wouldn’t be far off the mark.

With the benefit of hindsight, which could easily have been foresight if the proposals I recommended in my recent epistle of June 18 were adopted, this litigation was just as ill-advised as Judge Pearson’s attempt to extract $54 million from his hapless dry cleaner.

Fortunately for American taxpayers however, Pearson’s suit took only two days to scorch. How is it that our system permitted Ziggy to gobble up $700,000 from the Consolidated Fund without so much as a by your leave from any polly or public official?

Surely, public money of that magnitude should be fixing up schools and hospitals rather than being squandered (no offence intended to Justice Habersberger who, with respect, did a sterling job) on forensic fancies like this one.

C’mon Hullsie, when are you going to pull the plug on these depredations on the public purse, or at least make the people who run them pay?