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Court in the Act
16 June, 2004  
Unisys Australia Ltd v RACV Insurance Pty Ltd - Judges' misplaced call for indemnity costs application

Appeal judges get over-excited in urging application for indemnity costs in RACV Insurance litigation … Peter Richards’ defamation case settled just as things were warming up. Barry Lane reports from Melbourne


A few ruddy faces on the Victorian Court of Appeal (Ormo, Phillips and Batty) arising from the costs tussle in the huge RACV Insurance v Unisys case.

After a two-month trial in 2001, Hansen J awarded damages of $4 million to the insurance company for expenditure wasted on a computer system that didn’t work properly.

Photocopiers must have been chewing through the toner at Baker & McKenzie (Unisys) and Phillips Fox (RACV Insurance), as the trial judge complained of creaking under the weight of paper:

“To the close of evidence the transcript ran to 2,731 pages. It extended to 3,178 pages by the close of final addresses in which counsel spoke to written submissions which ran to 378 pages and five supporting files of authorities At the outset of the trial the court book consisted of 49 lever arch files which contained 18,935 pages. I was also given another arch file which contained the December 1993 agreement and which seemed to comprise several hundred pages at least. When finally tendered at the conclusion of evidence the court book was reduced, by the agreed discarding of thousands of pages, to 28 volumes including [that] containing the pleadings I am, however, left with many thousands of pages or oral and documentary evidence.”

The appeal ran for 10 days and the judgment written by Phillips (with whom the others agreed) was handed down last month.

There was quite a volume of judicial complaint about bringing the appeal at all, apparently because there was so little to recommend it. The way it was fought with the rehearsal of most of the facts that had been at issue in the trial and the numerous grounds it encompassed also made the judges cranky.

Phillips in his judgment, more than once, specifically invited RACV Insurance to apply for indemnity costs. He said:

“What is, I think, surprising, is that the appellant, with a significant worldwide reputation, was prepared to put that reputation on the line, not only during such a long trial but also during the appeal which lasted some 10 days In my opinion, if, as I think it should, this appeal fails and costs are ordered to follow the event, there is at least an argument that they should be ordered on a basis beyond that merely of party and party.”

And:

” it seems to me that this case which has occupied so much time at trial and on appeal, turned upon a set of facts which was largely not in dispute, but that the parties, or perhaps more accurately one of the parties, has been at pains to drag from those facts every conceivable legal point that might be made, no doubt in the hope that somewhere a favourable case would emerge. That is not what I understand the law to be about.

“Let me say immediately, lest I be misunderstood, that I am not critical of counsel on appeal; in particular Mr [Tom] Bathurst, senior counsel for the losing side, was both able in argument and fair in presentation. I would be concerned, however, if it were to transpire that the solicitors for Unisys had allowed their client too much latitude in dictating the course of this extended litigation, even to the point of the client’s requiring, after a comprehensive loss at trial, an appeal which seems to me to have had little to commend it. Certainly the denials made by Unisys and the stand taken by it on some points at trial did little to confine the argument sensibly and much to extend it without, I think, sufficient warrant I am concerned about the amount of court time occupied by this litigation and the vast expense so obviously incurred. For my part, I would be prepared to entertain a submission that, given all the circumstances including the voluminous but in some respects disorganised state of the material on appeal, Unisys should suffer an order for costs on a basis over and above the usual, that of party and party.”

Yet the application for indemnity costs that was so earnestly invited by the court was subsequently dismissed.

Unisys waived privilege and put forward the opinions of three senior counsel who said that the appeal should be pursued and that the prospects of success were reasonable. One was from Bathurst himself, and there was another from a high-flying adornment of the Melbourne Bar & Lounge who advised against the abandonment of any of the grounds of appeal and urged a full investigation of the factual issues.

In the face of this evidence the appeal court retreated from the indemnity costs turf, accepting that there was a proper basis for bringing the appeal. This seems to be at odds with the main thrust of Phillips’ attack on the conduct of the appellant’s case.

The court refused a request to revise those parts of the judgment critical of the appellant for bringing the appeal. The court said that its remarks were conditionally expressed – that the criticism only applied if the appellant had acted without proper advice.

Funny, no one had realised that this meaning was buried deep in the judgment.

Possibly a reason why the appeal did not find favour with the bench was the difficulty it had in hearing it. The proceedings were peppered with interventions from the judges.

In one 20 minute period, while counsel for Unisys was attempting to make oral submissions, the timekeeper reported the following scorecard: counsel three minutes, judges 17 minutes, of which Phillips hogged 13 minutes.

This was not untypical of the entire appeal.

No wonder Victorian judges want pay parity with their federal counterparts, what with all this extra work they’re doing.

Peter Richards v State of New South Wales

Ministerial mouthpiece spins his way into an expensive grovel

imageWhat was shaping up to be an enjoyable little defamation case before Bernard Bongiorno (right) came to a grinding halt after only a day’s hearing.

The well known Melbourne lawyer and business identity Peter Richards, brother to Mark Latham’s chief of staff Mike Richards and brother-in-law to Judge Wilmoth of the County Court, commenced proceedings against the State of New South Wales.

The State of New South Wales was the employer of one Fred Smidt, the press secretary and mouthpiece to the lovely Dick Face, Minister for Gaming and Racing.

In an unrelated development The Independent Commission Against Corruption has today (June 16) recommended Face be charged with corruption for pinching postage stamps and stationery from his electoral office before he retired from parliament.

On August 11, 2002 Smidt briefed Tim Boreham, a business journalist on The Australian, about the NSW government’s attitude to a system of spread betting on tradable instruments operated by a business called IG Index.

While IG Index was perfectly above board and licensed by ASIC under the Financial Services Reform Act as far as the NSW state minister was concerned spread betting was illegal. The position of IG Index was that constitutionally the Commonwealth law prevails over an incompatible state law.

The relevant and most beastly part of the article, at least as far as Peter Richards was concerned, read:

“Only weeks after opening its doors in Australia, the financial spread betting firm IG Index faces a regulatory stoush which could go all the way to the High Court. The heart of the issue is whether the firm, which offers betting on financial products such as shares, market indices and commodities, is governed by state or federal law.

The NSW government claims a firm which is licensed under the Australian Securities and Investment Commission financial services regime has flouted NSW gaming laws by operating in the state. A spokesman for NSW Gaming Minister Richard Face said IG had illegally advertised its services in the state. This was because the firm was not a licensed bookmaker and had not received approval to offer this form of gambling. ‘We have no doubt it is illegal and we have told ASIC,’ the spokesman said.”

Further on the article identified Peter Richards as the executive director of IG Australia.

Interestingly, Richards sued Smidt’s employer, the State of NSW, not the publisher of The Australian.

Richards has spent most of his working life as a lawyer and increasingly large slabs of it as a businessman. He did articles at Gillett Moir & Winneke (now Minties) and worked there as a solicitor for two years. He lawyered for Shell in London and in Australia. In 1983 he went to the bar in Melbourne only to return to soliciting in 1996 where he spent most of his energies on business schemes developing a block of apartments in Hanoi in partnership with the Vietnamese army, construction projects in China and since 2000, after seeing the success of IG Index in London, setting up the setting up the spread betting business in Australia.

As he told the court on reading the article:

“I felt embarrassed and distresses because it attacked my personal integrity It attacked my honesty. It suggested that I was involved with some fly-by-night operator that had total disregard to the law. It attacked my professional competence as a lawyer. It attacked me as a business person and one, I hope, of integrity. I’ve devoted all my adult life to practising law and I would like to think that I honour the law and I respect the law and this suggested very plainly to me that I had no regard for the law. I was very upset by it.”

Just after lunch following the completion of Richards’ evidence in chief, his barrister Will Houghton stood up and announced that the parties had resolved their differences and were seeking orders by consent that the State of NSW pay the costs of the action (to be taxed in default of agreement).

The terms of the settlement involved the payment of a secret amount of damages to the plaintiff.

Rod Weaver for the defendant read an apology, the guts of which said:

“The State of New South Wales now accepts that the assertions made by the spokesman (for the Minister for Gaming and Racing) were inaccurate and are hereby withdrawn. The State of New South Wales sincerely apologises to Peter Gregory Richards for the distress and harm suffered by him.”

Thank you ball boys, thank you linesmen.