Barrow & Ors v National Crime Authority & Anor [2001] QSC 138

SUPREME COURT OF QUEENSLAND CITATION: Barrow & Ors v National Crime Authority & Anor [2001] QSC 138 PARTIES: ALLAN BARROW (plaintiff) WEI YAN YU (second plaintiff) SCOTGEM PTY LTD (ACN 011 057 337) (third plaintiff) SINO PACIFIC AUSTRALIA PTY LTD (ACN 011 046 683) (fourth plaintiff BONDREEF PTY LTD (ACN 068 172 412) (fifth plaintiff) GRAY AND MALONEY (a firm) (sixth plaintiff) KENT HACKER (seventh plaintiff) v NATIONAL CRIME AUTHORITY (first defendant) BRIAN DOBRICH (second defendant) FILE NO/S: SC No 979 of 1995 DIVISION: Trial Division at Brisbane PROCEEDING: Civil Trial ORIGINATING COURT: Brisbane DELIVERED ON: 11 May 2001 DELIVERED AT: Brisbane HEARING DATE: 30 April and 3 May 2001 JUDGE: White J ORDER: The sixth plaintiff pay the defendants’ costs of and incidental to the proceedings including the costs of the separate trial held before Mackenzie J and any other reserved costs to be assessed on the indemnity basis. CATCHWORDS: COSTS - non-active party - Solicitors lending name to proceedings for clients’purposes - allegations of unlawful -- 1 of 17 -- 2 and improper conduct against defendants - failure to withdraw allegations by solicitors - consent orders in favour of defendants - whether costs orders ought be made against solicitors as a party - indemnity costs. Drugs Misuse Act 1986 Crimes (Confiscation of Profits) Act 1989 Drugs Misuse Regulations 1987 Cosgrove v Johns [2000] QCA 157, unreported decision of the Court of Appeal of 5 May 2000 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 COUNSEL: Ms E Wilson (on 30 April 2001) for first to fifth and seventh plaintiffs Mr P Janssen (solicitor) for sixth plaintiff Mr D Boddice for first and second defendants Mr G Robinson was present in Court on 3 May 2001 but did not seek leave to appear for Robertson O’Gorman. SOLICITORS: Robertson O’Gorman for first to fifth and seventh plaintiffs Nicholsons for sixth plaintiff Australian Government Solicitor for first and second defendants [1] The trial of this proceeding was listed to commence on 30 April 2001. When the matter was called the representatives of the parties had reached agreement and handed up orders which, relevantly for this application, were made in the following terms: “THE COURT: 1. Declares that all documents the subject of these proceedings were lawfully seized by officers of the first defendant, including the second defendant, on 11 April 1995 pursuant to the warrant issued by Stipendiary Magistrate Cornack on 10 April 1995. 2. Declares that the documents listed … are not the subject of legal professional privilege … 3. Orders that the Registrar: (a) deliver the documents listed … to the solicitors for the plaintiffs, who shall furnish to the Registrar a receipt for such documents. -- 2 of 17 -- 3 (b) deliver all other documents the subject of this action which are held by him to the solicitors for the defendants, who shall furnish to the Registrar a receipt for such documents. 4. Orders that the plaintiffs (other than the sixth plaintiff) pay the defendants’ costs of and incidental to the proceeding, including the costs of the separate trial held before Mackenzie J, and any other reserved costs, such costs to be agreed or, failing agreement, to be assessed, on an indemnity basis.” [2] Mr P Janssen, solicitor, who appeared for the sixth plaintiff, a firm of solicitors (Gray & Maloney) which ceased to exist on 30 June 1996 wished to make submissions as to why no order as to costs ought to be made against those solicitors or, alternatively, if made, that costs should be assessed only on the standard basis. A suggestion was raised in material upon which Mr Janssen wished to rely that the first to fifth and seventh plaintiffs’ solicitors (Robertson O’Gorman) had joined Gray & Maloney as a plaintiff in the action without instructions. Those solicitors wished to be separately represented in the event that submissions were to be made that adverse orders ought to be made against them. The further hearing of submissions on behalf of the sixth plaintiff was adjourned to 3rd of May. [3] On the adjourned hearing Mr G Robinson of counsel indicated that he would seek leave to appear for Robertson O’Gorman solicitors if it became necessary to do so. In the event he concluded that it did not. Background [4] The first plaintiff (“Barrow”) was the subject of a large scale amphetamine production, drug trafficking and associated money laundering investigation by the first defendant (“the NCA”). Barrow was arrested and charged with various drug offences pursuant to the Drugs Misuse Act 1986 upon the execution of a search warrant at commercial premises at Doggett Street, Newstead on 8 February 1995. He has since been convicted after a trial and sentenced to a lengthy term of imprisonment. [5] As a consequence of documents seized at the Doggett Street premises, certain financial investigations and co-operation by his co-accused, Donald Andrew Vinall, the NCA became aware of links between Barrow, the second plaintiff, Wei Yan Yu, who is Barrow’s de facto wife and the third and fourth plaintiffs which were companies associated with them, and extensive money laundering. The fifth plaintiff was a company controlled by Barrow. The NCA became aware that the sixth plaintiff acted for the first to fifth plaintiffs in various commercial activities. The seventh plaintiff was the accountant for the first to fifth plaintiffs. [6] The second, third and fourth plaintiffs became respondents to proceedings brought by the Director of Public Prosecutions pursuant to the Crimes (Confiscation of Profits) Act 1989. -- 3 of 17 -- 4 The search warrant [7] Information about the execution of the search warrant is taken from the affidavit of Brian Dobrich filed on 16 March 2000. No contradictory version has been produced or filed on behalf of any of the plaintiffs. [8] On 10 April 1995 a Stipendiary Magistrate issued a search warrant pursuant to s 18 of the Drugs Misuse Act 1986 for the premises of the sixth plaintiff in Brisbane on the complaint of the second defendant, a member of the Australian Federal Police seconded to the NCA (“Dobrich”). [9] The warrant described the items to which the search warrant attached as consisting of “All files including but not limited to all instructions, correspondence, computer records, documents prepared for, trust account records, receipts, ledgers, memoranda of fees, file notes, records of meetings and discussions relating to the following: Donald Andrew VINALL Garry David MAGUIRE Allan BARROW Scottgem Pty Ltd Graphic Glass Queensland Sino Pacific Australia Pty Ltd Mediator Investments Pty Ltd Longmire Investments Pty Ltd Bondreef Pty Ltd Wei Yan YU Any documents or other material held on behalf of: Donald Andrew VINALL Garry David MAGUIRE Allan BARROW Scottgem Pty Ltd Graphic Glass Queensland Sino Pacific Australia Pty Ltd Mediator Investments Pty Ltd Longmire Investments Pty Ltd Bondreef Pty Ltd Wei Yan YU.” The warrant contained the following notation: “The powers conferred by this warrant do not extend to documents in respect of which legal professional privilege attaches and is maintained in accordance with the doctrine of legal professional privilege.” [10] The search warrant was executed on 11 April 1995 at the premises of the sixth plaintiff by Mr Dobrich in company with another NCA investigator. When -- 4 of 17 -- 5 Mr Dobrich arrived at 10.00 a.m. Stephen Gray, a partner in the firm, was present. He advised that an employed solicitor, John Duncan, who was not then present but who would shortly return, had knowledge of the matter but that he did not. Mr Dobrich advised Mr Gray that he would return with the search warrant in about 30 minutes. At 11.10 a.m. Mr Duncan had not returned and Mr Dobrich told Mr Gray that he would execute the search warrant and gave Mr Gray the “occupiers notice”. Mr Gray showed Mr Dobrich and his companion into a boardroom and provided some documents from 1992 relating to Barrow. He said he was unaware if a privilege claim was to be made in respect of those documents. Mr Dobrich advised Mr Gray that he would wait until Mr Duncan returned and, in the meantime, deposes that he did not look at the documents. [11] At 1.00 p.m. Mr Duncan returned and was shown a copy of the search warrant. He indicated that Mr Terry O’Gorman, a principal of Robertson O’Gorman, was acting on behalf of Barrow in the criminal proceedings and that he would need to consult with him. [12] Mr Duncan returned and advised that legal professional privilege would be claimed in respect of all the documents the subject of the warrant and that Mr O’Gorman would be attending. Mr Dobrich and the other NCA investigator waited in the boardroom. [13] Mr O’Gorman arrived at 1.30 p.m. and was shown a copy of the search warrant. He stated that there would be a claim of legal professional privilege in respect of all the documents. In conformity with guidelines which had been agreed between the Law Council of Australia and the Australian Federal Police Mr Dobrich and Mr O’Gorman agreed that all items the subject of the search warrant were to be secured and lodged with the Registrar of the Supreme Court in Brisbane. [14] The investigators remained in the boardroom while Mr O’Gorman and Mr Duncan attended to locating the documents. Mr Duncan returned with three boxes of documents which he and the other investigator sealed. Mr Duncan undertook that all the documents the subject of the search warrant were in the sealed boxes. Mr Dobrich suggested that all the items in the boxes should be listed but Mr O'Gorman stated that this would not be possible because of the great number of documents. Mr Dobrich deposes that at no time did he or the other investigator search for documents or look at any of the documents produced. [15] Mr O’Gorman left the premises at 2.20 p.m. and one of his employees and the two NCA investigators took the three sealed boxes and lodged them with the Registrar and obtained a receipt. [16] On 12 April 1995 Mr Duncan provided further documents the subject of the search warrant and he and Mr Dobrich lodged those documents in a sealed envelope at the court. [17] On 2 June 1995 the plaintiffs, who were represented by Robertson O’Gorman, issued a writ seeking declarations that the seizure of documents from Gray & Maloney’s premises particularised in Schedules A and B to the writ were unlawfully seized on two grounds, namely, that the Schedule A documents were not authorised by the terms of the search warrant and that the Schedule B documents -- 5 of 17 -- 6 were the subject of legal professional privilege. In the alternative a claim was made that to the extent that the seizure of the documents and things referred to in the schedules was authorised by the search warrant, the search warrant was invalid. Interlocutory orders were sought about the documents. The claims were not out of the ordinary, but the relief sought was. The plaintiffs other than the sixth plaintiff claimed: “(a) Damages (including exemplary, aggravated and punitive damages) for: (i) Trespass de bonis asportatis; (ii) Further or alternatively, detinue; (iii) Further or in the further alternative, trover and conversation; (iv) Further or in the further alternative, conspiracy to effect an unlawful purpose; (v) Further or in the further alternative, conspiracy to effect a lawful purpose by unlawful means; (vi) Further or in the further alternative, procuring a breach of contract; and (vii) Further or in the further alternative, breach of statutory duty; (b) Compensation in equity for: (i) Breach of fiduciary duty; and (ii) Further or in the alternative, misuse of confidential information; and (c) Interest, … ” [18] The statement of claim recited the charges against Barrow, the relationship between the plaintiffs including that the first to fifth plaintiffs were the professional clients of the sixth plaintiff. Paragraph 13 of the statement of claim alleged that “in purported execution of the search warrant Dobrich and other NCA officers seized and carried away” the Schedule A and B documents and things. Paragraph 14 alleged that this occurred “without the licence, permission or consent of the plaintiffs”. [19] Paragraphs 15 to 18 made allegations about the lawfulness of the seizure and paragraphs 19 to 21 concerned assertions which would found a claim for damages for trespass, detinue and conversion. [20] Then follows a heading, “Conspiracy”. Paragraph 22 alleged -- 6 of 17 -- 7 “At the time when the Schedule A documents and the Schedule B documents were seized and carried away as aforesaid: (a) Dobrich and the other NCA officers well knew that the same comprised or included documents and things which they had no lawful right or authority to seize and carry away; and (b) Either: (i) Deliberately chose to seize and carry away the said documents with the knowledge aforesaid; or (ii) Proceeded with reckless indifference to the rights and interests of the Plaintiffs. 23. In the premises, Dobrich and other NCA officers conspired together to effect the following unlawful purposes: (a) To prevent the solicitors from providing legal advice, in the course of the solicitors’ practice, to [first to fifth plaintiffs]; (b) To prevent Hacker from giving lawful advice as an accountant to each of [the first to fifth plaintiffs]; (c) To prevent or frustrate Barrow’s obtaining full and comprehensive legal advice concerning the charges; (d) To prevent or frustrate the following parties obtaining legal and accounting advice in connection with proceedings brought against them under the Crimes (Confiscation of Profits) Act 1989; [the first to fourth plaintiffs]; (e) To obtain unlawful access to information of a confidential nature, being information contained in; (i) Communications brought into being solely for the purpose of conveying or recording legal advice of a confidential character between the solicitors and their said clients; (ii) Documents and things brought into being solely for the purpose of pending proceedings, namely the charges against Barrow; and -- 7 of 17 -- 8 (iii) Documents and things brought into being solely for the purpose of pending proceedings, namely proceedings under the Crimes (Confiscation of Profits) Act 1989 against [the first to fourth plaintiffs].” [21] Paragraph 24 alleged “Further and in the premises, Dobrich and the other NCA officers conspired together to effect the following lawful purposes by unlawful means: (a) To obtain information which may assist in the prosecution of proceedings under the Crimes (Confiscation of Profits) Act 1989 against [the first to fourth plaintiffs]; and (b) To obtain evidence which will or may establish a foundation for instituting proceedings under the Crimes (Confiscation of Profits) Act 1989 against [the fifth plaintiff] and other persons or entities against whom such proceedings have not yet been instituted.” [22] Paragraph 25 alleged that the conduct of the defendants in seizing and carrying away the documents and things was to prevent or frustrate the provision by the solicitors of legal advice and services in accordance with the terms of their engagement. Similar allegations were made with respect to the seventh plaintiff, the accountant. The defendants were thereby alleged to have induced a breach of contract by the sixth and seventh plaintiffs. [23] Paragraph 28 refers to the Drugs Misuse Regulations 1987 which provide that nothing other than the things mentioned in a search warrant may be seized unless found by a police officer while executing the search and the officer reasonably believes that it would afford evidence as to the commission of an offence or may be liable to forfeiture. The plaintiffs alleged that a statutory duty was thereby imposed upon those executing the search warrant so that the seizure and carrying away of the documents constituted a breach of statutory duty by the defendants. [24] In paragraph 3 of the defence the defendants, in effect, gave their account of what occurred on the execution of the search warrant at the sixth plaintiff’s premises on 11 April 1995. [25] The plaintiffs repeated the allegations of unlawful conduct in the statement of claim in their reply delivered on 31 July 1995. Paragraph 3(c) alleged “… for the reasons pleaded in the Statement of Claim, the conduct of the Second Defendant and another officer or officers of the First Defendant on 11 April 1995, after they entered the solicitors’ office, did not constitute execution of the search warrant, but was unlawful conduct which they committed in purported or pretended execution of the search warrant.” -- 8 of 17 -- 9 Knowledge and involvement in these proceedings by sixth plaintiff [26] Mr Gray was a principal of the sixth plaintiff until it ceased to exist on 30 June 1996 whereupon he became and continues to be a partner in the firm Nicholsons Solicitors. Mr Gray deposes that the sixth plaintiff only became involved in the present litigation because of a request from Robertson O’Gorman on, it would appear, the advice of senior counsel, Mr A J H Morris QC, who settled the statement of claim. [27] Mr Gray on Mr O’Gorman’s advice spoke to Mr Morris who, it can be inferred, gave some oral explanation to Mr Gray as to why his former firm needed to be a party to the proceedings. It is not clear from Mr Gray’s affidavit or Mr Morris’s opinion whether this conversation occurred before the dissolution of the sixth plaintiff. However some communication must have occurred prior to the delivery of the statement of claim because it was amended to exclude the sixth plaintiff as a claimant for damages at Mr Gray’s request. Mr Gray has exhibited Mr Morris’s advice dated 4 September 1996 to his affidavit sworn on 26 April 2001. [28] Mr Morris sets out the history of the matter between himself and Mr Gray and, to a lesser extent, Mr O’Gorman. He confirmed to Mr Gray that it had been and was his advice that the sixth plaintiff be joined in the action because ß documents concerning Barrow and his companies were seized from the offices of Gray & Maloney in whose lawful possession they were; ß some documents probably were the property of Gray & Maloney (eg, file notes) and not of Barrow and his companies; ß a cause of action based on trespass to goods is based on unlawful interference with possession not ownership; ß although a cause of action based on conversion is concerned with issues of ownership since some of the documents relating to Barrow and his companies were owned by the firm there could not be a comprehensive action unless the firm joined in the action; ß there were too many documents to isolate those which belonged to Barrow or his companies, and, in any event, there would be “grey” areas; ß only Gray & Maloney could maintain an action in respect of all of the documents seized, that is, an action based on possessory rights. Mr Morris therefore concluded that Gray & Maloney was an essential rather than merely a convenient party to the proceedings. [29] Mr Morris recorded in his advice that Mr Gray had expressed a desire to avoid being involved in the proceedings if at all possible but accepted, it would seem -- 9 of 17 -- 10 largely on Mr Morris’ advice, that Gray & Maloney owed a duty to the clients to assist them in protecting the confidentiality of privileged documents in the firm’s possession. [30] Mr Morris noted that Mr Gray had “very forcefully expressed the view” that Gray & Maloney should not in any way involve itself in a claim for damages or other substantive relief and that the only involvement should be that of recovering possession of the seized documents. Mr Morris apparently redrafted the pleadings to give effect to this direction. [31] There is some reference in Mr Morris’s opinion to Gray & Maloney being indemnified as regards costs. What the arrangement, if any, was between Mr Gray on behalf of Gray & Maloney and Mr O’Gorman on behalf of the other plaintiffs or Robertson O’Gorman is not an issue for resolution on this hearing. Neither is the question of whether the proceedings were instituted in the name of Gray & Maloney as a joint plaintiff without the authority of Mr Gray. [32] Mr Gray deposes that it was not until about 15 February 2001 that he “saw or read” “so far as [he could] recall” the statement of claim. He deposes that he has not seen the defence or reply. This may be a careful use of language by Mr Gray because it is clear that he was aware prior to September 1996 of the allegations of serious misconduct made against the defendants in the statement of claim including by the sixth plaintiff. In a section headed “Correspondence from the Australian Government Solicitor” in Mr Morris’s advice, Mr Morris wrote that he had read the correspondence “which you [Stephen Gray] have made available to me”. There can be no doubt that Mr Gray had read that correspondence. Mr Morris made reference to a paragraph in a letter from Mr M Hanson, of the Australian Government Solicitor’s office who has had the carriage of this action, dated 25 July 1996 to Mr Duncan, then at Nicholsons. Mr Duncan had earlier expressed some concern to Mr Hanson about the sixth plaintiff’s liability for the costs of the action and in a letter of 19 July 1996 had reiterated that the sixth plaintiff was reluctantly in the proceedings on senior counsel’s advice and noted that as long ago as March 1996 the sixth plaintiff had indicated that it wished to withdraw from the action without any costs penalty. [33] Against that background Mr Hanson had written “I note that you assert your firm was joined as a Plaintiff of convenience. However, it was a party to the claims in paragraphs 1, 2 and 3 of the Writ and the allegations contained in paragraph 19 post of the Statement of Claim, including allegations that the Second Defendant and other officers of the First Defendant; (i) committed trespass; (ii) sought to remove documents to which your firm was lawfully entitled; (iii) converted the documents to their own use unlawfully; -- 10 of 17 -- 11 (iv) chose to seize documents to which they had no lawful right to; (v) (conspired together to affect various unlawful purposes including preventing the First Plaintiff, Mr Barrow, obtaining legal advice concerning charges and other proceedings and to obtain information of a confidential nature and information to which they were not lawfully entitled. It is clear that although your firm was excluded from the claim for damages and other relief, it remains a party to serious allegations against officers of the First Defendant.” [34] Mr Hanson enclosed a copy of the defence and the plaintiffs’ reply and added “You might care to reflect upon the allegations made by my clients in paragraphs 3(c) and (d) of the Defence and the denial of those matters by the Plaintiffs in paragraph 4 of the Reply. My clients follow the Law Society arrangements in these matters and do not deserve the perpetuation of these false allegations.” He continued “I note your assertion that you did not see the pleadings before they were issued. If the pleadings do not reflect your instructions to Messrs. Robertson O’Gorman, solicitors, then my clients would be pleased to be further informed about that matter. If that is the case, then you should file relevant material in the Court recanting any such allegations and explaining to the Court how those allegations came to be made.” [35] Mr Morris (after some observations about the Spanish Inquisition) observed to Mr Gray of Mr Hanson’s letter “I should have thought it perfectly adequate for you to swear an Affidavit deposing to the true position, namely that the proceedings were instituted by Messrs. Robertson O’Gorman without your authority; that you did not instruct Messrs. Robertson O’Gorman to make the allegations contained in the Statement of Claim or in the Reply; and that you do not make, and have never made, the allegations against the NCA or its officers to which Mr Hanson takes exception.” [36] Mr Morris turned to the question of costs. He observed that it appeared from Mr Hanson’s correspondence that the NCA “may be prepared to release your firm from any claim for costs, if you file an Affidavit explaining that proceedings were instituted without your instructions, and if you “recant” of the allegations to which Mr Hanson takes objection.” -- 11 of 17 -- 12 [37] In the letter of 25 July Mr Hanson could have left the sixth plaintiff in no doubt of the defendants’ view on the withdrawal by the sixth plaintiff from the proceedings and its liability for costs. “Our discussions of 28 March 1996 made clear that I would seek instructions from my clients concerning the withdrawal of the Sixth Plaintiff and the issue of costs, solely on the basis that the principle Plaintiff agreed to abandon the action … I advise that my client will be seeking to have this action struck out for want of prosecution and an award of costs against the plaintiffs, including the Sixth Plaintiff.” [38] Notwithstanding the contents of Mr Hanson’s letter and Mr Morris’s advice, no step was taken by the sixth plaintiff to disassociate itself from the allegations of impropriety. This is the more surprising because neither Mr Gray nor Mr Duncan could have conscientiously made or allowed to continue to be made the allegations of fact about improper conduct on the execution of the search warrant in the statement of claim and defence because, between them, they were present for the entire period. [39] Mr Gray deposes that he was, to a large extent, kept in ignorance of the progress of the action during the interlocutory steps. But from time to time there was communication between Mr Duncan and the Australian Government Solicitor about various mentions and directions hearings and whether the sixth plaintiff needed to be present. On 5 November 1996 Mr Barry Cosgrove, a principal solicitor with the Australian Government Solicitor, wrote to Mr Duncan noting Mr Duncan’s appearance on a summons for direction on 9 August 1996 and the further hearing on 4 November 1996 on which Mr Duncan did not, it seems, appear. Mr Cosgrove informed Mr Duncan that the Chamber Judge (Thomas J) had expressed concern that when Robertson O’Gorman filed a notice of ceasing to act they had nominated Mr Barrow as acting on his own behalf and on behalf of each of the plaintiffs, having regard to the fact that the sixth plaintiff was a firm of solicitors and the seventh an accountant. Mr Cosgrove wrote that the hearing was further adjourned until 7 November when it was expected that Robertson O’Gorman “may seek the Court’s leave to withdraw”. Mr Cosgrove enclosed all of the material which the Australian Government Solicitor had either filed or received since Robertson O’Gorman’s notice of ceasing to act dated 27 February 1996 was filed together with a copy of orders which were currently being sought by the defendants. Nicholsons then filed and served a notice of authorisation to act as solicitor for the sixth plaintiff. [40] On 19 November 1996 Nicholsons wrote to the Australian Government Solicitor enclosing a notice of discontinuance on the basis that the defendants would not seek any order for costs against the sixth plaintiff. The defendants did not agree with this proposal. [41] So far as can be ascertained from the material presently before the court nothing further concerning the sixth plaintiff occurred for approximately three years. On 8 September 1999 the Australian Government Solicitor served an application on the sixth plaintiff at Nicholsons seeking orders that the plaintiffs file and serve a list of -- 12 of 17 -- 13 matters in dispute in the action and outlines of argument on or before 30 September 1999 and an order that the plaintiffs pay the costs of the application. [42] Mr Gray responded on 8 September 1999 setting out his best recollection of the history of the matter adding that the sixth plaintiff would not oppose the application and “that Gray & Maloney (represented by the sole surviving partner, Mr Gray), do not intend to oppose nor wish to oppose your application except that we object to an Order that Gray & Maloney pay any costs. You are aware Gray & Maloney had no carriage of the action, from our discussion, and we note that you agreed you would not be seeking such an Order against Gray & Maloney … If you feel the need would you please bring it [this letter] to the attention of the court.” [43] Mr Gray wrote again to the Australian Government Solicitor on 10 September 1999 concerning the application for directions stating that he had very little recollection of the matters in issue, that he would attempt to see if there were any other relevant documents but that since Mr Duncan no longer worked at Nicholsons it may prove difficult. He concluded “In the circumstances, we note that you agreed that if we did not appear, you would seek no order for costs against this firm or Gray & Maloney. On that basis, we will not instruct, nor will we appear, as we have no objection to the orders you request of the parties who have the carriage of the action.” Mr Gray in para 27 of his affidavit of 26 April 2001 seems to be under the impression that that arrangement was “not to seek Costs Orders against the firm of Nicholsons or Gray & Maloney in relation to the proceedings”. It is clear on a reading of the contemporary correspondence that the references were to the costs of the application for directions. [44] At the same time, in early September 1999, the Australian Government Solicitor prepared a notice of discontinuance which was executed by the sixth plaintiff. Nicholsons noted that the Australian Government Solicitor would procure the other plaintiffs’ signatures to the discontinuance as required by the UCPR and would forward the original for execution in due course. Mr Hanson deposes that Mr Bosscher of Ryan & Bosscher was unable to procure the consent of the other plaintiffs to the release of the sixth plaintiff and the matter proceeded no further. The sixth plaintiff made no inquiry of the Australian Government Solicitor as to the fate of the notice of discontinuance and neither did the Australian Government Solicitor communicate with Nicholsons that they had been unable to procure the other plaintiffs to execute the notice. [45] Mr Gray deposes that the sixth plaintiff relied upon “… the representations from the Crown including the preparation and signing of a Notice of Discontinuance by them in September 1999, that there would be no exposure of the old firm, Gray & Maloney, nor this firm to a potential Costs Order at the -- 13 of 17 -- 14 behest of the Crown and so did not seek to bring on an application earlier to have leave of the Court to withdraw and discontinue.” [46] On 17 February 2000 Nicholsons wrote to the Australian Government Solicitor “On 8 September 1999, I sent to you, by facsimile, an executed Notice of Discontinuance. You had previously noted, and we have accepted, that the discontinuance is subject to the consent of all parties or the leave of the Court. If you have been unable to procure the consent of the other parties by the time of trial, I intend to appear and seek leave of the Court to discontinue the action.” [47] That Mr Gray could have been under no misapprehension about the attitude of the defendants to the question of costs orders being sought against the sixth plaintiff is clear in a letter from Nicholsons to the Australian Government Solicitor of 2 April 2001. “Our client has endeavoured on several occasions to discontinue its part in the action; however, your client has declined to consent, citing its possible seeking of recourse against all Plaintiffs with respect to costs.” After setting out the basis upon which the sixth plaintiff was involved in the action the following appears “We formally invite your client’s consent to our client’s cessation as a co-Plaintiff forthwith; on that basis G & M will bear its own costs. In any event, we intend seeking an order that the Sixth Plaintiff be given leave to withdraw from the proceedings, as a preliminary aspect at (or prior to) the trial.” In compliance with UCPR 444 the sixth plaintiff gave notice that “… in the event that it must bring this Application … ” it would seek orders that the sixth plaintiff be given leave to withdraw from the action and that the defendants should pay the sixth plaintiff’s costs of and incidental to the application and the action. [48] The Australian Government Solicitor responded in detail on 26 April 2001. Attention was drawn to the failure by the sixth plaintiff to recant the allegations of impropriety in which it had joined in the statement of claim and that all plaintiffs had sought declarations as to the unlawfulness of the seizure and a mandatory injunction to deliver up the documents and to restrain the defendants from otherwise inspecting the documents. [49] The sixth plaintiff was reminded that the defendants had no power to grant a discontinuance of the action to the sixth plaintiff either pursuant to the previous Supreme Court Rules - Order 30 - or UCPR 304. The court’s leave or the consent -- 14 of 17 -- 15 of all parties was necessary. Mr Gray’s involvement in the execution of the search warrant as outlined in the affidavit of Mr Dobrich filed on 16 March 2000 was mentioned. Mr Duncan was said to have filed two substantial affidavits in the action on behalf of the plaintiffs. It was said to be inappropriate for the sixth plaintiff to seek discontinuance without withdrawing the allegations of unlawful and improper conduct against the defendants and attempting to assist in determining the truth of the matter. Mr Hanson contended that the joinder of a firm of solicitors as a plaintiff “lent credence to what would otherwise have been allegations of those principally involved in the production and sale of amphetamines”. The sixth plaintiff was put on notice that indemnity costs would be sought. [50] Mr Gray, finally, recanted the allegations advanced on behalf of the sixth plaintiff in the Statement of Claim in paras 19 and 20 of his affidavit sworn on 26 April 2001. “I state that Gray & Maloney did not instruct Messrs. Robertson O’Gorman to make the specific allegations contained in the Statement of Claim or in the Reply, and that I and my firm did not make, do not make, and never have made, the allegations against the NCA or its officers to which Mr Hanson of the Crown takes exception. To the extent to which the pleadings implicate myself as a principal, or the firm of Gray & Maloney in allegations that the NCA or its officers acted with anything other than propriety is extremely regretted by me and I recant from that proposition categorically. I also say that I did not realise the full text of the pleadings and that the first time that I read them was this year in February, 2001 Ought costs be awarded against the sixth plaintiff [51] Since costs are in the discretion of the court, Mr Janssen submits that both as a matter of fairness and because the Australian Government Solicitor lead the sixth plaintiff to believe, at least since September 1996, that it would not pursue costs against it, there ought to be no order as to costs made against the sixth plaintiff. [52] Serious allegations of impropriety and unlawful conduct were made against defendants by all the plaintiffs in the statement of claim delivered on 2 June 1995. Even if Mr Gray did not peruse that pleading until February 2001 he was well aware from the time of Mr Hanson’s letter dated 25 July 1996 directed to Mr Duncan at Nicholsons of the detail of the allegations that were made against the defendant. Mr Duncan, as an employed solicitor of the sixth plaintiff actively managed the file and there is no suggestion that he had not read the pleadings. It is clear that Mr Gray had read Mr Hanson’s letter prior to 4 September 1996 because Mr Morris refers to it in detail in his advice and Mr Gray had provided it to him. The letter also exhibited the defence and reply. Both the letter from Mr Hanson and the advice from Mr Morris ought to have caused Mr Gray to obtain a copy of the statement of claim if he still had any doubt as to what it contained by way of allegations made in the name of the sixth plaintiff against the defendants. Not to have done so, whilst expressing lack of knowledge, is puzzling, to say the least. -- 15 of 17 -- 16 [53] The strongly expressed views of the defendants through Mr Hansons’s letter of 25 July 1996 together with Mr Morris’s written advice made clear what needed to be done to extricate the sixth plaintiff from the action. As any solicitor knows, from the moment the sixth plaintiff’s name appeared on the pleadings its exposure to orders for costs should the plaintiffs be unsuccessful was obvious. No doubt that knowledge prompted Mr Gray to have discussions, as he deposes, with Mr O’Gorman as to any costs associated with Gray & Maloney being a plaintiff. [54] The sixth plaintiff through Mr Gray and Mr Duncan could not have thought that the allegations of impropriety made in its name against the defendant were true. Those allegations were unnecessary to protect any claim to legal professional privilege. [55] The sixth plaintiff has also submitted that the defendants are precluded from seeking costs against it because they lulled it into a false sense that costs would not be sought against it if it did not participate in or obstruct the progress of the action. That there was no basis for this view is apparent from the material which has been discussed. [56] It is clear from Mr Gray’s affidavit that the sixth plaintiff supports the declarations made in the order of 30 April 2001. No cogent reason has been advanced as to why the defendants ought be deprived of an order for costs against all the plaintiffs. Ought costs be awarded on an indemnity basis [57] The court has power to award costs to be assessed on an indemnity basis, UCPR 704. As Thomas JA observed in Cosgrove v Johns [2000] QCA 157, unreported decision of the Court of Appeal of 5 May 2000, some unusual circumstances are required to warrant the court departing from the ordinary consequence for an unsuccessful party that an order to pay costs is to pay on the standard basis of assessment (formerly party and party costs). His Honour noted that the categories in which the discretion may be exercised are not closed. He referred to the relevant principles which were expressed by Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. In that case his Honour noted at p. 233 particular instances where the discretion in favour of indemnity costs had been exercised “… the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata)”. [58] . Mr Janssen did not submit that there should be a different approach and referred to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (a case referred to by Sheppard J) where Woodward J said that it was appropriate to consider awarding indemnity costs -- 16 of 17 -- 17 “… whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such a case as the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.” [59] It is difficult to understand why the allegations were made in the Statement of Claim other than for the improper purpose of delaying access to those documents and thereby attempting to stifle or stall the prosecution of Barrow and the second to fourth plaintiffs. It was otherwise a straightforward case of a claim for legal professional privilege in respect of certain documents which could have been disposed of promptly. [60] Mr Gray in consultation with Mr Duncan, who remained with Nicholsons for a considerable time after the sixth plaintiff ceased to exist, could have brought the true issue to resolution years before and thereby saved considerable costs. As Mr Hanson wrote to the sixth plaintiff in April this year, by continuing to allow the name of the sixth plaintiff to remain on the pleadings credence was lent to the allegations made by the first to fifth plaintiffs. [61] The facts and circumstances of this matter are such that it is appropriate that the sixth plaintiff be ordered to pay indemnity costs. Ought the first to fifth plaintiffs indemnify the sixth plaintiff [62] It must be assumed that Robertson O’Gorman acted on the instructions of the first to fifth plaintiffs in giving instructions to Mr Morris QC to draw the statement of claim in the way in which he did. Had the first to fifth plaintiffs been prepared to agree to the sixth plaintiff discontinuing as a party to the proceedings then the sixth plaintiff’s exposure to costs orders would have been less although it is hard to say if they would have been significantly less since it was not until September 1999 that a notice of discontinuance was finally prepared. On the other hand, there is no evidence that the sixth plaintiff made any attempt to negotiate with the first to fifth plaintiffs’ solicitors over this matter when it became apparent that the other plaintiffs would not consent to the sixth plaintiff’s withdrawal. Knowing the true facts of what had occurred when the search warrant was executed, it is not as if the sixth plaintiff was merely a passive participant in the process. I am not prepared to order that the first to fifth plaintiffs indemnify the sixth plaintiff in respect of the costs of the action. [63] The order is that, in addition to the order about costs made on 30 April 2001 the sixth plaintiff pay the defendants’ costs of and incidental to the proceedings including the costs of the separate trial held before Mackenzie J and any other reserved costs to be assessed on the indemnity basis. -- 17 of 17 --