Brand v Monks

On 21 December 2009 I handed down judgment in proceedings brought by Mr and Mrs Brand against Dr Monks, a consultant who had been engaged by them to prepare and submit to their local council a development application for subdivision of land they owned in Copacabana. Mr and Mrs Brand had sought relief on a variety of causes of action: breach of contract, breach of alleged fiduciary obligations and breach of s 43 of the Fair Trading Act 1987. I dismissed each of the plaintiffs’ claims and listed the matter for submissions in relation to costs on 3 February this year.

Mr and Mrs Brand, by notice of motion filed 4 January 2010, as amended by Amended Notice of Motion filed 29 January 2010, then applied pursuant to Pt 35 r 15 and/or r 16 of the Uniform Civil Procedure Rules (presumably referring to Pt 36 r 15 and/or r 16) for an order that the proceedings be re-opened and that the judgment be set aside and/or quashed. On 10 February 2010 I heard that application. At the outset of that hearing, Senior Counsel for Mr and Mrs Brand (Mr Jacobs QC), who had appeared for them at the hearing in 2009, indicated (in response to a query I had earlier raised) that the application for re-opening was limited to Mr and Mrs Brands’ claim in relation to the alleged unconscionable conduct. Thus, despite the breadth of the relief sought in the Amended Notice of Motion, the only part of the judgment which Mr and Mrs Brand now seek to have set aside or quashed is that dealing with their s 43 claim.

At the hearing of the Amended Notice of Motion, Mr Jacobs also sought an extension of time, pursuant to Pt 51.16(2) of the Uniform Civil Procedure Rules for the filing of a notice of appeal in respect of the judgment handed down last year. The reason for the extension, as I understand it, is that no notice of intention to appeal was filed within 28 days of entry of judgment in this matter for a combination of reasons, including uncertainty as to the material date from which time was to run; the time involved in considering the present application; and that there had been a change of solicitor acting for Mr and Mrs Brand in that period due to the retirement of the solicitor who had had the carriage of the proceedings before me. The application for an extension of time is not opposed by Dr Monks.

I note that the factors relevant to the exercise of discretion in this regard include the reason why the appeal was not lodged within time (including whether there has been a mistake or misapprehension or omission, as seems to be suggested is at least partly the case here, on the part of the appellant’s legal advisers) and where the extension is sought only for a small period and the delay has not caused relevant prejudice to the respondent. There was no suggestion of any prejudice to Dr Monks by a short extension of the period within which notice of appeal could be filed. Accordingly, I propose to extend the time in this regard by a period of 14 days from the date of this judgment.

Also heard at the time of hearing of the plaintiffs’ Amended Notice of Motion were the respective parties’ submissions in relation to the costs of the proceedings. I will deal with those after I have addressed the motion to re-open the case. Application to re-open and set aside judgment in relation to unconscionable conduct claim

The application to re-open and set aside judgment in relation to the unconscionable conduct claim arises, broadly, from the way in which Mr and Mrs Brand (or their legal advisers) chose to plead their case. I set out the history of the pleading of the s 43 claim in paragraphs 13-30 and 392-434 of my reasons for judgment and I do not repeat those matters here. Suffice it to say that the pleading (described, in my view fairly, by Mr Faulkner as convoluted and prolix) was hardly a model of virtue (even if not of cimmerian obscurity, to borrow the words of Lockhart J in A and S Oayda Investments Pty Limited v Burns Philp Trustee Company Limited (In Liquidation) (unreported, Federal Court, 25 November 1994)).

Paragraph 11.2 of the Further Amended Statement of Claim in which the allegation of breach of s 43 is to be found, limited this to the “conduct” set out in paragraphs 3.1 and 3.2 of the Further Amended Statement of Claim. Those paragraphs were restricted to the making of certain disclosures to the Council. There were, however, references (in particulars purportedly provided of various parts of the pleading) to the fact that Dr Monks had not informed Mr and Mrs Brand of the disclosure(s) made by her (and/or a consultant working with her) to the Council in relation to certain clearing activities on Mr and Mrs Brand’s land, as well as to the fact that Dr Monks had continued (after the time at which the disclosures were made) to perform work for and accept fees from Mr and Mrs Brand. There was also evidence in relation to those matters. For convenience, I will refer in these reasons to this conduct as the “non-disclosure conduct”.

I concluded that the non-disclosure conduct had not been pleaded as part of the s 43 unconscionable conduct claim and that Dr Monks had not acquiesced in an expansion of the issues in the case to include a case beyond the pleadings in this (or any other) regard. In those circumstances, as a matter of procedural fairness I made no finding in relation to the non-disclosure conduct. I did, however, express the view that had the non-disclosure conduct been pleaded then I would have been inclined to see it as unconscionable (though noting that this view would have been subject to any evidence which might have been adduced in relation thereto).

The particular passages of my judgment that Mr Jacobs identified as having given rise to the present application are to be found in paragraphs 399 and 427, as follows: [399] Significantly, however, the conduct allegedly giving rise to the contravention of s 43 is pleaded in the Further Amended Statement of Claim in paragraphs 3.1 and 3.2 (namely the disclosures to the Council and conduct related thereto alleged criminal conduct and urging the Council to prosecute Mr Brand). Nowhere in the pleading which was ultimately before me is the unconscionable conduct pleaded by reference to the fact that those disclosures were made “behind Mr Brand’s back” (although this was a common refrain in oral submissions) nor is it any part of the unconscionable conduct as pleaded that Dr Monks continued to accept fees without having told Mr Brand what she (and/or her consultants) had done viz-a-viz the Council. [427] Had the pleaded case remained that Dr Monks had engaged in unconscionable conduct in not informing Mr Brand that she was going to disclose (or, later, that she had made the disclosures of 20/24/25 May 2004) the matters she disclosed to the Council, and in allowing him to proceed with preparation of the development application and to pay fees in relation thereto in ignorance of the report which had been made, then I would have been inclined to the view (subject to any evidence which might have been adduced in response to that claim) that Dr Monks had engaged in unconscionable conduct by depriving Mr Brand of an opportunity at the very least to suspend the project or to give consideration it is suspension while the unauthorised clearing issue was to be determined (if not, indeed, to terminate it altogether).

In the second paragraph quoted above, the reference to the position had the pleaded case “remained” in the form there summarised was made in the context of my analysis of the amendments which had been made in September 2009 to the Fair Trading Act pleading. As part of those amendments, the allegation of a “deliberate failure” to inform (in paragraph 50 of the Amended Statement of Claim filed 24 July 2007) was deleted, as was paragraph 47 of the Amended Statement of Claim (that paragraph being contained in a section then headed “Particulars of breach of Fair Trading Act 1987 (ss 42 and 43)”). The deleted paragraph 47 is where there was to be found the assertion that Dr Monks had refrained from notifying Mr and Mrs Brand of the disclosure and had accepted payment of fees, coupled with the assertion that this was unconscionable conduct “in that unfair tactics were used against the Plaintiffs”. (Insofar as the unconscionable conduct was there described as involving the use of ‘unfair tactics’, Mr Faulkner notes that this was different in aspect from the non-disclosure case which Mr Jacobs now contends was “fully pleaded” in the Further Amended Statement of Claim.)

At the conclusion of my consideration of this issue, I said: [434] However, in circumstances where it appears that the defendant’s Counsel took a considered forensic decision to prepare and conduct the case at hearing on the pleadings (and not on the basis that they had to meet a claim which had formerly been pleaded, but had since been deleted and now appeared if at all only in remnant fashion as part of various particulars to other paragraphs of the pleading – albeit seemingly unrelated to the thing they were said to particularise, namely the “material provided”) and had made that very clear; and particularly in light of the fact that I had raised during submissions the question whether such a claim might lie irrespective of the position in relation to the fiduciary duty claim but the plaintiffs did not demur from the immediate response by Counsel for the defendant that this was not a matter which had been pleaded; as a matter of procedural fairness I cannot make any finding adverse to Dr Monks on this issue.

The application to re-open the case and set aside my finding on the unconscionable conduct claim was put by Mr Jacobs on four grounds: (i) that the judgment was irregularly obtained by reason of a lack of procedural fairness (that being said to arise from an exchange which took place with Counsel, during the course of Mr Jacobs’ cross-examination of Dr Monks, following an objection made by Mr Faulkner to a particular question which had been put to Dr Monks); (ii) that the judgment was obtained as a consequence of a misapprehension of the decision of the Court of Appeal in Ingot Capital Investments Pty Limited v Macquarie Equity Capital Markets Limited [2008] NSWCA 206; (2008) 73 NSWLR 653; (iii) that the judgment was obtained as a consequence of a misapprehension as to what had actually been pleaded and had overlooked the fact that Mr Faulkner had acknowledged that the unconscionability case was pleaded; and (iv) that the judgment was obtained as a consequence of a misapprehension of facts going, inter alia, to the question of acquiescence by Dr Monks to the non-disclosure case being considered in the case. Legal principles

In Paul Andrew Dwyer v John Maxwell Morgan [2009] NSWSC 1343 Barrett J (at [5]) outlined the principles, which his Honour observed were well settled, in relation to the exercise of the court’s power to recall its judgment and to re-open its decision, by reference to what his Honour had said in Wentworth v Rogers [2002] NSWSC 921 at [9]: It seems to me that the relevant principles, as they apply in a case such as the present, can be summarised in one basic proposition, namely, that a single judge whose decision is susceptible to appeal through readily available channels (with or without any preliminary need for leave to appeal) should allow re-opening after judgment where it is obvious to that judge that the decision has miscarried and that the miscarriage may be rectified and the situation retrieved by attention to the matter by that judge rather than by an appeal court. What is highly undesirable is that the first instance judge should be cast in the role of hearing what amounts to an appeal against his or her own decision. (my emphasis)

His Honour had referred to the observation of Rix LJ in Compagnie Noga d’Importation et d’Exportation SA v Abacha [2001] 3 All ER 513, to the effect that, other than in circumstances where there is a clear error of fact or law which may be corrected without imposing on the parties the need for an appeal, it would be the antithesis of justice according to law and would subvert the appeal process for the trial judge to open up reconsideration of his or her judgment. Rix LJ said: It is in my judgment wrong for a judge to be treated to an exposition such as would be presented to a court of appeal. If in such circumstances a judge should be tempted to open up reconsideration of his judgment, an appeal would not be avoided, it would be made inevitable.

This is of particular relevance, I note, to the current application insofar as it is said that I have misapprehended or misapplied Court of Appeal authority – a matter which would most appropriately by determined by the Court of Appeal itself (or have misapprehended facts going to the question of acquiescence).

Barrett J in Wentworth (at [7]) referred to three matters which have been identified as central to the re-opening jurisdiction: first, whether the appellant has shown that, without accident or fault on the appellant’s part, he or she has not been heard on a relevant matter; second, whether the appellant has shown an error in the court’s reasoning because of a misapprehension of the facts; and third, whether the appellant has shown an error in the court’s reasoning because of some misapprehension of the relevant law and then to the further consideration identified by Young J (as his Honour then was) in Twenty-First Australia Inc v Shade (unreported, 31 July 1998), namely the situation where the court’s reasons for judgment inadvertently did not deal with important matters argued by counsel at the hearing and where an appeal to correct this would involve inevitable delay.

In Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300; (1993) 111 ALR 385 (at 387) Mason CJ said: However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.

I turn then to the grounds on which this application is brought. (i) Procedural fairness / irregularity

Mr Jacobs referred to Candelori v Umberto [2006] NSWSC 777 (4 August 2006) for the proposition that a lack of procedural fairness (in that case a breach of the principles of natural justice) will constitute a irregularity under Pt 36 r 15 and (by drawing an analogy to the position of an arbitrator) to Micklewright v Mulloch (1974) 232 EG 337 for the proposition that departure by a judge from a stated intention to determine an issue, without notice to the parties, constitutes sufficient irregularity to justify re-opening the case.

The perceived irregularity, on which Mr Jacobs relies for the proposition that there has been a lack of procedural fairness, arises from the following exchange at (T 339) which I reproduce from the transcript: JACOBS: I put it to you that that act in itself is quite unconscionable for you to continue to act for him, continue to take his money, dob him in so to speak and keep quiet about it? OBJECTION FAULKNER: What is pleaded is an issue of law that this is unconscionable conduct within section 43. My submission is that this witness should not be answering… HER HONOUR: What is this witness's state of mind, what relevance does this have, whether it is conscionable or unconscionable conduct is a decision I have to come to. JACOBS: We have alleged that she was in breach of section 43. HER HONOUR: You have, yes. JACOBS: It also goes to the question, I am reminded, of exemplary damages. I don't want to be criticised for not putting it to her.

Mr Jacobs submits that it is a fair inference to be drawn from the language employed in the above exchange that it was accepted that unconscionable conduct, based on the facts canvassed in Mr Jacobs’ question (which was disallowed), had been pleaded and was an issue in the case that would be decided by the court. Mr Jacobs submits that: Had the objection been upheld on the basis that the “unconscionability case” had not been pleaded, this would obviously have led to an immediate application for a further amendment or, alternatively, argument based on the acquiescence point [ie that Dr Monks had acquiesced in the determination of that issue by the court]

As I understand this submission, it seems to be contrasting an objection put on the basis that a particular issue (namely whether there had been unconscionable conduct) was a matter of law for the court to determine and not therefore a matter for the witness to answer (being the thrust as I understood it, of Mr Faulkner’s objection to the particular question) with an objection put on the basis that the question had no relevance as there was no pleaded issue to which an answer to that question might be relevant.

The lack of procedural fairness identified by Mr Jacobs is that at no time was it put to him (as opposed to being raised with his opposing Counsel) that the unconscionable conduct had not been pleaded by reference to what I have referred to as the non-disclosure conduct. Mr Jacobs says that I should have directly asked him where it was that the non-disclosure conduct was pleaded as part of the unconscionable conduct claim. What he contends is that, instead of so doing, in the exchange extracted above I implicitly acknowledged that the unconscionability issue was pleaded and had undertaken to determine it. In his oral submissions on this application, Mr Jacobs went so far as to say that I was ‘misled’ by the later submission of the defendant’s Counsel that this had not been pleaded.

Mr Faulkner submits that Mr Jacobs’ contention (set out in paragraph 21 above) that he would have made an immediate application or argument as to the non-disclosure conduct (had the objection been upheld on the basis that this issue was not pleaded) assumes that an application to amend or to raise an argument based on the acquiescence point would have been successful. Mr Faulkner submits that such an assumption cannot be made (particularly in the absence of any explanation given to the court by Mr Jacobs as to why such an application had not been made at the relevant time during the hearing) and that any such application would in any event have failed in light of the analysis contained in the reasons for judgment in relation to both the pleading point and the issue of acquiescence.

Further, Mr Faulkner submits (as must be the case) that the argument so put by Mr Jacobs is subjective and based entirely with the benefit of hindsight. Mr Faulkner submits that it should not be accepted because of Mr Jacobs’ failure to demur at an appropriate time when the issue was raised squarely during the course of closing submissions.

In Mr Jacobs’ oral submissions in reply, the furthest Mr Jacobs goes on this point is to contend that it was appropriate that he had allowed his opponent to have his say in closing submissions without interruption, although that does not explain his silence on the point during his own submissions in reply.

Mr Faulkner contends that Mr Jacobs’ failure to demur had the further significant result that the issue was taken no further by Mr Faulkner in closing submissions. He says, and I accept (this having been foreshadowed at the time), that had this issue been raised by Mr Jacobs he would have dealt with it in his closing submissions. It seems to me that the exchange at T 431 indicates at least in part the submissions which Mr Faulkner intended to develop in that regard, namely that there would have been a problem for the plaintiffs in establishing any damage caused by reason of any such unconscionable conduct.

Hence, it is said by Mr Faulkner that the result of Mr Jacob’s failure to raise the issue when it arose during closing submissions in the trial was to deny Dr Monks the opportunity further to deal with this matter in closing submissions. (In particular, as I understand it, it is submitted that Dr Monks lost the opportunity to deal with the question whether any loss had been established as having been caused by the non-disclosure conduct – assuming, for the purpose of this argument, that it had been accepted by the court that such conduct was part of the unconscionable conduct claim).

When the present application first became before me, on 3 February 2010, and Mr Jacobs at my request summarised the contentions set out in his written submissions, he quite fairly conceded that he was not able to say that he had been misled during the course of the trial by the exchange on which he now relies as establishing procedural irregularity. As I recall, without the benefit of transcript of the discussion on that occasion, the highest Mr Jacobs considered he could put this was to assure me that he must have assumed, from what Mr Faulkner and I had said, that this point (ie the non-disclosure issue) was going to be dealt with, as he did not press the question or attempt to revisit the issue at a later stage with the witness. He indicated that he had mentally ticked off that point of his cross-examination. In that regard, it seems to me that a fair inference, from the comment by which Mr Jacobs had concluded the exchange at T 339, is that the matter of which Mr Jacobs was satisfied (or had mentally ticked off) at that point was no more than that no Jones v Dunkel inference could be raised against him from a failure to put to Dr Monks the assertion that what she had done was unconscionable.

I do not believe, on a fair reading of the exchange, that there was any indication given of an intention to do more than determine whatever facts were relevant to the unconscionability claim (as that claim was in fact pleaded) and to find, as a matter of law, whether the conduct so found was unconscionable. (I consider later the question as to whether Mr Faulkner had by this exchange acknowledged that the non-disclosure conduct was in issue on the pleadings.) The force of Mr Faulkner’s objection, as I understood it at the time, was that the question whether or not conduct amounted to unconscionable conduct in breach of s 43 was a conclusion of law for the court to determine on the facts as proven. In that context, Dr Monks’ opinion (unless what was sought was an admission against her own interest – and the question was not sought to be pressed on that basis) was a matter which I did not consider would assist me in that task.

In that context it strikes me as artificial to suggest (as I understand the thrust of Mr Jacob’s submission reproduced in paragraph 21 above) that, by upholding the objection put on a particular ground during the cross-examination of Dr Monks, there should have been understood to be an alternative way in which an objection might have been raised to the same question such that the upholding of the objection as put amounted to an undertaking to determine whether particular conduct was unconscionable conduct in breach of s 43, even if that conduct (on a careful review of the pleadings) was not pleaded as being unconscionable conduct on which the plaintiffs’ cause of action for breach of s 43 was based. (In that regard, this case seems to me to be distinguishable from a case in which there is an express statement of intention by the relevant judicial or quasi-judicial officer.)

In any event, it seems to me that whatever construction might properly and reasonably be placed on what I had said at T 339, any misapprehension on the part of the plaintiffs’ legal representatives as to that issue must later have been well and truly dispelled when, during the course of closing submissions by Counsel for Dr Monks, I raised this very issue – namely, the question as to what was the unconscionable conduct which had been pleaded. Not only did I raise that issue, I went on to state what my understanding was as to what had been pleaded in that regard. This is recorded at T 431.31, where Mr Faulkner was addressing me during closing submissions in relation to the unconscionable conduct claim: FAULKNER: So did what Dr Monks did amount to unconscionable conduct? The moment that is stated, it immediately imports her state of mind and the reason for it. … Even if they passed the test, they still have the problem, if they have properties [sic] of unconscionable conduct, they would still have the same problems in relation to establishing damages. HER HONOUR : I think the answer to this is evident from the pleading. I was having a look back [at] what was the unconscionable conduct pleaded. It seems to me as I read para 11.2 of the further amended statement of claim the unconscionable conduct was the conduct in 3.1 and 3.2 which is simply the disclosures, the making of the disclosures because it had been exercising my mind as to whether or not there was an element of unconscionability not in making the disclosures but in making the disclosures continuing and to carry on work without having —(my emphasis) FAULKNER: That is not the case that is put. I won't go into it for obvious reasons. … But that is not pleaded against us and we are not here to answer the case on that basis . (again, my emphasis)

During oral submissions by Ms Chan in relation the fiduciary duty claim (where the conduct alleged to have amounted to a breach of fiduciary duty was the same conduct as that relied upon for the unconscionable conduct claim), I again raised the question whether there would be some issue about Dr Monks having gone on to perform further services and to continue to perform the contract after having made the disclosure in question. I expressly referred to the scenario which I had earlier put to Mr Faulkner as to whether or not, even accepting that Dr Monks was acting properly in the public interest in disclosing the alleged iniquity, the fact that Dr Monks’ conduct in continuing to charge and accept fees for work in relation to the project was relevant. Ms Chan’s immediate response again was that this was not pleaded against the defendant. Again, I commented that the breach of the alleged fiduciary duties seemed to be by Dr Monks acting in the manner set out in paragraphs 3.1 and 3.2 which was “just the disclosures”, adding that “it may be I am raising a furphy because the only breach of fiduciary duty pleaded is the making of the disclosure not Dr Monks’ conduct after that disclosure” (T 436.9-27).

It seems to me that what should have emerged very clearly from the above exchanges was that my understanding of the pleaded case in relation to both unconscionable conduct and breach of fiduciary duty rested simply on the allegation that Dr Monks had made disclosures to the Council in which it is said she alleged criminal conduct and urged prosecution.

Insofar as Mr Jacobs asserts that there was procedural unfairness in that I did not raise the pleading point directly with him (by asking him where he said in the pleadings there was any such allegation of unconscionable conduct), it seems to me that, having made clear my understanding of the way in which the unconscionable conduct was pleaded (particularly in the context of the concern I had raised, and which Mr Faulkner had himself acknowledged, that it might be thought to be unconscionable for Dr Monks to engage in what I have referred to as the non-disclosure conduct), it was a matter for Mr Jacobs to correct that understanding if it revealed (as he now says it does) a misapprehension of the plaintiffs’ pleading. Having apparently chosen not to do so, he does not now suggest that (by reference to a much earlier exchange during the course of cross-examination) he was not on notice of the understanding I had expressed as to the limits to the plea of unconscionable conduct or that I was addressing the unconscionable conduct claim in the light of what I understood had been pleaded.

It should be remembered that Mr Faulkner had not only stated, on more than one occasion, that the defence was being conducted on the case as pleaded and that Mr Jacobs had been asked to confirm this for the record and had done so, but that Mr Faulkner had also proffered a concession in that regard (in that, on the basis of Mr Jacobs’ confirmation that the case would be as pleaded, the defence elected not to press certain of the allegations raised as part of the illegality defence).

I consider that the issue as to the scope of the pleading in relation to unconscionable conduct had been squarely raised by me (albeit in discussions during the defendant’s closing submissions). Whatever he may have thought during the cross-examination of Dr Monks, it must have been abundantly clear to Mr Jacobs, and those assisting him during closing submissions, that I did not consider the unconscionable conduct as pleaded to go beyond the disclosures made to Council and that it was the position of the defendant that no non-disclosure conduct was pleaded.

Mr Jacobs had the benefit, throughout the trial, of assistance in court both from junior Counsel (indeed on some occasions more than one junior Counsel) and his instructing solicitor (who I infer had considerable experience as a solicitor as I was told that she was then on the cusp of retirement). He had every opportunity to respond to this issue in relation to the pleadings and to raise the points which he has now raised on this application. He did not do so.

The suggestion by Mr Jacobs that it was sufficient for him to have referred on numerous occasions to Dr Monks ‘dobbing in’ Mr Brand does not seem to me to be an answer to this point. As the transcript will show, Mr Jacobs made any number of comments critical of Dr Monks – that she had lied to Mr Brand, that she had deliberately ‘scuttled’ his project, that she had decided at will to turn on her principal, that she had used her relationship with him to incite and urge his prosecution, that she was on an “environmental crusade” and the like. One might be excused for regarding the ‘dobbing in’ comments as in the same vein as the various other perjorative remarks made of Dr Monks’ conduct – as being in the nature of rhetorical flourish but not as invoking a case not otherwise actually pleaded.

What Mr Jacobs did not do was to correct either the observation I had made in open court that the pleading of unconscionable conduct, as with the pleading of breach of fiduciary duty, was confined to the conduct pleaded in paragraphs 3.1 and 3.2, namely the disclosures to the Council, or the immediate response by Mr Faulkner that the non-disclosure case had not been pleaded and that the defendant had not come to court to meet a case that was not pleaded. As Mr Faulkner submits, there was no demur from Mr Jacobs to that and his silence allowed the matter to be determined by the court on the basis that there was no demur to that proposition.

In those circumstances, I do not accept that the judgment was irregularly obtained for lack of procedural fairness as contended nor, I should add, do I accept that counsel for the defendant acted in any way improperly (if that be what Mr Jacobs is implying in his submission that I was misled by Counsel) in submitting that the non-disclosure case had not been pleaded by Mr and Mrs Brand. (ii) Misapprehension of principles of law

Turning to the second of the grounds identified by Mr Jacobs, it is submitted, first, that I overlooked s 56 of the Supreme Court Act 1970 “in holding that the Plaintiffs’ [Further] Amended Statement of Claim allegations were insufficient to raise the unconscionable conduct issue [in relation to the non-disclosure conduct], and thus avoiding “pleading points”, and preventing the real issues being determined, cheaply and expeditiously” in circumstances where it is submitted that Dr Monks was fully aware of the unconscionability case being put against her and her Senior Counsel had acknowledged that fact; that Dr Monks had acquiesced in that case being run; and that there was no submission by Dr Monks of prejudice whatsoever.

If, by this, it is suggested that s 56 mandates that the court determine issues which have not been pleaded simply to avoid pleading issues later being taken, then I cannot agree. Section 56 does not remove from a party the obligation of properly pleading his or her case. As Ipp JA noted in Ingot , in a passage I quoted in my earlier reasons (at [419]), relief in general is confined to that available on the pleadings – a principle which secures a party’s right to a basic requirement of procedural fairness.

As to the question of acquiescence (which is raised also in connection with the fourth ground on which the current application is brought), it is submitted by Mr Jacobs that if (which is denied) the non-disclosure case had been inadequately pleaded then I misapplied what was said in Ingot in failing to hold that: (a) Dr Monks’ failure to object to Mr Brand’s evidence amounted to an acquiescence in a departure from the pleaded case; (b) the failure [by Mr Faulkner, I assume] to object to Dr Monks being cross-examined on that issue “on the ground that it was not a pleaded issue” [presumably as opposed to the basis on which he did object, which was that the question whether conduct amounted to unconscionable conduct was an issue of law for determination by the court] constituted an acquiescence in a departure from the pleaded case; (c) there was a further acquiescence in the departure from the pleaded case by reference to the exchange referred to at T 339 (as extracted above); and (d) the exchange at T 339 placed the unconscionability issue was “fairly and squarely before the court”.

Mr Faulkner submits that the question as to whether there was acquiescence by the defence in the plaintiffs’ s 43 case going outside the pleadings was a question of fact determined by the court by considering the conduct at trial of both the parties as a whole (referring to paragraphs 411, 424 and especially 421 of my reasons); that it was found as a fact that there was no such acquiescence after consideration of the authorities; and that in those circumstances any review of the court’s reasons would be for me to adopt the altogether inappropriate role of entertaining an appeal from my own decision. Mr Faulkner therefore submits that this issue should not be re-opened.

It seems to me that Mr Jacobs’ second ground of objection does invite me to do that which Rix LJ observed would not avoid an appeal but would render it inevitable. I addressed in my judgment the principles as I understand them in relation to pleadings and particulars. Having concluded that the non-disclosure case was not pleaded, I had regard to the question whether the defendant had acquiesced in a departure from the pleaded case on this point. I found as a matter of fact that she had not. Whether I have misapprehended or misapplied what was said in Ingot is a question for an appellate court, not me, to determine. (iii) Misapprehension of pleadings

Mr Jacobs submits that the unconscionability case was “fully pleaded” even if it was for the purposes of only one of the causes of action – there, as I understand him, referring to the claim for exemplary damages (a claim for relief dependent on the establishment of an underlying cause of action not a cause of action in its own right).

It is submitted that there was a misapprehension as to what was actually pleaded in that I overlooked the allegations in the first sentence of paragraph 3.2, paragraph 3.2(k), paragraphs 1 and 2 on page 6, paragraphs (ff) and (jj) on page 8, and paragraphs 8.3(e) and (f) of the Further Amended Statement of Claim in holding that the unconscionability case had not been pleaded.

Mr Jacobs, in his 3 February 2010 written submissions on the application to re-open also submitted that what had been overlooked were the allegations pleaded in the plaintiffs’ Response of 31 January 2008, which document he said “remained filed of record as part of the Plaintiffs’ pleaded case, and to the best of Counsels’ recollection was not withdrawn”.

I deal with the pleading points so raised in two parts – first, the reliance now sought to be placed on the Response (that being the document referred to as a Reply in paragraph 24 of my earlier reasons for judgment) and, secondly, the paragraphs of the final iteration of the Statement of Claim which are said to have been overlooked. Response

The Response, on which reliance is now placed but to the substance of which I was not taken during the course of the hearing, relevantly referred back to what had been pleaded in the then Amended Statement of Claim by stating in various specific paragraphs that the plaintiffs relied on paragraphs in that Amended Statement of Claim. It seems to be suggested that this operated as an incorporation by reference into the Response of the particular allegation in the pleading to which reference was made.

So, for example, paragraph 44 of the Response stated the plaintiffs’ reliance on paragraph 47 of the Amended Statement of Claim. Paragraph 47, to which I had expressly referred in my analysis of the history of the pleadings, stated 47. By the defendant refraining from notifying the plaintiff of her disclosure to Gosford City Council and by her subsequent acceptance of payments by the plaintiffs totalling $58,000, the defendant refused to do an act including refraining (otherwise than inadvertently) from doing the act and such conduct constitute unconscionable conduct within s 43 of the Fair Trading Act 1988 in that unfair tactics were used against the plaintiffs.

Similarly, Mr Jacobs refers to paragraphs 38 and 47(b) of the Response, which state the plaintiffs’ reliance on paragraphs 41 and 50, respectively, of the Amended Statement of Claim (which I do not propose to set out).

If it is suggested that, notwithstanding the subsequent deletion of those paragraphs from the Amended Statement of Claim, the Response should have been read as containing an independent (and subsisting) pleading of the very same paragraphs which had been deleted, then a real issue would have arisen as to whether the state of the pleadings was such as to put the defendant properly on notice of the case pleaded against it. A defendant would surely be entitled to assume that allegations which were formally deleted from a pleading did not thereafter remain part of the plaintiffs’ case (unless otherwise repleaded in some fashion) notwithstanding that at an earlier point the plaintiffs may have affirmed their reliance on those allegations in a document apparently responding or replying to the then defence.

In other words, it would seem to me to be redolent of procedural unfairness for Mr and Mrs Brand now to assert that, after the deletion of the paragraphs in question, they nevertheless sprang back up in the Response. This calls to mind the comment made [at 359] in Ingot , that a convoluted and confusing pleading is unlikely, justly, to permit picking up for one pleaded case facts pleaded for another. Here, what it is suggested was picked up by the Response was an allegation that by the time of the hearing had already been withdrawn by way of its deletion from the earlier pleading. (And, as noted in my earlier reasons for judgment, the Response itself was confusing insofar as on its face it appeared to be no more than a verified draft pleading.)

In any event, this issue is a red herring because the Response (contrary, it would seem, to the combined recollection of the plaintiffs’ various Counsel) had been rendered obsolete in a pleading sense by the process of pleading amendments which had occurred after it was filed. The Response of 31 January 2008 was a response to the Defence which had been filed on 2 November 2007 to the Amended Statement of Claim filed on 24 July 2007. By the close of the hearing, however, the subsisting pleadings comprised the Further Amended Statement of Claim filed pursuant to leave I gave on 4 September 2009; the Amended Defence filed in court on 30 September 2009; and (insofar as it still operated in light of the amendment to the defence) an Amended Reply, filed in court on 29 September 2009, to the Defence to the Further Statement of Claim which had been filed on 16 September 2009 (and which Defence was subsequently amended when Mr Faulkner indicated, on the basis of Mr Jacobs’ confirmation that the plaintiffs’ case was solely that which was pleaded, that Dr Monks would not press particular paragraphs of her 16 September defence).

The Amended Reply (not surprisingly since the paragraph in question had by then already been deleted from the pleading) made no reference to paragraph 47 of the Amended Statement of Claim. It simply joined issue generally and made no reference to the unconscionable conduct case.

In those circumstances, the Response can be of no more than historical interest in terms of the pleadings. Further Amended Statement of Claim

I set out the history of the s 43 pleading in paragraphs 392 to 434 of my reasons for judgment. Turning then to the paragraphs of the Further Amended Statement of Claim which it is said I overlooked, they are as follows: Paragraph 3.2, first sentence

This paragraph follows the pleading in paragraph 3.1 which alleged that in or about April/May 2004 Dr Monks “together with persons employed and instructed by her accordingly, made disclosures” to the Council. The first sentence stated: The said disclosures include conduct by which the defendant has , together with persons employed who instructed her, and whilst being employed by the plaintiffs and undertaking their work pursuant to the consulting agreement above sent documents created or received in the course of the consulting agreement and sent, emails and made telephone calls to the Gosford City Council, its corporate directors and executive staff, alleging criminal conduct on the part of the first plaintiff in breach of environmental laws by the first plaintiff on the property in question (s 127 Environmental Planning Act) and urging it to prosecute the first plaintiff. (my emphasis)

There is nothing in this sentence which articulates an element of the non-disclosure case, ie of conduct by Dr Monks after the making of the alleged disclosures. Paragraph 3.2(k)

This paragraph in the pleading is stated to be a “particular” of paragraph 3.2 (ie, logically, of the “said disclosures” or the conduct said to be included in those disclosures). It reads as follows: (k) On 15th July 2004 and on subsequent dates, Mr Clarke with the knowledge, connivance, and consent of the Defendant met and provided both material and information to officers of the Gosford City Council, on the understanding that his name would remain secret until he had finalised his assignment given to him by the Defendant on behalf of the Plaintiffs in respect of the said property, including material obtained by him in execution of his engagement with the Defendant and other materials supplied to the Defendant by the First Plaintiff, in direct breach of the confidentiality provision in the contract between the parties.

Again, this paragraph says nothing in relation to the non-disclosure case as such. The only conduct of Dr Monks referred to in this so-called particular is knowledge, connivance and consent to or of the provision of material by Mr Clarke to the Council as alleged. Paragraphs (1) and (2) on page 6

The description of these paragraphs by page number and not the pleading’s paragraph numbering is perhaps reflective of the convoluted and confusing way in which the document has been prepared. Directly underneath paragraph 3.2(k) is a section which was inserted at the time of the amendment to the Amended Statement of Claim and was headed “Particulars to paragraph 3.2(k) above as Ordered by Ward J on 4 September 2009”. It noted the plaintiffs’ reliance on the following facts, matters and circumstances for the allegation in paragraph 3.2(k) (which was itself a particular of the disclosures or conduct pleaded in paragraph 3.2): 1. The allegations, facts and matters detailed in paragraphs 3.2(a) to 3.2(j) [those being the preceding particulars of the alleged “disclosures” or conduct pleaded in paragraph 3.2, none of which goes to the non-disclosure case]. 2. The following documents, and the inferences to be reasonably drawn therefrom. All of the said documents are being placed in a bundle and will be duly indexed and paginated and served on the Defendant shortly, between the Defendant and the said Clarke [and the paragraph then itemised eighteen documents, a batch of photographs and, confusingly described as documents, two “facts” in sub-paragraphs (xix) and (xx)].

Other than insofar as one or two of the documents (such as those in (xv) and (xvii)) referred to in the sub-paragraphs to paragraph 2 above indicate that Dr Monks was continuing to perform work for Mr and Mrs Brand after 20 May 2004, there is no indication in paragraph 2 that the plaintiffs were relying on those documents, or inferences to be drawn therefrom, for an unconscionable conduct cased based on non-disclosure. The paragraphs themselves purport to be particulars of the allegation (itself contained in a self-described particular) that certain disclosures were made to the Council. Paragraphs (ff) and (jj) on page 8

Mr Jacobs next refers to these paragraphs, which appeared in the Amended Statement of Claim and were unchanged in the Further Amended Statement of Claim, which are to be found under the heading “Particulars of the material provided”. (It should be noted that this is the third, but not the last, set of “particulars” which follow the pleading in paragraph 3.2). Unlike the preceding set of particulars provided in respect of 3.2(k), this third set of particulars seems to be a reference back to 3.2 itself (though not all of the sub-paragraphs could be described as a particular of the “material” alleged to have been provided, so one is left to speculate as to that to which they purported to be particulars). The sub-paragraphs in question relied upon by Mr Jacobs in the present application are as follows: (ff) In that manner Mr Clarke, with the knowledge, connivance and consent of the Defendant would be able to finalise his work for the Plaintiffs, earn fees, and make serious complaints and assist in the prosecution of the First Plaintiff behind his back. (jj) At all material times, the Plaintiffs paid and continued to pay fees to the Defendant, more particularly an amount of $58,000.

As to the particulars provided in (ff), they do not relate to any conduct of Dr Monks relevant to the non-disclosure case. Rather, they relate to the alleged knowledge, connivance or consent by Dr Monks to conduct on the part of Mr Clarke. As to the particulars provided in (jj), they do no more than particularise the fees paid and continued (from some unspecified time) to be paid to Dr Monks. Taken in isolation it is not apparent from the pleading that they are to be read as part of a non-disclosure case, as opposed to the other causes of action pleaded (including the breach of fiduciary duty claim) for which a claim for damages or equitable compensation was made. The damages said to have been suffered by the plaintiffs included, as pleaded in paragraph 8.2(c), the aggregate of all moneys paid to Dr Monks and her consultants in respect of her work (not just the moneys paid after Dr Monks’ disclosure to the Council). Paragraphs 8.3(e) and (f)

Finally, reliance was placed by Mr Jacobs on paragraphs 8.3(e) and (f). These follow, confusingly since they are stated to be particulars to paragraph 8.1, underneath the allegation in paragraph 8.3 to the effect that, further or in the alternative, by reason of the alleged breach of fiduciary duty Dr Monks enhanced the goodwill in her business by association with the Council’s prosecution of Mr Brand and by the fees she gained by the further work and attendances “which she was caused to undertake as a result of, or in connection with, the Plaintiff’s reaction to the said prosecution”.

Paragraph 8.3 is followed by a heading “Particulars to paragraph 8.1 above as Ordered by Ward J on 4 September 2009” (my emphasis). (Paragraph 8.1 pleads loss of a chance to subdivide the property in or about 2004-6 and so to make substantial profits. As noted in my December judgment, I assumed that the particulars said to be of paragraph 8.1 were in fact intended to be particulars of the loss or damages pleaded in paragraph 8.2. If they were instead pleaded as particulars to paragraph 8.3, then they would seem to relate not to any non-disclosure case as such but to the loss alleged to have been suffered as a result of the prosecution of Mr Brand.)

The relevant sub-paragraphs are as follows: (e) The amount claimed for exemplary damages flowing from the said conduct including the alleged breach of section 43 of the Fair Trading Act above is in the sum of $25,000 for each Plaintiff. It will be submitted that the Defendant’s conduct was highhanded and deceitful in reporting the First Plaintiff behind his back, and continuing to take fees from him for the proposed subdivision, and was further reckless in the sense that, with her qualifications, she must have known that no offence had been committed by the Plaintiffs. (f) In regard to the First Plaintiff’s claim for aggravated damages, he claims a further amount of $25,000 for the pain, hurt and humiliation caused by the Defendant’s conduct and subsequent prosecution, and the deceitful manner in which she urged Gosford City Council to prosecute the First Plaintiff. It will be alleged that the First Plaintiff suffered strain and humiliation in that in the relatively small community in which he lived, the prosecution received substantial press publicity.

I expressly noted the first of the above sub-paragraphs in my December judgment (para 400) and commented that the statement seemingly recognised that the matters so particularised had the status of submissions (not the pleading of any material fact). I remain of that view. (The second sub-paragraph says nothing which is now relied upon for the non-disclosure case other than perhaps, the assertion that the manner in which Dr Monks was said to have urged the prosecution of Mr Brand was deceitful.)

Mr Jacobs took issue with the description by Mr Faulkner of this as a convoluted and prolix pleading, deploring this language as denigrating. With respect, the description of the Further Amended Statement of Claim as convoluted and prolix seems to me to be factually accurate and perhaps remarkably charitable in the circumstances. Apart from the errors in cross-references contained in the document, the manner in which various paragraphs were described as particulars and interposed throughout the pleading was confusing. I think there is much force in what I understand to be Mr Faulkner’s submission that the plaintiffs should not now be permitted to point to scattered references (most not even contained in the formal parts of the pleading but largely to be found only in what were described as particulars or submissions which would be made for certain relief which was sought) as a justification for the assertion that a different cause of action from that which had actually been pleaded was before the court and should have been determined.

I came to my decision in relation to the pleading point after a careful review of the pleadings, which were before me and to which I referred to in my judgment. My attention has not been drawn to anything material to that issue, which I consider was overlooked in that regard. If the plaintiffs consider that I have incorrectly applied the law or have otherwise fallen into appellable error, then the appropriate forum to determine that is elsewhere.

In this context, it is submitted by Mr Jacobs that Mr Faulkner had accepted that the unconscionability claim had been pleaded when he said at T339 that “what is pleaded is an issue of law that this is unconscionable conduct within the meaning of s 43”. To be fair to Mr Faulkner, I had not understood him on that occasion to be saying that any particular non-disclosure case had been pleaded. Rather, I had understood him to be objecting to the question on the basis that it was a question of law for the court to determine whether the defendant’s conduct (as pleaded) amounted to unconscionable conduct. However, even if that one sentence in the transcript was accurately transcribed and could, properly construed, have amounted to an acknowledgement that the factual scenario there being put to Dr Monks had been pleaded and was an issue for determination in the case, and that this might, in the absence of anything more, amount to an acquiescence in the departure from a pleaded case (if the matter so acknowledged was incorrect), that must have been dispelled by what Mr Faulkner quite clearly said during closing submissions, to which there was no demur from Mr Jacobs. (iv) Misapprehension as to facts going to the question of acquiescence.

As I understand it, the fourth ground on which Mr Jacobs relies is that which is the subject of the fourth proposition extracted by Ipp JA in Ingot from the authorities to which his Honour had had reference, namely that acquiescence giving rise to a departure from the pleadings may arise from a failure to object to evidence that raises fresh issues.

In this regard, Mr Jacobs refers to Mr Brand’s evidence, to which he says there was no objection, that Dr Monks had failed to disclose her report to the Gosford City Council to him but went on with the work on the subdivision application and continued to charge fees and demand payment thereof and refused to hand over her papers to him until he had paid the final invoice and accepted payment – by reference to paragraph 7 of 1 April 2008, paragraph 37 of his affidavit of 9 September 2008, paragraph 38 of his affidavit of 9 September 2008. He submitted that all those passages contain the elements of the unconscionability case and that the failure to object to that evidence amounted to “acquiescence giving rise to a departure from the pleadings”.

In Ingot , Ipp JA noted simply that acquiescence may arise from a failure to object to evidence that raises fresh issues. It cannot be said, in my view, that a failure to object to those paragraphs of the affidavits (or indeed the denial by Dr Monks of the conversation to which Mr Brand had deposed, in which she was asked whether it was she who had notified Council that he was doing the clearing) amounts to an acquiescence that the case would be run in a manner contrary to that which had been accepted by Mr Jacobs at the outset of the hearing.

Mr Jacobs drew attention to aspects of Dr Monks’ affidavit evidence which responded to the allegation (contained in Mr Brand’s affidavit) that she had not disclosed to him the fact of her disclosure to the Gosford City Council and that she had continued to work on the subdivision application and to charge fees and accept payment. Reference was made to Dr Monks’ affidavit of 22 May 2008 replying to the affidavit of 1 April 2008, which it is said did not put the relevant conversation with Mr Brand in issue (although this was clearly done in her affidavit of 26 June 2008) and that she had not denied that she continued to invoice the plaintiffs after her complaint.

Mr Jacobs submitted that “Dr Monks entered into the dust of the arena and took direct issue with the first plaintiff’s allegation that she had denied telling him that she was not the author of the complaint to the Gosford City Council, and further she denied making a demand for payment of the balance of her fees, before being prepared to hand his papers to him. She therefore knew (as must have her legal advisers) that it was part of the plaintiffs’ case against Dr Monks that she failed to tell the first plaintiff that she had made a complaint against him to the Gosford City Council, then continued to work for the plaintiffs, take money for fees from them, and held onto their documents until her last invoice had been paid”. Mr Jacobs said that the defendant traversed in her evidence the essentialia of the unconscionability case. He also relied upon the fact that there was no objection to parts of his cross-examination (T 313.24-36; T 321.24-49; T 322.1-8).

In his written submissions in reply on this application, Mr Jacobs submitted that the following facts went to the question of acquiescence (as well as to the question of what were the issues which arose on the proceedings): (a) Dr Monks’ admission in paragraphs 33(a) and 47(a) of her Defence of 2 November 2007 that she did not advise the plaintiff that she had sent the letter of 20 May 2004 to the Gosford City Council; (b) Paragraph 3.2(f) of the Amended Defence of 20 September 2009 in which Dr Monks pleaded: In relation to the allegations contained in paragraph 2.2 of the Further Amended Statement of Claim and the particulars provided thereto, the Defendant: (f) admits that she did not inform the Plaintiffs that she had written to the Council on 20 May 2004; (c) Paragraph 3.2(g) of the Amended Defence: In relation to the allegations contained in paragraph 3.2 of the Further Amended Statement of Claim and the particulars provided thereto, the Defendant: (g) admits that the Plaintiffs paid her $50,787.38 in the period between 21 July 2004 to 3 March 2005.

It is said that I overlooked these specific pleadings (and the admissions comprised therein) and misapprehended the pleadings accordingly.

Apart from the fact that there is no obligation on a party to plead to particulars, and so it might be thought that the admissions referred to above go no further than admissions as to isolated facts which may or may not go to establish particular causes of action, the reliance which Mr Jacobs seeks to place on these matters seems to me to overlook the point made by Ipp JA at para 358 of Ingot , which I reproduce in the context of the preceding paragraphs of his Honour’s judgment: 355 The appellants’ argument, however, goes much further than anything said in Nocton v Ashburton . The appellants, at times, sought to identify facts alleged in various parts of their own pleadings, in the respondents’ defences and in the cross-claims, in order to bolster their submission that the smoothing cover argument had been pleaded. The appellants also submitted that a matter not particularised by a plaintiff but raised by a defendant in its defence is available to the plaintiff by way of additional support of the pleaded cause of action, citing Mummery v Irvings Pty Ltd [1956] HCA 45; (1956) 96 CLR 99 at 110-11… 356 The appellants submitted that pleading affirmative defences involving reliance on others and establishing that the respondents acted honestly “necessarily opened up the transaction’s propriety, including its intended effect”. That does not make the transaction’s propriety part of the appellants’ case against the relevant respondents. It remained for the appellants to prove their pleaded case. The respondents may or may not then have sought to establish their affirmative defences, and in establishing them had to address only the appellants’ case so far as they considered it had been proved against them. (my emphasis) 357 I do not accept that the respondents should have examined the various paragraphs in the dense thickets of 6FAS, and – from that dark journey –realised that certain allegations, when taken together with others pleaded elsewhere (not only in various distant parts of 6FAS but in the defences and in the cross-claims), were capable of pleading a case not otherwise signalled in the document. When regard is had to the fact that the pleadings numbered more than 3,200 pages, the phrase “needle in a haystack” comes to mind. It would be unfair and unjust to hold that the respondents should have undertaken such an exercise. Pleadings are not intended to function in this way. 358 There is another point that needs to be made in this regard. Elements pleaded in defences to a plaintiff’s case, in cross-claims, and in defences to cross-claims, when read together with other allegations made in the summons, may make out a potential cause of action the plaintiff has not pleaded. The plaintiff usually, will not be able to rely on such a cause of action. A defendant needs to know which elements the plaintiff contends make up its case. The defendant’s conduct of the trial may well differ depending on whether the elements are pleaded against it, or in another party’s cross-claim, or in a defence to the claim or cross-claim. If the plaintiff does not make clear that it is relying on a cause of action so made up, the defendant may be prejudiced. If so, the plaintiff will be precluded from relying on that cause of action. (my emphasis)

Insofar as Mr Jacobs places weight on the fact that Dr Monks made admissions or took issue with the factual assertions on which his non-disclosure point is now sought to be put, those facts might have been seen as relevant to a quite different unconscionability case (such as that which Mr Jacobs himself appeared to be putting in closing submissions – namely, that Dr Monks had exploited opportunities made available to her to make out a case for the Council against Mr Brand was part of what Mr Jacobs asserted was “little more than an environmental crusade” on the part of Dr Monks or the allegation that Dr Monks had enhanced the goodwill of her business). Dr Monks was entitled to know precisely what conduct was said to have amounted to the unconscionable conduct alleged in breach of s 43. To the extent that (as I consider to be the case) this was unclear on the pleadings and Mr Faulkner had made clear his contention that the non-disclosure case was not pleaded against the defendant, I do not accept that it can be said that there was any relevant acquiescence in a departure from the pleadings.

Mr Faulkner submitted that it was procedurally unfair that the plaintiffs should now seek to rely on paragraph 8.3(e) of the pleading when it had indicated that its claim for exemplary damages was no longer pressed. In that regard, my understanding was that Mr Jacobs was reserving his position in relation to a claim for exemplary damages at least in respect of the Fair Trading Act claim at this stage of the proceedings so I do not consider that procedural unfairness of the kind Mr Faulkner adverted to would necessarily arise.

It was also said by Mr Faulkner (and I accept the force of this submission) that this was a pleading that was difficult for the court, and the defendant, right up until final submissions to understand and that the lack of clarity in the proceeding should not be allowed to produce an unfair result for the defendant. It was submitted that it was the very lack of clarity and inexact language in the pleading and its ambulatory structure which had enabled the current application to be brought and that this would not have arisen had there been a clearly defined pleading. Hence, it is submitted by Mr Faulkner that the defendant should not be prejudiced by the plaintiffs’ deficiencies in pleading. I agree that the pleading left much to be desired. It was convoluted and inexact. To the extent that the defendant was left with uncertainty as to the precise case brought against her on the unconscionable conduct claim, I accept that it would be unfair for the plaintiffs, in the absence of demonstrable error on my part, to be able to rely on that uncertainty in order now to have the case re-opened in order to pursue a case not clearly pleaded.

On the question of acquiescence, Mr Faulkner also raises the issue of prejudice to the defendant if Mr Jacobs were to be allowed to re-open the case. He submits that, as a direct result of Mr Jacobs’ failure to demur in the trial, the defendant made no submissions on the damages issue in closing and did not further deal with the issue of the s 43 case. It is said that Mr Jacobs allowed the case to go to judgment on that basis as pleaded; that the forensic decisions made by the defendant cannot now be reversed and therefore to re-open would create procedural unfairness to the defendant.

It is submitted by Mr Faulkner that the defendant did not deal with s 43 damages because it was not required to do so on the case as pleaded. In this regard, he notes that the s 43 cause of action was dependent on proof of damage and that, if the reports prepared by Dr Monks and her consultants were of full value to Mr Brand and worth every cent that he paid, then there was no damage (an issue not opened by the defendant in evidence or cross-examination and not dealt with in the defendant’s submissions). It is noted that the defendant did not test whether Mr Brand might have sought to terminate the consultancy or to press on to seek subdivision approval had he become aware of Dr Monks’ communications to the Council (a matter to which I alluded in paragraph 429 of my judgment).

The unconscionable conduct claim, unfortunately perhaps for the plaintiffs in the context of what has transpired, was pleaded in very sparse terms. Paragraph 11.2 pleaded the breach of s 43 by reference back to the conduct “as set out in” paragraphs 3.1 and 3.2 (the disclosures made to the Council). Paragraph 11.3 pleaded that this conduct was in trade or commerce. Paragraph 11.4 simply repeated paragraph 8.2 (which pleaded the damages allegedly suffered as a consequence of the alleged breach of fiduciary duty) and 8.6 (which the parties accept should have been a reference to paragraph 8.3 and which pleaded the alleged enhancement of the goodwill of Dr Monks’ business by reason of the breach of fiduciary duty). Presumably, therefore, paragraph 11.4 was intended in summary fashion to allege that the damages allegedly suffered by reason of the breach of fiduciary duty were also suffered as a consequence of the alleged unconscionable conduct (that being as set out in paragraphs 3.1 and 3.2 ).

I should note that I accept that, had the non-disclosure case been pleaded, it would have been open to the defendant (among other things) to challenge the basis on which it was alleged that loss had been suffered. Mr Faulkner points to paragraph 433 of my reasons for judgment in which I observed that, had I been of the view that there had been unconscionable conduct of this kind, I would have considered the appropriate relief to be the recovery of the fees paid after a particular date. I accept that this comment did not expressly refer (as I had sought to do when adding a qualification in the corresponding section in which I had summarised my views on this issue (para 12(viii)) to the need to consider any account which the plaintiffs might have had to make for any benefit received from the additional work carried out after 20 May 2004.

On reflection, what I should have said in paragraph 433 (and equally in the context of the fiduciary duty claim), and what I had in mind, was that had I found for the plaintiffs on the unconscionable conduct claim then I would have considered that the appropriate relief would have been limited at most to the recovery of fees paid for work carried out after 20 May 2004, subject to any argument the defendant might have been in a position to make in relation to the damages so claimed. As this matter appears likely to go further, I have revised my published reasons to make this clear. Conclusion on application to re-open

I am not satisfied that Mr Jacobs has pointed to any demonstrable error or misapprehension of fact or law which would appropriately be rectified by the re-opening of the case and dealing afresh with the unconscionable conduct claim. It seems to me that a decision must have been made at the time the Further Amended Statement of Claim was filed (or else there was inadvertence in this regard) to delete the s 43 claim insofar as that was based on the failure to disclose to Mr and Mrs Brand the fact of disclosure to the Council (and any ‘unfair tactics’ that were said to have been engaged in) and to continue to accept fees for work performed under the contract. That is perhaps a not surprising decision given that the focus of the plaintiffs’ legal representatives as at the time the pleading was amended seemed firmly to be based on the view that the facts disclosed a conspiracy of some kind between the defendant and her consultants; and the theme of ‘exploitation’ by Dr Monks was what was emphasised as being the relevant unconscionable conduct in the submissions made at the hearing.

The issue as to what had been pleaded as being the unconscionable conduct (and what I understood to be the case in that regard) was squarely raised during debate in the course of the proceedings. The defendant in fact made a concession in relation to the narrowing of its pleading based on Mr Jacobs’ concession that the matter would be dealt with strictly as pleaded. I am not satisfied that there has been a miscarriage of the decision or a lack of procedural fairness. As to the errors of legal principle that it is said that I have committed, the determination of those is a matter more appropriately dealt with on appeal and not by way of a re-agitation of issues already considered and dealt with in my judgment.

I dismiss the motion for leave to re-open. Insofar as Mr Jacobs seeks leave for an extension of time to file a notice appeal (which was put on the basis that the time since delivery of my reasons for judgment had been spent in considering the bringing of this motion to vary the judgment which was complicated by the retirement of the plaintiffs’ former solicitor) as noted above I will give leave to extend the time for the filing of a notice of appeal by 14 days, which seems to me to be ample time for the plaintiffs’ legal advisers to attend to this task, as necessary, given the time that has already elapsed since judgment. Costs

I turn then to the respective submissions in relation to costs. There are two aspects to those submissions.

First, the plaintiffs’ submission is that there should be a departure from the usual rule as to costs, such that the Dr Monks should not only not have an order for the payment of her costs but that there should also be an order that some or all of the plaintiffs’ costs be borne by Dr Monks. That submission turns broadly on the fact that Dr Monks did not succeed on the public interest defence which she ran in (partial) answer to the breach of contract claim and by way of an unclean hands defence to any breach of fiduciary duty.

Secondly, for Dr Monks there is an application for indemnity costs based on the failure of the plaintiffs to accept a Calderbank offer which had been made on her behalf.

I deal with each in turn. Departure from usual order as to costs?

It is submitted by Mr Jacobs that the making of unfounded allegations of a serious crime “in the manner in which the defendant did, and persisting in them” was such that there should be no order for the payment of the defendant’s costs. In addition, it is said that the plaintiffs should be awarded the costs of litigating the defences which failed, viz that there was a prima facie case that the plaintiffs had committed a serious crime and that the public interest justified a breach of any express confidentiality agreement. Alternatively, it is said that this is a matter where there should either be an apportionment of costs or a division thereof with the result that the defendant should be deprived of the costs of litigating both on one of the following issues: whether or not the plaintiffs, or one of them, had committed a serious crime or any crime at all and whether it was in the public interest to disclose any such alleged breach to the Gosford City Council.

Reliance was placed on the broad discretion recognised in Oshlak v Richmond River Council (1998) 193 CLR 72. Mr Jacobs’ submissions also referred to Locnere Pty Limited & anor v Jakk’s Bagel and Bread Co Pty Limited [2003] NSWSC 1123 (in which the plaintiffs who failed in establishing a binding and enforceable contract with the defendant were nevertheless not ordered to pay the defendant’s costs of the proceedings on the basis of what was described as their unmeritorious conduct).

In Pacific General Securities Limited v Soliman & Sons Pty Limited [2006] NSWSC 724, Brereton J (at [10]), cited Waterman v Gerling Australia Insurance Co Limited (Costs) [2005] NSWSC 1111 in which it was held (at [10]) that it might be appropriate to award costs of a separate issue where a clearly defined and separate issue on which the otherwise successful party failed had occupied a significant part of the trial. Reference was also made to James v Surf Road Nominees (No 2) [2005] NSWCA 296 per Beazley, Tobias and McColl JJA and to the observations by Toohey J in Hughes v Western Australian Cricket Association (1986) ATPR 40-748. Mr Jacobs argued, and I accept, that the discretion to award costs on separate issues is not one which is only open to be exercised in the case of a successful plaintiff.

In Hughes, Toohey J said: It seems to me that the only basis on which it would be appropriate to depart from the general rule that costs follow the event, by reason of the circumstance that the appellant lost of what might be regarded as the dominant issue, is that the judgment is made that, had that issue been excluded then, although the dominant issue was not clearly separable, the costs incurred on the appeal would be likely to have been substantially less, perhaps because there was less at stake.

In Elite Protective Personnel Pty Limited v Salmon (No 2) [2007] NSWCA 373 it was said (at [6]) that where there are multiple issues in a case the court does not generally attempt to differentiate between those issues on which a party is successful and those on which it fails: Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.

In Corbett Court Pty Limited v Quasar Constructions (NSW) Pty Limited [2008] NSWSC 1423, Hammerschlag J summarised the rules in relation to this issue and gave examples of instances where the general rule may be displaced: 30 The general rule can, in the discretion of the Court, be displaced in appropriate cases. Relevant authorities have been recently and conveniently collected by White J in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]. 31 Examples of instances where the general rule may be displaced include the following: (a) a costs order in favour of a successful party can be modified to reflect its failure on particular issues even if the successful party did not act unreasonably in raising those issues: Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Supreme Court of New South Wales, Hodgson CJ in Eq, 3 June 1998, unreported, BC9802305 at 10-11); (b) if a party unreasonably pursues or persists with points which have no merit, such conduct will constitute a consideration relevant to the ordering of costs even in circumstances where that party is generally successful: Oshlack v Richmond River Council (1998) 193 CLR 72 at 122; (c) conduct in relation to the matter may be discreditable to an extent warranting a party being deprived of costs: Jamal v Secretary Department of Health (1988) 14 NSWLR 252 at 271; (d) where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed: Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at 48,136; (e) where the proceedings involve multiple issues departure from the general rule may be warranted particularly where the losing party has succeeded on issues which occupied significant time. Nevertheless the application of the general rule may involve hardship where a party succeeds on some issues but fails on others particularly where the losing party succeeds on some issues. However unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Ritchie’s Uniform Civil Procedure NSW at [42.1.15]; Waters v PC Henderson (Australia) Pty Ltd (New South Wales Court of Appeal, 6 July 1994, unreported, BC9404952 at 5); Short v Crawley (No 40) at [27]-[28]; (f) a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them: Hughes v Western Australian Cricket Association (Inc) at 48,136. 32 In Hughes v Western Australian Cricket Association (Inc) Toohey J (in a passage cited by White J in Short v Crawley (No 40) ) referred to what was said by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 12 in the following terms: His Honour sounded what he described as ‘a note of cautious disapproval’ of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented: ‘But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues .’” (My emphasis)

Mr Jacobs noted that in Jennings v Zihali-Kiss and MK Tremaine & Co Pty Limited (1972) 2 SASR 493, Bray CJ allowed a successful defendant a portion only of its costs on the basis that in such a case it was proper to split the costs having regard to the success of the parties on various issues of disputed questions of fact and law.

Mr Jacobs submitted that issues in relation to the alleged crime (on which the Dr Monks lost) had occupied a considerable amount of time. He analysed, in paragraph 4 of his submissions, the transcript in order to estimate the extent of the time occupied by evidence which, he said, went to the illegality/crime issue. In total, he estimated that 304 pages of the 453 pages of transcript (approximately two-thirds) of the transcript and the hearing went to issues on which Dr Monks lost, to which he said there would need to be added preparation time, affidavit evidence and written opening addresses plus the cost of pleadings and particulars in relation to that issue. (Mr Faulkner takes issue with this estimate and submits that the time devoted to this as a separate issue was only in relation to submissions.)

It is said that because I held that Dr Monks did not establish a bona fide and reasonably tenable charge of crime she could not have had a bona fide or reasonable belief that an offence had been committed; that this allegation had been commenced and persisted in until the bitter end; and that Mr and Mrs Brand should not have had this serious allegation hanging over their heads for the duration of the litigation. It was suggested that Dr Monks had “stooped to scraping the bottom of the legislative barrel” in order to find a crime.

I do not accept that Dr Monks did not hold a bona fide or reasonable belief that the clearing activities of Mr Brand amounting to an offence and certainly did not mean to suggest otherwise. The reasonableness of such a belief is supported by the fact that, with the benefit of legal advice, Gosford City Council took the serious step of instituting proceedings to prosecute Mr Brand. I can only assume that this was not a decision any Council would lightly take in the proper exercise of its powers and functions. Lest there remain any doubt as to my view in relation to this issue, I note that I accept that Dr Monks had a bona fide view that a serious environmental offence was occurring and that she had a duty in the public interest to seek to have it stopped. What I did not and do not accept, after engaging in the rather tortuous analysis of the environmental planning legislation and instrument in order to answer this question, was that a reasonably tenable charge of crime had been established. On that basis, the composite test of there being established a prima facie case of both a bona fide and reasonably tenable charge of crime was not satisfied.

However, as Mr Faulkner pointed out, the legislation in question was complex. Submissions on the legislation from both parties were detailed. Mr Jacobs was assisted in his oral submissions on this point by one of his Junior Counsel (Mr Bambagiotti). I did not find this a point on which there was an immediately apparent or easy answer. Having regard to the caution sounded in the cases on costs which I have extracted above, I do not consider that a defendant, who has a bona fide belief that there has been an offence of the kind pleaded (whether or not being cognisant of the particular legislative framework within which such an offence would have to be established) which, if correct, would have provided an answer to the allegations pleaded against her, should be dissuaded from raising in her defence such an issue by the risk of an adverse costs order.

Further, it is by no means easy to describe this as a separate part of the costs incurred in the proceedings. I accept that most of the witnesses called by the defence would (for the reasons adverted to by Mr Faulkner) have been called by the defence to meet the contract case pleaded against the defendant even had the issue of illegality not been raised. Mr Faulkner submitted that if there were to be any reduction in relation to this aspect of the matter (and he submits there should not be) should be of a minor amount (in the order of no more than 5%).

I am of the view that there should be no departure from the usual costs order for the reason that it does not appear to me that the allegations of public interest defence were ones in which Dr Monks improperly persisted. There was a reasonable argument in that regard and it was one which Dr Monks might well have considered had reasonable prospects of success. It must be remembered that this was an alternative to the principal defence (on which Dr Monks succeeded), which was that there was no breach of contract in the first place. While attention was drawn by Mr Jacobs to the difficulty Dr Monks had in articulating the offence which it was said had been committed, the same is true of the Brands’ difficulty in articulating precisely what was the confidential information said to have been disclosed by Dr Monks in breach of contract (uncertainty as to which persisted well through the hearing and even after the closing submissions had been completed – as outlined in my December judgment). The relevance of this is that I cannot be satisfied that, had the illegality defence not been raised, the evidence (and the time the trial occupied) would have been significantly reduced.

Mr Faulkner relies on the usual rule that costs should follow the event. He emphasises that Dr Monks has been wholly successful in defending the proceedings. He submits that there has been no disentitling conduct on Dr Monks’ part and that it was reasonable for her to raise the defence of illegality in the circumstances of the case. I agree. I also take into account the fact that the discretion to apportion costs is one to be exercised only in the most exceptional of circumstances: Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213. As noted above, it has been said that a court should be mindful not to discourage litigants from canvassing all material issues for fear of an adverse costs order. Reliance was placed by Mr Faulkner on Stena Rederi Aktiblag v Austal Ships Sales Pty Limited [2006] FCA 1141 and Cretazzo v Lombardi (1975) 13 SASR 4 at 12.

Ultimately, the claim for breach of contract failed for reasons not associated with the public interest defence but it seems to me that it was not unreasonable of Dr Monks to pursue that defence.

I have considered whether there should be a reduction in the costs ordered in Dr Monks’ favour to reflect the fact that, when the proceedings commenced, Dr Monks did not press that part of her defence which related to the tree preservation orders. Mr Jacobs submits that the abandonment of the defences raised in paragraphs 12 (b)(i)(A) and (B) and 17(a)(i)(ii) of the Defence (concerning an alleged requirement of the Tree Preservation Order) should carry with it an appropriate order in regard to costs.

The concession by the defence in this regard was expressly put on the basis that Mr Jacobs accepted that the matter would be run on the case as pleaded. As I understood the submissions later put by Mr Faulkner, the significance of that concession related in part to the argument that, in order to maintain any damages for breach of the contractual obligation of confidence (assuming that were to be made out in the case) it would be necessary for Mr Brand to rely upon the extent of the clearing activities he had carried out (which it was said was inconsistent with a denial that there had been any such activities). I adverted to this argument in paragraph 149 of my December judgment, in a different context.

It seems to me that the evidence in relation to what clearing activities were undertaken (and whether they involved the clearance of trees or, as ultimately contended, native vegetation and weeds) would have been broadly the same whether or not the aspects of the illegality defence which was were not pressed at the hearing had been raised in the first instance, not least because until the hearing it appeared that what the plaintiffs were contending was that it was the disclosure of the fact of the clearing activities which amounted to the breach of confidence – hence the issue as to whether that was information in the public domain. There was no relevant departure from the defendant’s case as to what had happened on the land. How it was properly characterised for the purposes of the Land and Environment Court legislation, does not seem to me likely to have added to the costs in any significant way and these allegations were withdrawn on the basis of a concession that, had it not been made, it might have required evidence in relation to the tree clearing still to have been adduced.

Mr Faulkner further submitted that Mr Jacobs’ analysis of the time spent on the illegality issue was not correct in that it did not take into account that the various witnesses called by the defence (other than perhaps Mr Scorgie) were needed in order to establish precisely and entirely all of Mr Brand’s activities, in circumstances where the defendant’s legal representatives had thought the scope of the information was the extent and nature of clearing the land, which required evidence of that kind to be adduced.

In the circumstances, where there would have been a need to ascertain the scope of any restrictions placed on Mr Brand’s land clearing activities by reference to the environmental planning legislation and the approvals obtained in relation to the land, whether or not the offence pleaded was that relating to the tree preservation order or, as ultimately pleaded, the mechanical clearing of native vegetation and weeds, I am not satisfied that there should be any reduction in costs to reflect the forensic decision apparently made at the commencement of the hearing not to press certain aspects of the illegality defence.

Accordingly, I am not satisfied that there should be a departure from the usual costs order. The next question is the basis on which those costs should be ordered. Indemnity costs?

Dr Monks seeks costs on an indemnity basis relying upon a Calderbank letter which sent on 21 December 2007. That offer was to compromise the proceedings by way of a verdict for the defendant and for the plaintiffs to pay her the sum of $15,000 on account of the defendant’s costs incurred as at that date. The letter asserted that the defendant’s costs as at that date on a party/party basis were approximately $20,000. Needless to say, given the present application, that offer was not accepted by the Brands.

The solicitor with carriage of the matter for Dr Monks, Ms Golovanoff, has affirmed an affidavit on 2 February 2010 in which she states that as at 21 December 2007 costs totalling $49,324.50 had been incurred in respect of the conduct of the defence in these proceedings. Following objection from Mr Jacobs, I read that portion of the affidavit simply as evidence of the charges that had been levied by Ms Golovanoff’s firm. Of those charges, approximately $7,300 were fees described as incurred by Conditsis. There was no evidence as to who Conditsis is or are. Even discounting that amount, the costs that Ms Golovanoff says were charged as at 21 December 2007 in respect of Kennedys’ charges and counsel’s fees amounted to roughly $42,000. (The costs will no doubt have substantially increased since then by reference to the length of the hearing at the very least.)

Ms Golovanoff has estimated that approximately $10,000 of the costs as at December 2007 were unrecoverable solicitor/client costs. The basis on which that estimate was made was not set out in her affidavit and I do not consider that I can attribute any weight to it for that reason. However, I do consider that I can infer that the costs were regularly incurred in relation to the conduct of the litigation, particularly as there was no cross-examination of Ms Golovanoff who I observed was in court during the course of the recent application. Even assuming that there were to be, say, somewhere in the order of a 50% reduction in the solicitor/client costs in arriving at the recoverable party/party costs, the offer to accept $15,000 would represent a compromise (albeit a small compromise) in that regard. I do not accept that this offer should be treated as a total capitulation, since it necessarily involved Dr Monks bearing a not insignificant amount of legal costs herself, for proceedings in which she has now been wholly successful in the result, particularly when the offer was made at an early stage of the proceedings and it might be assumed that both parties’ costs would be relatively low.

What the letter of compromise asserted was that the defendant was prepared to accept a $10,000 discount on what she was advised were her party/party costs in order to resolve the proceedings at that stage. There is no suggestion that the plaintiffs were unable to give proper consideration to that offer due to insufficient information as to how the costs were comprised or as to how the assessment was formed as to what component represented party/party costs. Rather, the plaintiffs tendered on this application an affidavit from Mr Fitzgibbon, Junior Counsel who has acted in these proceedings since the outset, which affidavit was sworn on 9 February 2010, deposing to the advice he had given to reject the offer and which he said had been confirmed by Senior Counsel then briefed in the matter, together with an affidavit sworn by Mr Brand on 9 February 2010, deposing to his acceptance of Counsel’s advice in that regard.

Broadly speaking, Counsel advised that the offer should be rejected for reasons solely connected to the second of the grounds raised in the letter as to why the information was not confidential (namely that there was no confidence in an iniquity). The first reason adverted to in the letter (that local residents had complained to Council in relation to the plaintiffs’ activities prior to the letter having been sent), was a matter going to whether the information was in the public domain. It would appear from the evidence of Mr Fitzgibbon that no consideration was given as to the reasonableness of the offer in light of the assertion that the information was not confidential or was in the public domain.

In Commonwealth of Australia v Gretton [2008] NSWCA 117 , it was said: 41 There are public policy considerations that underpin the making of favourable costs orders where a Calderbank offer has been made. In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA said at [14]: “… the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants.” See also Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322. 42 The public policy in encouraging settlement also finds statutory encouragement: see the Civil Procedure Act , s 56. Section 131 of the Evidence Act also provides statutory acknowledgment that Calderbank offers may be received into evidence. 43 The making of a Calderbank offer does not automatically result in a favourable costs order, notwithstanding that the judgment is more favourable to the party making the offer than the terms of the offer. Rather, as Giles JA stated in SMEC Testing Services Pty Ltd v Campbelltown City Council at [37]: “…the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …” (Emphasis added) See also Jones v Bradley (No 2) at [8]. 44 Two general ‘rules’ have emerged relating to Calderbank offers, namely, that to justify the making of an order for costs on an indemnity basis, the offer must be a genuine offer of compromise, which it is unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]-[5]; Leichhardt Municipal Council v Green at [21]-[24], [36]. However, as this Court (Santow, Bryson JJA, Stein AJA) pointed out in Leichhardt Municipal Council v Green at [8], the ‘common law principles’ that have been developed in relation to costs “ operate merely as guides to how the discretion might appropriately be exercised ”. The principles or rules to which I have just referred fall within that category. 45 The discretion is to be exercised having regard to all the relevant circumstances in the case. The question that had been raised in Leichhardt Municipal Council v Green was whether there had been a genuine offer of compromise. As the Court said at [21]: “There is little appreciable difference between saying that an offer should not in the court’s discretion attract costs sanctions in the circumstances and saying that an offer is not a genuine offer of compromise in the circumstances. Both depend upon a value judgment of the offer and the conduct of the parties in the circumstances of the claim.” 46 The onus is on the party making a Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour: see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61.

There is no doubt that the position in which Mr and Mrs Brand are now placed is less favourable than would have been the case had the offer been accepted. It is submitted by Mr Jacobs that this offer required in effect complete capitulation as well as a contribution to the defendant’s costs. As noted above, I do not consider that the offer required complete capitulation. True it is, that it required the Brands to accept the likelihood that they would fail in their claim (as they did), but that was not an unrealistic outcome of the case and parties are to be encouraged to weigh up the potential outcomes of litigation when assessing the reasonableness of offers of this kind.

Here, it seems that the focus (in considering the Calderbank offer) was solely on the strength or weakness of the illegality defence (something to which the Brands were no doubt sensitive having already been the subject of a prosecution in that regard). This seems to have blinded the Brands, or their then legal representatives, to the difficulties inherent in the overall claim based on alleged breach of contract and/or unconscionable conduct. (Furthermore, it seems to have been considered that acceptance of the offer would involved some form of admission as to the strength of the illegality defence, which does not seem to me to be a justifiable conclusion. I note in this regard that Mr Jacobs conceded in his submissions that considerable emphasis was given to the allegations in relation to a very serious offence and that this needed to be dealt with by the plaintiffs and that Mr Fitzgibbon’s handwritten note of his advice in relation to the offer concluded with the words “On the above I recommend you reject ‘the fiction’ that you have committed any crime and therefore reject the offer as ‘unreasonable’”, thus indicating clearly the emphasis given to this issue in the mind of the plaintiffs’ legal advisers.)

Had attention been given to the prospects of success of the plaintiffs’ claims (leaving aside the question whether an illegality defence would have succeeded) at that point, then the ambit of the case might well have been drastically reduced (and the costs associated with the lack of clarity in identifying what was the confidential information said to have been disclosed could have been avoided).

In the circumstances, I consider that Dr Monks made a reasonable offer of compromise and that this was unreasonably rejected, insofar as the evidence discloses that it was not considered other than by reference to the strength/weakness of the illegality aspect of the defence (and it seems to me that there is an available inference, on the material before me, that the proceedings were maintained, after the making of the offer, at least in part in order to clear Mr Brand’s name).

I therefore consider it appropriate to order that the plaintiffs pay the defendant’s costs from 21 December 2007 on an indemnity basis and her costs before then on a party/party basis of the proceedings. Corrections

Finally, it was helpfully drawn to my attention during the course of argument on this application that there had been an omission from paragraph 218 of my reasons for judgment. I now publish a revised judgment correcting that error, and making the qualification to paragraph 433 the error referred to above, as well as some minor typographical errors. I thank Counsel for drawing those matters to my attention. Orders

For the reasons set out above I make the following orders: 1. The plaintiffs’ Amended Notice of Motion filed 29 January 2010 be dismissed with costs. 2. The time for the filing of a notice of appeal be extended pursuant to rule 51.16(2) for a period of 14 days from today’s date. 3. The plaintiffs pay the defendant’s costs of the proceedings before me (other than the costs of the motion ordered in paragraph 1 above) from the date of commencement of the proceedings on a party/party basis and from 21 December 2007 on an indemnity basis.