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Philip John Pollack v Retravision (NSW) Ltd [1997] FCA 1049 (13 October 1997)

PRACTICE AND PROCEDURE - abuse of process - application for costs order against solicitor personally - whether intended to force solicitor to cease acting in those proceedings - whether an abuse of process.

BANKRUPTCY - proceedings by bankrupt for abuse of process of the Court - whether proceedings in respect of personal injury or wrong done to the bankrupt.

LEGAL PRACTITIONERS - Solicitors - solicitor acting for a party in the proceeding and likely to be a witness on contentious issues in the proceedings - desirability of solicitor so acting.

Bankruptcy Act 1966 (Cth), ss 60(2), 60(4).

Legal Profession Act 1987 (NSW), ss 57b, 57D

Revised Professional Conduct and Practice Rules (NSW), r 19

Chapman v Rogers [1984] 1 QdR 542, cited.

Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713, cited.

Grainger v Hill [1838] EngR 365; (1838) 4 Bing NC 212; 132 ER 769, cited.

Hanrahan v Ainsworth (1990) 22 NSWLR, cited.

Holmes v Goodyear Tyre & Rubber Co (Aust) Ltd (1984) 73 FLR 88, cited.

Varawa v Howard Smith Co Ltd [1911] HCA 46; (1911) 13 CLR 35, cited

Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, cited.

Yamaji v Westpac Banking Corporation (No 1) [1993] FCA 253; (1933) 42 FCR 431, cited.

PHILIP JOHN POLLACK v RETRAVISION (NSW) LTD

NG 442 of 1995

SACKVILLE J

SYDNEY

13 OCTOBER 1997

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	) NG 442 of 1995

BETWEEN:	PHILIP JOHN POLLACK Applicant
AND:	RETRAVISION (NSW) LTD Respondent

JUDGE:	SACKVILLE J
PLACE:	SYDNEY
DATED:	13 OCTOBER 1997

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The respondent file with his Honour's Associate and serve any written submissions on costs on or before 27 October 1997.

3. The applicant file with his Honour's Associate and serve any written submissions on costs on or before 10 November 1997.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	) NG 442 of 1995

BETWEEN:	PHILIP JOHN POLLACK Applicant
AND:	RETRAVISION (NSW) LTD Respondent

JUDGE:	SACKVILLE J.
PLACE:	SYDNEY
DATED:	13 OCTOBER 1997

REASONS FOR JUDGMENT

THESE PROCEEDINGS

The applicant ("Mr Pollack") was admitted as a solicitor of the Supreme Court of New South Wales in 1975. He practised as a sole practitioner under the name P.J. Pollack & Co from 1983 until February 1996, when the Law Society of New South Wales declined to renew his practising certificate. On 21 March 1996, a sequestration order was made against Mr Pollack's estate, on a creditor's petition. He has not yet been discharged from bankruptcy.

In these proceedings, which were commenced on 22 June 1995, Mr Pollack claims damages against the respondent ("Retravision") for what he says is an abuse of the process and procedures of this Court. The abuse of process is alleged to have occurred in the course of litigation in this Court, between certain clients of Mr Pollack, as applicants, and Retravision and two persons associated with Retravision, as respondents (the "Federal Court proceedings").

In the Federal Court proceedings, Retravision and another respondent sought an order for indemnity costs against Mr Pollack's clients and an order that Mr Pollack personally pay the costs "as ordered against [Mr Pollack's clients]". Mr Pollack alleges that Retravision abused the process of the Court by filing and serving documents in the Federal Court proceedings pressing the claim for costs against him personally, and by engaging in correspondence relating to that claim, for the improper, dominant and ulterior purpose of forcing Mr Pollack to cease acting for his clients in the Federal Court proceedings. Mr Pollack seeks general damages, aggravated damages and punitive damages.

It was common ground between the parties that the Official Trustee in Bankruptcy elected, on 5 July 1996, pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth) ("Bankruptcy Act 1995 "), not to prosecute or continue the present proceedings insofar as they have vested in the bankrupt estate of the applicant. Section 60(2) of the Bankruptcy Act provides that an action commenced by a person who subsequently becomes a bankrupt is, upon his becoming a bankrupt, stayed until the trustee in bankruptcy makes an election in writing to prosecute or discontinue the action. However, this is subject to s 60(4)(a), which permits a bankrupt to continue, in his or her own name, an action commenced by him or her before he or she became bankrupt in respect of "any personal injury or wrong done to the bankrupt...". Mr Pollack contends that his claim comes within s 60(4)(a) of the Bankruptcy Act.

The test of whether an action is one in respect of any personal injury or wrong done to the bankrupt is

"whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property":

Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713, at 721, per Dixon J. As will be seen, Mr Pollack claims that, in consequence of the alleged abuses of process, he has been injured in his character and reputation and suffered injury to his physical and mental health. I am prepared to assume that at least part of Mr Pollack's claim falls within s 60(4)(a) of the Bankruptcy Act: see Holmes v Goodyear Tyre & Rubber Co (Aust) Ltd (1984) 73 FLR 88 (S Ct Qld/Shepherdson J), at 90-91.

THE CLIENTS

In about July 1994, Mr Pollack commenced to act as a solicitor for Mrs Colleen Halls and her husband, Mr Francis Halls. Mrs Halls is the daughter of Mr Stanley Street and Mrs June Street, for whom Mr Pollack also acted. All four were directors of Terry's Sound Lounge Pty Ltd ("TSL"), which conducted a retail electrical goods business at Bowral, under the name "Terry's Retravision Discounts". TSL was a member of Retravision, a co-operative which purchases electrical goods on behalf of its members. The Streets and the Halls gave guarantees of TSL's indebtedness to Retravision. A guarantee was also given by Mr Warren Street, a son of Mr and Mrs Street. In August 1994 TSL went into liquidation, owing substantial sums to Retravision.

Mr and Mrs Halls and Mr and Mrs Street were also the directors of Jancollyn (1980) Pty Ltd ("Jancollyn"). Jancollyn was the trustee of the Street family trust and was the registered proprietor of houses in Bowral in which the Streets and the Halls lived. In 1992, Jancollyn executed a mortgage over the properties to secure TSL's indebtedness to Retravision. Mr Pollack also acted for Jancollyn.

The Streets and the Halls (to whom I shall refer collectively as "the clients") were involved in a protracted dispute with Retravision. This dispute led to a series of cases involving Retravision, the clients and persons associated with the clients, in the Federal Court, the Supreme Court of New South Wales, and the Local Court, although the parties to each set of proceedings were not identical. It is not necessary to refer to all the cases, but it is helpful to explain briefly the nature of the principal proceedings in the Supreme Court of New South Wales and in the Federal Court.

THE PROCEEDINGS INVOLVING RETRAVISION AND THE CLIENTS

The Commercial Division Proceedings

On 29 August 1994, Retravision commenced proceedings in the Commercial Division of the Supreme Court of New South Wales claiming sums said to be due to it from the clients, Warren Street and Jancollyn under guarantees and mortgages. The summons was subsequently amended to include a claim for possession of certain land which was owned by Jancollyn and mortgaged to Retravision. In these proceedings (the "Commercial Division proceedings"), J R Gibb & Co acted for Retravision, Mr J R Gibb, of that firm, having carriage of the matter. Mr Pollack acted on behalf of all defendants in the Commercial Division proceedings, other than Warren Street.

The defendants in the Commercial Division proceedings raised a variety of defences to Retravision's claim, including an allegation by Jancollyn that it had been subjected to illegitimate pressure by Retravision amounting to duress. The defendants also sought relief by way of cross claim. In a judgment delivered on 20 December 1994, Giles CJ Comm D, found in favour of Retravision. His Honour gave judgment for Retravision against each of the defendants for $2,817,867, and dismissed the cross claim. He also made an order for possession against Jancollyn, but directed that the writ for possession lie in court until 31 March 1995.

The Court of Appeal Proceedings

On 2 February 1995, the parties represented by Mr Pollack (that is, the clients and Jancollyn) filed a notice of appeal against the judgment of Giles CJ Comm D. On 21 March 1995, the appellants applied for a stay of the orders made by his Honour, but this application was dismissed by Meagher JA on 3 April 1995. Retravision in fact obtained possession of Jancollyn's property on 24 April 1995.

After a number of other interlocutory applications, Jancollyn discontinued its appeal, but the clients continued as appellants. Retravision filed a motion that the proceedings be dismissed for want of prosecution and seeking, inter alia, a costs order against Mr Pollack personally. On 5 June 1995, Sheller JA dismissed Retravision's motion. By this time, Mr Pollack had ceased to act on behalf of the clients in the Court of Appeal proceedings, and had been replaced by another solicitor. On 10 July 1995, immediately prior to the hearing of a further motion by Retravision to strike out certain paragraphs of the notice of appeal, the new solicitor acting for the clients filed a notice of discontinuance on their behalf. Sheller JA made orders dismissing the appeal and awarding costs against the appellants (other than Jancollyn), whose appeal had already been discontinued).

The Equity Division Proceedings

On 20 September 1994, Retravision and TSL (which was in liquidation and to which receivers and managers were appointed) instituted proceedings in the Equity Division of the Supreme Court of New South Wales against Simone Halls, Jason Halls, and Terrys Pty Ltd. Simone and Jason Halls were apparently the children of Mr and Mrs Halls, while Terrys Pty Ltd was a company associated with the clients.

The plaintiffs claimed that payments totalling $55,000 made by TSL to Simone and Jason Halls was a transaction entered into with intend to defraud Retravision as the holder of a charge over the assets and undertaking of TSL. They also claimed a declaration that a certain agreement between TSL and Terrys Pty Ltd, made on 25 July 1994, be set aside.

On 10 October 1994, Young J made orders requiring

* Simone Halls to pay $45,000 to the receiver and manager of TSL;

* Jason Halls to pay $100,000 to the receiver and manager of TSL; and

* Terrys Pty Ltd to deliver up and account for goods delivered to it pursuant to the agreement.

On 22 February 1995, Mr and Mrs Halls were examined before a Registrar of the Supreme Court, apparently in connection with attempts to enforce the orders made by Young J. In the course of that examination an undertaking was given that Mr Pollack would produce certain documents. A dispute subsequently arose as to whether the undertaking was given by Mr Pollack personally or on behalf of his clients. On 24 March 1995, Mr Pollack wrote to the Registrar of the Supreme Court requesting that the matter be relisted for a "clarification, variation or discharge" of the undertaking. The matter was ultimately referred to Cohen J on 29 May 1995, who ruled that the undertaking had been given on behalf of Mr Pollack's clients.

On 26 May 1995, shortly before the hearing before Cohen J, Retravision's solicitors wrote to Mr Pollack stating that they had instructions to claim costs against him personally at the hearing. As will be seen, in the event, that application was not pursued.

The Federal Court Proceedings

The Federal Court proceedings were commenced by the clients on 11 January 1995. The respondents were Retravision, Mr Macauley, the finance director of Retravision, and Mr Scott, a chartered accountant who was engaged by Retravision to report on the affairs of TSL. The clients sought a declaration, purportedly pursuant to s 592 of the Corporations Law, that the respondents and Mrs Halls (who was named as the fourth applicant in the proceedings) were jointly and severally liable for debts totalling $2.1 million incurred by TSL between June 1992 and 1993. The clients also sought a declaration that they were entitled to a contribution or indemnity from the respondents in respect of those debts. The clients relied on an amended application and an amended statement of claim filed on 23 February 1995.

On 2 March 1995, Gummow J directed that there should be a separate determination of the following question:

"whether upon the admission by the First and Second Respondents solely for this purpose of the facts alleged in the Amended Statement of Claim and with the Exhibits A and B and upon the agreed fact that the debt referred to in paragraph 4 of the Amended Statement of Claim arises under a judgment of the Supreme Court of New South on 20 December 1994, the Applicants are entitled to declarations in or to the effect of paragraphs 1, 2 or 3 of the Amended Application."

The hearing took place on that date and, on 11 April 1995, his Honour delivered judgment, answering the question in the negative and ordering the applicants to pay the respondents' costs. His Honour held that the words in s 592(1) of the Corporations Law "any person who...took part in the management of the company" should not be construed so as to include the creditor to whom the company incurred the debt, that is, Retravision.

By a notice of motion dated 1 May 1995, but not filed until 30 May 1995, the respondents sought several orders, including an order that Mr Pollack personally pay the costs of Retravision and Mr Macauley. The motion was set down for 15 June 1995. On that day Hill J ordered that the applicants should pay the respondents' costs on a party and party basis. His Honour noted that the motion for costs against Mr Pollack was not pressed.

THE PLEADINGS

Mr Pollack's amended statement of claim, in its final form, is styled the "composite statement of claim". Mr Pollack alleges that at all material times he was a solicitor and acted for and represented the clients and companies associated with them. Mr Pollack says that he acted for the clients against Retravision in the Federal Court proceedings, the Court of Appeal proceedings and in other litigation. He also says that Mr J R Gibb, of J R Gibb & Co, Solicitors, Mr Johnson of counsel and Mr K Macauley, Retravision's Finance Director, were each agents of Retravision.

The composite statement of claim (par 8) alleges that in and about May 1995, Retravision, by its solicitor and agents, "abused the process and procedures of the Federal Court". The statement of claim does not set out the allegations of material fact that support the pleaded case of abuse of process. However, so-called "particulars" to par 8 set out some material facts said to support the pleaded cause of action. The particulars to par 8 are as follows:

"(a) [Mr Pollack] for and on behalf of the clients brought an application against [Retravision] and Macauley in the Federal Court [proceedings]. This application was made pursuant to Section 592 of the Corporations Law and came on for hearing before Mr Justice Gummow on 8 February and 2 March 1995. His Honour gave judgment on 11 April 1995 and found in favour of [Retravision] and Macauley.

(b) On 1 May 1995 Retravision and Macauley filed and brought a notice of motion in the Federal Court in the said matter seeking orders dismissing the proceedings. Orders were further sought that the clients pay the costs of Retravision and Macauley on an indemnity basis and that [Mr Pollack] pay the costs as ordered against the clients.

(c) At that time the clients were impecunious and were without sufficient funds to pay the costs on an indemnity or any basis.

(d) The said notice of motion was supported by affidavits and was the subject of certain correspondence written on behalf of Retravision.

(e) The said affidavits and correspondence referred to above were not made and written to support the seeking of legitimate costs and orders against the clients and [Mr Pollack] but for the improper, dominant and ulterior purpose of threatening, harassing and intimidating [Mr Pollack] in order to force him to cease acting for the clients.

(f) In the abovesaid affidavits and correspondence Retravision made threatening and offensive statements of and concerning [Mr Pollack]. These statement [sic] were made on behalf of [Retravision], for the purpose of intimidating and harassing [Mr Pollack] and to prevent him from property representing his clients and to force him to cease acting for them.

(g) The said affidavits and correspondence also made personal attacks on and criticisms of [Mr Pollack] and were designed to make him lose confidence in himself and his ability as a solicitor and to further the purpose of Retravision to prevent him from continuing to act for the clients.

(h) Further Retravision by itself, its servants and agents included material in the affidavits and correspondence referred to above which were irrelevant to the notice of motion and orders sought for the purpose of intimidating and harassing [Mr Pollack] and to prevent him from properly representing his clients.

(i) The said notice of motion was not brought for the purpose of seeking legitimate costs orders against [Mr Pollack] but for the dominant, improper and ulterior purpose of threatening, harassing and intimidating [Mr Pollack] in order to force him to cease acting for the clients.

(j) By reason of the wrongful acts of Retravision as aforesaid and the abuse of the processes and the procedures of the Federal Court [Mr Pollack] ceased acting for the clients and notified Mr Gibb of his cessation to act whereupon [Retravision] withdrew the notice of motion and did not further seek the costs orders against [Mr Pollack]."

Mr Pollack claims that, by reason of the alleged abuse of process, he has been injured in his character, credit and reputation has been brought into public hatred, ridicule and contempt, and has suffered injury to his physical and mental health, anxiety, stress, worry and nerves. The particulars of the various heads of damage are set out in the composite statement of claim as follows:

"[Mr Pollack] claims in respect of the upset, worry and distress caused by the wrongful acts of [Retravision], its solicitor, servants and agents . [Mr Pollack] also claims injury to reputation following the publication of Retravision's correspondence, affidavits and notices of motion to Judicial and other officers of the Federal Court, staff and other persons who read the material complained of.

Particulars of Actual (Special) Damages

Legal costs in respect of defending the Federal Court

notice of motion (settling and preparing affidavits) $1,500.00

Taxi Fares from North Sydney to Counsel's Chambers

in Martin Place and return in respect of two conferences

regarding the Federal Court notice of motion $ 36.00

Medical, chemist expenses (estimated) say $ 60.00

Particulars of Aggravated Damages

[Mr Pollack] claims that his injuries and hurt to feelings have been increased by:-

(a) [Retravision's] wrongful failure to apologise.

(b) The manner in which [Retravision] has conducted its defence.

(c) The attacks on [Mr Pollack] by [Retravision] in its statements filed in these proceedings.

Particulars of Punitive Damages

The conduct of [Retravision] was scandalous and oppressive and an abuse of the process of the Court. [Retravision] is a large, wealthy and powerful corporation. The aim of its conduct was to prevent the clients from being represented by a solicitor and to prevent a solicitor ([Mr Pollack]) from representing his clients. The means of achieving this improper aim were notices of motion, affidavits and correspondence in the Federal Court."

Mr Evatt, who appeared on behalf of Mr Pollack, did not press the claim for $1,500 in respect of legal costs said to have been incurred in defending the Federal Court proceedings.

It is of some importance to note what is not pleaded. In its original form, the statement of claim pleaded that Retravision had abused the process and procedures of the Supreme Court of New South Wales, inter alia, by seeking an order for costs against Mr Pollack personally in the Court of Appeal proceedings. Following directions hearings in the present case conducted by another Judge of this Court, Mr Pollack elected to amend his statement of claim to excise any reference to the Supreme Court proceedings. It is therefore no part of Mr Pollack's case to allege that Retravision abused the process and procedures of the Supreme Court. His claim for damages rests only on the alleged abuse of the process and procedures of the Federal Court.

The statement of claim, in an earlier form, also alleged (or might be taken to have alleged) that Retravision made false and misleading statements, in affidavits and correspondence, of and concerning Mr Pollack. Following a hearing on an interlocutory dispute concerning subpoenas (Pollack v Retravision (NSW) Ltd (Fed Ct/Sackville J, 20 June 1997, unreported)), Mr Pollack amended the so-called particulars to par 8 of the statement of claim, to remove any allegation that the statements in affidavits and correspondence were false or misleading. Mr Evatt explained this course of action on the ground that it is not necessary for the applicant in a case founded on abuse of process to prove that the respondent has made false or misleading statements about the applicant. In any event, the amendment to the particulars to par 8 eliminated the potentially time-consuming issue of whether or not the statements made about Mr Pollack in the voluminous affidavits and correspondence were true.

Retravision's amended defence made some admissions on non-contentious matters. One of the allegations admitted was that the applicants in the Federal Court proceedings, namely, the clients, were impecunious and without sufficient funds to pay Retravision's costs on an indemnity or other basis. Retravision denied that it had abused the process and procedures of the Federal Court, or that it had any improper or ulterior purpose in preparing and filing the motion for costs against Mr Pollack in the Federal Court, or in any correspondence relating thereto.

Abuse of Process

There was no dispute between the parties as to the principles applicable to the present case. The history of the tort of abuse of process, which is generally said to have been established by Grainger v Hill [1838] EngR 365; (1838) 4 Bing NC 212; 132 ER 769, has been traced in detail by Clarke JA in Hanrahan v Ainsworth (1990) 22 NSWLR 73, at 107 ff. The existence of the tort was first recognised by the High Court in Varawa v Howard Smith Co Ltd [1911] HCA 46; (1911) 13 CLR 35 and the elements were discussed in Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509.

In Hanrahan v Ainsworth, Clarke JA said (at 112) that a number of propositions could be deduced from the early authorities. These included the following:

"1. An action on the case for abuse of the process of the court will lie where it has been proved that process ancillary to a principal claim for relief has been used to effect an object not within the scope of the process and damage has resulted;

2. Where the action lies it is not necessary to establish that the principal proceedings have terminated;

3. The action will not lie where the claim is that a party has instituted proceedings, whether principal or ancillary, in order to effect an object within the scope of the proceedings. This is so even if the proceedings have been irregularly or maliciously instituted".

In Williams v Spautz the joint judgment (Mason CJ, Dawson, Toohey and McHugh JJ) said (at 523) that it is central to the tort of abuse of process that

"the party who has instituted proceedings has done so for a purpose or to effect an object beyond that which the legal process offers."

Their Honours continued (at 524):

"In conformity with the approach adopted in Grainger v Hill, this Court has regarded the purpose of the party instituting the proceedings as of crucial importance. In Varawa, the plaintiff alleged that the defendant company had instituted proceedings for breach of contract and procured the issue of a writ of capias ad respondendum pursuant to which the plaintiff was arrested with the intention of coercing him into paying the defendant moneys to which it was not entitled. The allegations were found unproved, but Griffith CJ, O'Connor and Isaacs JJ recognised the existence of the tort of abuse of process [(1911) 13 CLR at 55-56, 70, 91.] Griffith CJ referred to the abuse in Grainger v Hill as being `a use of original process for purposes foreign to the scope of the process itself, that scope being merely to obtain security for enforcing the payment of an alleged debt' [ibid., at 55]. O'Connor J expressed himself in similar terms [ibid., at 70]. And Isaacs J observed [ibid., at 91]:

`In the sense requisite to sustain an action, the term `abuse of process' connotes that the process is employed for some purpose other than the attainment of the claim in the action. If the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the Court is asked to adjudicate they are regarded as an abuse of process for this purpose.'"

Later in the judgment, their Honours said (at 529) it was enough that the person alleging an abuse of process show that the "predominant purpose" of the other party in using the legal process has been one other than that for which it has been designed.

Mr Pollack was not a party to the Federal Court proceedings, although of course Retravision was. Mr Vincent, who appeared with Mr Tregenza for Retravision in the present proceedings, did not suggest that the fact that Mr Pollack was not a party to the Federal Court proceedings precluded him from succeeding in an action based on abuse of process. He accepted that, if Retravision was shown to have had the purpose alleged by Mr Pollack, namely, to force him to cease acting for his clients, it was open to conclude that the company had abused the process of the Federal Court.

Damage is a necessary element of the tort of abuse of process. Mr Vincent, on behalf of Retravision, on the assumption that Mr Pollack succeeded in establishing that Retravision had abused the process of the Federal Court, disputed that Mr Pollack had suffered any damage in consequence of that abuse. However, it will be necessary to address the question of damage only if Mr Pollack can establish other elements of the cause of action based on abuse of process.

Costs Applications in Other Proceedings

Mr Pollack relied principally on his own statements, which had been filed in these proceedings in support of his case. There was some debate at the time Mr Evatt read those statements in Mr Pollack's case, as to whether material contained in them, relating to the various proceedings in the Supreme Court and elsewhere, was admissible. In the event, Mr Evatt did not read much of that material. However, he put specifically to Mr Gibb and Mr Macauley, who gave evidence in Retravision's case, that each had taken or authorised steps in other proceedings for an improper purpose or motive, namely, to force Mr Pollack to cease acting in those proceedings as the solicitor for the clients and their companies.

One of the matters relied on by Mr Evatt was that Retravision had claimed costs orders against Mr Pollack personally in the Court of Appeal proceedings and had foreshadowed such a claim in the Equity Division proceedings. These claims were made or foreshadowed at about the same time as the motion, seeking costs against Mr Pollack personally, was filed in the Federal Court proceedings. All claims in the various courts were closely related, since they involved Retravision, on the one side, and the clients and members of their family or associates, on the other. Moreover, the claims essentially arose out of the same transactions.

In these circumstances, I allowed Mr Evatt to ask questions in cross-examination, directed to the role and motives and purpose of Mr Gibb and Mr Macauley in making or pursuing the costs claim against Mr Pollack personally in the Court of Appeal and Equity Division proceedings. I gave Mr Vincent the opportunity of adducing further evidence on these issues. In the event, Mr Vincent did not tender any further evidence.

THE SEQUENCE OF EVENTS

The following is the sequence of major events in relation to the claims for costs made by Retravision against Mr Pollack personally. There was no significant dispute between the parties as to these events, which mostly reflect correspondence or documents filed in Court. The account does not include the legal advice provided by Retravision's counsel and solicitors, to which I shall refer later.

(i) On 20 February 1995, Mr Gibb wrote to Mr Pollack, in relation to the Court of Appeal proceedings, as follows:

"We refer to the Notice of Appeal served on our office on 2 February 1995.

We have perused the Notice of Appeal and consider the appeal to be an abuse of process. The appeal is without foundation. You and your clients pursue it without regard to your clients' financial circumstances. It may be that you alone will benefit.

We have been instructed to apply to the Court of Appeal to have the proceedings struck-out and to seek costs against your clients and also yourself. If the Court of Appeal does not strike-out the proceedings then we will be seeking alternative orders for security for costs against each of the Cross Claimants.

We will let you have the relevant Notice of Motion shortly."

(ii) On 24 February 1995, Mr Gibb wrote to Mr Pollack a brief letter, as follows:

"Our instructions are - in relation to this matter [viz, the Federal Court proceedings] - to seek costs against you personally."

This letter was sent the day after the clients (the applicants in the Federal Court proceedings) filed an amended application and an amended statement of claim, in the Federal Court proceedings.

(iii) On 10 March 1995, Mr Gibb wrote to Mr Pollack in connection with the Equity Division proceedings. After complaining about a failure to forward certain statements, the letter continued as follows:

"...there is no compliance with the undertaking you gave to Registrar Berecry on 22 February 1995.

We suggest as follows:

1. you look at page 27 of the transcript and there you will find the following:

`POLLACK: We will produce all statements and banking records.

REGISTRAR: Both examinees are stood down, their examination is stood over generally with liberty to restore on seven days' notice. I note the examinee's solicitor undertakes on their behalf to produce to the receiver's solicitor all bank statements, deposit books and cheque book butts relating to the third defendant company in respect of accounts held on and from 25 July 1994.'; and

2. you comply with your undertaking without prevarication [sic]."

On 16 March 1995, Mr Pollack replied to that letter, and a follow-up letter of 15 March 1995, indicating that the banking statements had already been supplied to Retravision. On 17 March 1995, Mr Gibb wrote to Mr Pollack in response to the latter's letter of 16 March 1995 denying that all statements had been provided and claiming that Mr Pollack now sought "to breach or evade [the] undertaking" to produce those records.

On 20 March 1995, Mr Pollack replied to this letter. Among other things, he denied that there had been any attempt to breach or evade the undertaking.

(iv) On 21 March 1995, Mr Gibb wrote to Mr Pollack in response to the latter's letter of 20 March 1995. On the question of the undertaking, Mr Gibb said this:

"As to your undertaking - its breach or attempted evasion

The breach or attempted evasion remains: see again your own words on page 27 of the transcript and Registrar Berecry's concluding words on the same page. Your undertaking is not to the effect:

`We will give you only what we have or which is in our clients' control or possession.'

Will you - please - comply with your undertaking in the terms in which it was given?"

The letter also claimed that some of the statements made by Mr Pollack before Registrar Berecry on 22 February 1995 were false.

(v) On 20 March 1995, Mr Pollack sent a letter to the Registrar with whom an appointment had been made the following day to settle the index for the appeal book in the Court of Appeal proceedings. In that letter, the applicant stated that he would be seeking an adjournment of one month for the settling of the index. On the following day, Mr Pollack and Retravision's counsel appeared before the Registrar, who made directions for the preparation of a draft index. The Registrar noted that

"the respondent [Retravision] applied for an order for costs against the appellant's [sic] solicitor personally - reserve costs of today."

(vi) On 4 April 1995, Mr Pollack wrote two letters to J R Gibb & Co concerning the Court of Appeal proceedings. The first advised that "our instructions are that the appeal herein is to be withdrawn". The second advised that the Registrar, before whom the matter had again been listed on that day for settling of the Appeal Index, had been advised of Mr Pollack's instructions. The second letter stated that the Registrar had excused the parties from attendance and had said that an order would be made requiring a notice of discontinuance to be filed within seven days. Mr Gibb replied to these two letters, on 5 April 1995, as follows:

"The Court of Appeal proceedings should never have been commenced. They were an abuse of process and intended solely to defeat and delay our client in the enforcement of the judgment obtained by it.

When the Notice of Discontinuance is filed we will be seeking to obtain costs against you personally and on an indemnity basis."

Mr Pollack responded to Mr Gibb's letter by a letter of the same date. This letter asserted that the notice of appeal was settled by senior counsel and that the instructions to discontinue the appeal "were founded on factors, quite apart from prospects of success of the appeal". The first paragraph of Mr Pollack's letter continued as follows:

"If, it is really your intention, to proceed, with an application of the type, referred to in [sic] final paragraph of your letter, I would indicate that it would be my intention to brief Counsel to oppose that application and to protect my position. If successful, I would, of course seek costs on an indemnity basis."

(vii) On 11 April 1995, Gummow J delivered judgment in the Federal Court proceedings in favour of Retravision. On 1 May 1995, Mr Pollack wrote to J R Gibb & Co, stating that he had instructions to file a notice of discontinuance in the Federal Court proceedings and seeking Retravision's consent to the filing of such a notice. Mr Gibb replied to this letter, as follows:

"It appears that you and your clients have overlooked the costs incurred by our client as the result of commencement of the proceedings. Our client will be seeking, on Friday 5 May 1995 payment of its costs and in fact, payment by you personally. Accordingly, we enclose by way of service, Notice of Motion (to be filed on 2nd May, 1995).

The Affidavit of James Roger Gibb to be sworn 2 May, 1995, will follow on that day. Similarly, a copy of the filed Notice of Motion."

(viii) On 1 May 1995, Mr Gibb wrote another letter to Mr Pollack, pointing out that no notice of discontinuance had been filed in the Court of Appeal proceedings. The letter continued as follows:

If, therefore, a Notice of Discontinuance is not filed within seven days from the date of this letter then we will re-list the matter before Registrar Jupp and seek his directions in relation to the filing of the Notice of Discontinuance and such other directions as he may consider appropriate.

It would follow - in the relevant circumstances - that we seek a costs order against you personally and on an indemnity basis".

(ix) As I have said, a notice of motion in the Federal Court proceedings was sent to Mr Pollack on 1 May 1995. The motion was not, however, filed until 30 May 1995. The motion sought orders in the following terms:

"1. An order that the proceedings be dismissed..

2. An order that the Applicants pay the costs of the First and Second Respondents [Retravision and Mr Macauley] on an indemnity basis.

3. An order that Phillip J Pollack, the solicitor for the Applicant pay the costs of the First and Second Respondents [Retravision and Mr Macauley] as ordered against the Applicants."

(x) On 1 May 1995, Mr Gibb swore an affidavit, consisting of 81 paragraphs of text extending over 30 pages and about 150 pages of annexures, in support of the motion to be filed in the Federal Court proceedings. The affidavit was filed in the Federal Court on 2 May 1995, some four weeks before the notice of motion itself was filed. Not all of the affidavit was tendered in evidence in the present proceedings. However, it included assertions that Mr Pollack "has had little regard for Orders and Directions" in various proceedings involving Retravision and the clients (par 10); that he had "shown little or no willingness generally to provide particulars" in the various proceedings (par 11); that he had continued to act for Jason Halls (a son of the Halls) after informing the Supreme Court that he (Mr Pollack) had advised Mr Halls to instruct another firm of solicitors (par 14); that there was evidence given by the Halls before a Registrar in the Equity Division proceedings which suggested that Mr Pollack had been present when a certain sale agreement had been executed (that sale agreement having been found by Young J in the Equity Division proceedings to have been back-dated) (pars 18, 19); that Mr Pollack had filed the notice of appeal in the Court of Appeal proceedings notwithstanding that he had failed to comply with an undertaking given in the Commercial Division proceedings to file an engrossed copy of the cross-claim in those proceedings (par 25); that at no time had senior counsel sought to appear or been identified as the author of any documents filed on behalf of the clients (par 42); and that Mr Pollack had not replied to various letters sent to him in connection with several of the proceedings in which he acted for the clients or associated persons (par 78). Mr Gibb's' affidavit concluded with an assertion that a large number of proceedings, including the Court of Appeal proceedings and the Federal Court proceedings "are of benefit to Mr Pollack personally" and that "[t]here seems to have accrued no benefit to [the clients], Jancollyn, [TSL], Simone Halls or Jason Halls from any of the Proceedings whether commenced by or against [Retravision]".

(xi) On 18 May 1995, Mr Gibb swore another affidavit in the Federal Court proceedings in support of the motion (still not yet filed). Among other things, this affidavit referred to an alleged failure by the applicant to appear in bankruptcy proceedings against Simone and Jason Halls (par 6) and asserted that certain proceedings in the Moss Vale Local Court were "misconceived" (par 15).

(xii) On 23 May 1995, Retravision filed a motion in the Court of Appeal proceedings seeking an order dismissing them for want of prosecution. The motion also sought an order that the clients and Jancollyn (the appellants in those proceedings) pay Retravision's costs on an indemnity basis and that Mr Pollack pay Retravision's costs "as ordered against [the clients and Jancollyn]". This motion was supported by an affidavit sworn by Mr Gibb on 23 May 1995.

(xiii) On 25 May 1995, Mr Pollack wrote to J R Gibb & Co, as follows:

"I refer to the notice of motion returnable in the Court of Appeal on 5 June 1995 and the accompanying affidavit of Mr J R Gibb sworn 23 May.

I regard order 3 as sought in the notice of motion as an improper attack on myself. Some of the matters raised in Mr Gibb's affidavit contain letters and statements which are false and defamatory. The letter which should never had been written and the statements have caused me worry and upset. I am distressed that the Affidavit will be read by Judges and officers of the Court of Appeal and by other persons. The effect of the Affidavit is to injure my professional and personal reputation.

I note [sic] in the Federal Court proceedings between the parties ...and your letter to me of 28 April 1995 [sic] wherein you threatened to seek costs against me personally.

In other proceedings between the parties in the Equity Division ... you have made threats against me concerning undertakings.

It is obvious that your letter of 24 February 1995 was an attempt by your client to force me to discontinue acting for my clients. When this failed you sought order 3 in the Court of Appeal notice of motion and made the statements you did in the affidavit in a further attempt to force me to cease acting. You object has succeeded because the notice of motion and affidavit in the Court of Appeal have put me in a position where I feel I can no longer act. I am consequently compelled by your client's conduct to withdraw thereby denying my clients the representation of their choice. As your client well know their impecuniosity will make it difficult or impossible for them to obtain other representation.

I propose to seek legal advise [sic] as to whether I can take any action in respect to the order sought against me, the defamatory allegations and their client's manoeuvres to get me out of the case and deny the Appellants' [sic] representation.

In the meantime I propose to instruct Counsel to oppose order 3 in the notice of motion. I also propose to file affidavits which you should receive next week. Representation on my behalf will be separate to representation of the Appellants if they are able to find another solicitor."

(xiv) Mr Gibb replied to this letter on 26 May 1995. The letter contains the following paragraphs:

"Federal Court Proceedings... - Reference to letter dated 28 April 1995...

Do you not mean our letter 1 May 1995? For ease of reference, we attach a photostat copy of our letter dated 1 May, 1995. Your reply to this letter dated 1 May 1995, that reply being dated 2 May 1995, shows no distress. Again, for ease of reference, we attach a photostat copy of your letter dated 2 May, 1995."

[The letter of 2 May 1995, referred to in this extract, does not appear to be in evidence.]

(ii) Equity Division Proceedings...

You might identify the threats.

To the extent that these proceedings now concern you personally, there are the following issues:

(1) Your undertaking and compliance (and here you are aware that, in our view, your purported compliance does not match the words in which you expressed your undertaking);

(2) The sworn evidence given - in your presence - by two of your clients (Mr T F Halls and Mrs C M Halls) as to your presence on 25 July 1994 at the time of execution of the Sale Agreement bearing as its date `25 July 1994' in circumstances found by Young J not to have existed on that date. That Agreement was, it is said by your two clients (Mr T F Halls and Mrs C M Halls), prepared by you. That Agreement was then offered to all who might have an interest in it, on the footing of its date being in fact `25 July 1994'. No consents were sought from lenders or those with retention of title arrangements; and

(3) Our instructions are to seek costs against you personally at the hearing before Registrar Berecry on 29 May 1995.

Our letter dated 24 February 1995...

Our letter dated 24 February 1995 simply states our client's instructions. Those instructions were to be pursued irrespective as to whether you had prior to your letter dated 25 May 1995 decided that you could no longer act. Our client is entirely indifferent as to whether you elect to continue or elect to cease to act. The decision is yours.

Our letter dated 24 February 1995 indicated to you - as a matter of courtesy - our client's instructions. It is only now - some weeks later - that it causes you, it seems, distress, worry and upset, sufficient for you to cease to act. Circumstances as at 24 February 19945 are little different from circumstances now."

(xv) The Equity Division proceedings were listed before a Registrar of the Supreme Court in relation for a hearing on 29 May 1995 concerning enforcement of orders previously made in the proceedings. There was little direct evidence before me as to what occurred on that day. However, it was common ground between Mr Vincent and Mr Evatt that the Registrar referred the matter to Cohen J, in order to deal with an application by Mr Pollack to interpret, vary or discharge the undertaking previously given to the Court. It is not clear on the evidence whether Cohen J made any orders in respect of this application. However, it was again common ground that his Honour ruled that Mr Pollack had given the undertaking on behalf of his clients and had not given a personal undertaking. Mr Pollack did not seek costs against Retravision. For its part, Retravision did not pursue further its costs application against Mr Pollack personally in the Equity Division proceedings.

(xvi) Retravision's motion in the Court of Appeal proceedings came on for hearing before Sheller JA on 5 June 1995. On that day, the clients' new solicitor, Mr Jackson, filed a notice of change of solicitors in the proceedings. Both Retravision and the clients (the appellants in the proceedings) were represented by senior and junior counsel. The applicant was separately represented by Mr Evatt. Senior counsel then appearing for Retravision (Mr Coles QC), proceeded on the motion previously filed, including the paragraph seeking a costs order against the applicant.

Sheller JA dealt first with the application that the appeal be dismissed for want of prosecution. Retravision based its application principally on the ground that, on 4 April 1995, Mr Pollack, as solicitor for the clients, had stated that the appeal was to be discontinued. Despite this (so it was said), the clients had provided no explanation for resiling from that statement. His Honour declined to make the order sought by Retravision. He pointed out that the notice of appeal had been filed within time, and that there was "some doubt" as to whether Mr Pollack had instructions to indicate that the appeal would be discontinued. His Honour concluded that any fault that might have been attributed to the clients (the appellants) was not such as to lead the Court to deny their right to appeal.

Notwithstanding that Sheller JA had indicated that he was not prepared to dismiss the proceedings, Mr Coles sought an order against Retravision for costs of the application, on an indemnity basis. He also sought an order that Mr Pollack pay the costs ordered against the clients. Sheller JA rejected Mr Coles' principal submission, holding that the costs of the application should be costs in the appeal. His Honour then pointed out to Mr Coles that an order for costs against a solicitor personally was "very unusual" and invited Mr Coles to consider whether he was "really pressing the order". After taking instructions, Mr Coles asked Sheller JA to stand over the application against Mr Pollack to abide the outcome of the appeal. Sheller JA stated that he was "not happy with that idea". Mr Coles responded by stating that he had nothing further to put on the question. Mr Evatt then invited Sheller JA to dismiss the application for costs against Mr Pollack, and his Honour took that course. Mr Evatt did not apply for the costs of the motion on behalf of Mr Pollack.

[I have set out the events of 5 June 1995 in some detail. In part, this is because Mr Evatt suggested to Mr Gibb in cross-examination in the present proceedings that Mr Coles "did not specifically seek any costs order against Mr Pollack in the Court of Appeal proceedings". The difficulties with this question, having regard to the transcript of the proceedings before Sheller JA (which was in evidence), were pointed out to Mr Evatt. Mr Evatt said he would take the matter no further because "it is all in the transcript". Mr Evatt also said, somewhat surprisingly, that he had not at that stage read the transcript of the proceedings before Sheller JA, notwithstanding that a copy of the transcript was annexed to Mr Gibb's first statement. The question of the relationship between the events of 5 June 1995 and the decision by Retravision not to pursue the costs application against Mr Pollack in the Federal Court proceedings was addressed in submissions.]

(xvii) On 6 June 1995, Mr Gibb wrote to Mr Pollack in connection with the Federal Court proceedings, as follows:

"We refer to the Notice of Motion filed 30 May 1995 and set down for 10.15am on 15 June 1995.

Our client will not seek to proceed with the proposed Order 3 in that Notice of Motion."

The terms of the Notice of Motion are set out in par (ix) above.

(xviii) On 14 June 1995, Mr Pollack filed a notice of ceasing to act as solicitor for the clients in the Federal Court proceedings.

(xix) On 15 June 1995, Hill J heard Retravision's motion. Retravision was represented by senior counsel, but there was no appearance on behalf of the clients. Retravision's counsel advised the Court that Mr Pollack had filed a notice of ceasing to act and that the clients' new solicitor (Mr Jackson) had indicated that he had been instructed not to participate in the Federal Court proceedings on their behalf. Counsel also informed the Court that it was not intended to proceed with the application for costs against Mr Pollack personally. In the event, Hill J dismissed the proceedings, and ordered the clients to pay Retravision's costs on a party and party basis.

STATEMENTS RELIED ON IN THE PROCEEDINGS

It is fair to say that the presentation of evidence in this case did not proceed entirely smoothly. Mr Pollack relied primarily on two statements by him, the first filed on 26 June 1996, and the second on 9 September 1996. These statements appear to have been drafted at a time when Mr Pollack's statement of claim pleaded that Retravision abused the process of the Supreme Court of New South Wales, in addition to pleading that the company had abused the process of the Federal Court. As I have already said, substantial portions of the statements were either not read or were not admitted into evidence. Moreover, because the statements did not annex source documents, it was not easy, at least initially, to follow the course of events relied upon by Mr Evatt, on Mr Pollack's behalf, as establishing that Retravision had abused the process of the Federal Court.

In its case in chief, Retravision relied initially on two statements signed by Mr Gibb and one signed by Mr Macauley. The first of Mr Gibb's statements, filed on 19 August 1996, is a very long document, containing 216 paragraphs of text and five substantial volumes of annexures. The second of Mr Gibb's statements was filed on 13 September 1996 and is considerably shorter. In the event, much of Mr Gibb's first statement was not read or was not admitted into evidence, while only five paragraphs of Mr Gibb's second statement were admitted into evidence.

Mr Gibb's first statement takes the form of a response to Mr Pollack's first statement. Presumably for this reason, the statement does not directly address Mr Gibb's purposes or motives in taking steps to obtain a costs order against Mr Pollack in the Federal Court proceedings. Nor does the statement explain the circumstances in which the decision was made on behalf of Retravision to claim costs against Mr Pollack personally in the various proceedings. These matters were, however, explored in Mr Gibb's cross-examination.

Mr Macauley's statement was filed on 13 March 1997. It refers only briefly to the Federal Court proceedings, concentrating instead on proceedings in the Supreme Court and elsewhere. Once again, much of Mr Macauley's statement was not read, or was not admitted into evidence. Nonetheless, Mr Macauley's statement goes a little further than those of Mr Gibb. Mr Macauley says in his statement that Retravision did not seek to have Mr Pollack cease to act for the clients in any of the proceedings in which he was involved as their solicitor. Mr Macauley also says that, if Retravision had persisted with the costs application against Mr Pollack in the Federal Court, it would have argued its case "and accepted the Court's decision as it did in the Court of Appeal Proceedings". However, Mr Macauley's statement does not explain why costs were sought by Retravision against Mr Pollack personally in the Federal Court proceedings, nor why the application for costs was withdrawn prior to the scheduled hearing date of 15 June 1995.

Mr Macauley was called as the first witness in Retravision's case, on the third day of the trial. At that time, Mr Vincent sought to read a further statement prepared by Mr Macauley, which had been signed the previous day (22 July 1997). Mr Evatt did not object and the statement was admitted into evidence.

In his second statement of 22 July 1997, Mr Macauley says that in early 1995 he became concerned about the legal costs being incurred by Retravision in the litigation arising out of the affairs of the Halls and the Streets. He was particularly concerned that, although Retravision had been "totally successful" in each of the proceedings, it had obtained no monetary benefit from the judgments or orders it had secured. According to Mr Macauley, he asked Mr Gibb's advice as to who would pay Retravision's costs and whether "some security" for those costs was available. Subsequently, Mr Macauley received advice from Mr Johnson in relation to security for costs. As a result of that advice, he decided not to instruct J R Gibb & Co to apply for security for costs, in either the Federal Court or Court of Appeal proceedings.

Following this decision, Mr Macauley says that he asked Mr Gibb:

"Can we claim costs against Mr Pollack?"

Mr Macauley took this course because he knew that the clients did not have resources sufficient to enable them to satisfy an order for costs. Paragraph 10 of Mr Macauley's statement reads as follows:

"I do not have an actual recollection of receiving advice as to claiming costs against Mr Pollack personally. However, I would not have given the instructions to claim against Mr Pollack personally for payment of those costs without having taken legal advice, which I would have received from either Mr Gibb or from Mr Gibb and Mr Johnson in conference. It is my practice to take steps in legal proceedings on behalf of [Retravision] only after taking legal advice."

Mr Macauley also says that the motion in the Federal Court proceedings to obtain an order for costs against Mr Pollack personally was brought on his instructions. He gave the instructions solely because Mr Pollack was the only likely source for the payment of Retravision's costs. At the time, Mr Macauley says that he was not aware that Mr Pollack was experiencing financial difficulties, and that he did not learn of those until some time in 1996. Finally, Mr Macauley says that, following the proceedings before Sheller JA in the Court of Appeal on 5 June 1995, he decided that Retravision should not press the claim for costs in the Federal Court against Mr Pollack. He says he made that decision after receiving further advice on the subject from Mr Johnson.

Additional Discovery

Mr Tregenza elicited from Mr Macauley in his evidence in chief that he had recently come across a memorandum from Mr Johnson providing advice in relation to the claim for costs against Mr Pollack personally. This revelation led to some debate concerning the adequacy of Retravision's discovery and the extent to which client legal privilege otherwise attaching to legal advices and to communications between Mr Gibb and Mr Johnson had been lost (see Evidence Act (Cth), s 122(2)). The end result was that Retravision produced by way of discovery a number of advices, letters, memoranda and file notes in respect of which privilege was explicitly waived. These were made available to Mr Evatt before his cross-examination of Mr Gibb was complete, and before he commenced his cross-examination of Mr Macauley. Although there was a short adjournment to enable Mr Evatt to consider some of the documents, he did not seek any further adjournment of the proceedings.

Assessment of Mr Macauley's Evidence

In cross-examination, Mr Evatt challenged Mr Macauley's account of events. Mr Evatt suggested to Mr Macauley that he wanted Mr Pollack out of the various legal proceedings in which he (Mr Pollack) was acting on behalf of the clients. Mr Macauley rejected this suggestion, stating that his objective (on behalf of Retravision), was to explore whether any portion of the costs in the various proceedings could be recovered, having regard to the clients' lack of means. Mr Macauley also said that his decision not to pursue the costs application in the Federal Court proceedings was based on the failure of the application for costs against Mr Pollack in the Court of Appeal proceedings. Mr Johnson had given a written advice on 6 June 1995, that the claim for costs against Mr Pollack in the Court of Appeal proceedings were stronger than the claim for costs against him in the Federal Court proceedings. Mr Macauley said that he accepted that legal advice. Mr Macauley specifically denied that the reason he had decided not to press the application for a costs order against Mr Pollack in the Federal Court proceedings was that he knew that Mr Pollack had withdrawn as the solicitor acting on behalf of the clients in those proceedings.

Despite the challenge to Mr Macauley in cross-examination, Mr Evatt, in his submissions, did not dispute the truthfulness or reliability of Mr Macauley's evidence. Nor did he suggest that I should reject any part of Mr Macauley's evidence. While it is perhaps unnecessary to say so, I record that I found Mr Macauley to be a truthful and reliable witness, whose account of events and of his role in the application for costs against Mr Pollack in the various proceedings, should be accepted. In particular, I accept Mr Macauley's evidence as to his reason for giving instructions on behalf of Retravision to consider obtaining costs orders against Mr Pollack personally in the Federal Court proceedings. I also specifically accept that Mr Macauley's decision not to pursue the application for costs against Mr Pollack in the Federal Court proceedings had nothing to do with his knowledge that Mr Pollack, by that time, had ceased to act as a solicitor in those proceedings. Mr Macauley did not at any stage intend to secure the removal of Mr Pollack from the Federal Court proceedings or, indeed, from any other proceedings.

I should add that I accept Mr Macauley's evidence that he and not his legal advisers first raised the question of whether it was possible to pursue a claim for costs personally against Mr Pollack. This occurred some time in January 1995. His evidence is consistent with the memoranda and advices admitted into evidence. Contemporaneous notes prepared by Mr Gibb show that the question was discussed, apparently for the first time, at a conference held on 6 February 1995 involving Mr Coles QC, Mr Johnson, Mr Gibb, Mr Macauley, Mr Grose and another solicitor from J R Gibb & Co. The topic was further discussed at a conference between Mr Johnson, Mr Gibb and the other solicitor on 8 February 1995. Mr Gibb's notes, although cryptic, suggest that advice was given at the conference that a costs order against Mr Pollack personally could or might be obtained if he was likely to receive a benefit from the proceedings. On 15 February 1995, Mr Johnson provided a memorandum of advice dealing with a number of topics, including the following paragraph:

"Consideration ought also be given in my opinion to seeking in any proceedings which is commenced on behalf of any of the debtor which is summarily dismissed, discontinued or struck out as having been without merit, for an order for costs (depending upon the basis of dismissal, strike out or result) either on a party paid basis or indemnity basis to be paid by the solicitor on the record for the respective debtors - in most cases being Mr Pollack. Mr Pollack should be advised of such an approach in the event of instructions to that effect being obtained."

I am satisfied that the consideration by Retravision legal representatives of the question seeking costs against Mr Pollack resulted from Mr Macauley having raised the issue in January 1995.

MR GIBB'S EVIDENCE

The fact that Mr Evatt did not challenge Mr Macauley's evidence did not deter Mr Evatt from submitting that I should find that Mr Gibb was not a credible witness. Mr Evatt submitted that, despite Mr Gibb's denials, he intended that the applications for costs made against Mr Pollack personally should have the effect of forcing Mr Pollack to cease acting as a solicitor for the clients in the various proceedings, including the Federal Court proceedings.

It seems to me that, having regard to the findings I have made concerning Mr Macauley's evidence, Mr Evatt's submission encounters difficulties. Mr Macauley was the source of instructions to Mr Gibb and Mr Johnson in the Federal Court proceedings on behalf of Retravision. Indeed, Mr Macauley instructed Mr Gibb on behalf of Retravision in all matters in which the company and the clients were involved, although occasionally Mr Grose, the managing director, participated. Mr Gibb had acted for Retravision over a period of at least twenty years. On Mr Macauley's evidence, which I accept, he made decisions as to the conduct of the litigation on the basis of advice given to him by his legal representatives. He was in regular contact with Retravision's legal advisers, whether in person, by telephone or by means of correspondence.

Mr Evatt's submission, that Mr Gibb had an ulterior and improper motive in pursuing the costs application, implied that Mr Gibb never communicated his intention to Mr Macauley. Had Mr Gibb done so, Mr Macauley obviously would have been aware of Mr Gibb's motivation. Mr Evatt did not suggest to Mr Macauley that, although he himself did not intend to force Mr Pollack to withdraw from the proceedings, he (Mr Macauley) nevertheless knew that Mr Gibb or Mr Johnson had expressed a desire or intention to achieve that result. Nor did Mr Evatt make any such submission. In my view, there is no basis for making a finding of this kind. In these circumstances, it appears to me inherently improbable that Mr Gibb intended at the relevant times to force out Mr Pollack, yet never have communicated that intention to Mr Macauley, who had raised the question of costs orders against Mr Pollack.

Nonetheless, for the purpose of assessing the credibility of Mr Gibb's account, I put to one side the significance of the finding that Mr Macauley had no improper motive or purpose. Mr Gibb spent over a day in the witness box. I therefore had the opportunity to observe him closely. Mr Gibb impressed me as endeavouring to give a frank and truthful account of the circumstances, including his own motivation for initiating, pursuing and (in the case of the Federal Court proceedings) withdrawing the claims for costs against Mr Pollack personally. He had a good recollection of the major events, but recognised when he needed to refer to primary documentation to refresh or confirm his memory. He was prepared in his evidence to make concessions. For example, he acknowledged that discovery in the present proceedings had been unsatisfactory and accepted that he had been criticised previously for using strong language in correspondence.

In my opinion, Mr Gibb's account was supported by the contemporary documentation, especially the correspondence recording legal advice. For example, Mr Johnson advised on 6 June 1995 that it was unlikely that the application for costs against Mr Pollack in the Federal Court proceedings would succeed, having regard to the outcome of the similar application in the Court of Appeal proceedings. This advice supports Mr Gibb's antecedent denial of the allegation that the application was withdrawn because he knew that Mr Pollack had already decided to cease acting as the solicitor for the clients. In an earlier advice, dated 18 April 1995, Mr Johnson noted that he had received instructions to the effect that an application was to be made for costs to be paid by Mr Pollack on an indemnity basis. In that advice, Mr Johnson detailed the steps that were necessary for a notice of motion to be filed, and briefly referred to two authorities, including a judgment of Mason CJ and Deane J in Knight v FP Special Assets Limited [1992] HCA 28; (1992) 174 CLR 178, at 192-193. Mr Johnson concluded the advice by stating that it was necessary to put on evidence that Mr Pollack had benefited or was likely to benefit as a result of the proceedings "i.e. in respect of legal fees". In my view, this advice was material to Mr Gibb including in his affidavit of 1 May 1995 an assertion that the various proceedings including the clients were of benefit to Mr Pollack personally, and that there appeared to be no benefit to the clients from any of those proceedings. I accept Mr Gibb's evidence that he did not intend, by the assertions in par 81 of the affidavit, to cause Mr Pollack to withdraw as solicitor in the various proceedings.

I have taken into account an observation made in Mr Johnson's memorandum of 6 June 1995. That memorandum was prepared by Mr Johnson shortly after he held a conference with Mr Gibb and another solicitor from J R Gibb & Co. As I have noted, Mr Johnson confirmed his opinion that, in view of the outcome of the costs application before the Court of Appeal on 5 June 1995, it was unlikely that an order would be made against Mr Pollack personally in the Federal Court proceedings. The memorandum continued as follows:

"The question then remained as to whether or not Mr Pollack was advised immediately or after the next date for return of the Creditor's Petition proceedings before the Court, namely on 13 June 1995, or immediately of a decision not to proceed against him.

Note that I initially considered that a later notification would be appropriate having regard to the pressure aspects. Subsequent to discussions with Mr Gibb on this point the desirability of eliminating Mr Pollack from any question in the proceedings was considered to be the most appropriate. Having regard to that fact I note that Mr Pollack will be notified, subject to instructions to that effect being received from Retravision (NSW) Limited that paragraph 3 of the Notice of Motion filed 30 May 1995 would not be proceeded with. Such action would of necessity result in a much short [sic] hearing on 15 June 1995."

Mr Evatt put to Mr Gibb that he (Mr Gibb) understood the word "pressure" to refer to pressure on Mr Pollack to withdraw as solicitor for the clients. Mr Gibb denied that the word had been used, or had been understood by him, to refer to pressure on Mr Pollack to withdraw as solicitor for the clients. He also gave evidence that the expression "eliminating Mr Pollack from any question in the proceedings" referred simply to eliminating the claim against Mr Pollack personally and that it did not refer to removing Mr Pollack from his role as a solicitor. In my opinion, Mr Gibb's evidence on these matters was convincing and I accept it.

My acceptance of Mr Gibb as a truthful and reliable witness does not mean that all Mr Evatt's criticisms of Mr Gibb's conduct were without substance. It is clear that Mr Gibb identifies very closely with Retravision, for which he has acted as solicitor over a long period. Perhaps for this reason, he has been slower than might have been expected to recognise potential conflicts of interest. For example, in the present proceedings, Mr Gibb continued as the solicitor on the record for Retravision despite the fact that he was one of Retravision's principal witnesses, and it was therefore almost inevitable, having regard to the pleadings, that his credit would be attacked: see Revised Professional Conduct and Practice Rules (NSW) ("Professional Conduct Rules"), r 19; Legal Profession Act 1987 (NSW), ss 57B, 57D; Chapman v Rogers [1984] 1 QdR 542 (S Ct Qld/FC), at 545, per Campbell CJ; Yamaji v Westpac Banking Corporation (No 1) [1993] FCA 253; (1993) 42 FCR 431 (Fed Ct /Drummond J). Mr Evatt submitted that Mr Gibb took this course because he wished not to reveal to an independent solicitor his true role in the litigation between Retravision and Mr Pollack's clients.

Mr Gibb said that he was unaware of the terms of r 19 of the Professional Conduct Rules, which prohibits a practitioner from continuing to act in a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence material to the determination of contested issues before the court, unless there are exceptional circumstances. I accept that Mr Gibb was unaware of the rule, although it might have been expected that he would have taken steps to ascertain whether any such rule was in force, since his dual role as solicitor and witness was raised at pre-trial directions hearings. However, the conclusion that he should have made further inquiries to ascertain whether it was appropriate for him to continue as the solicitor on the record for Retravision does not demonstrate that his motivation was as Mr Evatt suggested. I am satisfied that, although Mr Gibb was unwise in continuing to act as solicitor in the present proceedings, he was not activated by an improper motive of this kind. I am also satisfied that Mr Gibb did not, at any time before Mr Pollack wrote his letter of 25 May 1995, advert to the possibility that the claims for costs against Mr Pollack in the various proceedings might cause Mr Pollack to withdraw as the solicitor for the clients. In particular, I am satisfied that Mr Gibb did not advert to the possibility that the claim for costs in the Federal Court proceedings would, or might, cause Mr Pollack to withdraw as the clients' solicitor in these proceedings. (I do not mean to imply by this statement that I have made a finding that Mr Pollack did in fact withdraw from the Federal Court proceedings because of the costs claims against him in those proceedings.)

Mr Pollack criticised the inclusion in Mr Gibb's affidavits in the Federal Court proceedings of material critical of Mr Pollack. Of course, in an application for costs against a solicitor personally, some such material is to be expected. Nonetheless, I formed the view that Mr Gibb has tended, in the various proceedings with which I am concerned, to bring what can fairly be described as a somewhat undiscriminating approach to the preparation of affidavits and, to a lesser extent, in the drafting of correspondence. One consequence of this tendency is that Mr Gibb has filed lengthy affidavits in the various proceedings, including the Federal Court proceedings containing considerable material which is, or appears to be, irrelevant to the issues. Having heard Mr Gibb's evidence, I do not think that this tendency, perhaps influenced by Mr Gibb's strong identification with Retravision, reflects adversely on his credit or reliability as a witness. I am satisfied that, to the extent that the affidavits are unnecessarily critical of Mr Pollack, their form and content was not motivated by any intention or desire on Mr Gibb's part that Mr Pollack be forced to withdraw as solicitor for the clients in the various proceedings.

FINDINGS

I make the following findings on the basis of the evidence of Mr Gibb and Mr Macauley:

(i) Mr Macauley gave instructions in January 1995 that the question of costs orders against Mr Pollack personally be considered. He was motivated by concern about the costs of the various proceedings and the lack of resources of the clients to meet any costs orders. He did not then, or at any time until Mr Pollack's withdrawal, contemplate or intend that the claims for costs would cause Mr Pollack to withdraw as the solicitor in the various proceedings. Until Mr Johnson gave his advice on 6 June 1995, Mr Macauley intended, on behalf of Retravision, that the claim should be pursued to finality.

(ii) Mr Gibb acted on Mr Macauley's instructions, given in January 1995, and obtained advice from counsel. Counsel advised that a claim for costs against Mr Pollack could be brought. Mr Gibb acted on that advice in relation to the Federal Court proceedings. He did so by filing the notice of motion, preparing affidavits and engaging in correspondence. Mr Gibb at all times, until Mr Johnson gave his advice of 6 June 1995, thought that there were reasonable prospects of the claim against Mr Pollack in the Federal Court proceedings succeeding. He did not contemplate or intend that the claim for costs against Mr Pollack in the Federal Court proceedings would cause Mr Pollack to withdraw from these proceedings. Until 6 June 1995, he intended that, subject to instructions, the claim for costs against Mr Pollack in the Federal Court proceedings should be pursued to finality.

(iii) The decision not to proceed with the claim for costs in the Federal Court proceedings was made by Mr Macauley, having received legal advice from Mr Johnson. Mr Macauley made the decision because he no longer believed the application had reasonable prospects of success.

MR JOHNSON

In the course of final submissions, Mr Evatt contended that, even if I found (as I have) that Mr Macauley and Mr Gibb were truthful witnesses, it was still open to find that Mr Johnson had proposed or maintained the claims for costs against the applicant personally with the ulterior purpose of forcing the applicant to cease acting for the clients in various proceedings, including the Federal Court proceedings. This contention assumed that an uncommunicated ulterior motive on the part of Mr Johnson could be attributed to Retravision notwithstanding that, as I have found, Mr Macauley (who was Retravision's representative) did not intend at any time to force Mr Pollack to cease acting as the client's solicitor. Mr Vincent challenged this assumption, but it is unnecessary to address the issue.

I have already pointed out that Mr Evatt never suggested to Mr Macauley that he was aware that Mr Johnson had expressed a desire or intention to force Mr Pollack to withdraw from the proceedings. Nor was any such suggestion made to Mr Gibb. There is no basis for a finding that Mr Johnson communicated any such desire or intention to Mr Macauley or Mr Gibb. In my view, it is inconceivable that Mr Johnson formed such a desire or intention, yet assiduously refrained from mentioning it to his client (represented by Mr Macauley) or his instructing solicitors. Mr Johnson was in regular contact with both, particularly Mr Gibb. He regularly provided written advices to Mr Gibb, who relied heavily on that advice. Had Mr Johnson planned to force Mr Pollack's removal from the proceedings, in my view, it is inevitable that the proposal would have been raised with Mr Gibb. The contrary suggestion implies that Mr Johnson succeeded in persuading senior counsel to put the claim for costs against Mr Pollack personally in the Court of Appeal proceedings in order to pursue his (Mr Johnson's undisclosed objective of forcing Mr Pollack out of the various proceedings. This does not seem to me, in the absence of direct evidence, to support it, a plausible scenario.

Mr Evatt pointed out that Mr Johnson had prepared a statement for the proceedings, but the statement had not been read and Mr Johnson did not give evidence. However, Mr Johnson's statement was prepared in response to a statement that was not admitted into evidence and thus there was no occasion to rely on it in Retravision's case. Mr Johnson was referred to in the pleadings as an agent of Retravision, but until the latter stages of Mr Evatt's address there was no clear indication that the applicant intended to suggest that Mr Johnson, quite independently of Mr Macauley and Mr Gibb, had formed the undisclosed purpose of forcing Mr Pollack to cease acting as the solicitor for the clients. It is true that Mr Evatt, through no fault of the applicant's legal representatives, only gained access in the course of the hearing to the written advices prepared by Mr Johnson. But these advices were put to Mr Gibb, who had received them and had discussed them in conference with Mr Johnson and others. I have, for example, accepted Mr Gibb's evidence in relation to the memorandum of 6 June 1995. Having regard to all these factors, this is not a case in which an inference should be drawn, on the principle of Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, that Mr Johnson's evidence would not have assisted the respondent's case: Nuhic v Rail and Road Excavations [1972] 1 NSWLR 204, at 221, per Moffitt JA.

Even if the principle in Jones v Dunkel were to be applied, it would not warrant an inference being drawn that Mr Johnson had the undisclosed ulterior motive alleged by Mr Evatt. The rule in Jones v Dunkel permits, but does not require, an inference that the uncalled evidence would not have assisted the case of the party not tendering the evidence: Cross on Evidence (5th Aust ed) par 1215. Moreover, the rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it: ibid. In the circumstances of this case, to draw an inference that Mr Johnson had an undisclosed improper purpose would be to produce a factual conclusion that flies in the face of probabilities.

CONCLUSION

Mr Pollack has failed to establish that Retravision's claim in the Federal Court proceedings that he personally pay costs was for the purpose or purposes pleaded in the composite statement of claim. Nor has Mr Pollack established that any other actions carried out by or on behalf of Retravision in the Federal Court proceedings were carried out for the purpose or purposes alleged. Mr Pollack has therefore failed to make out essential elements of his claim that Retravision abused the process of the Federal Court.

In the light of these conclusions, there is no need to consider whether, if Retravision had abused the process of the Federal Court, the applicant suffered any loss as a consequence. The application must be dismissed. I shall give the parties the opportunity to make written submissions on costs.

I certify that this and the preceding thirty-three (33) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville

Associate:

Dated: 13 October 1997

Counsel for the Applicant:	Mr C A Evatt and Mr M Rollinson.
Solicitor for the Applicant:	Michael Maher.
Counsel for the Respondent:	Mr R A Vincent and Mr R W Tregenza.
Solicitor for the Respondent:	J R Gibb & Co.
Date of Hearing:	21 - 25 July 1997
Date of Judgment:	13 October 1997