Legal Costs Relevance in Criminal Motive Cases

The court considered the relevance of evidence of legal costs incurred in disputes between parties as proof of motive in criminal actions. The judge ruled that such evidence was relevant and admissible.

Supreme Court New South Wales

Medium Neutral Citation: R v [NAME] (No. 39) [2018] NSWSC 373 Hearing dates: 21 March 2018 Date of orders: 23 March 2018 Decision date: 23 March 2018 Jurisdiction: Common Law Before: Bellew J Decision: See [30] Catchwords: CRIMINAL LAW – Evidence – Evidence of motive – Where Crown alleged that [NAME] was motivated to murder [NAME] following breakdown of their previous relationship – Where breakdown lead to protracted litigation between [NAME] and [NAME] – Where Crown sought to lead evidence of costs incurred by [NAME] in that litigation – Evidence that [NAME] had complained to others about the amount of costs he had incurred – Whether evidence of such costs relevant to motive Legislation Cited: Evidence Act 1995 ([NAME]) Cases Cited: Adam v R (2001) 207 CLR 96; [2001] HCA 57 [NAME] v New South Wales [2002] NSWSC 1270 R v Pearce [2001] NSWCCA 447; 48 ATR 390 [COMPANY] v [COMPANY] (1995) 140 ALR 701 Category: Procedural and other rulings Parties: [NAME] (Crown) [NAME] ([NAME]) Representation: Counsel: [redacted] Mr W [NAME] SC and [NAME] ([NAME])

Solicitors: [redacted] Colin Daley Quinn ([NAME]) File Number(s): 2010/356916 Publication restriction: Nil

Judgment – ex tempore (revised)

1. The Crown has sought to tender evidence of legal costs paid by [NAME] in the course of, and/or as a result of, litigation in which he was engaged against [NAME] and/or [NAME]'s entities. Objection has been taken on behalf of [NAME] to some, but not all, of that evidence. In order to deal with this issue it is necessary for me to briefly record some matters of context.

2. It is part of the Crown case that [NAME] was motivated to kill [NAME], and later intimidate [NAME]'s wife, because of a series of disputes in which they found themselves, which ultimately led not only to what might be described as a "falling out" between them, but also to litigation in this Court as well as (for a period) in the Federal Court of Australia. In the course of her opening address, the Crown Prosecutor said the following (commencing at T97.4): "[T]he Crown says that in determining whether or not [NAME] directed the murder and then the intimidation of [NAME], that you need to consider the relationship between [NAME] and [NAME] and how their business dealings got to the stage where there were these extensive civil disputes between them. So the civil disputes explains their falling out. Now, the Crown case is that the business deals were ending badly for [NAME], who was losing a significant amount of money, including the costs of the litigation, so the legal costs involved in the court cases."

1. It will be evident from that passage of the Crown's opening address that an aspect of the motive upon which the Crown relies arises from the cost, to [NAME], of the litigation against [NAME]. As I noted a moment ago, [NAME] raises no objection to much (indeed, to the majority) of the evidence of such costs. However, an objection has been raised to that part of the evidence relating to the costs incurred by [NAME] in what has been referred to in the trial as the "[NAME] proceedings".

2. In her opening address (commencing at T99) the Crown took the jury to what she referred to as "the disputes between [NAME] and [NAME]". The second of those disputes centred upon the [NAME] proceedings, which the Crown commenced to outline at T106.28. That outline was consistent with that part of the statement of agreed facts (Exh. G) commencing at [32]. [NAME] and [NAME] purchased [ADDRESS], Point Piper in March 2003. On 12 October 2004, "[COMPANY] ([COMPANY])" entered into a Deed with [NAME] regarding the sale and development of [ADDRESS], Point Piper. [COMPANY] was to provide $7.5 million in vendor finance. On 13 October 2004 [ADDRESS], Point Piper is transferred from [NAME] and [NAME] to [NAME]. On 8 September 2005, [NAME] lodged a caveat over [ADDRESS] regarding the $5 million vendor finance. On 30 November 2005, [NAME] lodged a caveat over [ADDRESS], Darling Point, regarding the further $2.5 million vendor finance. On 8 November 2006, [NAME] refinanced a $6.5 million loan previously given by NAB by entering into a mortgage with [COMPANY] for $7.5 million. The mortgage was secured over [ADDRESS], Point Piper. On 11 December 2006 [NAME] and [NAME] lodged a caveat over the property at [ADDRESS] December 2007 (before [NAME] went to Hawaii), [NAME] approached [NAME] and told him that he needed money urgently as the banks were threatening to foreclose on the mortgage he had over [ADDRESS], Point Piper. [NAME] agreed to provide another loan of $8,650,000. On 14 December 2007, [NAME] appointed [NAME] with Power of Attorney over matters involving the [NAME] development agreements. The Power of Attorney expired on 31 December 2007. Between 14 December 2007 and 21 December 2007, [NAME] organised the refinance of the [COMPANY] mortgage over [ADDRESS], Point Piper, and tidied up the previously largely undocumented arrangement between [NAME] and the [NAME] (by requiring [NAME] to enter into two Loan Deeds, a Deed of Acknowledgment and two Deeds of Guarantee with [NAME] on 21 December 2007). These documents related to the loans for $7.5 million and $8,650,000. The due date for the repayment of the $7.5 million was "on demand" and the $8,650,000 loan was 21 June 2008. [NAME] registered two mortgages (AD663450P to secure the $7.5 million vendor finance) and (AD663451P to secure the $8,650,000 loan). On 15 May 2008, [NAME] and his wife [NAME] assigned the Loan Deeds, Deeds of Acknowledgments, Deeds of Guarantee and mortgages over [ADDRESS], Point Piper to [NAME]. On 21 June 2008, the $8,650,000 loan was due. [NAME] offered the "first mortgage monies to pay the original debt" to [NAME] which he did not accept.

44. On 24 June 2008, [NAME] sent a letter of demand to [NAME] regarding the $8,650,000 due. On 27 June 2008, [NAME] registered three caveats over any real property in which [NAME] have an interest. The loan was not repaid. On 8 August 2008 [NAME] sent a letter of demand to [NAME]' for $8,111,935.91. The money was not received. Supreme Court Proceedings: 51060/2008 47. On 13 August 2008, [NAME] instituted proceedings in the Supreme Court seeking possession and sale of [ADDRESS] following non-repayment of the loan. On 9 October 2008, [NAME] filed a cross-claim and cross-summons naming [NAME] and [NAME] as the cross-defendants maintaining that [NAME] entered into an oral agreement with [NAME] in June 2004 regarding the development of [ADDRESS] and that the Deed entered into on 13 October 2004 was to be read subject to this agreement. On 7 November 2008 the matter was listed before Bergin J in the Supreme Court who ordered the caveats over the [NAME] properties be extended until further order of the Court. On 16 December 2008, a letter was sent from [NAME]'s solicitors to [NAME]'s solicitors requesting the re-assignment of mortgages secured over [ADDRESS] back to [NAME]. In late January 2009 Linkshore, [NAME] commenced urgent proceedings in the Supreme Court for the removal of a caveat lodged over a property at 62-[ADDRESS], Edgecliff. On 3 February 2009 Bergin J made orders concerning the Linkshore Proceedings in accordance with short minutes of order. On 6 February 2009 Bergin J ordered the plaintiffs (in the Linkshore Proceedings) pay the costs of [NAME]. On 18 February 2009 [NAME] and [NAME] file separate defences to the Cross-Claim by [NAME] in the Supreme Court. On 16 March 2009 [NAME]'s solicitors sent a Letter of Demand to [NAME]'s and [NAME]'s solicitors requesting indemnity payments for costs incurred during the [NAME] proceedings in the sum of $1.5 million and $3m for stamp duty. On 17 March 2009, "[COMPANY]" filed a cross-summons against [NAME] seeking a declaration that he held the mortgages AD663450P (securing $7.5 million) and AD663451P (securing $8.65 million) on trust for [NAME] and [NAME], orders that the trust property be conveyed and orders that equitable compensation and interest be paid. [NAME] did not transfer the Trust property, being the mortgages, back to [NAME] and to [NAME] and to [NAME]. (amended as requested on 7.3.16) On 8 April 2009, solicitors for [NAME] sent a letter to solicitors for [NAME] and [NAME] and [NAME] requesting that [NAME] pay all of [NAME]'s costs incurred to date in the [NAME]/Linkshore Proceedings, to pay stamp duty on the Declarations of Trust and to pay [NAME]'s costs of taking advice in relation to the procedural steps of being removed as a plaintiff from the [NAME] proceedings. On 8 May 2009, [NAME] filed a Second Cross-Claim against "[COMPANY]" seeking costs for acting in the proceedings and stamp duty on the first and [COMPANY] deed. On 13 July 2009, a letter was sent from solicitors for [NAME] to the solicitors for [NAME] and [NAME] and [NAME] demanding payment of $153,487.63 as money owed to [NAME] for "Indemnities under Declarations of Trust". On 16 July 2009, a letter was sent from [NAME] to [NAME] enclosing the cheques as requested. On 22 July 2009, Consent Orders were signed by [NAME], by [NAME] and [NAME] and [NAME]. (amended as requested on 7.3.16) [NAME] and [NAME] agreed to indemnify [NAME] for any costs, stamp duty etc which had arisen by reason of the proper conduct of [NAME] in relation to the "First Trust" ($7.5 million loan) and "[COMPANY]" ($8.65 million loan) and remove [NAME] as a plaintiff in the proceedings. [NAME] agreed to transfer the mortgages back to [NAME] and [NAME]. On 7 August 2009, mortgage AD663450P was transferred by [NAME] to [NAME] and mortgage AD663451P was transferred by [NAME] to [NAME] and mortgage AD663451P was transferred by [NAME] to [NAME] and [NAME]. On 10 August 2009, [NAME]'s solicitors sent to the solicitors for [NAME] and [NAME] a bill for $70, 228.45 for costs pursuant to the Consent Orders. On 10 December 2009, [NAME] paid $68,370 in costs to [NAME]'s solicitors.

1. Having explained the [NAME] proceedings (as well as other disputes which were said to have arisen between [NAME] and [NAME]) the Crown then said in her opening address (commencing at T131.6): "So, members of the jury, in relation to all of those disputes, it is the Crown case that the multiplying effect of those disputes - the loss of control by [NAME] over his own interests, his losses in court, his legal costs, the resulting damage to his reputation and embarrassment that [NAME] felt at how he was being treated by [NAME] - led to that complete breakdown of their business relationship and indeed their friendship, and there was no going back. Because of what came to be his hatred of [NAME], his wish developed to have him removed permanently from his life."

1. On the present application, two bundles of documents setting out the costs were tendered, although as matters transpired much of that material was extraneous to the real issue that I have been asked to determine. Also tendered was the declaration of trust referred to in [60] of Ex G as outlined above. 2. [NAME] of senior counsel, who acted for [NAME] in the [NAME] proceedings, was called to give oral evidence on the present application. Having said (commencing at T2582.15) that the [NAME] proceedings had ultimately settled, [NAME] gave the following evidence: "Q. Yes. With respect to the proceedings in terms of their finalisation, was it by agreement? A. Finalisation as between [NAME] and the [NAME] parties? Q. Yes. A. Absolutely, on 22 July. Q. And, so far as you were concerned, the reason why you don't have the payment of costs at your fingertips is because that would be attended to by those that instructed you? A. Absolutely. I know what my own fees were and I know about the $150,000 because I advised that it be paid and I was told it was paid, but I don't know any other cost detail. Q. Do you have a recollection of [NAME] indicating to you that he was happy with the settlement? A. On the morning of 22 July, at the conclusion of the conference I had with him starting shortly after 8 o'clock, he was overjoyed. HIS HONOUR Q. At the fact that the proceedings were settled? A. No, at the fact that he was getting his mortgages back and that he'd resolved amicably that dispute with [NAME]. 1. … Q. It is your evidence that he was happy with the settlement, but there had obviously been a dispute between him and [NAME] for some time over those properties? A. Well, there was ‑ I think the short answer is yes, but not much of a dispute. It was only about whether, and, if so, in what amount, there should be a retention to secure [NAME]'s, as trustee, lien or charge over trust property. The mortgages themselves as indivisible property provided value way in excess of anything that was reasonable to provide ‑ to secure that lien."

1. In the course of [NAME]'s cross-examination, a copy of a cross-summons which was filed in the [NAME] proceedings was tendered. That cross-summons, which [NAME] drafted, was brought by [NAME], his wife [NAME], and [COMPANY] against [NAME]. It sought a number of orders against [NAME], including an order for equitable compensation.

2. When cross-examined, [NAME] gave evidence (commencing at T2585.33) that the [NAME] proceedings had been "amicably resolved": "Q. The fact was, [NAME], wasn't it, that [NAME] and [NAME] were fighting each other and suing each other over these [NAME] proceedings, wasn't it? A. Certainly, yes, in answer to the suing but as to the fighting, it was amicably resolved. Once the parties came to grips with the substantial question, which is how to make a proper security for the cost risk under the [NAME] cross-claim. HIS HONOUR Q. What do you mean the term "amicably resolved"? A. The afternoon before 22 July I had a number of conversations with [NAME], who appeared for [NAME], and we had a conversation in which it was conveyed to me that [NAME] was keen to come to an arrangement that was satisfactory to everyone and they, too, were my instructions. In that sense, it was amicable. It was resolved in a straightforward - in a straightforward way in straightforward terms with no rancour or bitterness. No-one wanted to have a fight about it. That's what I mean by that phrase." 1. [NAME] described (commencing at T2586.7) [NAME] as being "happy" about the fact that he had been asked to pay [NAME]'s costs: "Q. In relation to your conference with [NAME] on the morning of 22 July 2009, did he initially express some reservations at having to pay [NAME]'s costs as part of that settlement? A. No, he didn't. No, he asked the question - as I was going through the terms and explaining each one and getting from him his instructions to give undertakings, the only question he raised was, "Why do I have to pay [NAME]'s costs?", and I answered that question. Q. He wasn't happy about that, was he? A. Well, I think he was. He was happy with my answer."

1. Other evidence given before the jury also bears upon the present issue.

2. In the course of his evidence in chief, the Crown's principal witness, [NAME] ("[NAME]") gave the following evidence (commencing at T363.27) of a conversation with [NAME] which he said took place before he was asked by [NAME] to arrange [NAME]'s murder: "Q. Had he said anything to you in relation to [NAME] and a loss of control? A. He made some comment that he - [NAME] was made - was put in charge or in control of some properties, real estate, that [NAME] owned and that he had lost total control of these properties and was doing all he could to get back the control. Q. And that was prior to him asking you to find someone to murder [NAME]? A. Yes." 1. [NAME]'s reference to those properties of which [NAME] had "lost control" is capable of being construed as a reference to the properties the subject of the [NAME] proceedings.

2. Earlier, [NAME] had given evidence about the circumstances in which he said that [NAME] had asked him to arrange [NAME]'s murder. He was asked (at T347.14): "Q. As best you can, the words he said? A. Well, he would be pacing up and down the office saying, "That bastard is making me look like an absolute idiot. People in the eastern suburbs think I'm a fool", and things like that."

1. Commencing at T348.5, [NAME] was then asked: "Q. Was there a time when [NAME], when he was being verbal and angry about [NAME], expressed that he wanted you to do something? A. Yes. I don't remember the exact time, but at one - one incident, or an incident that happened on that particular day, he was quite angry and upset and at that stage he asked me would I possibly help him out by finding someone to kill the bastard. Q. Do you remember the words that he used? A. Not exactly, but it was basically, you know, "I've got to do something about this. I've got to put an end to all this bullshit and if you can help me, find someone to kill him."

1. Later (at T348.28) [NAME] was asked: "Q. All right. Did he say anything about the court cases on that day, can you remember? A. Oh, he was always talking about the expense of the court cases and that things were not going very well for him."

1. There is also evidence of telephone intercepts (Ex BJ) to which [NAME] was a party and which are also relevant to this issue.

2. In a conversation with a [NAME] on 26 May 2010, and in the context of particular proceedings which were then on foot (which I acknowledge were not the [NAME] proceedings but other proceedings involving [NAME] and/or his entities) [NAME] said: "Oh yeah fuckin' hopeless, but you know all as I'm doing is incurring legal costs galore, you know, and these people are just not getting the job done."

1. In another conversation on 12 July 2010, again with [NAME] was recorded as saying: "I'll just talk to you about a coupla matters that are concerning these bloody cases and that you know...Fuck me. You know that they hit me for 40 grand for them losing that bloody caveat thing? This has turned out to be the joke of the century..."

1. The schedule sought to be tendered by the Crown in its case establishes that the legal costs paid by [NAME] for his own representation in the [NAME] proceedings were, on any view, substantial. I do not include in that moneys paid to [NAME] (which are in dispute and upon which I understand the Crown will no longer rely) nor some of the costs paid to [NAME], solicitor. It is apparent on the face of Mr [NAME]'s Memorandum of Fees that some of the costs set out do not relate to the [NAME] proceedings. Nevertheless, the costs paid to [NAME] by [NAME] for his representation in the [NAME] proceedings amounted to hundreds of thousands of dollars. There is also evidence that pursuant to the Declaration of Trust, and aside from his own legal costs, [NAME] was required to pay a substantial sum to [NAME]. He was also requested to pay [NAME]'s legal costs in the [NAME] proceedings of slightly less than $70,000.00.

2. The Crown submitted that the evidence of the totality of costs paid by [NAME], including those incurred in the [NAME] proceedings, was relevant to the issue of motive. It was submitted that the evidence going to the issue of motive should be viewed as a whole, and in the context of other evidence which, if accepted, establishes that [NAME] had complained about the cost of the litigation in which he had been engaged against [NAME]. The Crown submitted that the costs of the [NAME] proceedings were relevant to "the accumulation of costs" which [NAME] had been incurring and which, on the Crown case, had the effect of aggravating his feelings of resentment and hostility towards [NAME].

3. Senior counsel for [NAME] objected to the evidence on the ground of relevance and advanced three submissions in support of that position. Firstly, he submitted that the [NAME] proceedings should be viewed as being separate from the other litigation in which [NAME] and [NAME] were involved. Secondly, he pointed to the evidence of [NAME] that [NAME] had been "happy" with the settlement of the [NAME] proceedings, and that they had been brought to an end. Thirdly, he submitted that in these circumstances the evidence was not capable of being relevant to motive, because there was no evidence that [NAME] was anything other than happy that the [NAME] proceedings had settled.

4. Relevance of evidence is governed by s 55 of the Evidence Act 1995 ([NAME]) ("the Act) which is in the following terms: Relevant evidence (1) The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. (2) In particular, evidence is not taken to be irrelevant only because it relates only to: (a) the credibility of a witness, or (b) the admissibility of other evidence, or (c) a failure to adduce evidence.

1. It is self-evident that the terms of s 55 are wide. The word "could" as it is used in that section has been construed to mean "it is possible that it may": [NAME] v New South Wales [2002] NSWSC 1270. Moreover, whilst the section requires that there must be some rational effect of the evidence upon the probability of the existence of a fact in issue, that effect may be direct, or it may be indirect: [COMPANY] v [COMPANY] (1995) 140 ALR 701.

2. It should also be noted that relevance is to be determined on the assumption that the evidence in question is accepted: Adam v R (2001) 207 CLR 96; [2001] HCA 57.

3. In light of the way in which the Crown puts its case, and bearing in mind the evidence to which I have referred, the evidence of the costs incurred by [NAME] in the [NAME] proceedings, both in terms of his own costs and those paid to [NAME], is relevant to the relationship which existed between them, and the deterioration of that relationship. These factors (along with others) are relied upon by the Crown case in support of the existence of a motive for [NAME] to want to have [NAME] killed. There is, in my view, a clear and logical connection between the evidence of the costs paid by [NAME] in all of the proceedings (including the [NAME] proceedings) and the issue of motive. 4. [NAME] raises no objection to the Crown leading evidence of other costs he incurred in other proceedings. The effect of the position taken by [NAME] on the present application was to seek to (for want of a better term) "quarantine" the costs in respect of the [NAME] proceedings, on the basis that those proceedings were settled, and all costs were paid in full. That, in my view, reflects a somewhat artificial approach. It is also one which overlooks the width of the terms of s 55, as well as the fact that on the evidence, [NAME] paid hundreds of thousands of dollars to his own lawyers (leaving aside the other costs paid to [NAME]) in the [NAME] proceedings. The total amount he paid is obviously significant.

5. It would also be open to the jury to conclude, if [NAME]'s evidence is accepted, that the issue of the [NAME] proceedings was raised by [NAME] prior to his engaging [NAME] to carry out the murder. [NAME] has also given evidence which, if accepted by the jury, would support a conclusion that expense of the litigation was a matter which was on [NAME]'s mind. That conclusion is also supported by the telephone intercepts to which I referred. I accept that the statements made in the course of those intercepts were made in the context of other proceedings against [NAME] (or more specifically, his estate) which were then on foot, and not the [NAME] proceedings. However, when the evidence is taken as a whole, it would be open to the jury to conclude that the totality of the costs paid by [NAME] in relation to the various proceedings in which he was, or had been, engaged against [NAME], was a source of ongoing consternation to him.

6. The evidence given by [NAME], assuming for a moment that it will be before the jury in due course, does not mean that the evidence of the costs paid by [NAME] in the [NAME] proceedings is irrelevant. If and when [NAME] is called, it will be a matter for the jury to assess his evidence, and the other evidence to which I have referred, and determine what weight is to be attached to it, and what conclusions should be reached from it.

7. It is for those reasons that in my view, the evidence of the costs incurred in the [NAME] proceedings is relevant and admissible.

8. There is one further matter to which I should refer. In the course of the submissions made in respect of this issue senior counsel for [NAME] said (at T2589.26): "There is great potential, when it is put in a chart or a document like this, for it to be misleading."

1. I pointed out that whether or not the evidence might be misleading was a separate question, and that if the evidence was relevant, it would be admissible subject to it being excluded under some other section(s) of the Act. In response to that, senior counsel said: "Our point is that it is just simply not relevant."

1. It will be evident from the reasons given that I have determined the question before me according to the issue of relevance which was the sole basis of objection advanced on behalf of [NAME]. However, for the sake of completeness, and to the extent that the statement at [31] above might be construed either as (a) an objection to the schedule which the Crown wishes to tender, or (b) a submission that the evidence ought be excluded under s 137 of the Act (even though no express application for its exclusion on that basis was ever made), I make two observations.

2. Firstly, s 50 of the Act is in the following terms: Proof of voluminous or complex documents (1) The court may, on the application of a party, direct that the party may adduce evidence of the contents of 2 or more documents in question in the form of a summary if the court is satisfied that it would not otherwise be possible conveniently to examine the evidence because of the volume or complexity of the documents in question. (2) The court may only make such a direction if the party seeking to adduce the evidence in the form of a summary has: (a) served on each other party a copy of the summary that discloses the name and address of the person who prepared the summary, and (b) given each other party a reasonable opportunity to examine or copy the documents in question. (3) The opinion rule does not apply to evidence adduced in accordance with a direction under this section.

1. No objection per se has been taken to the schedule which the Crown proposes to tender, other than that outlined. Section 50 facilitates the simplification of issues by the use of a summary or chart of the kind which the Crown wishes to tender. Such a schedule has the effect of alleviating any need for the jury to examine a large volume of documents: R v Pearce [2001] NSWCCA 447; 48 ATR 390 at [125] per [NAME] (Dowd and James JJ agreeing). The schedule in the present case fulfils the intention which underlies s 50.

2. Secondly, the suggestion that the schedule may be misleading is, in my view, without substance. There is nothing misleading about it at all. No issue has been taken on behalf of [NAME] as to the accuracy of its contents. The objections taken to it is limited to that which I have outlined. In those circumstances, there is no potential for the schedule to be misleading or to be misused by the jury in a way which might justify its exclusion pursuant to s 137. I again note that despite the reference to the potentially misleading nature of the schedule, no application was made for its exclusion under s 137. It follows from what I have said that had such an application been made, it would have been rejected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 April 2018