Fleming v Marshall

Judgment 1TOBIAS AJA: In this matter, the applicants who are a New York firm of attorneys were sued by the respondents on various causes of action, the details of which are not presently relevant. They filed a notice of motion to have the proceedings stayed so that they could be commenced in New York. The notice of motion came before Rothman J who on 19 February 2010 dismissed it with costs. Marshall v Fleming [2010] NSWSC 86. 2An appeal to this Court was then instituted, but on 8 April 2011 was dismissed with costs: Fleming v Marshall [2011] NSWCA 86. The costs ordered by Rothman J have not yet been assessed and in any event cannot be enforced until the substantive proceedings are concluded. 3The costs ordered in the Court of Appeal were assessed in the sum of $150,343.12 and pursuant to the provisions of s 368(5) of the Legal Profession Act 2004, became a judgment of the Supreme Court upon the filing of the Assessors Certificate. This occurred on 8 December 2011. 4As a consequence of the decision of the Court of Appeal, on 16 January 2012 the respondents filed an amended statement of claim (the ASC) the effect of which, as I understand it, was to attempt to sidestep some of the problems that had been raised in the judgment of the Court of Appeal. On 7 March 2012, amended on 13 March 2012, a notice of motion was filed by the applicants to strike out the ASC and for consequential orders. 5Alternatively, in the event that leave was granted to file the ASC, various orders were sought with respect to the costs said to have been thrown away as a consequence of the change in the causes of action which the respondents now seek to pursue against the applicants. Because there was an outstanding judgment of the Supreme Court in the amount of the assessed costs ordered to be paid by the Court of Appeal on 8 April 2011, the applicants on 9 March 2012, filed a notice of motion in this Court seeking an order staying the enforcement of the cost judgment obtained in the Supreme Court on 8 December 2011 pursuant to the order made by this Court on 8 April 2011. The basis of that application, as I understand it, is that it is intended to be argued that there should be some form of setoff with respect to any costs that might be awarded to the applicants by the Supreme Court as a consequence of the amendment of the respondents' statement of claim, if leave is granted for it to be filed. 6By letter dated 9 March 2012 which was two days prior to the filing of the notice of motion in this Court for a stay, the solicitors for the applicants wrote a letter to the solicitors for the respondents, in which they indicated that in view of the nature of the orders now sought in the notice of motion filed in the Common Law Division of the Supreme Court on 7 March 2012, the respondents agreement was sought not to seek to enforce the judgment for costs pending the outcome of that notice of motion which was then returnable before Schmidt J. No response was apparently received to that part of that letter. Between then and 29 March 2012 the applicants realised that the notice of motion seeking a stay should not have been filed in this Court but should have been filed in the Common Law Division of the Supreme Court and should be heard together with its notice of motion filed on 7 March 2012 and amended on 13 March 2012. In other words, that both notices of motion should be heard by Schmidt J. 7By letter dated 29 March 2012 from the applicants' solicitors to the respondents' solicitors it was indicated that on further consideration, they were of the view that it would be more appropriate for Schmidt J to hear the application presently before me. They therefore proposed writing to the Registrar seeking a transfer of the motion to the Common Law Division and vacating the hearing of the matter which was listed before this Court for today. 8By letter dated 5 April 2012 from the respondents' solicitors advised that they opposed the course proposed in the applicants' solicitors in their letter of 29 March 2012 but without giving reasons. Those reasons were sought by letter dated 10 April 2012 which resulted in a letter from the respondents' solicitors to the applicants' solicitors of 12 April 2012, setting out reasons why first, this Court was functus officio and would have no jurisdiction in any event to grant the order sought in the notice of motion filed on 9 March 2012 in this Court and, secondly, asserting that Schmidt J would equally have no jurisdiction to stay the order for costs that the Court of Appeal had made on 8 April 2011. In par 4 of that letter, the applicants' solicitors advised the respondents' solicitors that they had already taken steps to retain a New York attorney to register and enforce the 8 December 2011 costs judgment in the Supreme Court of New York. 9By letter dated 17 April 2012 the applicants' solicitors wrote to the respondents' solicitors disagreeing with the basis for their objection, particularly given that the present notice of motion was merely an application for a stay of execution of the costs judgment of the Supreme Court and that the most appropriate course was for it to be determined by a single judge of the Supreme Court. However, in the interests of having the matter dealt with promptly, the solicitors indicated they would not press the transfer of the notice of motion from this Court to Schmidt J and the matter could proceed before this Court on 7 May. 10On 3 May 2012, the respondents' solicitors filed an affidavit of Terence Lewis Goldberg in support of their opposition to the relief sought in the notice of motion filed on 9 March 2012. At par 34 of that affidavit, it was revealed for the first time under the heading, 'Enforcement of the Judgment for Costs in New York', that a lawyer had been briefed in the USA to recover the judgment for costs and had agreed to act, "but has not yet taken any action". 11When the matter came on for hearing this afternoon, I was informed by counsel for the respondents that a decision had apparently been taken as far back as March 2012 when the notice of motion was filed by the applicants to strike out the ASC not to take any further action to enforce the costs judgment in New York. Regrettably that decision does not seem to have been conveyed to the applicants' solicitors. It was a proper and responsible decision to take in the circumstances. 12The consequence of the foregoing is that it is now unnecessary for me to determine the applicants' notice of motion for a stay given that counsel for the respondents has made it plain that it is not intended to seek to enforce the costs judgment until the proceedings before Schmidt J which are fixed for hearing before her Honour on 25 May next, have been heard and determined. 13The consequence of the foregoing is that the notice of motion for a stay should be dismissed. The issue which remains however is one of costs. The applicants seek an order that the respondents pay the costs of today. The respondents seek an order that the applicants pay the costs of the notice of motion. 14In my view, there is fault on both sides. There is fault on the side of the respondents in first, failing to clarify with the applicants that a permanent stay was not sought but only a stay for the purpose of enabling the issues which will arise before Schmidt J to be heard and determined by her and, in particular, whether there are to be any offsetting orders for costs that might be made by her Honour as a condition of granting leave to the respondents to pursue the ASC. Secondly, it would have been appropriate for the respondents to have indicated at an early point of time before significant costs were incurred by either side, that the matter could be determined by Schmidt J and in so doing, the respondents could have reserved their position in relation to the objections to jurisdiction which they articulated in their solicitors letter of 12 April 2012. 15On the other hand, the applicants, once they were aware of the attitude of the respondents, could have discontinued the notice of motion in this Court and filed a new notice of motion in the Common Law Division and then sought to have that notice of motion heard at the same time as the notice of motion relating to the ASC. If that had occurred and even if the applicants had been required to pay the costs of the notice of motion in this Court to date, those costs would have been minimal. Regrettably, that was not done. 16In all the circumstances, in my opinion the appropriate order for costs is that each party should bear their own costs of the notice of motion of 9 March 2012 and I so order. 17The formal orders I make are as follows: (a) Pursuant to s 51(2) of the Supreme Court Act 1970 (NSW), I remit the notice of motion filed in this court on 9 March 2012 to the Common Law Division of the Supreme Court, to be listed before Justice Schmidt on 25 May 2012 without prejudice to any determination by her Honour as to whether she will hear that notice of motion at the same time as she hears the amended notice of motion filed on 13 March 2012. (b) Each party is to pay their own costs to date of the notice of motion filed in this Court on 9 March 2012. 18I would record that on 8 May 2012 I received an unsolicited email from the respondents' counsel alleging an error on my part which appears to be relevant to the question of the costs of the hearing before me on 7 May and further, suggesting that I should not have remitted the notice of motion to be heard by Schmidt J or at least I should have given reasons for taking that course. The applicants' counsel responded the following day. 19Neither party was given leave to file what were, in effect, further submissions after the hearing concluded and I had delivered judgment and made formal orders. Without that leave, they should not have taken the course they did. I therefore do not propose to consider the matters contained in their emails.