Solicitors:
L C Muriniti & Associates (Applicants)
Goldsmith Lawyers (Respondents)
File Number(s): 2020/234084
[2]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[3]
Judgment (ex tempore)
The applicants Leonardo Carlo Muriniti and Robert Duane Newell acted for defendants and cross-claimants in defamation proceedings in the District Court. The plaintiffs in the District Court proceedings, the present respondents Kylie Eather and Mahmoud Khalil, sought an order pursuant to (NSW) Civil Procedure Act 2005, s 99, that the applicants personally pay their costs in certain respects, essentially associated with repeated attempts to amend the defence in the District Court proceedings.
On 24 July 2020, Wass DCJ, in a judgment of some 489 paragraphs and 109 pages, made an order as sought by the respondents. The applicants served a notice of intention to appeal on 17 August 2020. On 9 October 2020, the respondents' solicitors retained cost consultants to prepare a bill of costs. On 23 October 2020, the applicants filed their summons for leave to appeal. On 30 November, the respondents served a draft application for costs assessment and, in the absence of objections thereto, on 22 December 2020 filed and served their application for costs assessment, which was duly referred to an assessor.
Meanwhile on 3 December 2020, the respondents were granted leave to discontinue their defamation claim in the District Court proceedings, pursuant to which they filed a notice of discontinuance on 4 December 2020. The question of costs consequent on that discontinuance remains outstanding, although, prima facie, it would seem likely that the respondents (plaintiffs) would be required to pay the costs of the applicants (defendants) in those proceedings.
On 19 January 2021, the applicants filed a notice of motion for a stay of the judgment below, which is the process that comes before the Court today. On 3 February 2021, in the cost assessment proceedings, the applicants served comprehensive objections to the bill of costs.
It is not suggested on the present application that the summons for leave to appeal is not bona fide or is so devoid of prospects of success that a stay should be refused on those grounds, and the argument has proceeded essentially on the balance of convenience, in the context that the application for leave to appeal has been set down for hearing, on a leave-only basis, on 11 May 2020.
If a stay is not granted, then the costs assessment process will continue to completion, with the assessor completing his task and issuing a certificate. An application for review by a review panel might then be made. Ultimately, an enforceable certificate would issue, which would be capable of registration in a court of competent jurisdiction and enforcement as such.
So far as the time frame for that is concerned, given that all parties appear to accept that the probability of a review is high, and that in the absence of any interim certificate a review operates as an automatic stay, there is unlikely to be an enforceable certificate before the hearing of the leave application in May.
It seems to me that there are really two aspects to this application. One concerns the assessment process, and the second concerns the enforcement of any award that might be made as a result of the assessment process.
So far as the assessment process is concerned, the principle contention advanced in favour of a stay was that the applicants might be caused to incur costs which would not be recoverable by way of restitution. (NSW) Uniform Civil Procedure Rules 2005, r 51.54, provides that if any step has been taken for the enforcement of a judgment or order that the Court varies or sets aside, the Court may make such orders for reinstatement or restitution as it thinks fit. That rule contains an ample power for restitution, and if costs were incurred and the assessment process and the order for costs were ultimately set aside, then it seems clear that r 51.54 would authorise orders for restitution in that respect.
The assessment process is otherwise well advanced. In my judgment, given that that power of restitution is available, there is no reason to interrupt its progress at this stage. The respondents can proceed, essentially at their own risk of being required to make reinstatement or restitution with the assessment process, and either party can, if so minded, make any application for a review. If the respondents wish to assume those risks, then there seems to me no reason to prevent them from advancing the assessment process as far as they can while they have the benefit of the costs order and the prima facie entitlement it confers. That means that should the application for leave to appeal or any subsequent appeal fail, they will then be in a position to reap the fruits of the order below in relatively short order.
So far as enforcement of any award that might result from the assessment process is concerned, the competing considerations appear to me to be on the one hand that in circumstances where the bill of costs is in the order of $200,000, having to meet such an order would plainly cause considerable inconvenience and financial stress to someone required to meet it.
A usual consideration on these applications is whether there is a risk as to recoverability or of dissipation. That has been practically resolved in this case by the undertaking proffered by Mr Muriniti in his affidavit of 26 February 2021, in which he deposes that jointly with his wife, he is a registered proprietor of two office suites located at Dee Why from which he conducts his practice, which are unencumbered and which he believes have a net value of between $650,000 and $750,000, and in which he undertakes not to dispose of or encumber them and to hold them as security in respect of any costs to which the plaintiffs may be found to be entitled pursuant to the judgment below until released from the undertaking.
The competing considerations are that the respondents are, prima facie, entitled to the fruits of the order below. There is some question as to whether there is a risk that restitution might not prove possible, which the respondents have sought to address by proffering a personal undertaking from their solicitor to repay any sums that are found to be payable. A personal undertaking falls some way short of the security that Mr Muriniti has offered so far as his position is concerned.
Another consideration is usually hardship; in this case, to the respondents. There is no evidence that a stay will occasion hardship, particularly in the context that the evidence of Mr Goldsmith is that any amounts recovered will be applied in satisfaction of costs owed by the respondents to him, and the balance held in his trust account.
As the applicants' liability or potential liability is, it seems to me, adequately secured by the undertaking proffered by Mr Muriniti, there seems little utility in the funds being paid over in order to sit in Mr Goldsmith's trust account.
In short, in my view, there is no sufficient reason to stay the assessment proceeding at the respondents' risk of having to make restitution of any costs occasioned to the applicants in that process in the meantime, but there should be a stay, until the hearing of the leave application, of enforcement of any award that might be made by an assessor or, upon review, by a review panel.
The Court orders that:
1. Enforcement of any award made by a costs assessor or a review panel on the application for costs assessment currently pending under the orders of Wass DCJ made on 24 July 2020 be stayed until the hearing of the application for leave to appeal; and
2. Costs of the application be costs in the application for leave to appeal.
[4]
Amendments
10 May 2021 - Correction to coverpage
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Decision last updated: 10 May 2021