Muriniti v Kalil

Court of Appeal (NSW)|2021-08-25|Before: Macfarlan JA, Leeming JA, Brereton JA, Commission J

Background

On 11 February 2019, the respondents Mahmoud Kalil (a veterinary surgeon) and Kylie Eather (a veterinary nurse employed by Mr Kalil) ("the Plaintiffs") commenced proceedings in the District Court against Ellie Rose Eppinga and Lisa Milham ("the Defendants"), claiming damages for defamation in respect of Facebook and other internet publications said to defame them in respect of their conduct of and related to a veterinary practice, in which Ms Eppinga had undertaken some work experience, during which she claimed to have made observations on which her publications complained of were based. After the proceedings had been referred for mediation, without resolution, the appellants Leonardo Carlo Muriniti and Robert Duane Newell, respectively the principal and an employed solicitor of the law firm LC Muriniti and Associates ("Murinitis"), on 27 June 2019 filed a defence and cross-claim on behalf of the Defendants.

Personal costs orders

CPA, s 99(1) ("Liability of legal practitioner for unnecessary costs") applies "if it appears to the court that costs have been incurred by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible." Subsection (2) provides that, "[a]fter giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following": "(a) it may, by order, disallow the whole or any part of the costs in the proceedings: (i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or (ii) in the case of a solicitor, as between the solicitor and the client, (b) it may, by order, direct the legal practitioner: (i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or (ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs, (c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party."
Subsection (6)(b) provides that "[a] party's legal practitioner is not entitled to demand, recover or accept, in the case of a solicitor, from the client, any part of the amount for which the legal practitioner is directed by the court to indemnify any party pursuant to an order referred to in subsection (2)(c)."
The jurisdiction to make such orders is to be exercised "with care and discretion and only in clear cases". [9] It is to be observed that the section speaks of "serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible". This indicates that it is only engaged by egregious conduct: mere (as distinct from serious) neglect, incompetence or misconduct does not attract it. In considering whether to make such an order, courts apply a three‐stage approach, asking first, is the practitioner's conduct such as to satisfy the test; secondly, if so, did that conduct cause the applicant to incur unnecessary costs; and thirdly, if so, is it in all the circumstances just to order the legal practitioner to compensate the applicant for the whole or any part of the relevant costs. [10]
Courts have not infrequently deprecated the threatening or making of applications for personal costs orders during or prior to the final hearing. This is for multiple reasons. First, often it cannot be determined until the conclusion of the trial whether steps taken in the matter were warranted, or unreasonable. [11] Secondly, the lawyer's independence may be compromised, and the client's confidence undermined, by an opponent's threats to apply for costs against the lawyer during the proceedings. Thirdly, such a threat or application will often if not usually place the lawyer in position of conflict, resulting in the lawyer deciding that he or she can no longer act, depriving the client of its chosen representation while the proceedings are still on foot.
In this respect, in the passage from Lemoto cited earlier, [12] McColl JA, accepting that the most realistic time for any such application to be made was immediately after proceedings have concluded, warned of the "real risk" that even then there may be prejudice to the client, if the legal practitioner ceases to act because of a perceived conflict of interest, as the client may be unable to secure advice as to the prospects of a successful appeal from the person most familiar with the proceeding. The prejudice is all the greater if the application is made before the proceedings are concluded, because it may deprive the client of its preferred legal representation during the proceedings. The problem, and the appropriate response, was discussed by Austin J in Redowood Pty Ltd v Goldstein Technology Pty Ltd: [13] "The evidence does not enable me to conclude that the claim against the Solicitor was made for an ulterior purpose (category (d)), but I have a very real concern about the effect of the making of the claim at the time when it was made. The making of such a claim undoubtedly puts pressure on the adversary, because it puts the legal practitioner into a potentially compromised position, creating an immediate conflict of interest between vigilant defence of the client's rights and the legal practitioner's own position. Even if there had been reasonable grounds for making the claim against the Solicitor, it should not been made in February 2004, when there were issues concerning final and interlocutory relief requiring the immediate attention of the parties. There was no plausible ground for believing that if an immediate application were not made, the plaintiff's legitimate interests in the litigation would be prejudiced. It must have been evident to all concerned that the hearing of the applications for substantive interlocutory and final relief would take place in the reasonably near future. The claim, if it was to be made, could and should have been foreshadowed and then deferred until after the hearing on 7 April."
Similarly, in Saadat v Commonwealth of Australia (No 2), Stanley J said: [14] "I do not accept that submission. It is not necessary for that point to be reached for the conflict to be sufficiently realised so as to justify the order I made in the exercise of my discretion. As was observed in Redowood Pty Ltd v Goldstein Technology Pty Ltd by Austin J, the mere making of a claim for a wasted costs order against the plaintiff's solicitors places them in a potentially compromised position, creating an immediate conflict of interest between the vigorous prosecution of the plaintiff's claim and the solicitors' own position. The real potential for conflict between the plaintiff and his solicitors, if the application for the payment of costs against the solicitors had been pursued before the conclusion of the trial, had arisen. If the Court had embarked on the hearing and determination of the applications now, the conflict would have crystallised. The plaintiff would have had to decide whether to submit that any costs order should be made against his solicitors and the solicitors would have had to decide whether to oppose the orders sought against them. Both the plaintiff and his solicitors would have had to decide whether to retain new solicitors and counsel to act for them in relation to the applications. The reservation of the question of these costs until the conclusion of the trial avoided the potential for conflict which could have resulted in the undesirable undermining of the plaintiff's trust and confidence in his solicitors at this stage of the proceedings or, worse, the solicitors ceasing to act for the plaintiff. Given the lack of any real detriment to the Commonwealth and the third parties from the reservation of the hearing and determination of the applications for costs until the conclusion of the trial, the balance of convenience favoured the order I made."
The prospect of compromising opposing lawyers and potentially depriving the opposing litigant of its chosen representation may incentivise opponents to make threats of this kind for tactical advantage. [15] These problems are obvious. They must have been obvious to the Plaintiffs, or at least to their solicitors.

The primary judgment

In order to understand the scope and structure of the primary judgment, and how the course of the proceedings departed from that which the above-discussed authorities endorse, to become a general inquiry into the conduct of Murinitis with all the associated difficulties of which those authorities warn, it is helpful to set out a skeleton, using the headings and sub-headings used by her Honour, accompanied by a short summary of the subject-matter under each: 1. Background ([1] - [4]). Her Honour explained that the judgment dealt with whether a personal costs order should be made against either Mr Muriniti or Mr Newell, in circumstances where the matter had been before her on ten occasions to deal with various objections to iterations of the proposed amended defence, the application for a personal costs order, and the position of conflict affecting Mr Newell in continuing to represent both the defendants, and Mr Muriniti and himself, in respect of the application for a personal costs order; 2. Evidence Relied On ([5] - [6]). Her Honour listed the affidavit evidence relied on; 3. Legal Principles Regarding the Making of a Personal Costs Order and the Basis of the Application ([7] - [13]). Her Honour summarised CPA s 99, and made observations, more fully set out below, [16] as to the approach she adopted and considerations to which regard had been had; 4. The Basis of This Application ([14] - [15]). Her Honour summarised the basis of the application, and Murinitis' response, as follows: "[14] In point form, the Plaintiffs' position is that Mr Muriniti and Mr Newell both exhibited serious incompetence, based on the following: (1) Neither Mr Muriniti nor Mr Newell has any experience in conducting Defamation cases; (2) Notwithstanding that, both have persevered in providing inadequate Amended Defences, despite "endless" education by the Court as to how to plead matters; (3) Fundamental, wholesale and basic deficiencies were exhibited, for example to plead the facts. Such deficiencies were as a result of a demonstrated lack of knowledge and experience on the part of Mr Muriniti and Mr Newell; (4) Mr Muriniti persevered in engaging Mr Newell against very clear evidence that Mr Newell does not know how to address in a proper way a Defamation case; and where (5) Such perseverance was, from the Plaintiffs' perspective, expensive, time consuming, and frustrating, against a background where both Mr Muriniti and Mr Newell, have engaged in conduct that is substantially the same as that which has led to the making of personal cost orders against them in the past, showing a tendency to expend costs without due regard to any obligation to the Court or to their opponent, and in breach of s 56 of the CPA. [15] In response, Mr Newell submitted that serious incompetence cannot be established simply by pointing to four attempts at a pleading and complaints within the various drafts. He said that it was a much higher benchmark standard that called for serious incompetence and that no cases have been put forward of a comparable nature to this one to found the application." 1. Mr Newell's Alleged Past Incompetence and Mr Muriniti's Support of Him ([16] - [20]). Her Honour referred to professional difficulties which Mr Newell had encountered in the past, not associated with the present case, and observed that Mr Muriniti continued to support him regardless; 2. The Current Arrangement Between Mr Muriniti and Mr Newell ([21] - [27]). Her Honour described the arrangements under which Mr Newell was employed by Mr Muriniti, including that he held a "supervised practising certificate". Her Honour referred to Mr Muriniti having changed his evidence, from saying that Mr Newell "would" be remunerated at the end of the proceedings, to that he "might" be remunerated, as "inconsistent answers" which "have negatively impacted upon my willingness to accept Mr Muriniti as an honest and reliable witness"; [17] 3. The Conflict of Interest Arising from the Application for a Personal Costs Order and How it was Dealt With ([28] - [118]): 1. The Foreshadowing of the Personal Costs Order ([28] - [33]). Her Honour noted that the Plaintiffs' intention to apply for a personal costs order had first been notified when only the original Defence had been served on 6 August 2019, and had again been foreshadowed before Gibson DCJ on 8 August; and that Murinitis contended that it was brought for an improper collateral purpose; 2. Application for a Personal Costs Order against Mr Muriniti on 5 September 2019 ([34] - [36]). Her Honour recorded that the application was made on 5 September 2019, and articulated by Mr Goldsmith on 11 December 2019, in terms more fully recounted below, [18] but which relevantly included that the pleading was hopelessly defective, that Mr Muriniti and Mr Newell have a tendency to file pleadings that are lacking in merit, subjecting the Plaintiffs to significant and unnecessary costs where they were concerned the Defendants did not have funds or assets to meet any costs order, and there were additional concerns about the propriety of Mr Muriniti and Mr Newell, including that Mr Newell had held himself out to be a barrister at a time when he was not; 3. The Obvious Conflict of Interest from the Outset ([37] - [40]). Her Honour recounted that it was obvious to Mr Newell from the outset that his decision to continue to act for the Defendants and for Mr Muriniti and later himself placed him in a position of conflict of interest, and explained how Mr Newell had responded when her Honour had raised that issue, to the effect that while he accepted that it was unlikely that no costs would be payable as a result of the amendments, he would not be actively submitting that the Defendants should bear the costs, though that was implicit in opposing the personal costs order; 4. Mr Newell's Continued Position on the Conflict of Interest ([41] - 59]). Her Honour recorded that Mr Newell had stated that the Defendants had consented to him continuing to appear for them while also appearing for Mr Muriniti and himself; observed that the Defendants had not received independent advice; stated that it was "a clear breach of Mr Muriniti's and Mr Newell's ethical responsibility to the defendants to ensure that the defendants could make fully informed decisions regarding their representation", [19] made other observations critical of Mr Newell's failure to appreciate and resolve the conflict, and also referred to Mr Newell's "ludicrous" submission, that (in the context of other litigation in which he and Mr Muriniti were involved) "There is a proper anxiety about whether, if the Defendants obtain independent legal advice … whether that person would be genuinely independent or would be seeking to cause damage". [20] 5. The Presentation to the Court of the Defendants' Informed Consent ([60] - 67]). The circumstances in which, on 11 December 2019, written consents of the defendants, in the form of "irrevocable waivers", were produced to the Court are recounted, and her Honour's decision to postpone the cross-examination of Mr Goldsmith in order to question the defendants is explained. 6. Taking the Defendants' Evidence ([68] - 74]). Her Honour made observations about the intermittent disconnection of the AVL during the questioning of the Defendants, and expressed the view that "I have absolutely no confidence that the defendants were not coached by someone in their answers, including during their evidence when the AVL link disconnected", [21] but concluded "Given the adamant nature of both defendants' responses, I am bound to accept their position that, contrary to their own interests, they did not wish to have any independent legal advice of any kind on the issue of conflict, or on the application, or to seek the assistance of any barrister without cost, to assist them in their proceedings going forward". [22] However, her Honour added: "It is, however, appropriate in my view that the circumstances in which the Defendants were advised by Mr Muriniti and/or Mr Newell be examined by the Legal Services Commissioner to determine whether either Mr Newell or Mr Muriniti has acted in circumstances of unsatisfactory professional conduct or professional misconduct, and I refer the papers on that issue". [23] 7. Ms Eppinga's Evidence ([75] - [103]). Ms Eppinga's evidence is summarised, and in particular her rejection of her Honour's repeated attempts to persuade her to obtain independent advice, including an offer to assist her to obtain pro bono assistance; 8. Ms Milham's Evidence ([104] - [118]). Ms Milham's evidence is similarly summarised. 1. Unreasonable Delay Occasioned by Mr Newell and Mr Muriniti in Bringing Forward the Defendants' Evidence on the Irrevocable Waiver ([119] - [133]). It is explained that her Honour had required that the Defendants provide an affidavit and be questioned in court about whether their consent was a truly informed one, and that her Honour concluded, having heard from them, that it was not. [24] The course by which the affidavits were obtained and provided, and the Defendants ultimately produced for examination, is recounted, culminating in the conclusion: [25] "The process of ensuring that the Defendants were properly represented on the costs application was, in my view, entirely frustrated by Mr Newell and Mr Muriniti. It ought to have been clear to them from the outset that they both had a clear conflict of interest and could not advise the Defendants in respect of the personal costs issue. They pressed on without ensuring independent advice. They failed in their responsibility to the Defendants, and to the Court. That responsibility fell entirely to Mr Newell in appearing for the Defendants, and to Mr Muriniti, in his role as the supervising solicitor. I find that the approach taken by Mr Newell and Mr Muriniti on this issue not only directly and unreasonably delayed the proceedings but was in breach of their professional obligations". 1. The Admission Into Evidence of the Unrelated Cases ([134] - [160]). The manner in which the judgments in the "Unrelated Cases" were admitted into evidence is set out, including criticisms of Mr Newell's not being prepared to argue the question of tendency evidence (although no tendency notice had been served), and that by cross-examining Mr Goldsmith about collateral purpose, he "cross-examined back into evidence the unrelated cases that I had only provisionally allowed". Her Honour also characterised Mr Newell's suggestion that Mr Goldsmith's real purpose was a collateral one as one of "serious wrongdoing by a solicitor", which her Honour found "entirely without foundation". Her Honour commented: "[157] The transcript reveals that Mr Newell's approach to the task lacked precision, indicative of a lack of preparation. Indeed on a number of occasions, Mr Newell appeared to be: unfamiliar with the subject matter and the legal principles; and unfamiliar with the affidavits. [158] Having reserved a decision on the tender of the judgments in the unrelated proceedings, where Mr Newell had argued that they were not relevant, Mr Newell then said that the unrelated proceedings were relevant to show a collateral purpose on the part of Mr Goldsmith. [159] Importantly, at that point, Mr Newell consented to reliance on the unrelated proceedings by Mr Goldsmith, for the tendency purpose (a matter to which I will return in detail). Again this was illustrative of a lack of consideration of the issues by Mr Newell prior to coming to Court. [160] Accordingly, I have had regard to the judgments in the unrelated proceedings in three ways: as tendency evidence as articulated on behalf of the Plaintiffs (where I find that it does show the relevant tendency); as evidence said to show a collateral purpose on the part of Mr Goldsmith (which I find it does not); and where appropriate, as precedent." 1. Did Mr Goldsmith Honestly and Reasonably Believe that Mr Newell Had held Himself Out to be a Barrister, to Add to His Concerns, So As To Justify the Seeking of a Personal Costs Order ([161] - [186]). With an initial further remark about Mr Newell's "lack of preparation and consideration of the relevant issues", [26] her Honour accepted that "by 6 September 2019 Mr Goldsmith had formed the view that Mr Newell was holding himself out to be a barrister and that he later found confirmation from that in a LinkedIn website, although that was not information Mr Goldsmith had when he sent the email on 6 August 2019". [27] Mr Goldsmith's belief was based in part on a number of published judgments which described Mr Newell as "counsel". Her Honour concluded: "[183] I accept Mr Goldsmith's evidence that he genuinely believed that Mr Newell had held himself out to be a barrister and I find that whatever was said by Mr Newell, both Mr Goldsmith and Ms Andrews were left with the impression that Mr Newell was a barrister. I do so for a number of reasons: I found Mr Goldsmith to be a reliable and truthful witness; his evidence is consistent with the information contained on Mr Newell's LinkedIn page; it is corroborated by his enquiry of the Bar Association, it is consistent with a number of judgments; and because I find it inherently unbelievable that Mr Newell would engage in the conversation that he put to Mr Goldsmith in cross-examination, and find that this conversation did not take place. Indeed, where Mr Newell did not give evidence, there is no evidence that this occurred. [184] Mr Newell submitted that an application for costs against a solicitor is apt to intimidate him from representing that client and that Mr Goldsmith relied on irrelevant matters designed to bring discredit on Mr Muriniti and perhaps Mr Newell, so as to discredit them in the eyes of the clients, with an intention to destroy the solicitor/client relationship so that the defendants would be at the mercy of the plaintiffs. I reject that submission. [185] I find that Mr Goldsmith had good reason to be concerned about the way in which the litigation might be conducted by Mr Newell and Mr Muriniti, such that what might otherwise be regarded as a premature application for a personal costs order, in this case was not driven by any improper motive on Mr Goldsmith's part. [186] Indeed, I am sufficiently concerned about Mr Newell's conduct to also refer that matter to the Legal Services Commissioner for investigation of Mr Newell as to whether he has been falsely holding himself out to be a barrister, and whether or not that amounts to unsatisfactory professional conduct or professional misconduct, and I refer the papers on that issue." 1. The Notice to Produce ([187] - [194]). This section deals with an application to set aside a notice to produce served on Murinitis for production of documents relevant to the "irrevocable waiver" and their timesheets, and contains further references to Mr Newell's "lack of preparation". 2. The Conduct of Mr Newell and Mr Muriniti Whilst Mr Muriniti was Under Cross-Examination ([195] - [219]). In this part, her Honour concluded that both Mr Newell and Mr Muriniti had breached their ethical obligations while Mr Muriniti was under cross-examination, in conferring with each other, in giving instructions and taking advice, and, in the case of Mr Muriniti, in approaching the Court with correspondence and providing advice to the Defendants. Her Honour characterised this as "an extremely serious breach of their obligations as both Mr Muriniti and Mr Newell understood them, and I propose as a result to also refer that matter to the Legal Services Commission for investigation as to whether or not Mr Newell and/or Mr Muriniti ought be dealt with for unsatisfactory professional conduct or professional misconduct". [28] 1. Mr Newell and Mr Muriniti Both Understood Their Obligations ([197] - [198]). Her Honour rejected a submission that at a relevant time Mr Muriniti did not understand that he was still under cross-examination, and found that Mr Newell clearly knew of the obligation of a witness not to talk about his evidence while under cross-examination. [29] 2. Mr Newell Comments to Mr Muriniti about his Evidence during Questioning ([199] - [203]). Her Honour recorded that during Mr Muriniti's cross-examination, at a time when the AVL had disconnected but a telephone link was still operational, "Mr Newell commented to Mr Muriniti about his evidence. Mr Newell admitted that he had said to Mr Muriniti that I was right to classify the conspiracy in the way that I had, that is to tell Mr Muriniti that his evidence was not quite accurate, a matter that I regard as an extremely egregious breach of his obligations". [30] 3. Mr Muriniti Continues to Advise the Defendants and Confer with Mr Newell Whilst under Cross-Examination ([204] - [208]). Her Honour records Mr Muriniti's evidence that while under cross-examination he conferred with the Defendants and provided them a copy of the transcript to convey her Honour's concerns about independent legal advice, and did not discuss the question of legal professional privilege, and rejected that evidence, finding "it highly likely that Mr Muriniti continued to advise the defendants, and confer with Mr Newell during the period he was under cross-examination"; [31] 4. Mr Muriniti Confers with Mr Newell In respect of the 22 April 2020 Email ([209] - [218]). The judgment records that on 22 April 2020 Mr Muriniti, while under cross-examination, and without Mr Goldsmith's consent, sent to her Honour's associate an email enclosing a submission objecting to being asked particular questions in cross-examination and complaining more generally about the manner in which Mr Goldsmith had been conducting the hearing, which he said had been drafted by Mr Newell and that he simply signed and sent, without discussion. Her Honour said: "I regard the conduct as highly concerning and in clear breach of his, and perhaps Mr Newell's, ethical obligations". [32] Her Honour concluded: "[218] Ultimately it became clear, despite some suggestions to the contrary, that whilst Mr Muriniti was under cross-examination and knew that he could not talk about his evidence, he gave instructions and obtained advice from Mr Newell precisely about his evidence, that is to say, about the kinds of questions he should be permitted to be asked in cross-examination going forward. [219] I regard this as an extremely serious breach of Mr Muriniti's and Mr Newell's obligations as they understood them, by Mr Muriniti and Mr Newell." 1. Mr Newell's Performance During This Motion Increasing Costs ([219] - [226]). Commencing with the observation that "Overall Mr Newell's performance in Court was poor", with the consequence that the proceedings "were unduly protracted and it led directly to the incurring of unnecessary costs and delay", this section includes observations that "at times when Mr Newell was addressing the Court in person … he did not stand, where given his experience, he knew that this was appropriate Court etiquette. Apart from it being a discourtesy to the Court, it made it difficult to know if he was addressing me, obtaining instructions or speaking to Mr Goldsmith, adding to the delay", and that "On one occasion Mr Newell was eating a muffin whilst in Mr Muriniti's office and appearing in Court via the AVL. His response to that was most unsatisfactory. I formed the view overall, that Mr Newell was either not aware of, or not overly concerned with, the normal Court protocols". Her Honour continued to the effect that there were many instances in which it appeared that Mr Newell was incompetent in defending the application and in conducting the defamation action more generally, by reason of either a lack of understanding and experience or a lack of preparation, or both; that his advocacy was at times rudimentary; and that these deficiencies prolonged the proceedings; 2. Who Prepared the Pleadings ([227] - [232]). Reference is made to Mr Muriniti's acceptance of responsibility for the pleadings while maintaining that it was Mr Newell who drafted them, and an apparent inconsistency with the timesheets which attributed time spent in drafting to Mr Muriniti, concluding: "[232] In my view, either Mr Muriniti's evidence or his timesheets is untrue, or perhaps both. I do not regard it as a matter of being incorrect, but honest. This is an extremely serious matter. I propose to refer that matter to the Legal Services Commission for investigation as to whether or not Mr Newell and/or Mr Muriniti ought to be dealt with for either unsatisfactory professional conduct, or professional misconduct in respect of the evidence and/or the timesheets." 1. The Proposed Amended Defences ([233] - [371]): 1. Work on the Pleading Prior to the First Argument on 5 September ([233] - [253]). An account is provided of the attendances and time spent by Mr Muriniti and Mr Newell in connection with preparation of the initial defence and then the first amended defence; 2. Deficiencies in the First Proposed Amended Defence Exposed by the 5 September Hearing ([254] - 285]). There is an account of the hearing on 5 September 2019, including reference to matters conceded in the course of that hearing to be deficient in the pleading. Her Honour expressed the view that the proposed amended defence "was entirely deficient"; [33] 3. The Defendants Attempt a Second and Third Proposed Amended Defence ([286] - [301]). An account is provided of the attendances and time spent in preparing further iterations of the amended defence; 4. The Hearing on 4 December 2019 - Objections to the Fourth Proposed Amended Defence ([302] - [361]). There is an account of the hearing on 4 December 2019, again including reference to matters conceded in the course of that hearing to be deficient in the pleading, to submissions which were not understandable, and to Mr Newell's lack of preparation and wasting of the Court's time; 5. Preparation for the Fifth Proposed Amended Defence ([362] - [371]). The attendances and time spent in preparing the fifth and final iteration of the amended defence, and that it was belatedly served on 18 March 2020, three months after it was due, are set out. 1. The Position Taken By Mr Newell in Submissions in the Course of the Personal Costs Application Regarding the Proposed Pleadings ([372] - [376]). Reference is made to Mr Newell's attempt to justify parts of the earlier pleadings, deficiencies in which he had previously conceded. Her Honour observed that although there might only have been two arguments concerning leave to amend before the Court, the other iterations of the draft amended pleadings also caused the Plaintiffs to incur costs; 2. The Position Taken By Mr Muriniti Regarding the Proposed Pleadings in the Course of the Personal Costs Application ([377] - [398]). Reference is made to Mr Muriniti's acceptance that the first draft was "problematic", his assertion that Mr Goldsmith kept "moving the goalposts" with new objections, his acceptance that he and Mr Newell had minimal experience in defamation but took on the defendants on a "compassionate basis" (about which he was questioned by her Honour, suggesting that they ought to have been referred to the pro bono scheme), his failure to seek assistance from any defamation barrister, and to a suggestion by her Honour that "an inexperienced defamation lawyer whilst wanting to do the best by a client is not necessarily fulfilling his obligations to the Court. Mr Muriniti accepted that this might be a possibility, but that had not occurred in this case". Her Honour concluded: "[395] Mr Muriniti said that he was willing to help the defendants despite the absence of experience and skills in a defamation case. He rejected the proposition that he did so without regard to the pain and the cost that he had subjected the plaintiffs to. [396] I find that Mr Muriniti's approach to the litigation has been in clear breach of his obligations to the Court and to his opponent. Engaging Mr Newell to appear in all matters for the defendant has resulted in the defendants being incompetently represented, has resulted in delay in the proceedings, and has resulted in unnecessary costs being incurred by the plaintiffs. Mr Muriniti's decision to persist in using Mr Newell in those circumstances has been unreasonable and unexplained. [397] Furthermore, Mr Muriniti had been on notice of this occurring in the past. For example, despite the finding of the Federal Court in Young v Hughes Trueman that the solicitors had not only instituted and maintained a proceedings which had no prospect of success, but have also engaged in something more, being unreasonable conduct in making serious allegations absent a reasonable basis; and also with a disregard of any proper consideration of the prospects of success, Mr Muriniti continued to instruct Mr Newell in this matter. He said that he responded by discussing with Mr Newell what had fallen from the Court and what had been raised against him and sought to address those concerns. He said that it never occurred to him that Mr Newell was simply not up to the task. I regard that statement to be either disingenuous or as a result of intractable thinking. [398] It is appropriate to refer Mr Newell and Mr Muriniti to the Legal Services Commissioner on this issue to determine whether or not he ought be dealt with for unsatisfactory professional conduct of professional misconduct arising from their clear incompetence in conducting the case to date." 1. Breach of s 56 ([399] - [410]). Her Honour found that both Mr Muriniti and Mr Newell had breached their obligations under s 56 of the Civil Procedure Act "in many respects"; 2. The Unrelated Cases - Tendency ([411] - [474]): 1. Are they Appropriately Admitted as Tendency Evidence ([411] - [425]). Her Honour explained the basis on which the conclusions reached in the "unrelated cases" were admissible and relevant tendency evidence; 2. The Tendency Findings - The Latest Overarching Conspiracy ([426] - [435]). Reference is made to Mr Muriniti's evidence about the De Costi matter involving an "overarching conspiracy" (involving, inter alia, LawCover), and his reluctance to articulate fully an allegation of a conspiracy to pervert the course of justice; 3. The Tendency Findings from Previous Unrelated Cases ([436] - [474]). The judgment summarises findings in, and sets out extracts from, a number of judgments in "unrelated cases", which are critical of the conduct of Murinitis, namely Young v Hones (No 2); [34] Young v King (No 3); [35] Young v King (No 4); [36] Young v King (No 6); [37] Young v King (No 8); [38] Young v King (No 9); [39] Young v King (No 11); [40] Young v King; [41] Lawcover Insurance Pty Ltd v Muriniti; [42] Muriniti v Lawcover Insurance Pty Ltd (No 2); [43] Young v Hughes Trueman Pty Ltd; [44] Young v Hughes Trueman Pty Ltd; [45] and Young v Hughes Trueman Pty Ltd (No 4). [46] Many of those comments refer to Murinitis' "conspiracy theories", which are characterised variously as "fevered imagining", "completely without foundation", and "unarguable"; their apprehensions about processes involving apparently independent lawyers; their non-compliance with directions; and their incurring for their client of "unnecessary liability for her own costs and the costs of those she unreasonably pursued"; 1. The Respondents' Lack of Candour and the Most Recent Case ([475] - [483]). Reference is made to another "unrelated case", to which her Honour had not been referred, in which a personal costs order was made against Mr Newell and Mr Muriniti, namely Muriniti v King, [47] in which this Court referred to their having behaved "incompetently, unprofessionally, inappropriately and against the true interests of their client" by having "embarked on futile litigious activities and incurred considerable unnecessary costs liabilities". Her Honour concluded: "[482] The Court of Appeal observed that the conduct of Mr Newell and Mr Muriniti gave cause for concern: that they have been variously been [sic] found to have "behaved incompetently, unprofessionally, inappropriately and against the true interests of their client. Each has embarked on futile litigious activities and incurred considerable unnecessary costs liabilities", "made serious allegations amounting to fraud with no apparent proper basis"; and have "sought needlessly to prolong these proceedings on the basis of even more outlandish allegations made in correspondence and repeated in this Court with no apparent basis." [483] The fact, that in light of those observations by the Court, Mr Muriniti and Mr Newell continue to do so before me is cause for considerable concern. I note that the Court of Appeal directed the Registrar to forward the papers to the Legal Services Commissioner with a recommendation that he investigate whether the conduct of Mr Muriniti and Mr Newell amounts to either unsatisfactory professional conduct or professional misconduct. I propose to do the same in this matter on this issue." 1. Legal Principles - Indemnity Costs ([484] - [486]). Her Honour referred to the discretion to award costs on an indemnity basis and referred to the "many and varied acts of delinquency" on the part of the Murinitis which her Honour considered to justify such an award; 2. Finding In Respect of Personal Costs Orders Against Mr Newell and Mr Muriniti ([487]). Her Honour expressed the conclusion that the orders sought by the Plaintiffs would be made; 3. Orders ([488]). Her Honour made the orders which have been set out above. [48]

The appeal

It is not necessary to address all of the thirteen grounds contained in the draft notice of appeal. Ground (i) was as follows: "The primary judge erred in taking into account irrelevant considerations in determining the Plaintiffs' costs application or applications in that: (i) relied upon irrelevant antecedent judgments against the Appellants. (ii) relied upon asserted aspects of the conduct by the Appellants in the course of the hearing of the defendants' application to amend and the costs application. (iii) relied upon an assertion that the Appellants were acting in a claimed conflict of interest circumstance."
The essential question for the primary judge was whether, within the meaning of CPA s 99, "costs have been incurred by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible". From the outset, the application was founded on the defective pleadings. This is reflected in her Honour's summary of the case, which has been more fully set out above, [49] but in particular that "wholesale and basic deficiencies were exhibited, for example to plead the facts. Such deficiencies were as a result of a demonstrated lack of knowledge and experience on the part of Mr Muriniti and Mr Newell".
In the particulars provided on 3 April 2020, Goldsmiths, for the Plaintiffs, relied upon "serious neglect" and "serious incompetence", "incurring of costs without reasonable cause", and "breach of the obligations imposed by section 56", and "in support of each of the grounds, the plaintiffs also rely upon the tendency conduct of both Mr Muriniti and Mr Newell". In summary, the "serious neglect and serious misconduct" was said to be in the preparation of the first four iterations of the draft amended defence. Aside from annexing the objections which had been taken to the 1st and 4th drafts, it was said that provision of four drafts, two of which were abandoned and two of which were rejected by the Court, "is not consistent with the competence reasonably expected of ordinary members of the profession and/or Mr Muriniti and Mr Newell were seriously incompetent in the preparation of them". In addition, it was said that costs had been incurred without reasonable cause relating to the need to consider and address the various drafts, the "informed consent issue", and inappropriate cross-examination of Mr Goldsmith; in the latter two respects, this confused costs associated with the conduct of the application, with the costs the subject of the application. Further, "the plaintiffs rely upon 6 judgments in which personal costs orders have been made against Mr Muriniti and/or Mr Newell as evidence of their tendency to engage in conduct that infringes section 99(1) and/or causes a breach of section 56(1)".
In explaining the approach she adopted, her Honour said: "[9] Section 99 of the CPA provides that, if it appears to the Court that costs have been incurred "by the serious neglect, serious incompetence or serious misconduct of a legal practitioner" or "improperly, or without reasonable cause", in circumstances for which a legal practitioner is responsible, the Court may order the legal practitioner to pay the costs incurred. The legal practitioner is not entitled to demand, recover or accept from the client, any part of the amount that the legal practitioner is directed by the Court to pay. [10] Mr Goldsmith relied on a decision of Taylor SC DCJ in this Court of De Costi Seafoods (Franchises) Pty Limited and Anor v Wachtenheim and Anor (No 6) [2016] NSWDC 378. Not unlike this case, the underlying claim was not especially unusual or complicated. In the circumstances of that case, his Honour took the view that, "without explanation, three versions of a pleaded claim, the original and two amendments, might be excused. Perhaps the presence of another two amendments should be disregarded before the negligence or incompetence can be regarded as serious. But, in my view, the service of 16 versions of the pleading, whether filed or not, is grossly excessive if unexplained. It raises the possibility that the costs thrown away or occasioned by the amendments reflected in the fifth further amended statement of cross-claim and subsequent versions should be borne by the legal practitioners." [11] Mr Muriniti explained in that case, as Mr Newell does in this case, that, "Not every amendment of a pleading is caused by the neglect, incompetence or misconduct of a practitioner". I agree. What is required is to examine the conduct of the legal practitioners overall and decide to what extent any or all of the costs occasioned arose by reason of the serious negligence or incompetence, or was attended with misconduct, or were occasioned improperly or without reasonable cause. [12] No real explanation has been provided in this case justifying the various versions of the pleading. Indeed Mr Newell and Mr Muriniti have studiously avoided informing the Court as to the background behind any of the amendments, relying on the Defendants' claim for privilege over that issue, and complaining that they were responding to the (at times unreasonable) objections put against them on behalf of the Plaintiffs. [13] I have therefore had recourse to: the conduct and attitude that Mr Newell and Mr Muriniti have exhibited in the proceedings (and as informed by unrelated cases); their conduct during the hearing of the motion; the detail of the various amendments and the responses to the objections in the various iterations of the Amended Defences, together with what has been identified in various timesheets."
That passage, in particular at [13], is an explicit statement that, as well as considering the various iterations of the amended defences, and the responses to the various objections to them - matters which were central to the application - her Honour did indeed have regard to (1) the "conduct and attitude" of Mr Muriniti and Mr Newell in the proceedings and during the hearing of the motion, (2) their conduct as illustrated in the "unrelated cases", and (3) conclusions drawn from their timesheets. The headings and structure of the primary's judge's reasons, as reflected in the above skeleton, confirms that her Honour did so. In my judgment, for the reasons that follow, her Honour erred in having regard to those matters, which were not only irrelevant but prejudicial. The suggestion that her Honour was driven to rely on these matters by Murinitis reliance on their clients' privilege to decline to inform the Court as to the background behind the amendments is inapt: the amendments reflected technical objections to the pleadings, not changes in instructions; they were not of a kind that might be explained by instructions; and even if they were, that would not render recourse to irrelevant and prejudicial considerations permissible.
Below, I address first, the use of Murinitis' conduct in the hearing, including the "informed consent issue"; secondly, the use of the "unrelated cases"; and finally, the use of the timesheets.

Conduct of the hearing

As has been foreshadowed, her Honour was critical of Mr Newell's conduct of the proceedings on the personal costs order application: "Mr Newell's Performance During This Motion Increasing Costs [219] Overall Mr Newell's performance in Court was poor. This unduly meant that the proceedings were unduly protracted and it led directly to the incurring of unnecessary costs and delay. I have already provided some examples of this in the context of dealing with the Notice and there are further examples given in relation to his submissions on the various iterations of the Amended Defence. [220] Furthermore, at times when Mr Newell was addressing the Court in person (I made the obvious concession when the parties appeared via AVL) he did not stand, where given his experience, he knew that this was appropriate Court etiquette. Apart from it being a discourtesy to the Court, it made it difficult to know if he was addressing me, obtaining instructions or speaking to Mr Goldsmith, adding to the delay. [221] On one occasion Mr Newell was eating a muffin whilst in Mr Muriniti's office and appearing in Court via the AVL. His response to that was most unsatisfactory. [222] I formed the view overall, that Mr Newell was either not aware of, or not overly concerned with, the normal Court protocols. [223] More substantially perhaps, there were many instances in which it appeared to me that Mr Newell was incompetent in defending this application and in conducting the Defamation action more generally, by reason of either a lack of understanding and experience or a lack of preparation, or both. I have already given some examples of this. [224] As a further example, at times whilst he was under cross-examination, Mr Muriniti had to object to obviously objectionable questions, to protect his own interest, where Mr Newell had failed to do so. At one point, having raised almost no objection to the questions being asked, Mr Newell said that the cross-examination of Mr Muriniti had been "badgering" for a long time. At other times Mr Newell appeared to forget that Mr Muriniti was giving evidence, and was discussing matters with Mr Muriniti as he went. [225] Mr Newell's grasp of many of the principles in Defamation law appeared to be poor (a matter to which I will return in the context of the various iterations of the proposed Defence). That is perhaps understandable given his utter lack of previous experience in this area, having conducted only one Defamation case before this. Furthermore, Mr Newell's advocacy was, in my view, also at times rudimentary, particularly in light of his purportedly long litigation experience. [226] These deficiencies unduly prolonged the proceedings on many occasions."
The above observations did not relate, at least directly, to the defective pleadings which were the foundation of the application. In Smith v NSW Bar Association, [50] the High Court explained that if it was intended to rely on the conduct of a practitioner in the course of the defence of a disciplinary proceeding as an additional element of misconduct, it is necessary at the least that it be explicitly drawn to the practitioner's attention, if not made the subject of an additional charge. Deane J said: [51] "If, in the course of the hearing before the Court of Appeal, it had been sought to expand the particulars of the allegations against the appellant to include an allegation that he had deliberately given false evidence to that court, a question would have arisen whether it would be reasonable to require the appellant to deal at the one time with the original particularised complaints against him and a complaint that the evidence which he gave in answer to those complaints was deliberately false. Obviously, there would have been something to be said for the view that it would have been unfair to require the appellant to establish that he had been honestly mistaken in giving the evidence upon which he relied before that evidence had been rejected by the Court of Appeal. In fact, there was no attempt to amend the particulars of complaint. In the absence of any such amendment, the issue before the Court of Appeal remained whether the effect of all the evidence, including the appellant's evidence about the car park conversation, was that the particularised complaints had been made out to the requisite standard of proof [footnote omitted]. The appellant could not realistically be expected, while maintaining the reliability of his evidence in relation to that issue, to have set out to establish how and why that evidence was honestly mistaken. If the Court of Appeal, after reaching the conclusion that the appellant's evidence about the car park conversation should be rejected, had thought it desirable or necessary to consider whether the appellant had been guilty of professional misconduct in that he had deliberately given false evidence before it, "at the very least a new charge would have [had] to be laid (before it could be relied upon) so that [the appellant could] then know of it, appreciate what he [had] to meet and be allowed ample opportunity to meet it" [R v Solicitors' Disciplinary Tribunal [1988] VR, at 770 (per Murphy, Fullagar and Southwell JJ)]. Such a new charge could have been laid by appropriate amendment to the particulars of complaint and an appropriate opportunity of being heard could have been provided by relisting the matter for that purpose. In fact, however, no specific charge of deliberately giving false evidence before the Court of Appeal was ever laid against the appellant and no opportunity was extended to him to deal with such a specific charge before the Court of Appeal made its initial finding of guilt."
To like effect, Brennan, Dawson, Toohey and Gaudron JJ observed: [52] "It is clear that Meagher JA proceeded on the basis of a positive finding that the appellant deliberately lied. There is no express statement to that effect by Mahoney JA and it is not clear whether his Honour adopted the findings of Samuels JA, including the finding that the appellant deliberately lied, in their entirety. However, if his Honour did not proceed on that basis, he was clearly in error in having regard to the mere rejection of the appellant's evidence when determining the order that should be made. In these circumstances it is convenient to proceed on the assumption that his Honour also acted on a positive finding that the appellant deliberately lied. But even if the evidence was sufficient to support the findings so made and even if that finding could properly be taken into account in determining the result, considerations of procedural fairness required that the appellant be given an opportunity to be heard as to whether the finding should be made [See, in relation to disciplinary proceedings against a solicitor, O'Reilly v Law Society of New South Wales (1988) 24 NSWLR, at 231]. In the first hearing before the Court of Appeal, no allegation of deliberately lying was made against the appellant before the adverse finding was made. That being so, the finding then made that the appellant had lied and the consequence of that finding then determined by Mahoney and Meagher JJA that the appellant be disbarred were flawed. In the second hearing, evidence which might have affected the finding of deliberate lying was erroneously rejected. It follows that the affirmation of the finding that the appellant lied and of the order that he be disbarred cannot stand."
The present are not disciplinary proceedings, but not dissimilar considerations apply. Moreover, while misconduct in the course of a disciplinary hearing might inform the ultimate question of fitness, in an application for a personal costs order it is difficult to see how conduct during the hearing of that application could inform the question of whether the costs the subject of the application have been occasioned by serious neglect or incompetence.
Mr Newell's lack of proficiency in the conduct of the proceedings might have been relevant to the costs of the application itself, but it was not relevant to the question whether the deficiencies in the pleadings were such as to warrant a personal costs order. His general proficiency in defamation law and practice was not relevant on either basis. Nor was his supposed knowledge of or attitude to courtroom protocols. His failure on occasion to stand when addressing the Court, and that he was eating a muffin in Mr Muriniti's office when an AVL commenced, while they may have been indecorous, did not warrant the attention they received, and were entirely irrelevant to whether the pleadings were the result of such incompetence as to warrant a personal costs order.

Conflict of interest

A substantial part of the judgment ([28] - [133]) dealt with "The Conflict of Interest Arising From the Application for a Personal Costs Order and How it was Dealt With". The Plaintiffs say that this issue was raised by her Honour and not by them. Murinitis submit that the intended result of the application was to separate them from their clients.
Her Honour was "concerned that the only advice that the defendants had received (on either the issue of conflict of interest or as to any decision to waive privilege as to how the various iterations of the proposed Amended Defence were prepared) was from either Mr Newell or Mr Muriniti". [53] Her Honour was dissatisfied with Mr Newell's assurance that the defendants had consented to his continuing to act, and in particular that: "[46] Despite my urging, the Defendants have never received independent legal advice, with advice at all times being provided to them by Mr Muriniti. Mr Newell said that they simply decided not to get it and so he did not forward to them the particulars. Just how the Defendants could have made an informed decision on representation or whether or not they wished to waive privilege on any advice that had been given by Mr Muriniti or Mr Newell about the pleading without such information was not explained."
As has been recorded, on 11 December 2019, "irrevocable waivers" signed by the clients were produced, exhibited to an affidavit by Mr Muriniti. The evidence of Mr Goldsmith, who was then under cross-examination, was postponed, so that her Honour could question each Defendant personally. Her Honour plainly considered that the AVL was manipulated by Murinitis, to permit them to "coach" their clients, but ultimately accepted that: "[71] I have set out at length below the various matters that I put to the defendants to ensure that they understood their rights. Given the adamant nature of both defendants' responses, I am bound to accept their position that, contrary to their own interests, they did not wish to have any independent legal advice of any kind on the issue of conflict, or on the application, or to seek the assistance of any barrister without cost, to assist them in their proceedings going forward."
The costs of that exercise are part of the costs of the motion, which were included in the personal costs order. The exercise also appears to have formed part of "the conduct and attitude that Mr Newell and Mr Muriniti have exhibited in the proceedings" to which her Honour had regard on the personal costs order application.
The conflict arose because of the timing of the application for a personal costs order. By raising the spectre of such an application at the outset of the proceedings, the Plaintiffs - or their lawyers Goldsmiths - created the potential conflict. Had they, in accordance with the guidance of the authorities referred to early in this judgment, awaited the outcome of the proceedings, it would not have arisen. Whether or not intended, making the application was calculated to create a conflict and the Plaintiffs, or their lawyers, ought to have realised this.
This conflict, Murinitis' response to it, and its resolution at her Honour's instigation, were not relevant to the essential question, namely whether the deficiencies in the pleadings were a manifestation of such incompetence as to warrant a personal costs order.

The tendency evidence

From the outset, the Plaintiffs sought to deploy in support of their claim for a personal costs order the fact that personal costs orders had been made against Murinitis in other unrelated proceedings. This is apparent, for example, in the initial affidavit of Ms Andrews of 6 August 2019, which referred to and annexed some of those cases. In submissions on 11 December 2019, when Mr Goldsmith moved on the application for a personal costs order, he submitted that the original defence was absolutely hopeless; the proposed amended defence was equally hopeless; the pleadings were simply taken from a book of forms and precedents without any real regard or consideration as to what an appropriate defence required; and Mr Muriniti and Mr Newell have a tendency to file pleadings that are lacking in merit, knowingly in this case subjecting the Plaintiffs to increasingly significant and unnecessary costs, and where he and the Plaintiffs were rightly concerned that the Defendants did not have any funds or assets to meet any costs order. [54]
In respect of the judgments in the 'unrelated cases", her Honour stated that "the evidence ordinarily could not, without consent, be used as tendency evidence in this case". [55] However, her Honour proceeded: "[418] However, s 190 of the Act provides that the Court may, if the parties consent, by order dispense with the application of any one or more of the provisions of Parts 3.2-3.8, in relation to particular evidence or generally. Section 97 of the Act sits within Part 3.6 of the Act. [419] In this case, Mr Newell having objected to the tender of the unrelated judgments documents, insisting on cross-examining them back into evidence in questions asked of Mr Goldsmith regarding his motive in bringing the proceedings for personal costs orders. Ordinarily the fact that the evidence is admitted for another purpose might not render it as admissible tendency evidence. However, Mr Newell did not object to the facts as stated being used as tendency evidence. Accordingly, I ordered that the provisions of s 97 of the Act did not apply and the tendency evidence could be used in this case. [420] Furthermore, given the way in which this case has unfolded, I am satisfied that the use of those decisions has not operated in any unfair way in respect of Mr Newell or Mr Muriniti and that they had had ample opportunity to explain the decisions. I found the explanations they gave however to be without merit. [421] Given the great many similarities in the conduct of Mr Newell and Mr Muriniti in the conduct of the unrelated matters, I am satisfied that they both had have the same attitude to this litigation as they have had on many occasions in the past, as identified over a long period of time. Their cavalier approach to: court procedure; the rules of evidence; their duty to their clients in the context of their undoubted conflict of interest; their duty to their opponent and to the Court to be candid; and to conduct the proceedings consistent with their obligations under s 56 of the CPA, is almost identical in character. Indeed they have persisted in arguments before me that have long since been closed to them by reason of the findings other Courts have made on many occasions in the unrelated litigation. It speaks loudly of a tendency to act in the way I have identified, making it more likely that they have acted in this way on this occasion. [422] I am satisfied that the findings of fact in the unrelated cases have significant probative value in this case so as to permit their admissibility under s 97 of the Act. [423] Given Mr Newell's concession as to admissibility and where it has been open to both Mr Newell and Mr Muriniti to respond to what might otherwise be regarded as findings of fact in unrelated cases thus resulting in a lack of procedural fairness, I have determined that the conclusions arrived at in the unrelated cases, are relevant tendency evidence and I have taken them into account. [424] They have also been relevant in my determination to refer the papers to the Legal Services Commissioner for the reasons cited, as they show that this is not the first time Mr Muriniti and Mr Newell have been faced with applications of this kind and they cannot be said to be inexperienced in dealing with such matters or the serious implications of the matters that they have put before me. [425] However, my conclusion, about the lack of regard for the Court and for their opponent, in pursuit of what is said to be their clients' interests, their clear breach of s 56 of the CPA on many occasions and my decision ultimately about whether a personal costs order is appropriate, has not changed by reason of the tendency evidence. Given the other findings that I have made regarding both Mr Newell and Mr Muriniti, they alone make personal costs orders against them both appropriate. The tendency evidence simply confirms my view of Mr Newell's and Mr Muriniti's utter disregard for their professional obligations in respect of the issues I have identified."
It is not at all clear on what basis the judgments of other judges in other cases were admissible as evidence of any decision or finding of fact made in them. Her Honour referred to King v Muriniti, in which Basten JA, with whom Gleeson JA agreed, concluded that Evidence Act, s 91, does not preclude the use of evidence of a decision or finding of fact in exercising jurisdiction under Civil Procedure Act, s 99; [56] but that related to the use of findings made at an earlier stage in the same proceedings, not to judgments by other judges in completely unrelated proceedings - as her Honour appears to have appreciated. [57]
But putting that to one side, it is quite unclear what the relevant tendency was said to be. The particulars provided by the Plaintiffs referred to "their tendency to engage in conduct that infringes section 99(1) and/or causes a breach of section 56(1)". The primary judge referred to "Their cavalier approach to: court procedure; the rules of evidence; their duty to their clients in the context of their undoubted conflict of interest; their duty to their opponent and to the Court to be candid; and to conduct the proceedings consistent with their obligations under s 56 of the CPA". When asked to formulate the relevant tendency, Mr Smark SC referred to the Plaintiffs' submissions to the primary judge, which referred to "a tendency to be indifferent to their obligations to the Court", "a tendency to make submissions that do not grapple with the point", "a tendency to be unable to accept or act on criticism", "a tendency to make unsubstantiated allegations", and "a tendency to prolong hearings".
It is not apparent just what was the fact in issue in the present case the assessment of which could have been affected by the establishment of any such tendency. [58] Whether the pleadings were grossly defective, and whether such defects amounted to serious incompetence, was simply not informed by how Murinitis had conducted other litigation. All the "unrelated cases" really demonstrated was that Murinitis had suffered personal costs orders and judicial criticism in other cases with uncommon frequency. That was of no probative value on the issues in the particular case, just as a tendency no more particular than one to commit crimes of the kind charged is ordinarily insufficiently probative to permit the reception of tendency evidence. [59]
There was no contested question of fact in the present case, the resolution of which could be aided by establishing any such tendency. The "unrelated" cases did not have significant probative value such as to authorise their admission as "tendency evidence". It was, therefore, impermissible to have regard to the "findings of fact in the unrelated cases", let alone to regard them as having significant probative value in the instant case. To the contrary, they were not only irrelevant and inadmissible, but highly prejudicial.
Before us, Mr Smark SC sought only faintly to support the admissibility of the so-called tendency evidence, but emphasised her Honour's statement that it was not decisive, merely confirming "my view of Mr Newell's and Mr Muriniti's utter disregard for their professional obligations in respect of the issues I have identified". However, while her Honour stated that the "tendency evidence" did not change her mind, her Honour expressly took it into account. Once it was taken into account, error in having regard to it cannot be immunised by a statement that it was not decisive. Here, the "tendency evidence" played such a role in the formulation and conduct of the case, from the outset, and was so prejudicial, that it cannot be passed off as having had no impact on the mind of a judge who expressly took it into account. Moreover, its use significantly contributed to the miscarriage of the proceedings into a general inquiry into Murinitis' "conduct and attitude".

Timesheets

In one section of the primary judgment, her Honour said: "Who Prepared the Pleadings? [227] Mr Muriniti was asked whether he accepted any responsibility for the provision of the four versions of the Defence. He stated "Mr Newell is my employee and as the American Presidents like to say, the buck stops here. Of course I accept responsibility. I accept responsibility. I do not say I have liability. That's a matter for the Court."…"I accept that Mr Newell drafted some defences and if there's - if there is a fault with those defences, as - as his employer, I am responsible. If there is." [228] I sought clarification in the following terms : Q. So do you say that you had no input into any of the defences? You've taken no instructions and have had no input into the drafting of any of the versions of the defence? A. I have - the - the drafting of the versions of the defence has been delegated to Mr Newell as an experienced litigator. [229] Mr Muriniti said that he saw the letter of objection to the first pleading and discussed it with Mr Newell. He said that he asked Mr Newell "to consider it, do appropriate research, and address the issues." [230] Mr Muriniti agreed that even in his role as Mr Newell's supervising solicitor, he did not take over the taking instructions for or drafting of any versions of the Defence. He said that this was despite there being five proposed versions. He said, "The iterations from two, plus the other two, that was left to Mr Newell and I did discuss it with him. He did tell me and explain to me what the issues were that he was being asked to address based on what Mr Goldsmith was objecting to but the drafting was left up to him." [231] However, Mr Muriniti's timesheets provide quite a different account as set out below. [232] In my view, either Mr Muriniti's evidence or his timesheets is untrue, or perhaps both. I do not regard it as a matter of being incorrect, but honest. This is an extremely serious matter. I propose to refer that matter to the Legal Services Commission for investigation as to whether or not Mr Newell and/or Mr Muriniti ought to be dealt with for either unsatisfactory professional conduct, or professional misconduct in respect of the evidence and/or the timesheets."
The "different account" was that according to the timesheets, Mr Muriniti was engaged rather more extensively in the drafting of the pleadings than his oral evidence suggested. It may be that such an inconsistency was relevant on questions of credit. The timesheets may also have been relevant to show the time incurred by Murinitis in drafting pleadings and responding to objections. However, they and this discrepancy had nothing to do with costs incurred by the Plaintiffs and whether they were unreasonably inflicted, or whether they were a manifestation of serious incompetence: it is not apparent how Murinitis taking less time, or more time, in drafting the pleadings, or the extent to which Mr Muriniti as distinct from Mr Newell was involved, would have made any difference at all to whether by incompetence they inflicted unnecessary costs on the plaintiffs.

Conclusion: error is demonstrated

The passage extracted above [60] explicitly states that these irrelevant matters were expressly taken into account by the primary judge on the substantive application for a personal costs order. For the reasons stated above, her Honour erred in having regard to the conduct and attitude that Mr Newell and Mr Muriniti have exhibited in the proceedings (and as informed by unrelated cases); their conduct during the hearing of the motion; and what has been identified in various timesheets. [61] Those considerations were irrelevant, and prejudicial. The discretion to make a personal costs order miscarried.

Redetermination

As the discretion miscarried, it may be exercised afresh by this Court, having regard to the circumstances now prevailing. Those circumstances notably include one development since the hearing before the primary judge, namely the Plaintiffs' discontinuance of their substantive defamation claim.

Serious neglect, serious incompetence or serious misconduct?

Her Honour dealt with the pleadings, which were the essence of the application, under the heading "The Proposed Amended Defences". [62]
It is to be borne in mind that, although there were five versions of the draft amended pleading, only two contested applications for leave to amend were dealt, one of which, on 5 September 2019, concerning the first draft of 15 August 2019, occupied about 90 minutes, and the other, on 4 December 2019, concerning the fourth draft of 2 October 2019, about four hours. The second draft of 20 September 2019 was quickly superseded by the third draft of 26 September 2019, and in turn by the fourth draft of 2 October 2019; the three versions reflected a process of evolution over a period of less than two weeks. Ultimately, the fifth draft of 18 March 2020 was uncontested, although at times that position was said to be subject to conditions, which were never specified. It is also to be borne in mind that no objection was ever articulated to the cross-claim.
It is also worth noting that this was a relatively small defamation claim, in respect of Facebook and other internet posts by a work experience student who apparently was unsurprisingly not financially well-resourced and for whom Murinitis were acting on a "compassionate" basis. A practitioner acting for a defendant in a small defamation claim in the District Court is not to be judged by the standard of an experience specialist defamation lawyer.
As explained above, mere negligence, incompetence or misconduct is insufficient to satisfy the test in s 99; the section is enlivened only by serious negligence, incompetence or misconduct. A conclusion of serious incompetence does not follow from two unsuccessful attempts to obtain leave to amend a pleading, together with two intermediate drafts that were promptly superseded.
I have reviewed each iteration of the defence, and the transcript of the hearings before her Honour on 5 September 2019 and 4 December 2019. The earlier drafts were far from perfect, at least from a technical defamation lawyer's perspective. But from the first draft, the Plaintiffs - or at least their lawyers - could have been under no serious misapprehension as to the substance of the defence. Many of the objections which prevailed at the hearing on 4 December 2019 were highly technical, if not pedantic. For example, complaints that the Plaintiffs could not know what to make of an allegation that the first defendant was given a cleaning cloth that was "filthy", in the absence of an articulation of the relevant professional standard; that a cat was left with nothing but newspaper and litter in its cage and was distressed, in the absence of further particulars of the cat's distress; or that two boarding dogs did not have a water bowl, in the absence of detail as to when and for how long and whether surgery was imminent; have an air of unreality. Likewise, an objection that a pleading that certain matters complained of were an expression of opinion of the first defendant failed to plead that they were her "honest" opinion.
Some of Mr Newell's "concessions" in the course of the hearing on 4 December 2019 were plainly to the effect that further argument could be avoided if the pleading were amplified by further particulars, and savour of cooperative compromise rather than of concession. That such matters were "conceded" in the context and atmosphere of the hearing, especially once it was established that there would to any extent have to be a further pleading, despite having been pressed in written submissions, is not evidence of serious incompetence.
To the extent that the objections were technically correct, the defects identified, taken as a whole, did not in my opinion manifest "serious incompetence" as referred to in s 99 such as to warrant a personal costs order.
Moreover, the objections, even if technically correct, were in large part unnecessary for the Plaintiffs, in the context of a small claim of this kind, to understand in substance the case they had to meet, and in that sense disproportionate. That is an additional reason for concluding that, as a matter of discretion, it was and is not appropriate to make a personal costs order.

Abuse of process

Before us Mr Newell submitted, as he had at first instance, that the application ought to have been dismissed on the basis that it was an abuse of process, being brought for the collateral purpose of forcing Murinitis to cease to act for the Defendants. The primary judge viewed this as a grave allegation made against Goldsmiths on insubstantial grounds.
The following circumstances must be viewed in light of the notorious fact that an application for a personal costs order almost inevitably and inherently creates at least the potential for a conflict between the interests of the solicitor and the client, and is calculated to undermine clients' confidence in their solicitor. Goldsmiths must be taken to have been aware of these inherent characteristics of such applications.
First, there was the quite remarkable threat in the very first letter of 12 July 2019 taking objection to the original defence, to seek such an order, at a time when, as Mr Newell rightly points out, there were, at least not yet, any "wasted costs" at all. There was no need to threaten such an application at that stage, which begs the question why it was raised so prematurely, and thereafter pressed so persistently and ardently.
Secondly, there was Goldsmiths' email of 6 August 2019, in which - before any amended pleading had been served, and still before there were any "wasted costs" - the threat to apply for a personal costs order was repeated.
Thirdly, there was Ms Andrews' affidavit of 6 August 2019, the purport and I would infer purpose of which was to impugn Mr Newell as falsely holding himself out as counsel, to impugn Murinitis in the face of the Court and their clients and create an environment prejudicial to them by showing (irrelevantly) that they had previously been associated with protracted litigation and incurred personal costs orders. Again, this was at a stage when the first draft amended pleading had not yet been proffered. Significantly, the "concerns" attributed to the Plaintiffs by Ms Andrews concerning the tendency of Murinitis to prolong and protract proceedings would not be resolved by making a personal costs order against them; indeed, pursuing such an order at the interlocutory stage was itself likely to protract and delay the substantive proceedings. However, such concerns would be resolved if Murinitis were separated from their clients and forced out of the proceedings.
Fourthly, there was the disregard of the wise cautionary words of Gibson DCJ at the directions hearing on 8 August 2019. Instead, the application was relentlessly pursued, long before the pleadings were finalised.
Fifthly, at the outset of the hearing on 4 December 2019, when asked by the primary judge whether the Plaintiffs were content that "despite four attempts at a defence, that the defendants have another go at the fifth one", Mr Goldsmith delphically replied (emphasis added): "The word "content" wouldn't have been my choice of word. They are accepting of the fact that if leave is refused to file the fourth proposed amended defence, one further shot should be allowed to them. Could I just say this: that's also founded upon an anticipation that an order for costs will be made to [sic] Mr Muriniti. In fairness to the defendants, I should express what the plaintiffs' position is. The plaintiffs anticipate that if an order for costs is made against Mr Muriniti personally, we may seek a different course of action being taken by the defendants. Quite what that may be is open to speculation, but that's the reason why we're not seeking to shut out the defendants as such at this time."
Plainly, Mr Goldsmith recognised the potential impact of such an order on the Defendants' confidence in their solicitors.
Sixthly, there was the so-called "Barrister issue". Her Honour accepted Mr Goldsmith's evidence that "he genuinely believed that Mr Newell had held himself out to be a barrister and I find that whatever was said by Mr Newell, both Mr Goldsmith and Ms Andrews were left with the impression that Mr Newell was a barrister". However, no finding was made as to what Mr Newell said, and indeed no satisfactory evidence was ever given of what Mr Newell allegedly said to create that impression: Mr Goldsmith could not recall precisely what Mr Newell had said, but that he had said something which gave him and, he believed, Ms Andrews, the impression that he was a barrister. [63] Mr Goldsmith placed reliance on how Mr Newell was described in other judgments. However, as has been noted, of the two judgments which were annexed to Ms Andrews' affidavit: 1. in De Costi Seafoods (Franchises) Pty Ltd v Wachtenheim (No 3), [64] Mr Newell and Murinitis were recorded on the coversheet under "Representation" as representing the defendants/cross-claimants (but not described as "counsel"); and 2. in King v Muriniti, [65] Mr Newell's name appeared under the heading "Counsel" on the coversheet, but the judgment accurately recorded that Mr Newell was "a solicitor employed by Mr Muriniti" (at [54])).
In Muriniti v King, [66] to which Mr Goldsmith and her Honour specifically referred, [67] the coversheet records, under "Representation": "Counsel: R Newell (Applicants). However, although the judgment does not specifically refer to the status of Mr Newell, it is obvious to an intelligent reader familiar with the profession, from the repeated references to his and Mr Muriniti's standing with LawCover, that he was known to be a solicitor. This would also have been obvious to the Court from the fact that he presumably did not appear robed.
It is not at all uncommon, where a solicitor appears as an advocate, for his or her name to appear under the heading "counsel" on the Caselaw coversheet, albeit often followed by the designation '(Sol)'. To infer from that that he held himself out as counsel is not reasonable. But the issue was pursued with vigour. On 6 September 2019, Mr Goldsmith inquired of the Bar Association whether Mr Newell was a barrister, by reference to an old LinkedIn account which described him as "Owner Wentworth Chambers". As correspondence from Murinitis referred to Mr Newell "of our office", [68] and in the course of the hearing on 5 September 2019 Mr Goldsmith referred to "Mr Muriniti who is the principal of the firm of solicitors for which Mr Newell apparently works", [69] it is difficult to accept that this was motivated by anything other than a desire to cause trouble for Mr Newell, a view which might be confirmed by Ms Andrews having deposed on 6 August 2019 that by search conducted that day she had established that he was not a barrister but an employed solicitor of Mr Muriniti. In any event, the resolute pursuit of the issue begs the question, to what end? The issue was entirely irrelevant to the "wasted costs" application. It is an available inference that it was for the collateral purpose of embarrassing Mr Newell in the conduct of the proceedings.
Seventhly, when the application was articulated on 11 December 2019, it was again infected by the "tendency" argument, and the "barrister" issue. As her Honour recorded: [70] "[35] When the matter reconvened on 11 December 2019 Mr Goldsmith moved on his application for a personal costs order and again argued that: (1) The original Defence was absolutely hopeless; (2) The proposed Amended Defence (the subject of argument on that day) was equally hopeless; (3) The pleadings were simply taken from a book of forms and precedents without any real regard or consideration as to what an appropriate defence required; and (4) Mr Muriniti and Mr Newell have a tendency to file pleadings that are lacking in merit, knowingly in this case subjecting the Plaintiffs to increasingly significant and unnecessary costs, and where he and the Plaintiffs were rightly concerned that the Defendants did not have any funds or assets to meet any costs order. [36] Mr Goldsmith also submitted that he and the Plaintiffs held valid concerns about the propriety of Mr Muriniti and Mr Newell, including that Mr Newell had held himself out to be a barrister at a time when he was not."
Eighthly, there was the foreshadowed application for an injunction to restrain Murinitis from continuing to act. This was first raised on 1 May 2020. Although the threat of the application was repeated, on 17 August, 25 August and 2 September 2020, there was a conspicuous failure to articulate the grounds to be relied upon when they were requested - an entirely reasonable request - and when they were ultimately directed by the Court, the threatened application was abandoned.
And finally, there was the discontinuance of the substantive proceedings, when Murinitis continued to act after the wasted costs order was made, such that the proceedings resulted in no benefit for anyone but Goldsmiths.
The application was plainly motivated in substantial part by the fact that such orders had been made against Murinitis in other unrelated cases. From the outset, that fact was relied on in support of the application. However, that fact was quite irrelevant to whether such an order should be sought or made in the current proceedings, and was an inappropriate consideration in deciding to make the application. There was no need for this application to be made, let alone determined, when it was. It could at least have awaited the outcome of the applications for leave to amend the statement of claim, and should probably have awaited the outcome of the substantive proceedings. In that way, the risk of embarrassment, conflict of interest, and satellite proceedings, could have been avoided, and the court would have been better positioned to determine whether the appellants' conduct warranted the making of the order. The timing is eloquent of a collateral purpose.
For the above reasons, a view that the constellation of factors to which I have referred is to be explained by a collateral purpose of separating the Defendants from their solicitors is not a paranoid delusion, but one that is well open. However, it is unnecessary to go so far to resolve this appeal. In my view, if the proceedings stood as they did when the application came before her Honour, I would not embark on hearing it, but would defer it until the finalisation of the substantive proceedings.
However, the proceedings do not stand as they then did; the substantive claim has since been discontinued. The practical consequence of the orders made, in the light of the discontinuance of the substantive proceedings, is that the only beneficiary of the proceedings is the Plaintiffs' solicitors Goldsmiths, who will have the indirect benefit of the personal costs order against Murinitis. Their clients the Plaintiffs will derive no benefit from the proceedings at all.

Conclusion

In my opinion, in the context of this case, the drafting of the impugned pleadings was not so defective as to justify a personal costs order. In any event, the application for such an order was prematurely made and prematurely heard. In circumstances where the Plaintiffs have since abandoned their claim, it is in my opinion now entirely inappropriate to make a personal costs order against Murinitis in respect of the interlocutory applications for leave to amend the defence.

Referrals to Legal Services Commissioner

As has been noted, at various points of her Honour's reasons, the primary judge made observations about various aspects of the professional conduct of Mr Muriniti and Mr Newell, and foreshadowed that the matter would be the subject of a referral to the Legal Services Commissioner. Her Honour's formal orders included the following: [71] "Noted: These reasons are to be sent by the Registrar so that the matter may be referred to the Legal Services Commissioner to determine whether or not Mr Muriniti and/or Mr Newell have engaged in unsatisfactory professional conduct or professional misconduct."
It is conventional that when a judge has in mind referring a legal practitioner to a professional regulator for disciplinary investigation, the practitioner is afforded an opportunity to show cause why there should not be a referral. This practice was not followed in this case. This was not a private complaint to the Legal Services Commissioner, nor a decision to institute disciplinary proceedings, in respect of which at common law there might be no right to be heard, [72] but a formal decision recorded in a published judgment to refer a practitioner to a regulatory authority for disciplinary investigation, which of itself has serious potential reputational consequences for a practitioner, such as to attract the principles enunciated in cases such as Mahon v Air New Zealand, [73] Annetts v McCann, [74] and Ainsworth v Criminal Justice Commission. [75]
In my view, the direction that the Registrar send her Honour's reasons to the Legal Services Commissioner to determine whether or not Mr Muriniti and/or Mr Newell had engaged in unsatisfactory professional conduct or professional misconduct involved a denial of procedural fairness. There was no stay of that direction pending appeal, and the papers have presumably long since been sent. The receipt by the Legal Services Commissioner of the District Court's reasons does not of itself have any legal consequence, although it may well have a practical consequence. In those circumstances, the appropriate course is to make a declaration to the effect that that in sending the papers to the Legal Services Commissioner the District Court failed to observe the requirements of procedural fairness: cf Ainsworth v Criminal Justice Commission. [76]

Conclusion

I propose the following orders. 1. Allow the appeal, with costs; 2. Set aside the orders made in the District Court on 24 July 2020; 3. In lieu thereof, dismiss the application for a personal costs order, with costs. 4. Declare that in sending the papers to the Legal Services Commissioner the District Court failed to observe the requirements of procedural fairness.

Endnotes

(2005) 63 NSWLR 300; [2005] NSWCA 153 ("Lemoto") at [92(g)].
Kalil v Eppinga [2020] NSWDC 407 ("Primary judgment") at [488]. The orders are fully set out below at [37]. The paragraph enumeration in the judgment in the White Folder, and that published on Caselaw, differ; this judgment uses the Caselaw numbering.
It has since been held that leave is not required to appeal from an order under s 99, as such a decision is not one "as to costs only" for the purposes of s 101(2)(c) of the Supreme Court Act 1970 (NSW): see Muriniti v Mercia Financial Solutions Pty Ltd [2021] NSWCA 180 at [25]-[27] (Bell P); [124] (Gleeson JA); [130] (Emmett AJA).
[2013] NSWDC 54.
[2018] NSWCA 98.
See below at [53].
3/19/762.
Primary judgment at [488].
Muriniti v Kalil [2021] NSWCA 81.
Kelly v Jowett (2009) 76 NSWLR 405; [2009] NSWCA 278 at [60] (McColl JA; Beazley JA and Barrett J agreeing); Lemoto at [92(a)] (McColl JA; Hodgson JA and Ipp JA agreeing).
Ridehalgh v Horsefield [1994] Ch 205; 3 All ER 848.
Filmlab Systems International Ltd v Pennington [1994] 1 All ER 673 at 678 per Aldous J ('What may seem to be a misconceived application could, after trial, be seen as an application which was worth trying as it would have saved considerable time and money if it had succeeded'); B v Pendlebury (2002) 152 NLJ Rep 1072 (where Turner J refused a wasted costs order in a case where there had been no adjudication of the primary facts, being resistant to 'enquire into a state of affairs in which it had no solid foundation from which the process of analysis essential to the wasted costs procedure could proceed').
Above at [9].
[2004] NSWSC 515 at [35].
[2019] SASC 75 at [24].
On account of concern at this, albeit in the context of threats to seek personal costs orders against lawyers on the ground that the case has no reasonable prospects of success under then Legal Profession Act 2004 (NSW) s 348 (see now Legal Profession Uniform Law Application Act 2014 (NSW) Sch 2 cl 5)), the Law Society Council issued a statement to the effect that a threat to seek a personal costs order against a lawyer in any proceedings should not be made unless the lawyer making the threat has material available that would clearly suggest that the proceedings have little merit and are likely to fail, has specific instructions from the client to make the threat after the client has been made aware of its seriousness and the possible consequences for the client if the allegation is not made out, and makes known to the opposing lawyer the evidentiary basis for having formed the view that the proceedings have little merit and are likely to fail: see V Shirvington, "Be more than 'fairly honest' with colleagues" (September 2004) 42 LSJ 44. There is no reason why the same precepts should not apply, mutatis mutandis, in respect of applications under Civil Procedure Act, s 99.
Below at [54].
Primary judgment at [22].
Below at [98].
Primary judgment at [48].
Primary judgment at [58].
Primary judgment at [70].
Primary judgment at [71].
Primary judgment at [74].
Primary judgment at [119].
Primary judgment at [133].
Primary judgment at [161].
Primary judgment at [170].
Primary judgment at [195]-[196].
Primary judgment at [197]-[198].
Primary judgment at [200].
Primary judgment at [208].
Primary judgment at [212].
Primary judgment at [284].
[2014] NSWCA 338 at [119].
[2012] NSWLEC 42.
[2012] NSWLEC 236.
[2015] NSWLEC 111.
[2015] NSWLEC 187.
[2016] NSWLEC 4.
[2017] NSWLEC 34.
[2016] NSWCA 282.
[2017] NSWSC 1557.
[2018] NSWCA 311.
[2016] FCCA 989.
[2016] FCA 1176.
[2016] FCA 456; 247 FCR 224.
[2019] NSWCA 232.
Above at [37].
Above at [50(4)].
(1992) 176 CLR 256; [1992] HCA 36.
(1992) 176 CLR 256 at 272; [1992] HCA 36.
(1992) 176 CLR 256 at 268; [1992] HCA 36.
Primary judgment at [42].
Primary judgment at [35].
Primary judgment at [417].
[2018] NSWCA 98 at [44]-[46].
Primary judgment at [414]-[416].
Cf Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 at [16] (Kiefel CJ, Bell, Keane and Edelman JJ).
Hughes v The Queen 263 CLR 338; [2017] HCA 20 at [40], [57], [58] (Kiefel CJ, Bell, Keane and Edelman JJ).
Above at [54].
Cf Primary judgment at [13], see above at [54].
Primary judgment at [233]-[371]; see above at [50(15)].
Primary judgment at [165].
[2013] NSWDC 54.
[2018] NSWCA 98.
[2019] NSWCA 232.
Primary judgment at [173].
See above at [13].
See above at [21].
Primary judgment at [35]-[36].
Primary judgment at [488].
Killen v Lane [1983] 1 NSWLR 171 at 179 (Moffitt P); cf the position under a legislative regime in Murray v Legal Services Commissioner (1999) 46 NSWLR 224; [1999] NSWCA 70 at [1], [3] (Priestley JA); [88]-[92] (Sheller JA); [105], [109]-[110] (Stein JA).
[1984] AC 308.
(1990) 170 CLR 596 at 598 (Mason CJ, Deane and McHugh JJ); [1990] HCA 57.
(1992) 175 CLR 564 at 577, 578 (Mason CJ, Dawson, Toohey and Gaudron JJ), 591-592 (Brennan J); [1992] HCA 10. 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: 29 June 2022

Legal Profession Act 2004(NSW)s 348

HEADNOTE [This headnote is not to be read as part of the judgment] The appellants acted for the defendants in defamation proceedings which were commenced in 2019 by the respondents. During those proceedings, the respondents' solicitors applied for a costs order to be made against Murinitis, personally, in respect of the costs arising from their preparation and ongoing amendment of the pleadings. The order sought was made. On appeal by Murinitis: Held, per Brereton JA, Macfarlan JA and Leeming JA agreeing, allowing the appeal: [1] (Macfarlan JA), [2] Leeming JA, [8] (Brereton JA): As to whether a personal costs order was warranted:

Per Brereton JA; Macfarlan and Leeming JJA agreeing: In the context of the case, the impugned pleadings were not so defective as to warrant a personal costs order being made against the appellants: [5] (Leeming JA); [104] (Brereton JA). As to the timing of an application for a personal costs order:
Per Leeming and Brereton JJA; Macfarlan JA agreeing: Ordinarily an application for a personal costs order against a legal representative should be made at the conclusion, not the commencement, of proceedings, to mitigate the potential for prejudice to the client (a degree of which remains irrespective of when the application is made). The present application was no exception to that general rule: [5] (Leeming JA), [47]-[49] (Brereton JA). Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153, followed. Redowood Pty Ltd v Goldstein Technology Pty Ltd [2004] NSWSC 515; Saadat v Commonwealth of Australia (No 2) [2019] SASC 75, considered. As to whether the primary judge had regard to irrelevant considerations:
Per Brereton JA; Macfarlan JA agreeing; Leeming JA not deciding: The primary judge erred in having regard, when determining the application for a personal costs order, to irrelevant considerations, being: (1) the conduct and attitude of the appellants during the proceedings, as informed by their conduct in other unrelated cases; (2) their conduct during the hearing of the application; and (3) the timesheets of their work performed: [77] (Brereton JA). As to apprehended bias:
Per Leeming JA; Macfarlan JA agreeing; Brereton JA not deciding: A ground of apprehended bias cannot be founded in the reasons for judgment alone. Although there may be cases where a link can be drawn between the reasons for judgment and the conduct of a hearing, such a ground was not made out in the present case: [3] (Leeming JA). Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48; Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76, considered.

Judgment

MACFARLAN JA: I agree with the judgment of Brereton JA and also with the additional observations of Leeming JA supporting the orders proposed by Brereton JA.
LEEMING JA: I have had the very considerable advantage of reading the reasons for judgment of Brereton JA in draft. I agree with his Honour that the appeal should be allowed and the personal costs order made on 24 July 2020 set aside. What follows presupposes familiarity with his Honour's reasons.
I start with apprehended bias, which was the 13th ground of appeal. Any claim of actual bias was expressly disavowed (transcript 25 August 2021, T46.25). Yet the appellants' written submissions (including in reply) relied exclusively on matters contained in the reasons for judgment. It was said that the findings were unreasonable, or unfair, or lacked proportion, giving rise to an impression of "a judge determined to make a host of pejorative observations about the Appellants". These submissions are contrary to what was said in Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [67]. A ground of apprehended bias cannot be grounded in the reasons for judgment alone. There may be cases where a link can be drawn between the reasons for judgment and the conduct of a hearing, as explained in Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76 at [54]-[56]. Those points were made by Mr Smark and not responded to until Mr Newell's attention was drawn to them, just before the conclusion of Mr Newell's oral submissions. Despite a belated attempt to connect the course of the hearing with the findings in the judgment, I do not consider that this ground is made out. It is understandable that it was not at the forefront of the appellants' case, because its acceptance would have led to a rehearing.
Turning to the application for a personal costs order itself, in Rahman v Al-Maharmeh (No 2) [2021] NSWCA 151 at [22], Brereton JA (with whom Meagher JA and I agreed) identified the applicable principles: "The jurisdiction to make such orders is to be exercised 'with care and discretion and only in clear cases'. In considering such an application, courts apply a three‐stage approach, asking first, has the legal representative of whom complaint is made acted improperly, unreasonably, or negligently; secondly, if so, did such conduct cause the applicant to incur unnecessary costs; and thirdly, if so, is it in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs." (footnote omitted).
I agree with what Brereton JA has written concerning the importance of what was said in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 at [192]-[196]. I agree with Brereton JA that the deficiencies, such as they were, in the defences and draft defences drafted by the appellants did not warrant a personal costs order. I also agree that it was wrong for the plaintiff's solicitor Mr Goldsmith to have threatened to seek special costs orders, including orders that the appellants pay, personally, the costs of and occasioned by the amendment, some 15 days after receipt of the original defence and cross-claim. Ordinarily an application of this nature should be made at the conclusion, not the commencement, of proceedings. The present application was no exception to the general rule. I would rest my judgment on that point.

(2020) 102 NSWLR 490

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