Muriniti v Lawcover Insurance Pty Ltd [2022] NSWCA 159 | Case summary

Court of Appeal (NSW)|2022-08-16|Before: Gleeson JA, Adam P, The Hon AM

Background facts summarised

The applicants commenced proceedings by a statement of claim dated 22 April 2020 against the 23 respondents alleging that they concocted an unlawful conspiracy to injure the applicants by use of unlawful means (PJ [7], [126]). That alleged conspiracy was described by her Honour in the following terms (PJ [7]-[8]):

The respondents set up an elaborate plan to put forward, or prosecute ineptly, baseless or manifestly hopeless personal costs applications in the De Costi proceedings against the applicants.
The ultimate goal of the alleged conspiracy was to bring about a position whereby there would be personal costs orders made against the applicants, in turn instigating the applicants' PII providers to decline to renew, and renew with an increased premium, PII cover for Mr Newell and Mr Muriniti respectively.
The object or purpose of the alleged conspiracy was to prevent or dissuade the applicants from continuing to act for Mrs Young in separate LEC proceedings which had, since 2008, been directed to setting aside the consent orders made by the LEC in 2004. In addition, the "ultimate purpose" was to pervert the course of justice by denying the District Court knowledge of the true circumstances of the costs applications against the applicants and by denying Mrs Young legal representation by the applicants, thereby impeding the conduct of the proceedings initiated by Mrs Young.

The primary judge's determination and reasoning summarised

The primary judge noted at PJ [473] that the issues which remained for determination following the earlier striking out of the original statement of claim were: 1. whether, on the applicants' application, (a) the proceeding should be stayed pending the outcome of the costs reference in, or the conclusion of, the De Costi proceedings; or (b) alternatively, whether leave should be granted to the applicants to file an amended statement of claim (although her Honour subsequently found that this claim for alternative relief was not ultimately pressed); or 2. whether, on the respondents' applications, the proceeding ought to be permanently stayed or summarily dismissed; and 3. the issue, raised in the Suncorp respondents' submissions, as to whether, on her Honour's own motion, the applicants should be declared vexatious litigants (other than in relation to the finalisation of the District Court proceedings relating to the costs applications in the De Costi proceedings).

On issues (1) and (2)

The determination of issues 1 and 2 was closely linked. The primary judge found that there were numerous pleading deficiencies in the latest version of the proposed amended statement of claim. Those deficiencies are identified and discussed at considerable length in various parts of the primary judge's reasons.
Her Honour concluded at PJ [476]: There can be no doubt that the general pleading requirements (in particular, the requirements that a pleading set out the material facts on which a party relies in support of its case; that facts that might take a defendant by surprise be specifically pleaded; that the material facts be contained in the pleadings rather than supplied by particulars; and that the pleading give such particulars as are necessary to enable the opposing party to identify the case that the pleading requires to be met - see rr 14.7, 14.14; 15.1 of the UCPR) are of fundamental importance when very serious allegations of fraud, conspiracy, attempts to pervert the course of justice and criminal conduct are made (as is the case here). Clear and cogent evidence is ultimately required for such allegations to be established.
At PJ [482], her Honour stated: In the present case, the proposed amended statement of claim (far from demonstrating that the plaintiffs' claim is not illusory - as they have suggested was the purpose of its service) suffers from serious pleading deficiencies (as highlighted in the defendants' submissions), not least including the failure to plead the facts, matters and circumstances relied upon for the various alleged agreements or understandings, the knowledge by particular alleged conspirators of the alleged conspiracy (particularly those who it is alleged only joined the conspiracy at a later time) and the basis for the asserted intent to injure the plaintiffs. There is much force in the complaint that the connection between the various events and alleged conspirators is not made clear; and that much of the pleading consists of rolled-up conclusions. Moreover, the material facts to show that the defendants were dishonest or guilty of fraud (and not merely negligent), or otherwise acted in ways that were not the result of bad faith or other impropriety (i.e., facts, matters and circumstances which are not equally consistent with innocence) are not pleaded. Serious allegations of conspiracy, fraud and perverting the course of justice should not be made lightly, and must be clearly and precisely identified (see Hughes at 706; Weston v PBL [2011] at [652]).
After noting at PJ [486] that the applicants did not press for leave to file the proposed amended statement of claim, her Honour added that she would have refused leave in any event. Her Honour added that she accepted that the proposed amended statement of claim as then drafted did not disclose a reasonable cause of action in conspiracy.
The primary judge rejected the principal premise on which the applicants put their temporary stay application, namely that they were not in a position to plead their claims until the outcome of the costs reference was known (PJ [488]). Her Honour said that the applicants were in no different a position from other litigants who file pleadings based on a contingency that certain outcomes will follow from impugned conduct.
The primary judge noted that, while she ordinarily would have been inclined to allow the applicants to replead, they had effectively already had that opportunity (having served two versions of a proposed amended statement of claim). Moreover, as the applicants continued to maintain that they were not in a position to replead, the consequence was that any such order would be futile (PJ [489]).
The primary judge made an explicit finding at PJ [499] that it was an abuse of process for the applicants to make such serious allegations without a proper pleading and then to seek to have that proceeding remain in abeyance indefinitely. Her Honour stated that to leave on foot the very serious and deficiently pleaded allegations against the respondents would have been unjustifiably oppressive to those respondents and would have brought the administration of justice into disrepute (PJ [500]). The proceeding was summarily dismissed.

On issue (3)

The primary judge declined to declare the applicants to be vexatious litigants (PJ [508]). Instead her Honour considered it appropriate to refer the matter to the Attorney-General for his consideration (PJ [520]).

(a) Leave to appeal

The applicants sought leave to appeal from the whole of the decision below.
The original draft notice of appeal listed the following appeal grounds: 1. The learned primary judge erred in holding that the Applicants' (sic) proposed amended statement of claim did not disclose a reasonable cause of action. 2. The learned primary judge erred in holding that the granting of a temporary stay would bring the administration of justice into disrepute and/or would be oppressive to the Respondents. 3. The learned primary judge erred in dismissing the Appellants' proceedings. 4. The learning primary judge erred in not granting the Appellants a temporary stay of the proceedings in the Court below. 5. The learned primary judge's discretion miscarried in dismissing the proceedings and refusing a temporary stay in that she failed to take account of relevant considerations and misapprehended the Appellants' case in support of the temporary stay.

(b) Notice of motion

The applicants filed a notice of motion on 24 June 2022 seeking leave to amend and substitute their proposed draft notice of appeal and summary of argument.
In their supporting affidavit to the motion, the applicants provided a proposed amended draft notice of appeal. One further proposed appeal ground was added (as tracked): 6. The learned primary judge erred in ordering the Appellants to pay the costs concomitant with the order striking out the Appellants' statement of claim on 18 November 2021.
The proposed amended draft notice of appeal also altered the orders sought. Former order 3 was changed and a new order 7 was sought (as tracked): 3. The orders of the court below be set aside including the order made by the learned primary judge on 18 November 2021 that the Appellants pay the costs of the Respondents motions to strike out the Appellants' statement of claim. … 7. The Respondents pay the costs of their motions for lump sum costs orders against the Applicants (sic) including or in the alternative an order that the Respondents pay by way of restitution or reinstatement pursuant to UCPR 51.54 the Applicants' (sic) expenses by reason of steps taken by the Respondents for the purpose of enforcement.

Original summary of argument

In their original summary of argument, the applicants contended that the following questions arise in their leave to appeal application: 3. The questions involved are: (a) Whether the learned primary judge erred in denying natural justice in dismissing the Applicant's proceedings on the basis of an abuse of process not argued. (b) Whether the primary judge erred in finding that the Applicants' proposed amended statement of claim did not disclose a reasonable cause of action. (c) Whether the learned primary judge's discretion miscarried in dismissing the Applicants' proceedings and the motion for a stay in that: (i) The learned primary judge erred in holding that the Applicant's claim did not disclose a reasonable cause of action. (ii) The learned primary judge erred in holding that the Applicants could forthwith address the circumstances of the (as yet undetermined) Reference by pleading in the alternative. (ii) The learned primary judge erred in holding that the Applicants would not be greatly prejudiced if the proceedings were dismissed. (iv) The learned primary judge erred in holding that ordering a stay would involve or give rise to an abuse of process. (v) The learned primary judge erred in bringing the proceedings to an end in other than wholly exceptional circumstances.
At [12]-[20] the applicants set out 'relevant principles', covering issues such as the test for dismissal on the ground that no reasonable cause of action is disclosed in a pleading, what is needed to make out a claim in conspiracy and the manner in which cases involving circumstantial evidence should be dealt with.
At [21]-[31] the applicants set out the factual matters and circumstances which they allege support an inference of agreement informing the conspiracy between the respondents, indicate the knowledge of particular alleged conspirators to the alleged conspiracy and set out the basis for the assertion that the conspiracy was intended to injure the applicants.
There is little structure to the applicants' written arguments at [32]-[45]. They move between alleging further factual matters which allegedly support the applicants' case on conspiracy and noting the alleged errors of the primary judge:

At [32]-[34], the applicants note that the primary judge suggested that there could be entirely innocent explanations for the conduct of certain respondents. In response to this, they put forward more factual matters in support of their conspiracy claim.
At [35], the applicants note that the primary judge criticised the applicants for having failed to plead the states of mind of various respondent companies (such as Lawcover, Suncorp or the De Costi companies). The applicants submit that their pleading adequately accommodated this requirement by relying upon the states of mind of the natural person representatives of the corporate respondents.
At [36]-[37], the applicants note that the primary judge concluded that their proposed amended statement of claim did not plead facts which showed that the respondents were guilty of bad faith or dishonesty, and put forward more factual examples to support their case to the contrary.
At [38], the applicants note that the primary judge concluded that their proposed amended statement of claim did not plead facts which showed a prior agreement to injure by unlawful means. Again, they submit that the factual matters to which they have referred earlier in their summary of argument proves this conclusion wrong.
At [39]-[40], the applicants complain that the primary judge's summary dismissal decision was predicated on a conclusion that the applicants faced no impediment in pleading the case concerning the outcome of the costs reference in the alternative. They submit that this conclusion misapprehended the circumstances of the costs reference and that the actual outcomes of the completed costs reference would have to be pleaded, which could only be done after its completion.
At [41], the applicants complain that the primary judge erred in holding that a temporary stay would constitute an abuse of process. They submit that there is nothing exceptional in temporarily staying proceedings until material proceedings in another court are determined.
At [42]-[43], the applicants complain that the primary judge erred in concluding that the summary dismissal decision would not be unduly prejudicial to the applicants. They submit that the filing of fresh proceedings will almost certainly give rise to a limitation argument. Furthermore, the costs orders against them impose a large barrier in the way of advancing a claim for relief again.
At [44], the applicants complain that the primary judge erred in finding that leaving the proceeding on foot would be oppressive to the respondents. They submit that the summary dismissal on terms that leave the applicants at liberty to recommence effectively the same proceedings at some undetermined time in the future leaves the matter "hanging over the heads" of the respondents in any event.
At [45], in summation, the applicants state: The learned primary judge's dismissal and refusal of a stay was based on a conclusion that the granting of the stay would bring the administration of justice into disrepute. Again, that holding is anchored firmly in the learned primary judge's error that the PASOC does not disclose a reasonable cause of action.

In oral address, Mr Newell (who appeared for himself and Mr Muriniti) again contended that the primary judge's summary dismissal decision was based on the proposed amended statement of claim not disclosing a reasonable cause of action and not on the basis of abuse of process. Relatedly, he contended that, in circumstances where the primary judge found that the still undetermined costs reference was not a bar to a proper pleading, the primary judge should have granted leave to amend as sought by the applicants in prayer 5 of their notice of motion filed on 1 April 2021 in the proceeding below.

Proposed amended draft summary of argument

In the supporting affidavit to their notice of motion filed on 24 June 2022 in this proceeding, the applicants provided a proposed amended draft summary of argument.
To the end of paragraph 3 of the original summary of argument (extracted above at [42]), the applicants added (proposed changes underlined): 3. The questions involved are: … (c) Whether the learned primary judge's discretion miscarried in dismissing the Applicants' proceedings and the motion for a stay in that: … (vi) The learned primary judge erred in making an order on 18 November 2021 that the Applicants pay the costs of the Respondents' motions to strike out the Applicants' statement of claim.
The only other tracked change made was to insert a new [46] into the summary of argument, which makes a complaint that the primary judge made the costs order in November 2021:

upon no application being made or foreshadowed by the respondents;
in circumstances where the applicants were not heard prior to the order being made; and
in circumstances where there was no occasion for such an order to be made because the applicants had, at the time of serving their original statement of claim, indicated that it would need to be amended and "that it was a matter for expected case management directions as to whether that should happen before or after the completion of the [costs reference] in the District Court".

In oral address, Mr Newell submitted that the applicants should have leave to appeal against the primary judge's costs order arising out of the decision to strike out the original statement of claim, not least because the financial burden posed by those costs would severely undermine their ability to prosecute the proposed appeal.

Respondents' submissions summarised

There are 23 respondents. Some of the respondents adopted the submissions of other respondents. To avoid repetition, we propose to summarise the respondents' submissions collectively by reference to the relevant topic.

Leave to appeal

The Lawcover/YPOL respondents; Suncorp respondents; 8th, 11th, 13th, 19th, and 20th respondents; 10th respondent; 14th respondent; 18th respondent; and 22nd respondent all opposed a grant of leave.
Broadly, each of these respondents submitted that the applicants' summary of argument and draft notice of appeal disclosed no House v The King (1936) 55 CLR 499; [1936] HCA 40 error. They submitted that the primary judge correctly decided the matter before her and exercised her discretion appropriately.

Proposed ground 1

The Lawcover/YPOL respondents submitted that the primary judge correctly held that the proposed amended statement of claim did not disclose a reasonable cause of action in conspiracy.
The Suncorp respondents submitted that the primary judge did not make a dispositive finding as to whether the proposed amended statement of claim failed to disclose a reasonable cause of action in conspiracy. Rather, the primary judge found that it suffered from serious pleading deficiencies. The Suncorp respondents also contended that the applicants failed to identify any House v The King error in respect of this ground.
To similar effect, the 22nd respondent submitted that while the primary judge accepted that the proposed amended statement of claim did not disclose a reasonable cause of action in conspiracy, her Honour did not summarily dismiss the proceeding on this basis. Instead, her Honour dismissed the proceeding because they constituted an abuse of process, a conclusion in respect of which the applicants failed to show arguable error.

Proposed ground 2

The Lawcover/YPOL respondents submitted that the primary judge correctly held that to order a temporary stay would bring the administration of justice into disrepute and/or be oppressive to the respondents.
The Suncorp respondents submitted that this proposed ground made a general assertion of error in the ultimate finding below without identifying any House v The King error. The 22nd respondent made a similar submission.

Proposed ground 3

The Lawcover/YPOL respondents made no specific submissions on this proposed ground apart from their contention that there was no error in the primary judge's reasoning and the ultimate orders her Honour made were correctly made for the reasons published in her judgment.
The Suncorp respondents similarly submitted that this proposed ground made a general assertion of error in the ultimate finding below without identifying any House v The King error.
The 22nd respondent submitted that this proposed ground was repetitive of the issues covered in proposed grounds 1 and 2.

Proposed ground 4

The Lawcover/YPOL respondents made no specific submissions on this proposed ground apart from contending that there was no error in the primary judge's reasoning and the ultimate orders her Honour made were correctly made for the reasons published in her judgment.
The Suncorp respondents similarly submitted that this proposed ground made a general assertion of error in the ultimate finding below without identifying any House v The King error.
The 22nd respondent submitted that this proposed ground was repetitive of the issues covered in proposed ground 2.

Proposed ground 5

The Lawcover/YPOL respondents submitted that, insofar as the applicants allege that the primary judge failed to take account of relevant considerations, the applicants made no specific submissions in their summary of argument and failed to identify any error of fact or law. The 22nd respondent made the same complaint. The Lawcover/YPOL respondents further submitted that the primary judge took into account all relevant considerations in her detailed judgment, and that her Honour's discretion did not otherwise miscarry.
The Suncorp respondents similarly contended that this alleged error did not arise. They noted that the applicants now sought to allege that the relevant consideration which her Honour failed to take into account was the "real prejudice" to the applicants from the costs order in the proceeding below, which would prevent the conduct of fresh proceedings by the applicants. The Suncorp respondents noted that the applicants did not raise this issue below and argued that they should not be permitted to raise it now. They further submitted that the "prejudice" was purely speculative.

Proposed amendments to the draft notice of appeal

The Lawcover/YPOL respondents; Suncorp respondents; 8th, 11th, 13th, 19th, and 20th respondents; 10th respondent; 14th respondent; 18th respondent; and 22nd respondent opposed a grant of leave to amend.
If leave to amend was granted, the 14th respondent submitted in the alternative that leave to appeal from the costs order made on 18 November 2021 should be refused.

Proposed ground 6

This proposed ground seeks to impugn the decision of the primary judge on 18 November 2021 to make a costs order against the applicants upon the striking out of the original statement of claim. The Lawcover/YPOL respondents, Suncorp respondents and 14th respondent contended that this decision is separate from the decision from which leave to appeal is sought and is not within the scope of the summons presently before the Court.
These respondents broadly submitted that any application for leave to appeal from that costs order is hopelessly out of time and there are no grounds for granting an extension of time. In addition:

The Lawcover/YPOL respondents and the 14th respondent noted that the primary judge granted leave to the applicants to make an application to vary the costs order made on 18 November 2021, but that the applicants failed to avail themselves of that opportunity.
The Suncorp respondents argued that each of the three bases the applicants put forward in support of this proposed ground did not disclose any error. The 14th respondent made a similar submission, adding further that the applicants conceded before the primary judge at the 18 November 2021 hearing that their original statement of claim was liable to be struck. Therefore, it was within her Honour's power to allow the respondents' motions to strike out the original statement of claim with costs.

Proposed order 7

The Suncorp respondents, 10th respondent and 14th respondent each opposed proposed order 7 for the following reason. They noted that this proposed order seeks that the respondents pay certain costs associated with notices of motion for lump sum costs orders which were filed only by some of the respondents.
The Suncorp respondents and the 10th respondent contended that the applicants had failed to identify any basis for the Court making such an order against them.
The 14th respondent submitted that it would be inappropriate to grant leave to include proposed order 7 because these motions were yet to be determined and the applicants failed to identify the basis upon which the Court should make such an order.

Principles relevant to leave to appeal

There was no contest that the applicants require leave to appeal in respect of what is properly characterised as an interlocutory judgment (see s 101(2)(e) of the Supreme Court Act 1970 (NSW) and Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [10]-[13] per Allsop P, Tobias JA and Handley AJA).
There was also broad agreement regarding the relevant principles to apply in determining whether or not to grant leave to appeal. As Sheller JA said in Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 at p 2: In order to be granted leave to appeal the applicant must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at.
The principles as they apply to leave to appeal from a discretionary decision were elaborated upon by Gleeson JA (with whom Macfarlan and Payne JJA agreed) in Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]-[30]: 28 Only if the decision is attended with sufficient doubt to warrant its reconsideration on appeal will leave be granted: Sharpe v Heywood [2013] NSWCA 192 at [34]; McMahon v Permanent Custodians Ltd [2013] NSWCA 275 at [57]. Ordinarily, it is only appropriate to grant leave where there is an issue of principle, a question of general public importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]. It is well established that it is not sufficient merely to show that the trial judge was arguably wrong: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]. 29 The starting point is to observe that plainly, his Honour's decision to decline to grant injunctive relief was discretionary. Accordingly when considering whether there should be a grant of leave to appeal, the considerations identified in House v R (1936) 55 CLR 499 need to be kept in mind. See also Lovell v Lovell (1950) 81 CLR 513 at 518-519 and 532-533; Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621 at 627. In House v The King at 504-5 the Court (Dixon, Evatt and McTiernan JJ) emphasised that the discretion must be exercised according to settled principle: It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court at first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. 30 These principles are applied to a wide range of discretionary judgments, including the refusal to grant final injunctive relief: ACCC v Dataline.Net.Au Pty Ltd (in liq) and Ors (2007) 161 FCR 513; [2007] FCAFC 146 at [115].
We did not understand the applicants to contest the respondents' submissions that the primary judge's decision summarily to dismiss the proceeding involved the exercise of a discretionary power which thereby attracted the requirements in House v The King.
In addition, having regard to the proper characterisation of the primary judge's summary dismissal decision and refusal to grant a temporary stay of the proceeding as relating to matters of practice and procedure, it is also important to note the well-settled reluctance of appellate courts to review such matters. For example, in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177; [1981] HCA 39 per Gibbs CJ, Aickin, Wilson and Brennan JJ: Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. … [however] we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria [in respect of the discharge of that task].
These principles were conveniently summarised by Barrett AJA in Treadtel International Pty Ltd v Cocco [2016] NSWCA 360; (2016) 316 FLR 318 at [29]: The question whether Mr Cocco should be allowed to amend by filing the amended statement of claim was a discretionary question of practice and procedure, Because the decision was discretionary, appellate intervention is permissible only on grounds identified in House v R (1936) 55 CLR 499; [1936] HCA 40 at 504-5, namely, that the decision is affected by extraneous or irrelevant matters, or the judge has mistaken the facts, acted on a wrong principle or failed to take into account a material consideration, or the decision is unreasonable or plainly unjust. The fact that a matter of practice and procedure is involved means that, if leave to appeal is granted, this Court will be required to exercise the "added restraint" that that circumstance attracts (Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 112 CLR 170; [1981] HCA 39 at 176) and will be "extremely reluctant to interfere" (In the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318).

Applying those principles here

For the following reasons, the applicants have not satisfied us that any of their proposed grounds of appeal raise an arguable error or issue of principle.
As to proposed ground 1, it is predicated on a claim that the summary dismissal decision was based on a finding by the primary judge that the applicants' proposed amended statement of claim did not disclose a reasonable cause of action. That claim is not arguable simply because no such finding formed the basis for her Honour's decision summarily to dismiss the proceeding. That decision was based on what the primary judge described at PJ [490] and [499] as an abuse of process. In particular, her Honour made it abundantly clear at PJ [499] that she considered it to be an abuse of process "to make such serious allegations (of fraudulent and criminal conduct) without a proper pleading and then to seek for that proceeding to remain in abeyance for an indefinite period of time". The applicants have failed to establish any arguable error in relation to the primary judge's supporting reasons in arriving at that conclusion.
As is evident from the above summary of the primary judge's reasoning, there is no doubt that the primary judge accepted the respondents' claim that the latest version of the proposed amended statement of claim did not disclose a reasonable cause of action in conspiracy (see at PJ [486]). That then led to the primary judge's observations at PJ [489]: While ordinarily I would be minded (if a pleading is struck out for pleading deficiencies) to afford an opportunity to replead, in essence the plaintiffs have already had that opportunity (having served the proposed amended statement of claim after the original statement of claim was struck out) and even now they maintain that they are not in a position to replead (so that giving them an opportunity, which they do not seek, would surely be futile).
It is evident from the wording of that paragraph that the primary judge was addressing a hypothetical instance where a pleading is struck out for pleading deficiency. On a fair reading her Honour was saying that if the pleading had been struck out for pleading deficiency, she would ordinarily provide an opportunity to replead. She then immediately added that, in the present proceeding, the applicants had already had that opportunity (having provided in fact two versions of a proposed amended statement of claim after the original statement of claim was struck out) and they still maintained they were not in a position to replead. The primary judge then identified the "real issue" at PJ [490] as the issue of abuse of process. That concept provided the foundation for the proceeding being summarily dismissed.
In oral address, the applicants also contended that the primary judge erred in not granting them leave to replead, as sought by them in prayer 5 of their notice of motion below. Elaborating upon that contention, the applicants claimed that they should have had that opportunity because the primary judge found that, contrary to their asserted position, the unfinalised costs reference in the District Court did not present an insurmountable bar to a proper pleading.
These contentions do not present any arguable error or issue of principle to warrant a grant of leave to appeal. First, acceptance of the applicants' argument would effectively entail acceptance of the proposition that the applicants were entitled to the benefit of some form of judicial advice on the adequacy of their proposed pleading before being given an opportunity to act upon that advice by having leave to replead. The detailed written submissions of the respondents, filed in advance of the hearing below, put the applicants on clear notice that there were numerous pleading deficiencies in both their proposed amended statements of claim. The primary judge found that virtually all of those pleading deficiencies existed. The applicants took no steps to remedy those deficiencies prior to the hearing. No arguable error is shown because the primary judge did not grant the applicants yet another opportunity to replead.
Secondly, it was also well open to the primary judge to proceed on the basis that the applicants did not press prayer 5 of their notice of motion in the proceeding below. On no less than three occasions in his oral address below, Mr Newell told the primary judge that: 1. "… it doesn't seem to make any sense to talk about … an amendment if we can't put to the Court that this is the claim to be taken to trial; it is not the claim to be taken to trial"; 2. he accepted as correct the primary judge's understanding that the applicants' position "is you don't want to proceed with the proposed amended statement of claim that is the subject of your alternative relief" because "… it makes no sense to do it and would lead to an incoherent position because you'd only be seeking to amend later at great cost …"; and 3. he explained that the applicants "… don't even envisage that the Court would contemplate an amendment where it's not the matter that can be taken to trial".
Nor is there any arguable substance in the applicants' argument (raised for the first time in their summary of argument) that they were denied natural justice because abuse of process was not argued below. This claim is untenable. The possibility of the proceeding constituting an abuse of process was raised several times during the course of the hearing below (for example, see T 58.16-44, T 94.4-17 and T 103.46-104.1 and see also [106]-[109] of the amended written submissions below filed on behalf of the Suncorp respondents on 5 December 2021). Moreover, the issue of abuse of process was directly raised with Mr Newell several times by the primary judge during the course of oral address below (see T 140.46-141.30 and T 142.46-143.17).
Proposed appeal grounds 2, 3 and 4 may be dealt with together. None of them involves an arguable error by the primary judge or raises an issue of principle. Moreover, the applicants have failed to identify any House v The King error in respect of any of these matters. As to proposed ground 2, no arguable error has been established in relation to the primary judge's finding that she would not grant the applicants a temporary stay of the proceeding because that would bring the administration of justice into disrepute and be unduly oppressive to the respondents. Her Honour was plainly correct to give great weight to the seriousness of the allegations against the respondents, namely fraud and criminal conduct, without an adequate pleading.
Proposed ground 3 involves a bald assertion that the primary judge erred in dismissing the proceeding. The applicants contended that a proceeding should only be summarily dismissed in "wholly exceptional circumstances". This contention was linked to the applicants' claim that the primary judge dismissed the proceeding on the basis of deficient pleadings. That contention is wrong, as explained above. No arguable error is demonstrated in respect of the primary judge's analysis and application of the principles concerning abuse of process.
As to the applicants' contention that the primary judge erred in concluding that summary dismissal would not on balance be unduly prejudicial to the applicants because it was open to them to file fresh proceedings without having to confront a limitation problem, the applicants have failed to establish any arguable House v The King error.
No arguable error has been shown in respect of proposed ground 4. Her Honour's refusal to grant the applicants a temporary stay flowed inexorably from her conclusion that the proceeding was an abuse of process (see [36] above).
Proposed ground 5 asserts that the primary judge's discretion miscarried in dismissing the proceeding and refusing a temporary stay because she failed to take into account relevant considerations and misapprehended the applicants' case in support of a temporary stay. The proposed amended notice of appeal does not particularise these claims. Nor is it easy to divine any particulars from the applicants' written and oral submissions. It may be that one alleged "relevant consideration" is what the applicants described in their summary of argument (at [43]) that they would suffer "real prejudice" because their obligation to meet the costs orders flowing from the summary dismissal decision would present "serious barriers to advancing the proceedings …". The argument is untenable. It was not raised below and, in any event, the fact that the applicants bear a costs liability is the ordinary consequence of their unsuccessful motion and the successful motions of the respondents below. It might also be noted that the applicants adduced no evidence in support of their claim that they were unable to meet the costs orders.
As to the claim that the primary judge misapprehended the applicants' case, presumably this is a reference to the significance which the applicants attach to the outstanding costs reference. As is evident from the extracts from her Honour's reasons for judgment as set out above (see, in particular, PJ [199] which is set out at [20] above), there was no such misapprehension. Rather, the primary judge did not accept the core logic of the applicants' argument.
As noted above, by their notice of motion filed 24 June 2022, the applicants also sought leave to amend their notice of appeal so as to add a further proposed ground of appeal which claimed that the primary judge erred in ordering them to pay the costs of the proceeding which resulted in the original statement of claim being struck out on 18 November 2021. The applicants contend that no such order had been foreshadowed by the respondents, the applicants were not heard on the matter before the order was made and the order should not have been made in circumstances where an amended statement of claim was anticipated.
None of these claims has arguable substance. As to the first claim, at the hearing on 18 November 2021, Mr Newell sought an order that the costs of the strike out motions be reserved but this was rejected for reasons set out at PJ [152]. Her Honour confirmed there that the order for costs made on 18 November 2021 was an order made which followed the event, namely the striking out of the statement of claim.
Secondly, and importantly, as is made clear at PJ [152], the applicants were told that they could apply to have the costs order varied when the matter came before the primary judge for hearing in December 2021. No such application was ever made.
Thirdly, as several respondents pointed out, the 18 November 2021 costs order falls outside the summons seeking leave to appeal and an extension of time needs to be sought and granted. That is because the costs order was made in a separate and earlier interlocutory decision.
Finally, it is necessary to address new order 7 in the amended draft notice of appeal, which is as follows: The Respondents pay the costs of their motions for lump sum costs orders against the Applicants including or in the alternative an order that the Respondents pay by way of restitution or reinstatement pursuant to UCPR 51.54 the Applicants' expenses by reason of steps taken by the Respondents for the purpose of enforcement.
This new order evidently seeks an order (for the first time) that the respondents pay the applicants' costs in relation to the respondents' motions for lump sum costs below. A central difficulty with this matter is that the motions for lump sum costs are yet to be determined. Moreover, not all respondents have filed motions for lump sum costs in the proceeding below.
We would not grant leave to amend so as to add proposed new order 7.

Conclusion

For these reasons, the applicants' summons should be dismissed, with costs following the event (subject to what is said immediately below). The applicants' motion filed on 24 June 2022 should also be dismissed, with costs following the event (subject to what is said immediately below).
It would appear that the De Costi respondents and the 15th respondent are not entitled to costs because they either made no submissions and/or filed no appearance. Any party who opposes the proposed costs orders should file and serve a brief submission not exceeding 2 pages in length within seven (7) days hereof. If any submission is filed within that period, the other parties have liberty to file and serve a brief submission in response not exceeding 2 pages in length within a further seven (7) days thereof. Final orders as to costs will be determined on the papers and without a further oral hearing.

Endnote

The Hon AM Gleeson AC QC, "Finality" (2013) (Winter) Bar News 33, 41. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 August 2022

Solicitors: LC Muriniti & Associates (1st and 2nd applicants) Sparke Helmore (1st, 2nd, 16th,17th and 18th respondents) DLA Piper (3rd and 21st respondents) Mullane & Lindsay (8th and 11th respondents) Mills Oakley (10th respondent) Colin Biggers & Paisley (13th respondent) Moray & Agnew (14th respondent) Meridian Lawyers (19th and 20th respondents) Barry Nilsson Lawyers (22nd respondent) File Number(s): 2022/00043486 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2022] NSWSC 90 Date of Decision: 11 February 2022 Before: Ward CJ in Eq File Number(s): 2020/00120678

HEADNOTE [This headnote is not to be read as part of the judgment] The applicants, Mr Muriniti and Mr Newell, commenced proceedings in the Supreme Court by statement of claim dated 22 April 2020 alleging that the 23 respondents were party to a conspiracy to put forward or prosecute baseless or manifestly hopeless personal costs applications against the applicants with the broad intent of preventing or dissuading the applicants from continuing to act for one of their clients in unrelated proceedings. However, the applicants claimed that they could not properly plead their claim because an assessment of successful personal costs applications against them in the District Court remained unfinalised, and the outcome of that process would bear on the conspiracy claim in the proceeding before the primary judge, Ward CJ in Eq. The applicants subsequently filed a notice of motion on 1 April 2021 in which they sought a temporary stay of the proceeding pending the outcome of that process or, in the alternative, that they be granted leave to file a proposed amended statement of claim. On 18 November 2021, acting upon motions filed by various respondents, the primary judge struck out the applicants' original statement of claim. On 22 November and 3 December 2021, the applicants served different versions of a proposed amended statement of claim on the respondents. The respondents complained of serious pleading deficiencies in the later version of the proposed amended statement of claim and sought either summary dismissal of the claim, a permanent stay or a dismissal of the proceeding for want of prosecution. The primary judge made orders on 11 February 2022 summarily dismissing the proceeding on the basis that it constituted an abuse of process. The applicants filed a summons seeking leave to appeal from that decision on 11 May 2022, in addition to a draft notice of appeal which listed 5 proposed grounds of appeal. These proposed grounds made allegations of various errors in the primary judge's decision. The applicants subsequently filed a notice of motion on 24 June 2022 seeking to amend their draft notice of appeal. They sought to include a sixth ground of appeal that challenged a costs decision made by the primary judge on 18 November 2021 requiring the applicants to pay the costs of the respondents' successful motions to strike out the original statement of claim. Additionally, the applicants sought an additional order to the effect that the respondents pay the costs of their motions for lump sum costs orders against the applicants in respect of the proceeding below. The principal issues before the Court and their resolution were:

Whether leave to appeal from the decision below ought to be granted. Held that leave to appeal should not be granted. The applicants failed to demonstrate any error of the kind described in House v The King (1936) 55 CLR 499; [1936] HCA 40 nor any issue of principle which would justify intervention in the primary judge's decision.
Whether leave should be granted to amend the applicants' draft notice of appeal. Held that leave to amend should not be granted. In respect of the sixth proposed ground of appeal, the 18 November 2021 costs order fell outside the scope of the summons seeking leave to appeal. Furthermore, the applicants were given an opportunity by the primary judge to seek to vary the costs orders but they did not avail themselves of that opportunity. In respect of the new proposed order sought by the applicants, two issues made it inappropriate to grant leave to amend in the form sought by the applicants. First, the motions for lump sums costs had not yet been determined. Secondly, not all respondents filed such motions and the applicants failed appropriately to distinguish between the respondents in their drafting of that proposed order.

The Young litigation

The applicants (who are both legal practitioners) did not become involved in the Young litigation until 2008. The litigation arose from a neighbourhood drainage dispute between Mrs Young and her neighbours, Mr and Mrs King. Mrs Young commenced the proceedings in the Land and Environment Court (LEC) in 2003. The dispute was initially resolved by consent orders made by McClellan CJ of LEC in Young v King [2004] NSWLEC 93. In May 2008, Mrs Young, who by then was represented by the applicants, applied to have the consent orders set aside based on what she claimed was new evidence which established that the consent orders were procured improperly.
As the primary judge in the present proceeding noted at PJ [60], the 2008 LEC application "spawned a veritable barrage of litigation". This comprised no less than 14 judgments of the LEC and subsequent appeals.
In 2010, related proceedings were commenced in the Supreme Court by Mrs Young against her former lawyers and engineers who had acted for her in the LEC proceedings. They had advised her regarding entry into the 2004 consent orders, which spawned various conspiracy allegations by Mrs Young. This litigation (which may be described as the Young v Hones litigation) included an appeal to the Court of Appeal (see Young v Hones (No 2) [2014] NSWCA 338) and two unsuccessful special leave applications to the High Court.
As the primary judge noted at PJ [63], the Young litigation gave rise to a number of judgments in different courts and by different judges, which included criticism of the applicants' professional conduct. We will return to outline some of those judgments below.
Mrs Young was ultimately made bankrupt in March 2017 after apparently failing to set aside various bankruptcy notices issued to her by the successful defendants in the Young v Hones litigation. Personal costs orders were made against the applicants arising from their representation of Mrs Young in the Young v King litigation.
As the primary judge noted at PJ [66], the Young litigation is relevant in two respects. First, the proposed amended statement of claim pleaded that the ultimate purpose of the alleged conspiracy between the respondents was to interfere with the capacity of the applicants to prosecute Mrs Young's claims and thus impeded the conduct of those claims. Secondly, Mr Newell was the subject of applications for personal costs orders in Mrs Young's proceedings both prior to and following Suncorp's decision not to renew his professional indemnity insurance (PII) as a barrister.

The De Costi proceedings

These proceedings were commenced in the District Court in 2006. They involved: 1. the De Costi parties (companies and associated persons); 2. the Wachtenheim parties; and 3. Mr Shnider (brother-in-law to Mr Wachtenheim).
The applicants in the present proceeding represented the Wachtenheim parties in the De Costi proceedings. The first applicant, Mr Muriniti, is a solicitor and principal in the firm L. C. Muriniti & Associates, Solicitors. The second applicant, Mr Newell, is a former barrister but has since 2014 (from which time he could not renew his PII) worked as a solicitor employed as a consultant for L. C. Muriniti & Associates, Solicitors.
After several years of litigation, personal costs orders were made against the applicants (De Costi Seafoods (Franchises) Pty Limited v Wachtenheim (No 6) [2016] NSWDC 378). Taylor SC DCJ found that the applicants had engaged in serious neglect, serious incompetence or serious misconduct in conducting the De Costi proceedings. After unsuccessfully challenging most of those findings in the Court of Appeal, declarations were made holding the applicants liable to indemnify the De Costi parties and remitting the matter to the District Court for determination of costs (see Newell; Muriniti v De Costi (2018) 97 NSWLR 398; [2018] NSWCA 49).
On 20 March 2019, on the remittal, Taylor SC DCJ made orders appointing a referee to assess the alleged wasted costs (the costs reference). The applicants tried to have the costs reference terminated but were unsuccessful (see De Costi Seafoods (Franchises) Pty Limited v Wachtenheim (No 8) [2020] NSWDC 184).

Muriniti v Lawcover Insurance Pty Ltd

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