Solicitors:
LC Muriniti & Associates - Plaintiffs
Sparke Helmore - First, Second, Sixteenth and Seventeenth Defendants
DLA Piper - Third and Twenty-First Defendants
Mullane & Lindsay - Eighth and Eleventh Defendants
Mills Oakley - Tenth Defendant
Wotton + Kearney - Thirteenth Defendant
Moray & Agnew - Fourteenth Defendant
Sparke Helmore Lawyers - Eighteenth Defendant
Meridian Lawyers - Nineteenth and Twentieth Defendants
File Number(s): 2020/120678
[2]
EX TEMPORE Judgment
HIS HONOUR: On 22 November 2022, I gave judgment on an application by the defendants for gross sum costs orders pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) against the plaintiffs: see Muriniti v Lawcover Insurance Pty Limited [2022] NSWSC 1593 (costs judgment).
The costs orders were made against the plaintiffs by Ward CJ in Eq (as the President of the Court of Appeal then was) in Muriniti v Lawcover Insurance Pty Ltd [2022] NSWSC 90 (principal judgment).
An application for leave to appeal was dismissed: Muriniti v Lawcover Insurance Pty Ltd [2022] NSWCA 159.
Definitions used in the principal judgment and the costs judgment are used here. The plaintiffs were referred to in both of those judgments as Muriniti and Newell and will be so referred to here. This judgment should be read in conjunction with those judgments.
The Court made the following gross sum costs orders against Muriniti and Newell. Instead of assessed costs, the costs of:
1. the first, second, sixteenth and seventeenth defendants were specified in the gross sum of $199,000;
2. the fourteenth defendant were specified in the gross sum of $31,200;
3. the eighteenth defendant were specified in the gross sum of $36,000;
4. the eighth and eleventh defendants were specified in the gross sum of $48,000; and
5. the nineteenth and twentieth defendants were specified in the gross sum of $82,800.
As the costs judgment records,1 on 4 November 2022, Muriniti and Newell filed a motion in the registry seeking a stay of all costs orders made by Ward CJ in Eq "pending the hearing and determination of fresh proceedings recently commenced by Muriniti and Newell in this Court" and that all and any lump sum costs orders made in favour of the defendants be stayed on an interim basis. The stay application was made returnable today.
The fresh proceedings cite the Law Society of NSW as the 24th defendant for the first time.
As the costs judgment further records, [1] on 8 November 2022, Muriniti and Newell commenced fresh proceedings (fresh proceedings, proceedings number 2022/00334440) by way of Statement of Claim (over 100 pages long), making substantially the same allegations of conspiracy as had been made in the Equity proceedings.
On 5 December 2022, exercising their right under Uniform Civil Procedure Rules 2005 (NSW) r 19.1(1) to amend a Statement of Claim without leave once within 28 days after it was filed, Muriniti and Newell filed an Amended Statement of Claim, the substantive part of which runs to 107 pages. Additionally, they filed a document entitled Amended Addendum to Statement of Claim which gives particulars relating to conduct complained about in the conduct of the reference (see costs judgment at [24]).
UCPR r 12.10 provides:
12.10 Stay of further proceedings to secure costs of proceedings dismissed
(a) as a consequence of the dismissal of proceedings, a party is liable to pay the costs of another party in relation to those proceedings, and
(b) before payment of the costs, the party commences further proceedings against that other party on the same or substantially the same cause of action, or for the same or substantially the same relief, as that on or for which the former proceedings were commenced,
the court may stay the further proceedings until those costs are paid and make such consequential orders as it thinks fit.
Two defendants to the fresh proceedings have filed notices of motion seeking to have the fresh proceedings dismissed, struck out or permanently stayed. Most, if not all, of the defendants to the fresh proceedings have indicated that they intend to file notices of motion seeking orders under UCPR r 12.10 that the fresh proceedings be stayed until the costs are paid.
Muriniti and Newell's present stay application is supported by an affidavit of Muriniti sworn 9 November 2022 and two affidavits of Newell sworn respectively on 9 November and 28 November 2022. In addition, they provided written submissions signed by Muriniti and dated 6 December 2022.
Their contentions that they should have a stay of the costs orders made by Ward CJ in Eq and now quantified by the costs judgment can be summarised as follows:
1. the principal judgment dismissed the Equity proceedings but not on the merits;
2. they have now commenced the fresh proceedings in which they make the same substantive claims of conspiracy that they sought to make in the Equity proceedings with some additions, including that they now claim an indemnity in respect of the costs orders made by her Honour. The fresh proceedings will return to them a verdict exceeding the amount of their costs liability;
3. the defendants are in reality well-resourced corporations who are well able to withstand a delay in payment of the costs orders (which will accrue interest in their favour);
4. the prejudice of any delay is assuaged by offers of security in the form of undertakings not to dispose of assets owned by them; and
5. the applications under r 12.10 have not yet been brought and it is not appropriate to make any assessment of whether, if they are brought, they will succeed. If they are brought, they will be opposed.
In my opinion, justice does not dictate that the costs orders be stayed. To the contrary, it dictates that they should not be.
The beneficiaries of those orders are entitled to the fruits of the judgment. There is no reason why they should be held out of costs and expenses incurred by them in meeting those proceedings. This is especially so now that they will incur costs and expenses in meeting the fresh proceedings, which make the same substantive allegations.
It is not necessary or appropriate at this point to consider the prospects of the Court granting a stay of the fresh proceedings under UCPR r 12.10. But equally, given that the fresh proceedings make the same substantive, serious allegations, orders for costs with respect to the Equity Proceedings should take effect.
It is not suggested that the defendants to the fresh proceedings will not be able to meet any verdict given against them. Muriniti and Newell themselves argue that the defendants are well-resourced.
It is not suggested that Muriniti and Newell cannot meet the costs orders. Indeed, the evidentiary material makes it clear that together they can. They drew attention to the fact that they might be the object of bankruptcy notices based on the costs judgment. That risk will be alleviated by paying the costs.
They do not put that having to discharge their obligation to pay the costs will stifle their ability to prosecute the fresh proceedings.
The Motion filed 4 November 2022 is dismissed with costs.
[3]
Endnote
Costs judgment at [9].
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Decision last updated: 08 December 2022