5612/01 ANGELA PAINO v SALVATORE PAINO
JUDGMENT
1 I am dealing with a notice of motion filed by the defendant on 23 February 2007 and heard on 11 April 2007. By that notice of motion, the defendant seeks an order as follows:
"That the time for payment of the sum of AU$1,262,280.62 referred to in Order 5(ii) of the orders made 6 December 2006 ("the 2006 Court Orders") be extended until seven days after orders are made concluding the proceedings commenced by the Notice of Appeal filed by the Plaintiff against the 2006 Court Orders."
2 There is an alternative claim for the following order:
"That Order 5(ii) of the Orders made 6 December 2006 ("the 2006 Court Orders") be stayed until seven days after orders are made concluding the proceedings commenced by the Notice of Appeal filed by the Plaintiff against the 2006 Court Orders."
3 It was accepted by Mr Hallen SC and Mr Owens of counsel that the effect of each proposed order is essentially the same. In the course of argument, the matter was approached as an application for a stay pending appeal. I shall deal with it accordingly.
4 The orders made on 6 December 2006 (and entered on 8 December 2006) were made in consequence of findings recorded in reasons for judgment published on 5 April 2006 (Paino v Paino [2006] NSWSC 218) and 5 September 2006 (Paino v Paino [2006] NSWSC 886) in proceedings under the Property Relationships Act 1984. Relevant for present purposes is order 5:
"Order that the balance remaining after the aggregate of the sum referred to in Orders 2(i), 2(iv), 2(v), 4(i) and 4(ii) (that aggregate being $501,295.28) has been deducted from and offset against the sum of $2,046,575.90 referred to in Order 1 (being a balance of $1,545,280.62) be paid by the Defendant:
(i) as to $283,000 into a controlled moneys account with an Australian bank in the name of the Plaintiff's solicitor and the Defendant's solicitor; and
(ii) as to the remainder, being $1,262,280.62, to the Plaintiff,
each such payment to be made within 28 days."
5 The payment of $1,262,280.62 required by order 5(ii) to be made within 28 days from 6 December 2006 has not been made. It is the contention of the defendant that the requirement to pay that sum to the plaintiff should be suspended until the resolution of appeal proceedings and that, for that reason, one of the two orders set out above should be made.
6 It will be observed from the form of each order that the relevant appeal is an appeal by the plaintiff, not the defendant. The object of the appeal is to see an increase in the amount awarded to the plaintiff. The desire of the defendant to have his payment obligation under order 5(ii) suspended pending resolution of the appeal is accordingly not the product of any apprehension that the Court of Appeal may eliminate that obligation or reduce the sum to be paid by the defendant. Rather, the defendant's concern stems in large measure from a cross-appeal and, to some extent, from possible remoter consequences of the appeal itself.
7 The cross-appeal was initiated by notice filed on 5 April 2007. The defendant thereby seeks variation of certain of the orders made on 6 December 2007, being orders with respect to costs. Without going into details, he contends that he should be awarded, in addition to certain specific costs items referred to in the existing orders, the full amount of his costs (not, as at present, costs only for the period 29 July 2005 to 14 December 2005). To that end, according to the notice of cross-appeal, existing order 5 should be varied so that order 5(i) refers to a sum of $883,000 (not $283,000) and order 5(ii) refers to a sum of $662,280.62 (not $1,662,280.62).
8 If the cross-appeal were wholly successful, there would be a reduction of $600,000 in the amount to be paid by the defendant under order 5(ii). It might also be expected that the defendant would be awarded costs of the cross-appeal. And if, in addition, the plaintiff's appeal were unsuccessful, one would expect the defendant to be awarded also the costs of the appeal; while, if the plaintiff's appeal were successful, one possible outcome (and an outcome quite likely if my decision to proceed on a zero valuation of the Filicudi land were overturned) is a new trial which, depending on the outcome, might result in an order for costs in favour of the defendant. The defendant's solicitors estimate that his costs in the Court of Appeal will be about $70,000, that his costs of the present motion are about $20,000 and that his costs upon a retrial "would greatly exceed $100,000".
9 The possibility that outcomes of the kind the defendant apprehends will emerge is, in my view, plausible.
10 With these several possible outcomes in mind (and having regard to further possibilities I am about to mention), the defendant contends that steps should now be taken to forestall the risk that, if he pays the sum of $1,262,280.62 as required by order 5(ii), he will face a situation where he cannot obtain, in whole or in substantial part, the benefit of the moneys that will accrue to him if the various outcomes leading to ultimate recoveries by him emerge in, or as a result of, the appeal and cross-appeal. He wishes to ensure that the opportunity to set-off is preserved.
11 I turn now to the further possibilities just mentioned. The solicitors who acted for the plaintiff throughout the hearing before me are Kells. They are no longer retained. On 4 December 2006, Kells sent to the defendant's solicitors (Meyer Pigdon) a document of the same date signed by the plaintiff and reading:
"To: Salvatore Paino
c/- Meyer Pigdon
Level 14, 59 Goulburn Street
Sydney NSW 2000
I, ANGELA PAINO, hereby irrevocably authorise and direct you, SALVATORE PAINO AND MEYER PIGDON to pay all moneys due to me arising out of the proceedings in the Supreme Court between us to my solicitors, Kells Lawyers."
12 By letter dated 16 January 2007, Kells made it clear to Meyer Pigdon that they considered themselves to have a "fruits of the action" lien in respect of proceeds accruing to the plaintiff under the orders of 6 December 2006, such lien extending to protect not only costs and disbursements of Kells themselves but also "the fees owed by our client to her senior and junior counsel and … fees owed by our client to her previous lawyers, Messrs Orr & Co, Messrs Jenny Bull and Company and Messrs Barkus Edwards Doolan".
13 By reply of the same date, Meyer Pigdon questioned the right and ability of Kells to assert the lien on behalf of third parties, that is, counsel and the three other firms of solicitors. This led to notification of lien claims direct to Meyer Pigdon by each of Jenny Bull & Co, Orr & Co, Barkus Edwards Doolan and Mrs Bridger of counsel. Two of these notifications mentioned figures. The other two did not. Nor did Kells nominate any figure. The two amounts mentioned (referable to solicitors whose retainer ended before the trial) add up to some $182,000. It could be expected that the costs of Kells (and of the two counsel who appeared during the 20 day hearing) are very substantial. There is no evidence of their quantum, and it is noteworthy that the plaintiff has not seen fit to adduce evidence indicating that there will be any balance to be enjoyed by her. There is evidence that the full amount paid out by the defendant to the end of hearing in December 2006 was $1,349,807.10. It would be reasonable to think that, although Kells were retained for a somewhat shorter time, their costs and disbursements (including counsel's fees) would have been of the order of $1 million or more.
14 This evidence about the plaintiff's direction to pay, the assertion of liens by several lawyers and the likely quantum of the costs and disbursements which may be secured by such liens led to a submission on behalf of the defendant that, if he paid the $1,262,280.62 in conformity with order 5(ii), the whole amount (or at least, most of it) would go to the various lawyers in satisfaction of debts due by the plaintiff to them; and that no amount (or, perhaps, only a very small amount) would remain within the ownership and disposition of the plaintiff so as to be potentially recoverable from her should the appeal and cross-appeal result in or lead on to the various monetary orders in favour of the defendant. That reality co-exists with the conclusion emerging from the trial itself that the plaintiff has very few assets.
15 Although the application now before me is framed in terms of alternatives, it was, as I have said, treated essentially as an application for a stay of order 5(ii) pending the outcome in the Court of Appeal. It should therefore be approached in accordance with recent observations of McColl JA in Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103:
"The overriding principle in an application for a stay is to ask what the interests of justice require: New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83] per Spigelman CJ (Meagher JA and Sheller JA agreeing).