Lauro v The Marble House of Australia - [2013] SASC 17

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
LAURO v THE MARBLE HOUSE OF AUSTRALIA & ORS
[2013] SASC 17
Reasons for Decision of The Honourable Justice Stanley
15 February 2013
PROFESSIONS AND TRADES - LAWYERS - SOLICITOR AND CLIENT
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
Three applications before the Court - application by the appellant's solicitors to be removed from the file - application by the appellants for the matter to be adjourned and opposing removal of their solicitor's from the file - application by the respondents for security for costs - court file and address for service amended accordingly.
Held: Order made pursuant to 6SCR23(2) that Minter Ellison no longer appear as the solicitors for the appellant on the Court's records - there has been a failure of the appellant to comply with terms of the retainer and the breakdown of the solicitor/client relationship - Mr Lauro appeared for the appellant in person for the subsequent applications.
Order made pursuant to 6SCR295(1)(g) that appellant provide security for costs in the amount of $20,000 - respondents have put on evidence of the appellant's impecuniosity that the appellant has not refuted - appeal stayed until security provided.
Matter adjourned for further directions - appellant to file amended notice of appeal.
Supreme Court Civil Rules 2006 rule 23, rule 295, referred to.
Dagenham Nominees Pty Ltd trading as Banwell Marine Services v Gary Shanks [2011] SASC 163, applied.
Archer Pty Ltd v Woodhead Australia Pty Ltd (Unreported, Lander J, 29 March 1995), discussed.
Plenty v Pattison [1988] SASC 911; Plenty and Plenty v Dickson [2009] SASC 133, considered.

LAURO v THE MARBLE HOUSE OF AUSTRALIA & ORS
[2013] SASC 17
Magistrates Appeal: Civil
STANLEY J:
Introduction

This is a magistrates appeal.
There are three interlocutory applications before me.
The appellant has brought an application to adjourn the appeal which is due for hearing later this month.
In addition, he seeks an extension of time to file an amended notice of appeal.
The appellant brings his application on the basis of his ill-health, and the alleged failure on the part of his solicitors to make arrangements for access to the relevant recordings of the proceedings in the Magistrates Court which he asserts, as I understand it, are necessary for him to provide particulars of the grounds of appeal which he was ordered to provide by 23 January 2013 pursuant to an order made by White J on 30 October 2012.
The appellant’s solicitor brings an application seeking leave to cease to act for the appellant. The appellant opposes that order. The solicitor’s application is founded on two grounds.
First, the failure of the appellant to comply with the terms of the retainer agreement, in particular by failing to satisfy invoices for work done, and failing to put funds in their trust account to cover counsel fees. The outstanding invoices are said to exceed $130,000.
Secondly, on the breakdown of the solicitor/client relationship evidenced by the appellant’s abuse of his solicitor, the rejection of his advice, and threats to publically criticise the firm.
In the alternative, the appellant seeks orders that any permission for the solicitors to cease to act be conditional upon the solicitors paying the costs thrown away as a consequence of the appellant having to engage new solicitors, the costs of the appeal and the proceedings in the Magistrates Court, and the delivery up of the appellant’s files.
The appellant also seeks orders that the respondents and their lawyers be excluded from the hearing of the application by his solicitors seeking leave to cease to act.
In addition, he seeks orders that any privileged, confidential and/or private information contained in his solicitor’s application be withdrawn from the public record and deleted from any records now held by the respondents and their lawyers.
The respondents bring an application for security for costs of the appeal, and that the appeal be stayed until security is provided. The appellant opposes that application.
Application that solicitor cease to act
I am satisfied that it is appropriate to make an order pursuant to 6SCR23(2) that Minter Ellison no longer appear as the solicitors for the appellant on the Court’s record. Such an order should be made. I am not satisfied that the appellant was in breach of the terms of the retainer agreement by reason of a failure to pay substantial outstanding invoices for fees incurred. It is a term of the retainer that if an invoice is the subject of genuine dispute then the client must pay the undisputed amount within a 21-day time period. There are outstanding invoices exceeding an amount of $130,000. Mr Lauro asserts each of the invoices is the subject of a genuine dispute and accordingly he submits that his failure to pay does not constitute a breach of the retainer agreement. I am not in a position to determine on this application whether all those invoices are the subject of a genuine dispute. Further, if they are the subject of a genuine dispute, I am not in a position to resolve those disputes. Further, I cannot decide whether there was a breach of the retainer agreement by reason of Mr Lauro’s failure to put funds in trust to cover the fees of the barrister, Mr Dal Cin. Contrary to the assertion of his solicitors, he says that he did not give instructions to retain Dal Cin. Again, in the context of an interlocutory application, it is neither practical nor necessary to resolve this factual dispute. That is because I am satisfied that the solicitor/client relationship has broken down irretrievably. Apart from anything else, so much was apparent from the obvious antipathy displayed by Lauro towards his solicitor, Mr Mitchell, in court and his vehement complaints about other solicitors who had acted for him in Mr Mitchell’s firm. I have no doubt that it is impossible for the firm to continue to act for Mr Lauro. Old authorities to the effect that good cause be shown before a solicitor be granted leave to cease to act are no longer good law.[1] The rule is primarily concerned with the record of the Court and the service of documents.[2] In any event, I am satisfied that good reason exists for the reasons set out above. I am not prepared to make this order conditional on the terms proposed by the appellant. I do not consider those terms appropriate or justified. In the circumstances, I make no order as to the costs of the solicitor’s application for an order pursuant to 6SCR 23(2).
[1] Plenty v Pattinson, (Unreported, Bollen J, 14 July 1988).
[2] Plenty and Plenty v Dickson [2009] SASC 133.
I order the affidavit of Grant Mitchell sworn 7 January 2013, in support of this application, be sealed and access to its contents subject to further order of the Court.
I order that until notice of new solicitors acting is received, service is to be personally effected on the appellant by way of post at PO Box 111, Marden SA 5070, and by email [email protected].
Security for costs
The respondents bring an application for security for the costs of the appeal in an amount of $35,000. The basis of the application is that they assert special circumstances exist, within the meaning of 6SCR 295(1)(f), justifying the making of such an order. Special circumstances are said to be the impecuniosity of the appellant, his conduct in making threats against the respondents and those acting for them, his verbal attacks on the magistrate who heard the trial below, and the difficulties confronting the respondents on the appeal given the nature of the grounds, so far not particularised, of bias on the part of the learned magistrate. They submit that the nature of the grounds of appeal sought to be argued by the appellant, necessarily will make the preparation of the respondents’ case on appeal lengthy, arduous and expensive.
The appellant not only opposes the application for security for costs, but seeks an adjournment of the application and the appeal for a period of six months on the grounds of his ill health.
The appellant has provided evidence of ill health from a cardiologist, Dr Julie Bradley, in five reports to his GP dated 28 April 2009, 15 March 2011, 20 December 2011, 4 September 2012 and 20 November 2012, and two reports of a psychologist dated 11 April 2012 and 19 September 2012. The latter report was relied upon by the appellant when he sought unsuccessfully to obtain a six month adjournment of the appeal from White J last October. The evidence discloses that the appellant has suffered from ischaemic heart disease since at least May 2005, as well as hypertension, sciatica, old TB, hyperlipidaemia, haemorrhoids, transient bilateral loss of vision, borderline hypothyroidism, depression, anxiety, and post-traumatic stress disorder. In September 2012 a psychologist, Ms Lawton, advised that the appellant should take a six-month break from litigation to allow his psychological symptoms to stabilise. The most recent report of Dr Bradley from last November indicated that the appellant’s blood pressure has settled somewhat, although it remains mildly above ideal. She was reassured by a stress echo test which showed no significant reversible ischaemia.
Mr Lauro has presented to the Court a medical certificate of a general practitioner, Dr Mario Giordano, dated 13 February 2013, who certifies that Mr Lauro is suffering from post traumatic stress disorder and ischaemic heart disease and hypertension and is unable to attend at court or participate in any sort of legal action for a period of six months. He also relies on an affidavit of Deborah Lawton affirmed 10 February 2013 in which she deposes to having a consultation with Mr Lauro on 7 February 2013. At this consultation, Mr Lauro described symptoms of sleep disorder, high anxiety, and physical symptoms of stress. She considered he has ongoing symptoms of stress and post-traumatic stress disorder which now disable him from participation in court and legal proceedings. She described his presentation as displaying pressure of talk, an inability to concentrate, and emotional lability. She recommended that he have six months respite from having to attend at court and participate in any sort of legal action, after which his mental state should be further reviewed. In this regard I observe that his complaints of ill health appear to be long standing. That has not prevented the appellant from litigating in the past nor from filing extensive affidavits in support of this application and in opposition to the other applications. In addition, in his appearances before me on 6 February and 14 February 2013, Mr Lauro has not demonstrated any obvious inability to concentrate, follow the course of the proceedings, or respond to counsel’s submissions. I note these appearances not only straddle the consultation with Ms Lawton on 7 February 2013, but those appearances occurred within the period of six months from the report of Ms Lawton of 19 September 2012, at which time also she considered Mr Lauro have a six-month respite from having to attend Court and participate in any sort of legal action.
It must be borne in mind that he instituted this action and this appeal.
The evidence in relation to the appellant’s health is not the only consideration the Court must weigh. The Court’s obligation is to administer justice fairly and impartially. That requires that all parties to litigation are dealt with fairly. While the health of a party can be a relevant consideration in the disposition of proceedings by the Court, it will only be one of a number of factors which the Court must consider. The respondents, like the appellant, are entitled to some certainty in relation to the finality of this litigation. If this matter was adjourned for six months, there is no certainty that the appellant’s mental state will have improved sufficiently over that time that Ms Lawton would consider he was able to participate in Court proceedings. Further, it must be borne in mind that the proceedings before me are an appeal from the judgment of a magistrate. If the appellant was to retain new solicitors and counsel for the purpose of the appeal, he need hardly participate in the proceedings at all. In the circumstances, I am not prepared to grant an adjournment for six months.
I have considered all the material in this matter.
I am prepared to make an order for security for the costs of the appeal. I am satisfied that special circumstances exist. 6SCR295(1)(g) provides:
The Court may, in special circumstances, order that security be given for the costs of an appeal.
Impecuniosity can amount to a “special circumstance” per se. In Archer Pty Ltd v Woodhead Australia Pty Ltd[3] Lander J said:[4]
The impecuniosity of an appellant may constitute a special circumstance leading the court towards ordering security, in that it is a circumstance which may deprive or delay a respondent receiving his costs of the appeal, if the appeal fails, which costs a successful respondent can usually expect he will actually receive. In an appellate situation, a respondent seeking security is in a stronger position than a defendant at first instance, to the extent that he has a decision in his favour, which is presumed to be right until displaced. However, impecuniosity may not conclude the matter. Considerations of possible frustration of an apparently genuine appeal or concerning the subject matter of the appeal, such as appeals involving matters of great moment or the liberty of the subject, may provide reasons to refuse an order. The foregoing observations are made not to circumscribe the discretion, but in order to indicate its width.
[3] (Unreported, Lander J, 29 March 1995).
[4] (Unreported, Lander J, 29 March 1995) at 5.
The operation of this rule was considered by Blue J in Dagenham Nominees Pty Ltd trading as Banwell Marine Service v Gary Shanks.[5]
[5] [2011] SASC 163.
His Honour considered that the correct approach to the application of 6SCR 295(1)(g) is that:[6]
1.impecuniosity of the appellant (at least in the case where the appellant is a company) can suffice to enliven the discretion of the court;
2.the mere fact that the appellant is impecunious does not mean that the discretion ought to be exercised in favour of granting security for costs (in the same manner as pursuant to s 1335).
[6] [2011] SASC 163 at [54].
His Honour reached this conclusion for the following reasons:[7]
1.It accords with, and applies, the decisions of the New South Wales Court of Appeal in Kennedy v McGeechan and Lall v 53-55 Hall Street, where the relevant rule and context were essentially identical to the present and which have been applied on at least three occasions in this Court.
2.The traditional general law approach described in Cowell v Taylor distinguished between actions at first instance (where impecuniosity did not justify an order for security) and appeals (which were an exception to that general rule).
3.The Full Court in Collins v Emacord Autos applied the traditional general law approach in the context of an application for security for costs at first instance and to a natural person.
4.The reference to “special circumstances” in the predecessor to r 194 was in a very different context to the reference in r 295(1)(g) in that it was the last and residual category after four more specific categories were enumerated, and those specific categories themselves included impecuniosity in paragraph (a) (impecuniosity plus nominal plaintiff) and (d) (circumstances authorised by statute, including s 1335 of the Corporations Act).
5.Rule 295(1)(g) uses the criterion “in special circumstances” as the sole criterion to cover every appeal in which security for costs may be sought. This will include both individual and corporate appellants and will also include any of the circumstances in which r 194 would be satisfied (eg appellant resident outside Australia, appeal brought for ulterior purpose etc).
[7] [2011] SASC 163 at [55].
While his Honour, in Dagenham, was addressing the position of an appellant who was a company rather than a natural person, I am satisfied that the same approach should be applied to the position of a natural person. In saying that, I do not overlook the traditional reluctance of courts to order security for costs against natural persons, but I consider that the operation of 6SCR 295(1)(g) is not intended to be confined to corporate litigants.
Applying those principles, the power of the Court to order security for costs is enlivened by the fact of impecuniosity. I am satisfied of the appellant’s impecuniosity. The respondent has placed evidence before the Court that the appellant is a pensioner involved in protracted litigation in other courts. There is a claim for unpaid legal costs in a sum in excess of $130,000 referred to above, which is the subject of a dispute between the appellant and Minter Ellison. While he is, along with his sons, the registered proprietor of land in this State at Stradbroke Road, Rostrevor, this property is mortgaged. The mortgage payments are primarily met by the appellant’s sons, and there is a workers’ lien over the property. The property has been the subject of a warrant for sale.[8] The appellant has not put any evidence before the court to refute the evidence put on by the respondents to establish his impecuniosity. Indeed, he impliedly admits it. He submits by way of opposition to the application that if an order is made he will not be in a position to provide security. There is no suggestion that the appellant’s impecuniosity has been caused by the respondents.
[8] Affidavit of Mr Tropeano sworn 18 January 2013.
Further, I am satisfied that the circumstances of this case warrant an exercise of the Court’s discretion to order security for the costs of this appeal. If security is not ordered, the respondents confront the prospect of a lengthy and complex appeal after a nine day Magistrates Court trial. This trial occurred after the appellant’s claim was struck out for want of prosecution and a successful appeal from this order. The appellant’s claim concerned losses he alleged he incurred over the installation of floor tiles and a kitchen bench top in his home. His claim was for $40,000. The claim was dismissed. The basis upon which the appellant wishes to prosecute the appeal means that the preparation of the respondents’ case will be time consuming and costly. A principal ground of appeal is an allegation of bias, either actual or apprehended, on the part of the learned magistrate who presided at the trial. As I understand the basis upon which the appellant wishes to propound this ground, it will be necessary to comb through the transcript of the trial and consider numerous exchanges between the learned magistrate and Mr Lauro. Mr Lauro submitted that the transcript is inaccurate. He wants access to the tapes of the trial and interlocutory hearings. White J made orders for this on 30 October 2012. Mr Lazarevich, counsel for the respondents, submits that proper preparation of the appeal will require listening to hours of these recordings. I accept this will be so. The Court will be required to determine whether those exchanges between Mr Lauro and the learned magistrate evidence actual or apprehended bias on the part of the magistrate in the conduct of the trial. It will also be necessary to consider whether the reasons of the learned magistrate disclose actual or apprehended bias. This is unclear at present because of the appellant’s failure to particularise the relevant ground of appeal, in breach of the order made by White J on 30 October 2012. The appellant submits this is because of the dispute with his solicitors. He seeks an extension of time within which to file an amended notice of appeal.

If successful in defending the appeal, the respondents face the real prospect of being unable to recover the costs of that appeal from the appellant. I am satisfied that in the exercise of my discretion I should order security for costs. I do so on the basis explained above. It is unnecessary for me to consider the other ground upon which the respondents propound the application for security for the costs of the appeal, namely, the appellant’s conduct in making threats against the respondents, and those acting for them, and his verbal attacks on the learned magistrate who presided at the trial below. Furthermore, it is undesirable for me to enter upon a consideration of these allegations in the context of the application for security for costs because it would trespass upon some of the grounds of appeal which I will have to hear if the appellant provides security.
I take a broad brush approach to the question of the amount of the security. The respondents submit the figure of $35,000 represents a conservative estimate of the likely cost of the appeal. I am not satisfied that the costs will be that high. I would make an order in the amount of $25,000. I will allow the appellant 28 days from today to provide security i.e. by close of business Friday 15 March 2013. The failure to do so within that time will result in an order staying the appeal.
I will extend the time to file an amended notice of appeal in accordance with the order of White J to 26 March 2013. I will vary the terms of order 2 made by White J on 30 October 2012 by including reference to the appellant personally.
In the circumstances I am prepared to adjourn the hearing of the appeal from the February list. I do so on the basis that the appellant must be afforded a reasonable opportunity to retain new legal advisors and provide security. I will adjourn this matter to a further directions hearing at 10:00 am on Thursday 28 March 2013.
I make the following orders:
1The affidavit of Grant Mitchell sworn 7 January 2013 (FDN 4) be sealed.
2The Court’s records in respect of the appeal number 992 of 2012 between Natale Lauro as the appellant, and The Marble House of Australia Pty Ltd, Luigi Scardigno, Maria Antoinetta Scardigno as respondents, be altered so Minter Ellison no longer appears as the solicitors for the appellant.
3The Court’s records provide that Mr Lauro’s address for service is PO Box 111, Marden SA 5070 and email [email protected].
4The appellant provide security for costs of the appeal in action number 992 of 2012 by payment of $25,000 into the Supreme Court Suitors Fund by Friday 15 March 2013.
5That the appeal be stayed until the security is provided, with liberty to apply to dismiss the appeal if not provided by Friday 15 March 2013.
6That an amended notice of appeal which particularises grounds 1 and 2 of the present notice of appeal be filed and served by 26 March 2013.
7That for the purposes of the appeal, and for those purposes only, the appellant, and/or his solicitors and/or counsel be permitted to listen to any audio or digital recording of the hearings in the Magistrates Court in action number 3946 of 2006 entitled Lauro v The Marble House of Australia Pty Ltd (ACN 008 203 085) & Ors over which Mr Gumpl SM presided.
8Adjourned to Thursday 28 March 2013 at 10:00am for further directions.