Liddy v Bazley
[2012] NSWCA 426
•10 December 2012
Court of Appeal
New South Wales
Case Title: Liddy v Bazley Medium Neutral Citation: [2012] NSWCA 426 Hearing Date(s): 10 December 2012 Decision Date: 10 December 2012 Before: Ward JA Decision: Application for stay granted on certain conditions as set out at [26].
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: PRACTICE AND PROCEDURE - application for stay of judgment pending appeal - insured appellants - reasonably arguable grounds of appeal - respondent not impecunious - sufficient risk of difficulty in recovering judgment debt if appeal successful - stay ordered on certain conditions so as to be fair to all parties Cases Cited: Adeels Palace Pty Limited v Moubarak [2009] NSWCA 130
Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685
Bale & Anor v Mills (unreported, NSWCA, Handley AJA, 13 September 2010)
Cooper v Cooper (1976) 2 ChD 493
Firth v Sutton [2010] NSWCA 90
Merry v Nickalls (1873) LR 8 Ch App 206
Woolworths Ltd v Strong (No 2) [2011] 80 NSWLR 445Texts Cited: Ritchie's Uniform Civil Procedure NSW Category: Interlocutory applications Parties: James Gervase Liddy, Stephen Gerard Cahill, Raymond John McClenahan and Ivan Anthony Simic (Appellants)
Michael Laurence Bazley (Respondent)Representation - Counsel: Counsel:
S Climpson (Appellants)
J Cairn (Respondent)- Solicitors: Solicitors:
Yeldham Price O'Brien Lusk (Appellants)
Herbert Weller, Solicitor (Respondent)File Number(s): CA 12/361667 Decision Under Appeal - Before: Williams DCJ - Date of Decision: 09 November 2012 - Court File Number(s): 10/071921
JUDGMENT (EX TEMPORE)
HER HONOUR: This is an application brought by the appellants for a stay of the judgment of Williams DCJ. His Honour entered a verdict and judgment in favour of Mr Bazley (the respondent in the present proceedings) in proceedings in the District Court in the sum of $270,019 and also made an order in favour of Mr Bazley in relation to his costs of those proceedings.
The application for a stay is put on the basis that the appellants, who are solicitors who have been found liable in professional negligence in connection with a failure to advise and progress a possible work injury damages claim by Mr Bazley (against a former employer in relation to injuries he suffered while an employee during the 1987 Parklea Prison riots), have appealed as of right from the judgment of Williams DCJ by Notice of Appeal filed on 20 November 2012.
There is evidence from the solicitor for the appellants that the appellants are insured and that there is no excess amount payable by the appellants towards this claim. It is submitted that if the appeal ultimately fails the respondent will receive payment in full in respect of his judgment, together with post judgment interest and the costs of the action and in the appeal, and therefore that the only effect of granting a stay would be to defer the receipt by Mr Bazley of the fruits of the litigation, whereas if the stay is refused and the appeal succeeds then the appellants will face a very substantial risk of not being able to recover the judgment proceeds and costs order proceeds paid to the respondent pending the hearing of the appeal.
At the outset of the hearing of the application before me Counsel for the respondent (Mr Cairn) noted that he was instructed to give an undertaking that the costs order made by Williams DCJ would not be enforced pending the appeal. Such an undertaking would limit the exposure of the appellants to the risk of non-recovery of any amounts paid out at this stage pursuant to the judgment to an amount of roughly $270,000 (plus any interest that might be payable on the judgment sum to date).
Reliance is placed by Counsel for the appellants (Mr Climpson) on the judgment of Handley AJA in Bale & Anor v Mills (unreported, NSWCA, 13 September 2010), in which his Honour referred to the general principle applied in appeals by insured defendants against judgments in favour of an impecunious plaintiff, namely that the Court will protect such appellants in proper cases against the risk that, if a stay is refused and the appeal succeeds, the appellants may be unable to recover, or recover fully, any payments made pending the hearing of the appeal.
Reference was also made to what was said by this Court in TCN Channel 9 Pty Limited v Antoniadis (No 2) (1999) 48 NSWLR 381 at 385 to the effect that the Court regularly stays execution on judgments pending an appeal where there is a risk that the judgment creditor will be unable to repay the money without difficulty or delay (my emphasis) if the appeal were to succeed.
There is no dispute that the relevant test to be applied in determining whether a stay ought to be granted is that set out in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694G as applied in Adeels Palace Pty Limited v Moubarak [2009] NSWCA 130. Prima facie a successful party is entitled to the benefit of a judgment but it is recognised that a stay may be granted where an applicant demonstrates an appropriate case to warrant the exercise of discretion in its favour.
In Adeels Palace, Hodgson JA noted that very often an appropriate case (for a stay) is demonstrated by showing that there are arguable grounds of appeal and that there is a significant risk that if money is paid to the judgment creditor this money or a substantial part of it will be irrecoverable if the appeal succeeds. It was also noted by his Honour that the onus is on an applicant to demonstrate a proper basis for a stay that will be fair to all the parties.
Mr Climpson has relied on his written submissions for the proposition that there are reasonably arguable grounds of appeal from the judgment of his Honour. I do not propose to set those out in detail. There are two primary grounds of appeal.
The first concerns causation. It is submitted that his Honour failed to consider, or to determine in accordance with the principles in Firth v Sutton [2010] NSWCA 90, what advice a reasonable solicitor would have given in relation to a possible work injury damages claim against a former employer and what Mr Bazley would have done had he been given that advice.
The second primary ground of appeal concerns the quantum of the value of the lost opportunity by reason of the failure to advise in relation to the work injury damages claim.
On my brief review of the materials and without expressing any view as to the overall prospects of the appeal I am satisfied that it cannot be said that there are not reasonably arguable grounds of appeal in the present case.
As to the issue of prejudice, Mr Cairn submits that it has not been shown that Mr Bazley is an impecunious plaintiff in circumstances where the primary judge found that Mr Bazley had some weekly benefit entitlements (although he had not worked since 1999) and where the evidence before me is that Mr Bazley and his wife own as joint tenants in equal shares a property that was the subject of a transfer to them in September for the sum of around $585,000. (The title to that property appears to be unencumbered.)
The solicitor for the appellants, Ms Vitalone, has by affidavit of 10 December 2012 deposed to the appellants' concern as to their ability to recover, or fully recover, judgment proceeds if paid to the respondent before the hearing for the appeal and as to the reasons the appellants have for that concern. Objection was taken only in relation to para [4.9] of that affidavit which refers to the appellants' belief that even if the property is not sold and is unencumbered the appellants' capacity to enforce repayment against the property would be "very difficult, lengthy and uncertain of outcome". I have read that paragraph only as evidence that the appellants have such a concern (not as to its validity), although I note that it seems to me not unreasonable for solicitors to form the view that, if one were seeking to enforce recovery of moneys payable following an appeal ruling in favour of the appellants against an asset comprised of a house held jointly as joint tenants by the respondent and his wife, there might well be difficulties (or at least delay) in such enforcement.
Other reasons stated for the appellants' concern were that the appellants are not aware who may be the creditors of the respondent (other than his solicitors in the proceedings) or liabilities the respondent may have; and that the property might be sold or encumbered at any time.
I note that there has been no undertaking proffered by Mr Bazley to provide security for repayment against the property if the appeal succeeds (of a kind that was taken into account in the authorities to which Mr Climpson refers in para 14 of his submissions (Merry v Nickalls (1873) LR 8 Ch App 206; Cooper v Cooper (1976) 2 ChD 493; Ritchie's Uniform Civil Procedure NSW [51.44.25]).
While I accept that it has not been shown that Mr Bazley is strictly impecunious (in the sense of someone with no assets falling within the notion of an "impecunious plaintiff" for the purposes of the general principle expressed in Bale), since he has a share in a presently unencumbered property, I am satisfied that there is a sufficient risk that there might be difficulty in recovering, out of the property held by him, proceeds paid in satisfaction of the judgment in the event that the appeal were ultimately to succeed.
Mr Cairn submits that there is no evidence of any risk that proceeds of payments of the judgment debt will be in any way dissipated and I accept that that is the case. However, by analogy with the general practice of the Court when dealing with the position of insured appellants in cases of judgments in favour of impecunious plaintiffs, I consider that a similar position can apply to the circumstance where (though not impecunious) there may be difficulties or delay in enforcement against a respondent such as Mr Bazley in the present case.
I am, therefore, satisfied that this is an appropriate case in which to grant a stay of the judgment pending the determination of the appeal.
Mr Cairn has submitted that if so the stay should be on the basis of certain conditions. As I have noted, the onus is on an applicant to demonstrate a proper basis for a stay that would be fair to all the parties. In that regard the submission has been put that the stay should not apply to such part of the judgment as is necessary to be disbursed in reimbursement of legal costs incurred by the respondent in the proceedings below. Mr Cairn has proffered an undertaking to the Court by those legal representatives that any amount paid by the appellant in payment of the judgment debt will be repaid if the appeal succeeds.
Mr Climpson raised issues as to how the appellants can be satisfied as to whether costs are presently due and payable or as to the quantum of those costs.
It seems to me that the appropriate way to deal with this is to stay the operation of the judgment until the hearing of the appeal except for such amount of the judgment as corresponds to any amount presently payable by the respondent in respect of legal costs or expenses in connection with the appeal and subject to the receipt by the appellants of a written direction providing for the payment to the respondent's legal representatives of that amount of the judgment debt, on the basis of the undertaking by the respondent's legal representatives to repay that amount if the appeal is successful.
At the conclusion of my oral ex tempore reasons (having indicated that this was the ruling I intended to make) I suggested that the parties seek to agree the terms of an order to give effect to that ruling (such that if this could be agreed between the parties consent orders could be made in chambers) but that if agreement could not be reached on the terms of the order in order to give effect to my reasons then I would make orders in chambers to give effect to these reasons. No such consent orders were apparently able to be agreed. Directions were made for the parties to provide their competing versions of the proposed orders. I have now had the opportunity to review those drafts and I set out below my reasons for making the orders that I have now made.
Broadly speaking, the differences between the respective drafts seem to be that:
(i) the appellants have included in the orders a formal note as to the undertaking to which I referred in [4] above and which I noted prior to giving my oral ex tempore reasons;
(ii) the manner in which the orders are to provide for the direction I contemplated in [23] above (namely, the direction to pay the costs in question) and whether there needs to be a formal written undertaking by the legal representatives (over and above the undertaking that has already been proffered by Counsel on their behalf and with their instructions, as noted in my reasons);
(iii) the appellants' orders propose that there be a cap on the total payment of costs and disbursements under this regime to the sum of $160,000;
(iv) the appellants also include a regime to deal with what is to constitute success or partial success on the appeal for the purposes of repayment by the legal representatives of the costs paid out of the judgment sum; and
(v) the respondent's version provides for the costs of the motion before me to be borne by the appellants.
In light of the fact that the parties have not been able to reach agreement on the orders to implement my ruling as to the stay, it seems to me that I should err on the side of over-formalising the proposed regime (in an attempt to avoid disputes in the future as to the operation of those orders). Therefore, as to the principal differences between the versions, I am of the view that:
(i) The undertaking proffered by Mr Cairn on behalf of the respondent as to non-enforcement should be formally noted in the orders (as should the undertaking proffered on behalf of the legal representatives as to repayment of sums paid to them for outstanding legal costs and disbursements by the appellants pursuant to these orders).
(ii) The concern, as I apprehend it, underlying the terms in which the direction or authority to pay is sought by the appellants is as to whether (and how much) is in fact presently payable by the respondent by way of costs and disbursements and that it be recognised that payment of such an amount is in part satisfaction of the judgment.
In that regard, I consider it not unreasonable that (before payment out of moneys in accordance with this regime) the respondent should acknowledge in writing that any such payment is in part satisfaction of the judgment sum and should formally direct that the payment be made; I also consider it not unreasonable that the legal representatives confirm that the amount the subject of such a direction to pay represents legal costs and disbursements in relation to the District Court proceedings that are due and owing to them (since that is the basis on which, in the interests of fairness between the parties, I consider that there should be a "carve-out" from the stay).
As to the question whether there should be a written undertaking (to the Court and the appellants) from the legal representatives to repay those amounts, given that it may be necessary to specify more precisely the time at which an obligation to repay those amounts arises than was contained in the broad undertaking given in Court, I think (solely for the avoidance of later disputes) this is not unreasonable at least in the form of a written undertaking to the appellants. I am not persuaded that there needs to be a formal written undertaking to the Court given that the legal representatives who it is contemplated will be giving that undertaking are officers of the Court and should be able to be relied upon to comply with the inter partes undertaking.
The payment of interest (by the legal representatives) on the sums in question if the requirement for repayment arises was not the subject of debate when the application was before me and I do not consider it appropriate to add that now as a condition of the stay. Any amount paid in relation to legal costs under this regime is to be treated as being in part satisfaction of the principal judgment sum. If, on the determination of the appeal, the judgment below is set aside or the judgment sum is reduced (such that a claim for recovery of those moneys (had they been paid direct to the respondent) would then have been available from the respondent), then any claim for interest on the moneys paid at the respondent's direction (on the principles in Woolworths Ltd v Strong (No 2) [2011] 80 NSWLR 445) would lie against the respondent (and is a matter that could be agitated as part of the orders to be sought on appeal).
(iii) I assume that the proposed cap arises because Ms Vitalone has deposed that the respondent's costs below would exceed the appellants' costs (of approximately $160,000). However, that does not seem to me to be the issue. I consider it fair, balancing the interests of all the parties, to carve out of the stayed judgment such amount as Mr Bazley is presently liable to pay to his legal representatives (so that he is put in a position to utilise the judgment sum to meet those debts). If his costs are greater than the costs of the appellants, that does not alter the basis on which I consider the carve out to be appropriate - it simply means that Mr Bazley may ultimately enjoy less of the judgment sum for his own benefit. (If, at the end of the day, the judgment is upheld and the appellants have a liability for the respondents' costs as well as the judgment sum, this regime should not prevent them from seeking an assessment of the costs for which the judgment renders them liable in the ordinary course, since the payment regime above is in essence a payment of those costs on behalf of the respondent not an acceptance as to the quantum of the legal costs themselves.)
(iv) I consider (again in order to minimise the scope for future disputes), it should be made clear at what time an obligation to repay the moneys arises. I have attempted to make this clear (and to address what would be a fair outcome if the judgment is not set aside in full but the judgment sum is reduced).
(v) As to the costs of the motion, this was not a matter to which attention was directed in the course of oral submissions (although that might be explicable by the lateness of the hour at which this application came to be dealt with). Mr Bazley seeks an order that the appellants pay his costs of the motion. The appellants have, however, been successful in their application for a stay (albeit subject to a carve-out for legal costs) and that application was one that was resisted by Mr Bazley. In the circumstances, that would suggest that the costs of the motion should follow the event. Where, as here, Mr Bazley has had a measure of success in resisting the stay (by reference to the carve-out) I consider that the appropriate order would be that the costs of the motion be the appellants' costs in the appeal.
I therefore make the following orders, as adapted from the respective drafts provided to me:
1. The Court notes the undertaking of the respondent, by his Counsel, that the respondent will not enforce any costs order in Proceedings no. 2010/071921 ("the District Court proceedings") pending the determination of these proceedings and the undertaking (also proffered by the respondent's Counsel) of the legal practitioners who acted for the respondent in the conduct of the District Court proceedings that, if payment is made to them by the appellants in part satisfaction of the judgment in the said proceedings and the appellants are successful in this appeal, amounts paid by the appellants pursuant to the following orders will be repaid by the legal practitioners to the appellants.
2. The Court orders that:
(i) subject to (ii) below, the judgment entered on 9 November 2012 in the District Court proceedings ("the judgment") be stayed until the determination of these proceedings.
(ii) the stay in (i) above does not apply to such part of the sum of $270,000 ("the principal judgment sum"), if any, as is the subject of one or more written directions from the respondent to the appellants (and, if more than one, such written directions are not to exceed in aggregate the principal judgment sum) for the payment by the appellants (in part satisfaction of the judgment) to any one or more of the legal practitioners (including Counsel) who acted for or on behalf of the respondent in the conduct of the said District Court proceedings of amounts presently due and owing to any such legal practitioner in respect of legal costs and disbursements of the said District Court proceedings.
(iii) any written direction for the purposes of (ii) above must include an acknowledgment by the respondent that the legal costs and disbursements the subject of the direction are presently due and owing to the legal practitioner(s) and must be accompanied by a copy of the relevant invoice(s) in reimbursement of which the moneys are to be paid.
(iv) notwithstanding the above, the limitation on the stay of the judgment imposed by (ii) above operates only if the appellants are provided with a written undertaking by each legal practitioner to whom a direction to pay in accordance with orders 3 and 4 is provided that such legal practitioner will repay to the appellants on demand any sum paid to the legal practitioner pursuant to such a direction if, on the determination of the appeal in these proceedings, the judgment is set aside or the matter is remitted to the District Court or the amount of the principal judgment sum is reduced to an amount less than the total amount paid by the appellants in accordance with such direction or directions (and in the event that the principal judgment sum is reduced to an amount less than the total of the said payments then the amount to be repaid by each practitioner will be his or her pro rata share of the amount by which the principal judgment sum has been reduced).
3. The Court orders that the costs of the Notice of Motion shall be the appellants' costs in the appeal.
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