Young v King (No 11)

[2017] NSWLEC 34

Land and Environment Court

New South Wales

Medium Neutral Citation:	Young v King (No 11) [2017] NSWLEC 34
Hearing dates:	2, 3 and 4 August 2016
Date of orders:	27 March 2017
Decision date:	27 March 2017
Jurisdiction:	Class 4
Before:	Sheahan J
Decision:	See orders in paragraph [214]
Catchwords:	COSTS: applications for special and/or personal costs orders – principles to be applied – behaviour and liability of a party’s lawyers – indemnity costs – claims for interest.
Legislation Cited:	Civil Procedure Act 2005 Federal Court of Australia Act 1976 Land and Environment Court Act 1979 Legal Profession Act 1987 Legal Profession Uniform Law Application Act 2014 Supreme Court Act 1970 Uniform Civil Procedure Rules 2005
Cases Cited:	Aghajanian v Stanley Thompson Valuers Pty Ltd [2000] NSWSC 215 Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16 Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 Bayne v Blake (No 3) (1909) 9 CLR 366 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224 Cadogan v McCarthy & Stone (Developments) Ltd [2000] L&TR 249 Calderbank v Calderbank [1975] 3 All ER 333 Candler v Crane Christmas & Co [1951] 2 KB 164 Carver & Anor v Bankstown City Council [1999] NSWLEC 130 Christofidellis v Zdrilic [2000] FCA 679 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Degiorgio v Dunn (No 2) (2005) 62 NSWLR 284; [2005] NSWSC 3 Degmam Pty Ltd v Wright No.2 [1983] 2 NSWLR 354 Elbaf v Kayellou [2015] NSWLEC 81 Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. FPM Constructions Pty Ltd v The Council of the City of Blue Mountains [2005] NSWCA 340 Friends of King Edward Park Inc v Newcastle City Council (No 3) [2016] NSWLEC 74 Grabovsky v Secretary, Department of Social Services [2015] FCA 244 Harrison v Schipp [2001] NSWCA 13 Harley v McDonald [2001] 2 AC 678 Hofer v Howell Developments Pty Ltd [No.2] [2001] NSWLEC 42 Hypec Electronics Pty Ltd (in Liquidation) v Mead (2004) 61 NSWLR 169 Ireland v Retallack (No 2) [2011] NSWSC 1096 Kelly v Jowett (2009) 76 NSWLR 405 Knight v FP Special Assets Ltd (1992) 174 CLR 178 Kumar v Minister for Immigration & Multicultural & Indigenous Affairs (No 2) [2004] FCA 18 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 Levick v Commissioner of Taxation (2000) 102 FCR 155 ; [2000] FCA 674 Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 Maule v Liporoni (No 2) (2002) 122 LGERA 216 McKinnon v Hallbridge, No 30148 of 1997, 10 July 1998 Mead v Watson as Liquidator for Hypec Electronics (2005) 23 ACLC 718; [2005] NSWCA 133 Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120 Metsikas v Quirk [2010] NSWSC 756 MGICA v Kenny & Good [No.4] (1996) 140 ALR 707 Momibo Pty Ltd v Adam (unreported, 31 August 2004) Myers v Elman [1940] AC 282 NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) [2011] NSWLEC 98 Nadarajapillai v Naderasa (No 2) [2015] NSWCA 209 National Parks and Wildlife Services v Stables Perisher Pty Ltd (1990) 20 NSWLR 573; (1990) 71 LGRA 286 New South Wales Bar Association v Murphy (2002) 55 NSWLR 23; [2002] NSWCA 138 Nobrega v The Catholic Church [1999] NSWCA 133 Oasis Hotel Ltd v Zurich Insurance Co (1981) 124 DLR (3d) 455 Oshlack v Richmond River Council (1998) 193 CLR 72 Patrick v Capital Finance Corp (Australasia) Pty Ltd [2004] FCA 1249 Port Stephens Council v Randell [2000] NSWLEC 169 Probiotec Limited v The University of Melbourne [2008] FCAFC 5; (2008) 166 FCR 30; (2008) 244 ALR 96 Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19 Ridehalgh v Horsefield [1994] Ch 205 Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142 Rosniak v GIO (1997) 41 NSWLR 608 Sanko Steamship Company Ltd v Sumitomo Australia Ltd (unreported, Federal Court, 7 February 1996) Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683 Styles v Wollondilly Shire Council (No.3) [2001] NSWLEC 133 Tinda Creek Spiritual & Environment Centre v Baulkham Hills Shire Council (1998) 100 LGERA 432 Wentworth v Rogers [1999] NSWCA 403 White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169; [1998] FCA 806 Wyong Shire Council v Smith (unreported, NSWLEC, Bignold J, 24 December 1992) Young v Hones [2013] NSWSC 580 Young v Hones (No 2) [2013] NSWSC 1429 Young v Hones (No 3) [2014] NSWSC 499 Young v Hones (No 4) [2015] NSWSC 792 Young v Hones (No.5) [2016] NSWSC 822 Young v Hughes Trueman Pty Ltd [2016] FCA 1176 Young v Hughes Trueman Pty Ltd [2016] FCCA 989 Young v King [2004] NSWLEC 93 Young v King (No 3) [2012] NSWLEC 42 Young v King (No 5) [2012] NSWLEC 280 Young v King (No 6) [2015] NSWLEC 111 Young v King (No 7) [2015] NSWLEC 178 Young v King (No 8) [2015] NSWLEC 187 Young v King (No 9) [2016] NSWLEC 4 Young v King (No 10) [2016] NSWLEC 70 Young v King [2016] NSWCA 282 Yu v Cao [2015] NSWCA 276 Xabregas v The Owners - Strata Plan No. 79205; Moallem v Consumer, Trader and Tenancy Tribunal (No. 2) [2014] NSWSC 1027
Category:	Costs
Parties:	Margo Young (Applicant) Brendan King (First respondent) Kristina King (Second respondent) Ian Hemmings (Fifth respondent) Stephen Perrens (Sixth respondent) Hughes Trueman Pty Limited (Seventh respondent) Warwick Davies (Eighth respondent) Michael Brearley (Eleventh respondent) Ross Fraser (Twelfth respondent) Tony Tuxworth (Thirteenth respondent) Copland Lethbridge (Fourteenth respondent) Bee & Lethbridge Pty Limited (Fifteenth respondent) Geoff Goodyer (Sixteenth respondent) Victor Schubert (Seventeenth respondent) Leonardo Carlo Muriniti, Robert Duane Newell, and L C Muriniti & Associates (Respondents to personal costs applications)
Representation:	Counsel: Mr R Newell, solicitor (Applicant) Mr M Wright, barrister (First & second respondents) Ms A Horvath, barrister (Fifth respondent) Mr S Gray, barrister (Sixth & seventh respondents, with Mr Thornell deputising on 3 August) Mr T Faulkner, SC (Eighth respondent) Mr B Lim, barrister (Eleventh respondent) Ms J Reid, barrister (Twelfth respondent) Dr S Berveling, barrister (Thirteenth respondent) Mr E Cox, barrister (Fourteenth, fifteenth & sixteenth respondents, with Dr Berveling deputising on 2 August) Mr T Buterin, barrister (Seventeenth respondent) Mr D Lloyd, and Mr M Kalyk barristers (for Leonardo Muriniti, Robert Newell, and L C Muriniti and Associates)   Solicitors: L C Muriniti & Associates (Applicant) Stern Law (First & second respondents) Moray & Agnew (Fifth respondent) Kennedys Law (Sixth & seventh respondents) Gilchrist Connell (Eighth respondent) Norton Rose Fulbright Australia (Eleventh respondent) N/A (Twelfth respondent) TressCox Lawyers (Thirteenth respondent) Walker Hedges & Co (Fourteenth, fifteenth & sixteenth respondents) N/A (Seventeenth respondent) Yeldham Price O’Brien Lusk (for Leonardo Muriniti, Robert Newell, and L C Muriniti and Associates)
File Number(s):	2016/1607672016/160933

Judgment

A: Introduction

Background

1. This latest chapter in this sorry litigation between neighbours concerns not only the pursuit of the applicant, Margo Young, for costs, but, especially, the pursuit of personal costs orders against her current legal advisors (hereafter “Young’s lawyers”, or, simply, “the lawyers”).

2. The background history which brings this Court to this latest judgment was briefly summarised in Young v King (No 9) [2016] NSWLEC 4, at [3] – [11], and need not be repeated. (For a more detailed account, see also Young v King [2016] NSWCA 282, at [28] – [85].)

3. Young was ultimately unsuccessful in both the cases she ran before this Court – a “reopening” application she brought in Class 4 of this Court’s (“LEC”) jurisdiction, and a prerogative relief application, referred to this Court by the Supreme Court.

4. Young was ordered to pay the respondent Kings’ costs of both matters: Young v King (No 6) [2015] NSWLEC 111.

5. I later ordered, on Kings’ motion, that those costs be paid by her on an indemnity basis: Young v King (No 9) ([2] above).

6. In judgment No 6 (at [83] – [90]), I criticised, not for the first time, the way in which Young’s post-2004 legal representatives, Leonardo Muriniti and Robert Newell, have conducted her litigation.

7. In fact, throughout this litigation, I have frequently referred to Young’s and her lawyers’ “flagrant disobedience” of directions, and to the prejudice and cost caused to the Kings by that behaviour. (See also judgment No 3 [2012] NSWLEC 42, at [118]; judgment No 5 [2012] NSWLEC 280, at [1] and [7]; judgment No 6, at [7]; and judgment No 9, at [110] and [111]. See also T2.8.16, p22, LL23 – 31.)

8. For their part, the Kings have long foreshadowed seeking, and have indeed already moved the Court to make, personal costs orders in their favour against Young’s lawyers, namely Leonardo Muriniti (her solicitor), and Robert Newell (originally her counsel, briefed by Muriniti, and lately a solicitor employed by Muriniti and/or his firm), and also against that firm, known as “LC Muriniti & Associates” (“LCM” or “LCMA”), in respect of the substantive proceedings.

9. However, the Kings deferred this Court’s consideration of their request for those personal costs orders, pending Young’s appeals to the Court of Appeal against judgments Nos 6 and 9.

10. On 21 and 22 June 2016, the Court of Appeal dealt with Young’s substantive appeals against judgment No 6, and those aspects of judgment No 9 which dealt with questions of costs as between Young and the Kings.

11. That Court delivered its judgment in those appeals on 19 October 2016: Young v King [2016] NSWCA 282 (see [152] below).

12. Young’s appeals were dismissed with costs, but there remained six other relevant matters current before the Court of Appeal.

13. Despite the appellate outcome which became known in October, while this decision was reserved, this present judgment does not deal with those “personal costs orders” claims made by the Kings, in respect of the substantive proceedings. Those claims have yet to be argued.

Young unsuccessfully claimed her costs, from the Kings and others, by her Notice of Motion of 20 August 2015

14. On 20 August 2015, despite the costs order made against her in judgment No 6 (later amended to an “indemnity costs” order – see [5] above), Young filed a Notice of Motion (“NOM”) in which she sought orders for indemnity costs in her favour against 18 named respondents, being the Kings (“R1 and R2”), who had succeeded in the proceedings, and 16 non-parties (“R3 to R18”).

15. I will later identify the sixteen “non-parties” in detail (Section C, from [46]), but it should be noted immediately that the involvement of most of them in the subject matter of the main proceedings was minor, and/or peripheral.

16. Counsel for some of those “non-parties” described Young’s 20 August 2015 NOM as “novel” and “bizarre” (T2.8.16, p25, LL32 – 34), and Mr Wright (for the Kings) called it “truly perverse” (T2.8.16, p44, L18), but, however it may be categorised, Young’s NOM sought the following orders:

1.   That the First through to the Eighteenth Respondents pay the Applicant’s costs of the application to vacate the March 2004 orders on an indemnity basis from 8 March 2004 until final determination of these proceedings.

2.   That the Third through to the Eighteenth Respondents indemnify the Applicant against any costs order that might be made against her in relation to the application to vacate the March 2004 orders on an indemnity basis from 8 March 2004 until the final disposal of these proceedings.

3.   Such further and other orders as this Honourable court deems fit.

17. Insofar as her NOM affected the 8th, 9th, 10th, 13th, 14th, 15th, 16th, and 18th of those 18 respondents, it was summarily dismissed, as an “abuse of process”, on 1 December 2015, and Mrs Young was ordered to pay the costs of those respondents: Young v King (No 8) [2015] NSWLEC 187.

18. Insofar as it affected the Kings, and the 3rd, 4th, 5th, 6th, 7th, 11th and 12th respondents, her NOM was dismissed, after a full hearing, but again on the basis that it was an “abuse of process”, on 19 February 2016, and Mrs Young was ordered to pay the costs of all those respondents as well: judgment No 9.

19. In summary: In judgments Nos 8 and 9, this Court decided that Young’s August 2015 costs NOM was an “abuse of process”, in that it was an attempt by her to re-litigate issues already dealt with in this litigation, and/or in her related claims against those lawyers and the water expert who acted for her in its early stages: Young v Hones [2013] NSWSC 580, Young v Hones (No 3) [2014] NSWSC 499, and Young v Hones (No 4) [2015] NSWSC 792.

20. As such, Young’s 20 August 2015 costs motion had “no reasonable prospects of success”, and, in view of this Court’s findings in its judgment No 6, it was doomed to fail (see judgment No 9 at [106] – 109]).

The Claims brought by the respondent Kings

21. While the Kings’ claim for personal cost orders against Muriniti and Newell, in respect of the substantive proceedings, remains to be heard and determined, at a later date (see [8] – [9] above), the Kings presently seek an order that their costs on Young’s dismissed 20 August 2015 NOM be paid by Muriniti.

22. Their Amended NOM in this respect (Court Book Vol 1, tab 1.6, fols 18 – 20) seeks the following orders:

1   That ... Muriniti, solicitor for Margo Young, ... pay to the first and second respondents, Brendan and Kristina King, the amount of the costs which the plaintiff, Margo Young has been ordered to pay consequent upon the dismissal of the (sic) her notice of motion dated 20 August 2015.

2   That ... Muriniti pay the costs of this notice of motion.

3   Such further or other orders as the Court sees fit.

Motions brought by the non-party respondents against Young’s lawyers

23. Eleven of the 16 non-party respondents, who successfully resisted Young’s August costs NOM, and obtained costs orders against Young ([17] and [18] above), then moved the Court for various orders, including orders for indemnity costs on that NOM, and for personal costs orders against Muriniti and Newell. (See Section C of this judgment for more detail of these claims.)

24. Orders for costs on a personal basis are sought on various bases, including:

(a)   the alleged “inherent” or “implied” jurisdiction of the Court, and/or

(b) sections 98 and/or 99 of the Civil Procedure Act 2005 (NSW) (“CP Act”), and/or

(c)   relevant provisions of the Legal Profession Uniform Law Application Act 2014 (“LPULA Act”, or “the uniform law”), and/or

(d)   as compensation in the nature of “damages”.

25. On 18 May 2016, Young and her lawyers unsuccessfully sought to stay the motions of those respondents, and Young and her lawyers were ordered to pay the respondents’ costs of those stay applications: Young v King (No 10) [2016] NSWLEC 70.

26. The respondents’ costs motions then came on for hearing before me on 2 to 4 August 2016.

27. This judgment deals with those motions for indemnity and/or personal costs orders against the lawyers, detailed particulars of which I will set out below (in section C of this judgment, pars [46] – [54]).

Representation

28. The Kings are still represented by Mr Michael Wright of counsel, instructed by Terence Stern, solicitor.

29. Young is represented by Muriniti (her solicitor) and Newell (now a solicitor advocate, employed and instructed by Muriniti).

30. “The lawyers” (Muriniti, his now employee Newell, and LCMA) are all represented in the present “personal costs” proceedings by Mr David Lloyd and Mr M Kalyk of counsel (instructed by solicitor Bruce Yeldham, of Yeldham Price O’Brien Lusk).

31. Insofar as there are outstanding claims pending against Newell in his former capacity as a barrister, he is represented by Barry.Nilsson.Lawyers.

32. I will list later the names of counsel who appeared for the other costs respondents who now seek orders (see again section C below, pars [46] – [54]).

B: Relevant Statutory Provisions

33. I will now set out the key statutory provisions which are relied upon, in various combinations and alternatives, and to varying degrees, by the respondents in their motions and submissions before the Court. (Most of the emphasis is mine.)

The Court Act

34. Part 3 of the Land and Environment Court Act 1979 (“the Court Act”) details the jurisdiction of the Court.

35. Section 16 provides:

Jurisdiction of the Court generally

(1)   The Court shall have the jurisdiction vested in it by or under this or any other Act.

(1A)   The Court also has jurisdiction to hear and dispose of any matter not falling within its jurisdiction under any other provision of this Act or under any other Act, being a matter that is ancillary to a matter that falls within its jurisdiction under any other provision of this Act or under any other Act.

...

36. Section 22 provides:

Determination of matter completely and finally

The Court shall, in every matter before the Court, grant either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by that party in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters may be avoided.

37. Section 23 provides:

Making of orders

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, as the Court thinks appropriate.

The UCPR

38. Regard should be had also to Rule 42.1 of the Uniform Civil Procedure Rules 2005 (“UCPR”), which provides:

42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

The CP Act

39. “Costs” are defined in s 3(1) of the CP Act in these terms:

costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration.

40. Part 6, Division 1, of the CP Act makes the following relevant provisions regarding the roles of parties and representatives in the conduct of proceedings:

56   Overriding purpose

(1)   The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2)   The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

(3)   A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.

(3A)   (Repealed)

(4)   Each of the following persons must not, by their conduct, cause a party to civil proceedings to be put in breach of a duty identified in subsection (3):

(a)   any solicitor or barrister representing the party in the proceedings,

(b)   any person with a relevant interest in the proceedings commenced by the party.

(5)   The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs.

...

57   Objects of case management

(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects:

(a)   the just determination of the proceedings,

(b)   the efficient disposal of the business of the court,

(c)   the efficient use of available judicial and administrative resources,

(d)   the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(2)   This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).

58    Court to follow dictates of justice

(1)   ...

the court must seek to act in accordance with the dictates of justice.

(2)   For the purpose of determining what are the dictates of justice in a particular case, the court:

(a) must have regard to the provisions of sections 56 and 57, ...

59   Elimination of delay

...

60    Proportionality of costs

In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.

41. Part 6, Division 2, of the CP Act deals with the powers of the court to give directions, and the duty of parties and their representatives to comply:

61   Directions as to practice and procedure generally

(1)   The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings.

...

(3)   If a party to whom such a direction has been given fails to comply with the direction, the court may, by order, do any one or more of the following:

...

(f)   it may direct the party to pay the whole or part of the costs of another party,

(g)   it may make such other order or give such other direction as it considers appropriate.

(4)   Subsection (3) does not limit any other power the court may have to take action of the kind referred to in that subsection or to take any other action that the court is empowered to take in relation to a failure to comply with a direction given by the court.

62   Directions as to conduct of hearing

(1)   The court may, by order, give directions as to the conduct of any hearing, including directions as to the order in which evidence is to be given and addresses made.

(2)   The court may, by order, give directions as to the order in which questions of fact are to be tried.

...

(5)   In deciding whether to make a direction under this section, the court may have regard to the following matters in addition to any other matters that the court considers relevant:

...

(g)   the costs that are likely to be incurred by the parties compared with the quantum of the subject-matter in dispute,

...

42. Sections 98 and 99 of the CP Act, dealing with costs, are found in Part 7, Division 2 of that Act, and provide:

98   Courts powers as to costs

(1)   Subject to rules of court and to this or any other Act:

(a)   costs are in the discretion of the court, and

(b)   the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c)   the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

(2)   Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.

(3)   An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.

(4)   In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:

(a)   costs up to, or from, a specified stage of the proceedings, or

(b)   a specified proportion of the assessed costs, or

(c)   a specified gross sum instead of assessed costs, or

(d)   such proportion of the assessed costs as does not exceed a specified amount.

...

99   Liability of legal practitioner for unnecessary costs

(1)   This section applies if it appears to the court that costs have been incurred:

(a)   by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or

(b)   improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.

(2)   After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:

(a)   it may, by order, disallow the whole or any part of the costs in the proceedings:

(i)   in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or

(ii)   in the case of a solicitor, as between the solicitor and the client,

(b)   it may, by order, direct the legal practitioner:

(i)   in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or

(ii)   in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,

(c)   it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.

...

43. Sections 98 and 99 were discussed in a preliminary way in judgment No 9, (at [84] – [87]), but I will return to them in more detail (Section J, [132] – [136] below).

44. Section 101 (in Part 6, Division 3) of the CP Act has also been invoked in this case, because claims have been made by some respondents for interest:

101   Interest after judgment

(1)   Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.

...

(4)   Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs.

(5)   Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.

...

The LPULA Act

45. The LPULA Act relevantly provides:

61   Maximum costs in personal injury damages matters

Schedule 1 contains provisions relating to maximum costs in personal injury damages matters.

62   Costs in civil claims—no reasonable prospects of success

Schedule 2 contains provisions relating to costs in civil claims where there are no reasonable prospects of success.

...

Schedule 1 Maximum costs in personal injury damages matters

...

5   Costs can be awarded on indemnity basis for costs incurred after failure to accept offer of compromise

(1)   If a party to a claim for personal injury damages makes a reasonable offer of compromise on the claim that is not accepted, this Schedule does not prevent the awarding of costs against another party to be assessed on an indemnity basis in respect of legal services provided after the offer is made.

(2)   An offer of compromise on a claim by a party is reasonable if the court determines or makes an order or award on the claim in terms that are no less favourable to the party than the terms of the offer.

(3)   The local regulations may make provision for or with respect to requiring disclosure by a law practice to the practice’s client of information in relation to the operation of this clause in respect of any refusal by the client to accept an offer of compromise.

(4)   If it appears to the court in which proceedings are taken on a claim for personal injury damages that a law practice has failed to comply with any provision of the local regulations under this clause, and that the client of the practice has incurred an increased liability for costs as a result of refusing a reasonable offer of compromise in connection with the claim concerned, the court may of its own motion or on the application of the client make either or both of the following orders:

(a)   an order directing the law practice to repay to the client the whole or any part of those increased costs that the client has been ordered to pay to any other party,

(b)   an order directing the law practice to indemnify any party other than the client against the whole or any part of the costs payable by the party indemnified in respect of legal services provided after the offer is refused.

...

Schedule 2 Costs in civil claims where no reasonable prospects of success

...

5   Costs order against law practice acting without reasonable prospects of success

(1)   If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services:

(a)   an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party,

(b)   an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified.

(2)   The Supreme Court may on the application of any party to proceedings on a claim for damages make any order that the court in which proceedings on the claim are taken could make under this clause.

(3)   An application for an order under this clause cannot be made after a final determination has been made under Part 7 by a costs assessor of the costs payable as a result of an order made by the court in which the proceedings on the claim concerned were taken.

(4)   A law practice or legal practitioner associate of the practice is not entitled to demand, recover or accept from a client any part of the amount for which the practice or associate is directed to indemnify a party pursuant to an order under this clause.

C: The Non-party Notices of Motion now before the Court

46. Those of the sixteen non-party respondents to Young’s August 2015 costs motion who persist in the present costs motions, i.e. Rs 5 to 8, and 11 to 17, and the orders they respectively seek, are as follows:

47. The Fifth respondent (5R) – Ian Hemmings (“Hemmings”):

Mr Hemmings advised Young and appeared for her in the original proceedings: Young v King [2004] NSWLEC 93. He was represented before me by Ms P A Horvath of counsel, instructed by Moray & Agnew Lawyers.

ORDERS SOUGHT

1. An order pursuant to section 98 of the [CP Act] that:

(a)   the plaintiff's legal practitioner, ... Muriniti;

(b)   the law practice of [LCMA] ...; and/or

(c)   ... Newell, legal practitioner

pay the fifth respondent's costs of the plaintiff’s notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

In the alternative to order 1

2.   An order pursuant to cl5(1)(b) of Schedule 2 of the [LPULA Act] that the law practice [LCMA] ... pay the fifth respondent's costs of the plaintiff’s notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

In the alternative to orders 1 or 2

3.   An order that the plaintiff to (sic) pay the fifth respondent's costs of the plaintiff's notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

4. An order pursuant to section 99 of the [CP Act] ... that:

(a)   the plaintiff's legal practitioner, ... Muriniti;

(b)   the law practice [LCMA] ...; and/or

(c)   ... Newell, legal practitioner

pay the fifth respondent's costs of the plaintiff’s notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

5. Interest pursuant to section 101(4) of the [CP Act] ... .

6.   Such other order or orders as the court thinks fit.

48. The Sixth and Seventh respondents (6/7R) – Stephen Perrens, and the firm Hughes Trueman Pty Ltd (“Perrens”):

Dr Perrens, then employed by that firm, was engaged by Young in 2003 – 2004 as her hydraulic expert. He was represented before me by Mr S E Gray of counsel, instructed by Kennedys (Australasia) Pty Ltd (“Kennedys”).

ORDERS SOUGHT

1 An order pursuant to section 99(2)(c) of the [CP Act] that:

a.   ... Muriniti, a legal practitioner, the solicitor on the record for the Applicant, and the Principal of the law practice [LCMA] ...;

b.   The law practice [LCMA] ...; and/or

c.   ... Newell, a legal practitioner employed by [LCMA] ...

indemnify the Sixth and Seventh Respondents against any costs payable by them in relation to the Notice of Motion filed on 20 August 2015 on behalf of Margo Young (the Motion).

2 In the alternative to Order 1, an order pursuant to section 98 of the [CP Act] ... that:

a.   ... Muriniti;

b.   [LCMA] ...; and/or

c.   ... Newell

pay the Sixth and Seventh Respondents' cost of and incidental to the Motion, with such costs to be awarded on an indemnity basis.

3 In the alternative to Order 2, an order pursuant to section 98 of the [CP Act] ... that:

a.   ... Muriniti;

b.   [LCMA] ...; and/or

c.   ... Newell

pay the Sixth and Seventh Respondents' cost of and incidental to the Motion, with such costs to (sic) awarded on the ordinary basis.

4 In the alternative to Orders 2 and 3, an order pursuant to section 98 of the [CP Act] ... that Margo Young, the Applicant on the Motion, pay the Sixth and Seventh Respondents' costs of and incidental to the Motion, with such costs to be awarded on an indemnity basis.

5   The costs of an (sic) incidental to this Notice of Motion, including on the identical basis as set out above.

6   Such other or further order as the Court thinks fit.

49. The Eighth respondent (8R) – Warwick Davies (“Davies”):

Mr Davies was engaged by Young as a geotechnical engineer. He was represented before me by Mr T M Faulkner, SC, instructed by Gilchrist Connell.

ORDERS SOUGHT

1. Pursuant to section 98 of the [CP Act] and/or the inherent jurisdiction of the Court, that ... Muriniti, principal of [LCMA] ... and/or the law practice [LCMA] ... and/or ... Newell, a legal practitioner associate of the law practice of [LCMA] ... pay the Eight (sic) Respondent costs of the Applicant's Notice of Motion filed on 20 August 2015.

2. Alternatively, pursuant to section 99 of the [CP Act] ... and/or the inherent jurisdiction of the Court, that ... Muriniti, principal of [LCMA] ... and/or the law practice of [LCMA] ... and/or ... Newell, a legal practitioner associate of the law practice of [LCMA] ... indemnify the Eight (sic) Respondent against costs payable by him to his legal representatives in relation to the Applicant's Notice of Motion filed on 20 August 2015.

3.   Costs.

50. The Eleventh respondent (11R) – Michael Brearley (“Brearley”):

Mr Brearley is a civil engineer, engaged by Young in 2012. He was represented before me by Mr B Lim of counsel, instructed by Norton Rose Fulbright.

ORDERS SOUGHT

...

1 An order pursuant to s 98 or s 99 of the [CP Act] ... that:

(a)   ... Muriniti, principal of [LCMA] ... and solicitor on the record for the Plaintiff

(b)   the law practice of [LCMA] ...; and/or

(c)   ... Newell, a legal practitioner associate of the law practice [LCMA] ...

pay or indemnify the Eleventh Respondent's costs of and incidental to the Plaintiff's motion filed on 20 August 2015, such costs to be on an indemnity basis.

2   In the alternative to Order 1, the Plaintiff pay the Eleventh Respondent's costs of and incidental to the Plaintiff's motion filed on 20 August 2015, such costs to be on an indemnity basis.

3 An order pursuant to s 99 of the [CP Act] ... that:

(a)   ... Muriniti, principal of [LCMA] ... and solicitor on the record for the Plaintiff;

(b)   the law practice of [LCMA] ...; and/or

(c)   ... Newell, a legal practitioner associate of the law practice of [LCMA] ...

pay to the Eleventh Respondent the costs referred to in Order 2 or any other costs that the Plaintiff is to pay to the Eleventh Respondent.

4   Such other order as the court sees fit.

51. The Twelfth respondent (12R) – Ross Fraser (“Fraser”):

Mr Fraser is a civil engineer engaged by Young in 2008. He was represented before me by Ms J Reid of counsel.

ORDERS SOUGHT

1 An order pursuant to s 98 of the [CP Act] ... that :

a   The applicant's legal practitioner, ... Muriniti;

b   The law practice [LCMA] ...; and/or

c   ... Newell, legal practitioner

pay the 12th respondent's costs of the applicant's notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

In the alternative to order 1

2   An order pursuant to cl5(1)(b) of Schedule 2 of the [LPULA Act] ... that the law practice [LCMA] ... pay the 12th respondent's costs of the applicant's notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

In the alternative to orders 1 or 2

3   An order that the applicant pay the 12th respondent's costs of the applicant's notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

4 An order pursuant to section 99 of the [CP Act] ... that:

a   The applicant's legal practitioner, ... Muriniti;

b   The law practice of [LCMA] ...; and/or

c   ... Newell, legal practitioner

Pay the 12th respondent's costs of the applicant's notice of motion filed 20 August 2015, and the costs of this motion on an indemnity basis.

5 Interest pursuant to section 101(4) of the [CP Act].

6   Such other order or orders as the court thinks fit.

52. The Thirteenth respondent (13R) – Tony Tuxworth (“Tuxworth”):

Mr Tuxworth is a town planner engaged by Young in 2011. He was represented before me by Dr S Berveling of counsel, instructed by Tress Cox Lawyers.

ORDERS SOUGHT

...

2. Order that, pursuant to s. 99 of the [CP Act] ... Muriniti indemnify the thirteenth respondent against any costs payable by the thirteenth respondent to his legal representatives in relation to the Motion, on an indemnity basis from 20 September 2015.

3.   In the alternative to Order 2 above, order that, pursuant to s. 62 and clause 5(1)(b) of Schedule 2 of the [LPULA Act] ..., the law practice of [LCMA] ... and/or its associate ... Muriniti indemnify the thirteenth respondent against the whole of the costs payable by the thirteenth respondent to his legal representatives in relation to the Motion.

4.   In the alternative to Orders 2 and 3 above, order that the applicant pay the thirteenth respondent's costs of the Motion.

5.   Such further or other Order as the Court sees fit.

53. The Fourteenth and Fifteenth respondents (14/15R) – Copland Lethbridge and his firm Bee & Lethbridge Pty Ltd (“Lethbridge”) – and the Sixteenth (16R) – Geoff Goodyer (“Goodyer”):

Mr Lethbridge is a surveyor who was engaged by Kings (I acknowledge my error in par [27] of judgment No 9 in this respect – see also T2.8.16, p46, LL12 – 17).

Mr Goodyer is a town planner also engaged by Young.

All three were represented before me by Mr E Cox of counsel, instructed by Walker Hedges & Co, and all three seek the same orders, namely:

2 Order that, pursuant to s.99 of the [CP Act] ... Muriniti indemnify the Fourteenth, Fifteenth and Sixteenth Respondents against any costs payable by the Fourteenth, Fifteenth and Sixteenth Respondents to his legal representatives in relation to the Motion, on an indemnity basis from 20 September 2015.

3   In the alternative to Order 2 above, order that, pursuant to s.62 and clause 5(1)(b) of Schedule 2 to the [LPULA Act] ..., the law practice of [LCMA] ... and/or its associate ... Muriniti indemnify the Fourteenth, Fifteenth and Sixteenth Respondents against the whole of the costs payable by the Fourteenth, Fifteenth and Sixteenth Respondents to his (sic) legal representatives in relation to the Motion.

4.   In the alternative to Orders 2 and 3 above, order that the applicant pay the Fourteenth, Fifteenth and Sixteenth Repsondent's (sic) costs of the Motion.

5.   Such further or other Order as the Court sees fit.

6   Such other orders as the Court deems fit.

54. The Seventeenth respondent (17R) – Victor Schubert (“Schubert”):

Mr Schubert is a town planner who was engaged by Kings in 2003. He was represented before me by Mr T Buterin.

ORDERS SOUGHT

1. An order pursuant to section 98 of the [CP Act] ... that:

(a)   the plaintiff’s legal practitioner, ... Muriniti;

(b)   the law practice of [LCMA] ...; and/or

(c)   ... Newell, legal practitioner

pay the seventeenth respondent's costs of the plaintiff’s notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

2.   In the alternative to order 1, an order pursuant to cl. 5(1)(b) of Schedule 2 to the [LPULA Act] ... that the law practice of [LCMA] ... pay the seventeenth respondent's costs of the plaintiff’s notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

3.   In the alternative to orders 1 and 2, an order that the plaintiff to (sic) pay the seventeenth respondent's costs of the plaintiff's notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

4. An order pursuant to section 99 of the [CP Act] ... that:

(a)   the plaintiff's legal practitioner, ... Muriniti;

(b)   the law practice of [LCMA] ...; and/or

(c)   ... Newell, legal practitioner.

pay the seventeenth respondent's costs of the plaintiff’s notice of motion filed 20 August 2015, and the costs of this motion, on an indemnity basis.

5. Interest pursuant to section 101(4) of the [CP Act] ....

6.   Such other order or orders as the court thinks fit.

Summary of the claims determined in this judgment

55. It can be seen that:

1. all eleven non-party respondents still before the Court rely upon s 98 and/or s 99 of the CP Act;

2. most of them also rely on the LPULA Act;

3. some also made specific claims for interest on the costs payable to them, even though s 101(4) of the CP Act ([44] above) renders such claims unnecessary;

4. a few argued for an inherent or implied jurisdiction to award the costs they sought, and/or for costs to be recoverable as “damages”; and

5. most adopted the submissions of others, with individual emphasis.

D: The Evidence now before the Court

56. Many affidavits have been read, many documents have been relied upon, and there have been voluminous written submissions, including reply submissions, made by the parties, prior to and during this present costs hearing.

57. Those documents mostly found their way into a four-volume (white) Court Book (“CB”), assembled by Yeldham Price O’Brien Lusk (acting for Young’s current lawyers), or a two-volume (black) Supplementary Court Book (“SCB”), assembled by Kennedys (acting for Perrens and his firm).

58. Various other documents were separately tendered during the hearing:

59. Some were exhibits to affidavits (e.g. Exhibits RG1, RG2, RG3, and SER1), one was the transcript of the stay hearing on 18 May 2016 (Exhibit WD1), and another was a letter from Muriniti to Stern, dated 27 October 2015 (Exhibit K1).

60. On behalf of Perrens and Hughes Trueman (Rs 6 and 7), Mr Gray tendered part of one paragraph, and all of another, in an affidavit sworn and filed on 10 June 2016, by Muriniti, on Young’s behalf, in her Federal Court appeal proceedings against his clients (Exhibit SP1).

61. On behalf of Lethbridge, his firm, and Goodyer (Rs 14 to 16), Mr Cox tendered a letter from his solicitors to Muriniti, dated 7 September 2015 (Exhibit BL1).

62. On behalf of Young, Newell tendered three folders of additional material (Exhibits Y1, Y2, and Y3), two construction certificate plans from earlier hearings (Exhibits A4 and A5), and an affidavit by Perrens, which was dated 5 December 2008, and had been filed in the substantive proceedings (Exhibit Y4).

63. No oral evidence was called.

E: “Early warnings” were given to Young and her lawyers, but were ignored

64. Young, Muriniti and Newell were placed on notice, from very soon after they filed Young’s costs claims against 18 Respondents on 20 August 2015, that at least some of the respondents regarded such claims as an abuse of process.

65. On 31 August 2015, Hemmings’s solicitors, Moray & Agnew, warned Muriniti in respect of Young’s 20 August 2015 costs motion (CB Vol 1, tab 2.3, fol 40), in these terms:

1.   We refer to your client’s notice of motion filed in the above proceedings on 20 August 2015 (‘motion’).

2.   The motion is an abuse of process and will be dismissed. The issues sought to be agitated in the motion have been judicially determined. We refer you to the judgments in Young v King (6) [2015] NSWLEC 11 and Young v Hones (3) (sic ?) [2013] NSWSC 1429, (the latter of which was affirmed by the New South Wales Court of Appeal and the High Court of Australia).

3.   Before our client incurs substantial costs in opposing the motion, we have been instructed to offer that the motion be resolved by orders that:

(a)   the motion is dismissed insofar as it seeks orders against the fifth respondent:

(b)    each of the applicant and the fifth respondent to bear her and his own costs of the motion.

4.   The offer is open for acceptance until 4pm 8 September 2015 and is made pursuant to the principles set out in Calderbank v Calderbank [1975] 3 All ER 333 [(“the Calderbank principles”)].

5.   Should your client not accept the offer, our client will make an applicant that L C Muriniti & Associates or its solicitors pay our client’s costs of the motion on an indemnity basis, and will seek to rely on this letter in respect of any application for costs.

66. On 2 September 2015, Gilchrist Connell (for Davies) wrote to Muriniti, complaining that Young’s NOM did “not specify a basis” upon which she relied for orders against Davies, and seeking particulars (White CB, Vol 3, tab 4.3, fols 744 – 745). Davies’s lawyers reserved all Davies’s rights, “including his right to apply to have the [NOM] dismissed as frivolous, vexatious, and (sic) abuse of process or otherwise”.

67. Muriniti replied to Gilchrist Connell in somewhat intemperate terms that same day (fols 746 –747), saying, inter alia:

Our client’s proceedings against your client are not frivolous and vexatious as you contend. On the contrary, they are meritorious proceedings and should be taken very seriously by you and your client given that the proceedings are of an extremely serious nature and have not been commenced lightly but rather are proceeding (sic) which have been brought as a result of some 7 years of forensic investigations in order to unravel your client’s conspiratorial conduct on the conduct of his follow (sic) conspirators.

It should be self-evident to you that the allegations that have been made would not have been made unless we had proper and compelling reasons to do so and evidence to support those allegations.

Accordingly, we invite you to withdraw your allegation that the proceedings are frivolous and vexatious.

...

Your client has a great deal to answer for and will be held to account for his conduct. ...

...

... the [LEC] in this instance, has been vested with Supreme Court jurisdiction by virtue of orders that were made by the Supreme Court Court of Appeal last year and as such the court has the benefit of not only the Supreme Court’s inherent jurisdiction but also the provisions of s76 of the Supreme Court Rules.

68. Muriniti attached to that reply a copy of his letter of 2 September 2015 to Kennedys, acting for Perrens (fols 748 – 750), which reiterated some elements of the conspiracy allegations against various respondents, by way of “broad-brush illustration of your client’s complicity”. That attachment, like his letter to Gilchrist Connell, failed to engage with the suggestion of abuse of process.

69. On 7 September 2015, the solicitor for Tuxworth, Alistair Little of Tress Cox, wrote to Muriniti (CB Vol 3, tab 8.2, fols 1055 – 1058), asserting (1) that Young’s costs motion “has no prospects of success”, (2) that Young “suffered no direct loss in regard to any alleged conduct of Mr Tuxworth”, that Tuxworth is entitled to expert witness immunity, and (3) that, if the claim continued against Tuxworth, he would seek personal costs orders against Muriniti on an indemnity basis. There was no response to this letter.

70. Also on 7 September 2015, Walker Hedges & Co. wrote (Exhibit BL1) to Muriniti, on behalf of Lethbridge and Goodyer, suggesting that Young’s costs motion of 20 August 2015, was “totally misconceived” and “hopeless”, that she “should have been given advice that [it] is an improper use of the court”, and that the claims she makes should be the subject of “separate and discrete” proceedings in the “proper court of jurisdiction”. Again, personal costs claims were foreshadowed. As their counsel, Mr E Cox, points out in his submissions on Lethbridge’s behalf (CB Vol 4, tab 9.2, fol 1227, par 5), “no actual involvement” in the conspiracy is alleged against him, only an error in his survey and a failure to correct it – it is alleged that this error “harmonised with the purposes of the conspiracy”.

71. Kennedys reminded LCMA on 9 September 2015 (CB Vol 2, tab 3.3, fol 705, at par 13) of LCMA’s “obligations pursuant to Rule 21.4 of the Solicitors’ Rules, which provides that:

“21.4 A solicitor must not allege any matter of fact amounting to criminality, fraud or other serious misconduct against any person unless the solicitor believes on reasonable grounds that:

21.4.1 available material by which the allegation could be supported provides a proper basis for it; and

21.4.2 the client wishes the allegation to be made, after having been advised of the seriousness of the allegation and of the possible consequences for the client and the case if it is not made out.”

72. On 10 September 2015, when Young’s NOM came before the Registrar, all 18 respondents appeared.

73. Mr Faulkner SC appeared for Davies, and made clear, at the outset (T10.9.15, p8, LL44 – 48), that Davies’s position was that Young’s application was “an abuse of process and ought be summarily dismissed ... without going into any evidence”.

74. On 15 October 2015, Davies filed a NOM seeking such summary dismissal, and other respondents followed suit.

75. On 4 November 2015, Schubert (R17) wrote a personal “Calderbank” type letter to Muriniti (CB Vol 4, tab 10.3, fols 1238 – 1240), saying inter alia that any costs order against him would not be “in the interests of justice”, but “extravagant and injust (sic)”. Schubert was an expert town planner engaged by the Kings in 2003 – 2004. He heard nothing “further in relation to the 2003 proceedings until ... served with [Young’s NOM] in late August 2015” (CB Vol 4, tab 10.3, fol 1236, par 4), by which time he was “a recent cancer survivor”, advised by his oncologist that “stress may trigger a relapse” (fol 1239).

76. On or about 23 November 2015, Muriniti and Newell filed Young’s 258 pages of submissions, in which (T2.8.16, p27, LL24 – 25) “not a single word ... addressed ... the abuse of process” point.

77. On 25 November 2015, Faulkner replied to Young’s submissions (T2.8.16, p27, LL35 – 38), going “into the abuse of process point chapter and verse”. Three days later Newell responded in a way described by Faulkner (Tp27, LL38 – 39) as “superficial and perfunctory in relation to the key point – nothing of substance was said to address the abuse of process”.

78. On 26 November 2015, Moray & Agnew again sought to settle with Muriniti on (fol 496).

79. Muriniti did not properly respond in any substantive way to any of these warnings. In terms of the Calderbank principles (see par “4” in [65] above), Young did not reject the settlement propositions, nor seek time to consider her position.

80. In his oral submissions in support of summary dismissal of Young’s NOM, on 30 November 2015, Faulkner developed the abuse point further, and he submits, correctly in my view, that Newell said (T2.8.16, p27, L45) “nothing of substance to resist” it.

81. When I delivered judgment No 8 on 1 December 2015, summarily dismissing about half of Young’s claims for costs, Newell and I had the following exchange (T1.12.15 p79, CB Vol 2, tab 2.3, fol 591, at LL22 – 43):

NEWELL: I understand that that is to happen in a moment, but what your Honour has indicated about the judgment and its substance would suggest that this is a rather situation, but it seems there is some question whether, if the motions have been dismissed on a summary basis, that the same submissions on a final basis cannot go any other way as matters presently stand. I am wondering if there is a better way of dealing with this than to incur the costs of dealing with

HIS HONOUR: Well, you could surrender and pay the costs of the parties who have been brought here, if you expect the result to be the way you have just described it.

NEWELL: Well, I was going to suggest the possibility that those applications could be stayed or adjourned until the matter in the Court of Appeal is dealt with.

HIS HONOUR: Well, I my understanding is that the Court of Appeal would prefer as it is normal practice to deal with the whole of judgment number 6, of which this proceeding is part, so that request is denied. Now, if you do not want to proceed against these other parties, please let them go now.

NEWELL: No, your Honour, we will proceed against all of the parties ...

82. As Mr Gray (for Perrens) observed (subs SCB Vol 1, fol 59, par 26), Newell did not even pause to confirm, after judgment No 8, that he had instructions to proceed, but he and Muriniti persisted with the remaining costs claims.

F: Mrs Young’s role, her personal position, and her refusal to waive privilege

83. On 6 June 2016, Muriniti swore an affidavit in respect of a proposed out-of-time Federal Court appeal, which Young brought against the Federal Circuit Court’s judgment (per Smith J on 29 April 2016) in Young v Hughes Trueman Pty Ltd [2016] FCCA 989 (to which case I referred in judgment No 10, at [52] – [61], and in respect of which see now also [137]ff below).

84. The copy of that affidavit which was tendered before me (Exhibit SP1) is deficient, in that pages 10 and 11 (pars 51 – 59) are missing from it.

85. However, in what this Court has seen of the affidavit, Muriniti:

1. referred (pars 3 and 5) to Young’s “extremely limited resources” and “the limited resources of her legal representatives”;

2. complained (par 4) about a “concerted, aggressive smear campaign involving professional attacks” on her legal representatives by the respondents and their insurers.

3. deposed to the various proceedings she still has current in NSW Court of Appeal, and this Court, at the same time, and (par 21) to his having borne the expense of her disbursements;

4. deposed also that she was reconsidering the High Court outcome in her Young v Hones litigation (which turned on questions of immunity) in view of that Court’s subsequent decision in Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; and

5. foreshadowed (par 22) possible (further) proceedings against Hemmings, Hones and Perrens, and (pars 36 – 38) an application to at least stay Garling J’s costs orders in Young v Hones.

86. In establishing Young’s (conspiracy based) case for substantive for relief, and now for costs, Muriniti made clear (Exhibit K1 p2) that the “primary role” was to be played by Newell, as “lead advocate”, requiring:

... a minute and detailed understanding and familiarity with a mountain of documents which have had to be analysed in order to weave together and forensically demonstrate convincingly the conspiracy in which your clients and others in these proceedings have been parties.

87. It is clear to the Court that Newell was the principal architect of this conspiracy approach, that Muriniti willingly embraced it, and that, together, they convinced Young to pursue it. Thereafter, with her approval, and apparently on her express instructions, they pursued it on her behalf. Despite all the stumbles along the way, they still enjoy her confidence. As she appears to have so far paid none of their fees, there seems little point in speculation as to where this matter would now stand if she were self-represented.

Young’s Finances

88. In Young v Hones (No.5) [2016] NSWSC 822, Garling J said (at [85]):

Mr Newell submitted, from the Bar Table, that the fact that there had been an act of bankruptcy committed by Ms Young ought to be taken by the Court as an indication that his client was impecunious. As well, Ms Young discloses her occupation on her affidavit as a pensioner. These matters give rise to a substantial question as to the financial capacity of Ms Young to meet the costs orders, but that issue was not specifically addressed by the evidence which, potentially, could have been done quite easily. There did not seem to be any suggestion as to any financial arrangement with respect to the payment of any costs associated with the prospective proceedings which would enable Ms Young to undertake those proceedings against, apparently, at least 18 respondents, in circumstances where she was wholly impecunious for the purposes of this application. None of these matters were adequately addressed. It means that there is no evidentiary basis for this Court to find, that Ms Young would be prejudiced by the failure of the Court to make the restraining orders which she seeks.

89. Moray and Agnew’s Susan Reid annexes to her affidavit (CB Vol 2, tab 2.4, fols 677 – 683) a title search and several caveat documents regarding Young’s land at 35 Calca Cres, Forestville.

90. Young has a mortgage with St George Bank, but also three caveats have been lodged on her title by Muriniti – one, dated 3 April 2012, reliant upon his cost agreement with her, dated 1 February 2008; a second, dated around 13 November 2013, reliant upon an unregistered second mortgage; and the third, reliant on a “loan agreement and unregistered mortgage”, dated 17 September 2014.

91. It was clear, from her oral evidence before me in 2014, that Young is of very limited means (e.g. judgment No 6 at [12]), and her liability for solicitor-client costs has been estimated at, or asserted, without evidence, to be, $3M.

92. At the same time, several of the non-party respondents depose to having never been paid for services they rendered to her.

93. For example, Fraser (12R) acted for Young without fee, but she joined him in the conspiracy, without articulating any role he played, and without producing any evidence against him (see Ms J Reid’s subs at CB Vol 3, tab 7.3, fols 1045 – 1047).

94. Tuxworth (13R) also deposed (CB Vol 3, tab 8.3, fol 1060, par 2) that Muriniti, on Young’s behalf, engaged Coastplan Consulting to provide Tuxworth’s services as an expert witness, on the basis that any fees would be “settled at the end of the court matter”.

95. Tuxworth prepared a draft report (tab 8.3, fols 1096 – 1102), and eventually an amended final report (fols 1103 – 1117), and then engaged in a lengthy dialogue with Muriniti and Newell, from late May 2011 until August 2015 (fols 1118 – 1214). His expert services (costed at $9,893.15 – fol 1065, par 24) were never paid for.

96. Mr Gray’s submissions (for Perrens) included the following (CB Vol 2, tab 3.2, fol 692, pars 30 – 31):

30.   The Lawyers, at all times, had a duty to advise the Applicant as to the hopelessness of the Motion. That position was especially so in light of the various decisions that the Applicant was party to – not only in the Land and Environment Court but also in Supreme Court and the Court of Appeal.

31.   The written and oral submissions, and the years that has (sic) been spent trying to identify the conspiracy, which, whilst purportedly discovered many times has never been revealed to the Court in any admissible way (as distinct from a series of submissions without any evidentiary basis) do not give any confidence that the duty has been performed.

97. The affidavit of 15 October 2015 by Davies’s solicitor, Mr R E G Guyomarc’h of Gilchrist Connell (CB Vol 3, tab 4.3, fols 726ff), annexes Young’s affidavit of 20 August 2015. In it, Young repeats her attacks on several expert respondents, including Perrens, Davies, Lethbridge, Goodyer, and Schubert.

97. In his written submissions on behalf of Brearley, Mr Lim observed (CB Vol 3, tab 6.2, fol 1030, par 13), that it was unlikely that Young’s lawyers could produce any evidence showing that they were not “personally responsible for the institution and maintenance of the costs motion and the manner in which it was conducted”.

98. In this respect, he relies on a letter dated 27 October 2015, which Muriniti wrote to Stern (Exhibit K1) regarding delays caused in finalising Young’s submissions, as a result of Newell’s health issues (see Young v King (No 7) [2015] NSWLEC 178, delivered on 11 November 2015). Muriniti said:

We are comfortable in announcing that we now believe that we have a firm, if not complete, understanding of what was done by whom and why and how both the court and our client were seriously misled to put it mildly.

Privilege

100. Young has confirmed (her affidavit of 29 April 2016, in CB Vol 4, at tab 11.1, fol 1247, par 10) that she does not wish to waive privilege over the file held for her by Muriniti, at least not “whilst there are appeals on foot”, with a rehearing of her substantive case possible.

101. Accordingly, Mr Lloyd has not had full access to that file – it is not “open to Muriniti’s legal advisers to trample all over that privilege by looking at the documents” (T18.5.16 p9, LL22 – 23). Certainly it would be appropriate for Muriniti to get legal advice before swearing an affidavit in his own defence on costs (p20, LL21 – 26), and for his legal representatives to “have a look at some documents” (LL28 – 29) – a “confidential disclosure for a limited purpose that protects the privilege against all the world” (LL31 – 33).

G: Some Submissions of General Application to the Court’s consideration

102. Mr Gray (for Perrens) said (T2.8.16, p56, LL39 – 42) of Young’s pursuit of costs from non-parties:

This is a costs application brought by an unsuccessful party seeking costs on an indemnity basis from persons not party to the proceedings, on the identical basis upon which the unsuccessful party lost in number 6.

103. The basis upon which Young sought to recover costs was “precisely” the same conspiracy argument she had put unsuccessfully in the substantive case.

104. In this respect, Mr Wright (for the Kings) makes these submissions in respect of the conduct of Young, Muriniti and Newell, after Young lost her case, and was ordered to pay the Kings’ costs:

1. (par 16, CB Vol 1, tab1.5, fol 16):

No responsible practitioner, whether or not acting on express instructions, should have brought and maintained an application for costs against the successful party to proceedings in the absence of clear evidence of disentitling conduct by the successful party. There was no such evidence.

2. (par 20, ibid fol 17):

Where the Court had already dismissed the same claim against the Kings in judgment 6, it is incomprehensible that a comepetent (sic) and responsible practitioner could advance a claim for costs on the same basis against the successful party to the proceedings. Yet again, Mr Muriniti has been responsible for putting the Kings to the cost of responding to prolix and irrelevant submissions made in the absence of any probative evidence to support any of the allegations made against them.

3. (T4.8.16, p123, LL31 – 41):

The reality is - and it is comfortably open to your Honour to find on the materials that were before your Honour both in the proceedings leading to your Honour's decision in 6 and in the hearing leading to your Honour's decision in 9 - that the whole of Mrs Young's conspiracy construct was the product of Mr Newell's imagination - that is very clear from the evidence Mrs Young gave before your Honour in 2014 - and that the manner in which the case has been conducted, both the enormity of the allegations, the prolixity of the submissions, the vastness of the irrelevant evidence and Mr Newell's forensic decisions, are the very matters which have contributed to not only the fact that costs have been incurred but the fact that the case has been so painfully long and large.

and

4. (T4.8.16, p124, LL19 – 24):

In light of the findings in judgment 6 and the history of the litigation, there could be no reasonable basis upon which the lawyers could seriously be satisfied that they could promote an argument, the same argument, in pursuing a costs application against my clients - not only a costs application but an application for indemnity costs - on precisely the same grounds which had failed before your Honour at the trial.

105. Ms Horvath (for Hemmings) submits (pars 13 – 14, CB Vol 1, tab 2.2, fols 27 – 28):

13.   Having regard to the conclusion in Young No.6 and the well known doctrine of abuse of process, the Practitioners could not have reasonably believed that applying the ‘provable facts’, to a ‘reasonably arguable view of the law’ meant that the Costs Motion had reasonable prospects of success. In commencing the Costs Motion and pursing it to finality, the Practitioners’ actions were ‘quite plainly unjustifiable’.

14.   It might be put by the Practitioners that the [LPULA Act] has no application because the Costs Motion was not a claim for damages. Any such submission should be rejected. Whilst brought as a motion for costs, it was in fact a claim for damages by reason of the claimed conspiracy. That was the reason the Practitioners wanted an order for pleadings and for the matter to be listed for hearing for a minimum of 10 days .... That is also apparent from a review of the evidence and submissions relied upon by the applicant ....

H: The Law of Indemnity Costs

106. In Styles v Wollondilly Shire Council (No.3) [2001] NSWLEC 133, I set out (at [6] – [14]) a summary of the relevant principles for the awarding of indemnity costs:

6.   Essentially, orders for costs are compensatory, not punitive. Latoudis v Casey (1990) 170 CLR 534.

7.   So, in what circumstances are costs orders, therefore, to be made on an indemnity basis?

8.   The cases require the court, in its costs discretion, to conclude somewhat along the following lines:

•   The case is “manifestly hopeless” or “demonstrably devoid of merit”, and the relevant party either should, if properly advised, have known it had “no chance of success”, had some “ulterior motive”, or chose to wilfully disregard relevant facts or clear law. They are the concepts in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.

OR·

•   The relevant party relied upon a “false and deliberately concocted” claim or defence - that was Holland J’s finding in Degmam Pty Ltd v Wright No.2 [1983] 2 NSWLR 354 - or the party’s conduct was “ethically or morally delinquent” - Rosniak v GIO (1997) 41 NSWLR 608.

OR·

•   The case was continued after it patently became totally hopeless and pointless, such as when the fire-damaged building was demolished in Carver & Anor v Bankstown City Council [1999] NSWLEC 130 (my judgment delivered 27 April 1999).

OR·

•   In the context of failure to settle, the courts have adopted the test of whether it was “unreasonable” of the relevant party to continue after the relevant offer was made and refused.

9.   The court has today been referred to a number of authorities within and outside this court.

10.   Many involve proceedings not relevantly similar to this court’s class 4 jurisdiction, such as those in class 3 encroachment cases, where there is a specific statutory provision, and a practice discretion to be considered and applied (see e.g. my judgment in McKinnon v Hallbridge, No 30148 of 1997, 10 July 1998), but the principles I have just summarised are clearly established and frequently applied by Judges in the exercise of their “discretion at large” (as Hamilton J described it in Aghajanian v Stanley Thompson Valuers Pty Ltd [2000] NSWSC 215). See e.g. Einfeld J in Christofidellis v Zdrilic [2000] FCA 679, adopted and applied by Cowdroy J in the class 4 case Port Stephens Council v Randell [2000] NSWLEC 169.

11.   I have been referred also to the Court of Appeal decision in Nobrega v The Catholic Church [1999] NSWCA 133 (see Powell JA at par 21), in which I note that the court adopted the caution of Shepherd J in Sanko Steamship Company Ltd v Sumitomo Australia Ltd (unreported, Federal Court, 7 February 1996) that even a “true” Calderbank letter should not be regarded as the automatic trigger for the subsequently successful party to secure an order for indemnity costs.

12.   Each case turns on its own facts, as they may be found to display the reasonableness or otherwise of the parties’ conduct.

13.   So far as this court is concerned, although written in a class 3 encroachment case, I can find no fault or shortcoming in the statement of the appropriate principles by Lloyd J in his recent and considered judgment on costs in Hofer v Howell Developments Pty Ltd [No.2] [2001] NSWLEC 42.

14.   I conclude, therefore, that there must be at least circumstances which are “out of the ordinary”, such as an element of abuse of process, ulterior or extraneous purposes, or unreasonableness. See MGICA v Kenny & Good [No.4] (1996) 140 ALR 707 and Hofer at par 17. As Gummow & Gaudron JJ called it, in Oshlack v Richmond River (1998) 193 CLR 72 (at 89 - par 44), a “relevant delinquency on the part of the unsuccessful party”.

107. Campbell J stated the principles, to similar effect, in Hypec Electronics Pty Ltd (in Liquidation) v Mead (2004) 61 NSWLR 169, at [40] – [46]. Although there was a successful appeal in that case – Mead v Watson as Liquidator for Hypec Electronics (2005) 23 ACLC 718; [2005] NSWCA 133 – there was no challenge, on appeal, to His Honour’s statement of the principles, and the Court of Appeal said ([8] – [10]):

8 The primary judge set out these principles in [40]-[46] inclusive of the costs judgment and there is no challenge to their accuracy. In summary, although the discretion to award indemnity costs is absolute and unfettered, it must be exercised judicially in the sense that there is some special or unusual feature in the case justifying such an award. Thus, for instance and relevantly, the discretion is enlivened where a party persists in what should have been seen to be a hopeless case.

9 Furthermore, the impugned conduct of the party against whom such an award of indemnity costs is sought must be connected with the litigation itself. In particular, it must be related to the way the litigation is conducted. It is thus insufficient that the party against whom the award is sought has engaged in unconscionable conduct or breaches of fiduciary duty in a particularly deplorable way. The latter conduct comprises the subject matter of the litigation rather than a delinquency in its conduct. Thus, as Lindgren J observed in NMFM Property Pty Limited v Citibank Limited (No 11) (2001) 109 FCR 77 at 92,

"In my opinion, there is no counterpart ordinary rule that in the absence of special circumstances indemnity costs will be ordered where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation. … The conduct of the party that is relevant to the issue of indemnity costs is the party's conduct as litigant."

10 It follows from the foregoing, and the primary judge acknowledged, that indemnity costs could only be awarded in the costs proceedings if there was found to be inappropriate conduct on the part of Hypec or Mr Watson in the conduct of the litigation itself.

108. Mr Lim’s submissions (for Brearley (11R) at pars 14 to 18), outline the principles in these terms:

Costs on an indemnity basis

14   There must be a “sufficient or unusual feature” or “relevant delinquency” to justify awarding costs on an indemnity basis: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233; Oshlack v Richmond River Council (1998) 193 CLR 72.

15   It is well-recognised that indemnity costs may be awarded in cases where there is no chance of success: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4]. This includes where the matters raised have been previously decided: Bayne v Blake (No 3) (1909) 9 CLR 366.

16   It is equally well-recognised that indemnity costs may be awarded in cases that are an abuse of process: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359.

17   Indemnity costs may also be appropriate in cases involving unfounded allegations of fraud or improper conduct: Maule v Liporoni (No 2) (2002) 122 LGERA 216.

18   For the reasons advanced above ..., this is a case attracting the well-known bases for awarding costs on an indemnity basis. The interests of justice favour Mr Brearley being fully indemnified for the costs he has incurred in responding to the applicant’s costs motion.

109. In Elbaf v Kayellou [2015] NSWLEC 81, I applied the principles I had earlier stated in Styles, and I see no reason to depart from them as a summary of the appropriate test to apply in the present case.

110. Hopelessness of proceedings, and even a proliferation of unnecessary, inappropriate, and/or premature interlocutory applications, were not sufficient to tilt the interests of justice in the direction of indemnity costs in Metsikas v Quirk [2010] NSWSC 756.

111. However, Mr Lim argues (par 18) that this present case satisfies all the “well known bases for awarding costs on an indemnity basis”, and I agree.

I: Two Questions of Jurisdiction

112. Two jurisdictional questions have been raised:

(a)   Mr Lim (for Brearley (11R)) argued, and Mr Faulkner (for Davies (8R)) suggested (par 22), without fully arguing the point, that the Court had an implied (or inherent?) jurisdiction to make personal orders against the lawyers; and

(b)   Dr Berveling (for Tuxworth (13R)) argued that the Court may have jurisdiction to order costs against the lawyers pursuant to some “damages” power.

(a) Implied or Inherent Jurisdiction?

113. Jurisdictional issue (a) can be quickly despatched.

114. Mr Lim submitted (CB Vol 3, tab 6.2, fols 1027 – 1028, pars 4 to 6):

4 The [LEC] has the jurisdiction vested in it by the [the Court Act] and any other Act. That vesting of jurisdiction carries with it an implied jurisdiction to supervise the legal practitioners who appear before it in matters within its jurisdiction. Section 98 of the [CP Act] applies to Class 4 proceedings in the LEC: s 4(1) and Sched 1 of the [CP Act]. That section confers on the LEC the widest discretion to determine costs in a proceeding. In exercising the discretion, the Court is expressly authorised to "take into account any failure" by a solicitor or barrister to comply with his or her obligation not to cause a party to be put in breach of its duty to assist the court to further the overriding purpose of facilitating the just, quick, and cheap resolution of the real issues in the proceeding: s 56(5) of the [CP Act]. The wide discretion conferred by s 98, informed by s 56(5), and coupled with the implied jurisdiction to supervise the legal practitioners who appear before it, is sufficiently ample to authorise the making of personal costs orders against legal practitioners.

5   The power is analogous to that exercised by the Supreme Court in its own supervisory jurisdiction. Although the Supreme Court's power may also be an incident of its inherent jurisdiction, there is no reason to think that the power is any more confined in the LEC simply because it arises an incident of an implied jurisdiction.

6 In particular, the power is not limited by s 99 of the [CP Act]. Although that section deals in terms with costs orders against legal practitioners, it is limited in its scope and does not disclose any intention to remove or restrict the other powers of the LEC: "It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words": ... Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [(“Felicity”)] [2015] NSWCA 19 at [20].

115. However, Mr Lim conceded, in oral argument (Tp68, LL1 – 15), that I would need to depart from a decision of a former Chief Judge of this Court, McClellan J, in order to uphold the submission.

116. Ironically, the relevant decision was His Honour’s costs finding in the first Young v King judgment in this Court ([2004] NSWLEC 93), which predated the CP Act.

117. His Honour said (at [84] – [85]):

84 The Supreme Court Act 1970 (NSW) makes express provision for the Supreme Court to make an order directing a solicitor to indemnify any party in relation to costs: see s 76C. Express provision for liability of a solicitor is also made in the Supreme Court Rules 1970 in Part 52A rule 43 in circumstances where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the court that a solicitor is responsible. Provisions to that effect are not found in [the Court Act], although s 69(2) provides that the court may, subject to the rules and any other Act, determine by whom and to what extent costs are to be paid. This power has been interpreted and applied as permitting the court to make orders for indemnity costs and to order non- parties to proceedings to bear a costs burden.

85 Without traversing the principles upon which the latter decisions are based (see Wyong Shire Council v Smith unreported, NSWLEC, Bignold J, 24 December 1992; Tinda Creek Spiritual & Environment Centre v Baulkham Hills Shire Council (1998) 100 LGERA 432), I am satisfied that a power to make an order in relation to a solicitor is not presently available to a judge of this Court. The Supreme Court has a supervisory role in relation to legal practitioners and their professional conduct. This Court is a court of statutory jurisdiction and, although it has implied powers - some refer to them as inherent powers (see Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13) - on any view, they do not extend to the supervision of the conduct of the legal profession. Accordingly, insofar as that rule underpins any capacity in the Supreme Court to order a solicitor to pay the costs of proceedings, it is not available to this Court. In my opinion, before such an order could be made, express statutory provision would be necessary.

118. I believe that His Honour was correct.

119. I, therefore, respectfully adopt his finding, and choose not to depart from it.

120. Accordingly, I reject Mr Lim’s and Mr Faulkner’s submissions, insofar as they urge me to rely upon the “implied jurisdiction basis” for making costs orders in the circumstances of the present case.

(b) Costs as Damages?

121. Jurisdictional issue (b) concerns the line of authority on the question of this Court’s power (if any) to award damages, a line in which a key decision is that of the Court of Appeal in National Parks and Wildlife Services v Stables Perisher Pty Ltd (1990) 20 NSWLR 573; (1990) 71 LGRA 286, which predated the enactment of s 16(1A) of the Court Act ([35] above).

122. In this case, submissions were made by some of the non-party costs claimants that Young’s costs claims against them were, in reality, claims for damages, based on the conspiracy she alleges, but “cloaked” in claims for costs.

123. In that submission, the non-parties become parties to the case by virtue of Young’s NOM, which should be seen as “originating process” against them.

124. Young’s claims were rejected by this Court as abuses of process.

125. However, Dr Berveling (for Tuxworth (13R)), in the context of his LPULA submissions, appeared to put an argument (in his Reply submissions, at pars 7(c)(ii)(c), and 7(c)(ii)(e)(ii)) that, as the costs orders sought by the respondents, are “compensatory in nature” (Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59, and see also Oshlack), they would fall squarely within the definition of “damages”, as such a costs order “seeks to remedy the detriment arising from legal costs incurred in successfully defending (or fending off) proceedings” (being Young’s costs claims).

16 If that were the case, different considerations may have arisen. However, even in that situation, the conduct of a legal practitioner in putting another party to expense unnecessarily and inappropriately may have constituted a breach of the practitioner’s obligations under s 56 of the Civil Procedure Act. ... It may be that, in such circumstances, both the practitioner and the client would be liable for the costs thus incurred. ...

17   I consider that the conduct of Mr Patel, in instituting and maintaining an appeal that had no prospects of success, and no merit, constituted serious incompetence on his part as a legal practitioner and that costs have been incurred improperly and without reasonable cause, in circumstances for which he is responsible. Mr Patel should bear the costs that the Borrower was ordered to pay to the Lender.

168. As Pain J pithily observed, in NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) (“NA & J”) [2011] NSWLEC 98 (at [254]), “without s 99 an opposing party has no ability to recover costs wasted as a result of the conduct of the other party’s lawyer”.

169. However, as I noted in judgment No 10 (at [7]), echoing the English Court of Appeal’s caution in Ridehalgh ([162] above), Lemoto v Able Technical Pty Ltd (“Lemoto”) (2006) 63 NSWLR 300; [2005] NSWCA 153 is authority for “courts to be extremely cautious and circumspect in considering the making of personal costs orders against legal practitioners ...”.

170. I went on to examine Lemoto in some detail (No 10, at [35] – [40]):

35   Lemoto concerned an application for a personal costs order against a solicitor under Pt 11 Div 5C of the Legal Profession Act 1987. Such matters depend often upon disputes about the existence or perception of there having been “reasonable prospects of success”, or not, when action was taken. The Court of Appeal was alive to the prospect that even the process of a Div 5C application can cause prejudice to the client who obtains such an order.

36   Ipp JA agreed with both Hodgson and McColl JJA, and added no comments of his own, but Hodgson JA agreed with McColl JA’s lengthy judgment, adding only “a few comments” of his own, notably (at [5]) concerning how time-consuming, expensive, and complicated the necessary hearing(s) may be.

37   His Honour added (at [6]):

Further, the whole process may be complicated by considerations of the interests of the party represented by the persons against whom an order is proposed. A s.198M order is, in itself, in the interests of that party, in that it may relieve that party of the costs of the proceedings; but the process of determining whether such an order should be made may be very much against that party’s interests, by depriving that party of its legal advisers and thereby hindering proper consideration of the possibility of an appeal and the institution and conduct of an appeal, and also by giving rise to disclosure of privileged communications (which, even if it does not involve loss of the privilege for other purposes, could be to the detriment of that party). This may not be a serious difficulty if it is this party itself that applies for the s.198M order, because in that case the party chooses to subject itself to these possible disadvantages. But if, as in this case, the process is initiated by another party, or by the Court, the possible disadvantages to the party for whom the relevant legal services were provided need to be kept steadily in mind.

38 McColl JA noted (at [19]) that the legislative intention of Div 5C was, at least in part, to prevent “unmeritorious claims” and “spurious defences”.

39   The factual history in Lemoto was very complex, and Her Honour went through it, and the history of the provisions, in painstaking detail. She cautioned several times that the discretion to make such serious orders must be exercised with “care”, “discretion”, “circumspection”, and only “in clear cases”, extending every element of natural justice to the practitioner involved – the order must be “just in all the circumstances” ([138]).

171. Although Lemoto concerned a different statutory regime from that in the present case, the following general observations made by McColl JA (at [189] – [196]), which I set out in No 10 at [40], are helpful:

189 First, the fact that Division 5C appears in legislation which makes elaborate provision in Part 10 for the discipline of legal practitioners suggests that Division 5C should not be invoked where the conduct impugned is “sufficiently egregious to give rise to a contention that a person is permanently, or at least indefinitely, unfit for practice”: see New South Wales Bar Association v Murphy [2002] NSWCA 138; (2002) 55 NSWLR 23 at [5], [27] per Spigelman CJ. This tends to reinforce the proposition that the Division 5C power should be exercised with caution.

190 Secondly, no doubt Division 5C was introduced with the purpose of eliminating claims for damages which are not “fairly arguable”. However, it runs the grave risk of becoming an instrument of injustice if not properly understood and applied. Division 5C requires the legal practitioner to form a belief about the prospects of success in circumstances where he or she is not merely considering the client’s interests and the duty to the court, but will inevitably be concerned about his or her potential exposure to a personal costs orders. There is a real risk that the over-cautious will refuse to act, potentially depriving a client of an effective remedy. As Lord Steyn said in Medcalf [v Mardell (“Medcalf”) [2002] UKHL 27; [2003] 1 AC 120] (at [42]):“The law reports are replete with cases which were thought to be hopeless before investigation but were decided the other way after the court allowed the matter to be tried.”

191 Lord Steyn’s observation highlights the necessity to approach a submission that a legal practitioner has contravened s 198J with considerable circumspection. It would be a sad consequence of Division 5C if it influenced legal practitioners to become “timorous souls” as opposed to “bold spirits”: cf Candler v Crane Christmas & Co [1951] 2 KB 164 at 178 per Lord Denning.

192 Thirdly, because Division 5C operates at the fault line between a legal practitioner’s duty to the Court and his or her duty to the client it has the potential to expose clients to unfortunate consequences. Thus in [Degiorgio], where the defendant sought costs on an indemnity basis not only from the unsuccessful plaintiff but also from his solicitor, the solicitor withdrew from the retainer immediately it became clear that an application for a costs order against him would be pursued. At the hearing on costs, the plaintiff appeared without legal representation and his former solicitor was represented by counsel.

193   There is a real risk if s 198M applications are made immediately after proceedings have concluded (which I accept is the most realistic time for any such application) that the client may be prejudiced if the legal practitioner ceases to act because of a perceived conflict of interest leaving the client unable to secure advice as to the prospects of a successful appeal from the person most familiar with the proceedings.

194   Fourthly, I share the concern expressed elsewhere of the risk of a practice developing whereby solicitors endeavour to browbeat their opponents into abandoning clients or particular issues or arguments for fear of personal costs orders being made against them: see Levick v Commissioner of Taxation [(“Levick”)] [[2000] FCA 674; (2000) 102 FCR 155] (at 166); Patrick v Capital Finance Corp (Australasia) Pty Ltd [2004] FCA 1249.

195   Finally, as I earlier noted, in [Ridehalgh] at 238 – 239, the Court of Appeal warned that judges “must be astute to control what threatens to become a new and costly form of satellite litigation”. Despite this warning the House of Lords observed in Medcalf (at [13]):“… [T]he clear warnings given in [Ridehalgh] have not proved sufficient to deter parties from incurring large and disproportionate sums of costs in pursuing protracted claims for wasted costs, many of which have proved unsuccessful.”

196 What has happened in this case is a salutary warning to courts to ensure that Division 5C applications do not assume a costly life of their own.

172. For completeness, I note that, during argument in the present costs proceedings, this Court was taken also to pars [123], [124], and [132] of McColl JA’s judgment in Lemoto, and I should include those paragraphs here.

173. Her Honour said (in [123] and [124]):

123 The grave consequences to which Division 5C exposes a legal practitioner and his or her client indicates that “[t]he construction of the section and the application of the jurisdiction should … be no wider than is clearly required by the statute”: cf Medcalf at [56] per Lord Hobhouse.

124 There are some general observations which can be made. First, Division 5C represents a departure from the historical basis upon which legal practitioners could be exposed to personal costs orders. A legal practitioner is now required to ensure that a claim, or a defence to a claim, for damages has “reasonable prospects of success” and, to that extent, to become a judge of the client's cause. The legislature has endorsed the proposition that it is not in the public interest, nor a function of the due administration of justice, for legal practitioners to provide legal services in circumstances which involve representing clients who wish to pursue or defend claims for damages which have no reasonable prospects of success.

174. Her Honour went on to refer to, and to quote at some length from, Barrett J’s decision in Degiorgio. Barrett J said (at [17]):

A helpful analysis of the elements underlying s.198M(1) is to be found in the judgment of Judge Neilson of the District Court of New South Wales in Momibo Pty Ltd v Adam (unreported, 31 August 2004). His Honour identified five such elements. The first is that reasonable belief (as subjectively held by the practitioner) encompasses the other four and entails a proposition or propositions that can be regarded as logically arguable in an objective sense. The second element is that the reasonable belief must have its objective foundation in material available to the practitioner at the relevant time, which material is not confied (sic) to admissible evidence as such and may extend to material that is credible but not strictly admissible. Third, it must be seen that the material thus identified constitutes a proper basis for alleging each relevant fact. Fourth, the claim must proceed according to a reasonably arguable view of the law, a matter not to be approached narrowly: arguably available extension and innovation may be contemplated. The fifth element is that there be reasonable prospects of damages being recovered in the action – not necessarily damages as claimed but some damages, however modest.

175. His Honour suggested:

(a)   (at [19]) – that “...a lawyer may with impunity act for a client in proceedings which are apparently hopeless, provided that the lawyer is not aware that the proceeding might amount to an abuse of process”:

(b)   (at [21]) – that “[i]n some contexts, ‘reasonable prospects of success’ signifies no more than ‘arguable’”;

(c)   (at [22]) – that “[i]t may also be said that ‘reasonable prospects of success’ connotes something less than likelihood of success; and

(d)   (at [23]) – that the term “reasonable prospects of success” means that the subject claim “is not hopeless or entirely without merit”, or has

“a real chance, a prospect that is strong enough to be acted on by a reasonable landlord minded to go ahead with plans which require permission, as opposed to a prospect that should be treated as merely fanciful or as one that should sensibly be ignored by a reasonable landlord. A reasonable prospect does not entail that it is more likely than not that permission will be obtained” (taken from Cadogan v McCarthy & Stone (Developments) Ltd [2002] (sic ?) L&TR 249, at 253 – 4 per Saville LJ).

176. His Honour further suggested (at [24]) that the position taken should be “rationally based”, and not “irrational, absurd or ridiculous”, and went on to quote (at [26]) the following comments by Davies JA in Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683 (at 689):

“... it is one thing to present a case which is barely arguable (but arguable nevertheless) but most likely to fail; it is quite another to present a case which is plainly unarguable and ought to be so to the lawyer who presents it. In my opinion, with respect, it is improper for counsel to present, even on instructions, a case which he or she regards as bound to fail because, if he or she so regards it, he or she must also regard it as unarguable.”

177. Barrett J concluded (at [28]) by adopting “the construction of ‘without reasonable prospects of success’ that equates its meaning with ‘so lacking in merit or substance as to be not fairly arguable’. The concept is one that falls appreciably short of ‘likely to succeed’”.

178. McColl JA said of this analysis (Lemoto at [132]):

132 Barrett J’s construction of the expression “without reasonable prospects of success” appears to me to accommodate both the purpose of Division 5C and to reflect the language of s 198J. The test, whether a claim or a defence was “so lacking in merit or substance as to be not fairly arguable”, must be applied, however, in the context of the constituent components of s 198J. In that context the question becomes whether the solicitor or barrister held a reasonable belief that the provable facts and a reasonably arguable view of the law meant that the prospects of recovering damages or defeating a claim or obtaining a reduction in the damages claimed were “fairly arguable”. These are matters about which reasonable minds might differ. The question will be whether the solicitor or barrister’s belief that they had material which objectively justified proceeding with the claim or the defence “unquestionably fell outside the range of views which could reasonably be entertained”: Medcalf at [40] per Lord Steyn.

179. Mr Lloyd also drew attention to par [92] of Her Honour’s judgment in Lemoto, viz (many citations omitted):

92 The new Division 5C should be construed against the background of the following principles which can be gleaned from the English and Australian authorities which have considered the power to order legal practitioners to pay the costs of proceedings in which they have represented parties:

“(a)   The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised ‘with care and discretion and only in clear cases’: Ridehalgh (at 229), ... ;

(b)   A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail: Ridehalgh (at 233); [Medcalf] at [56] per Lord Hobhouse; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) [(“White”)] (1998) 156 ALR 169 (affirmed on appeal, Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134); Levick ... ;

(c)   the legal practitioner is not ‘the judge of the credibility of the witnesses or the validity of the argument’: ... the legal practitioner is not ‘the ultimate judge, and if he reasonably decides to believe his client, criticism cannot be directed to him’: ... ;

(d)   A judge considering making a wasted costs order arising out of an advocate's conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, a legal practitioner's conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order: Ridehalgh (at 236, 237);

(e)   A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it: ... Ridehalgh (at 229);

(f)   Where a legal practitioner's ability to rebut the complaint is hampered by the duty of confidentiality to the client he or she should be given the benefit of the doubt: ... Ridehalgh (at 229); in such circumstances ‘[t]he court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so’: Medcalf [at [23] per Lord Bingham];

(g)   The procedure to be followed in determining applications for wasted costs must be fair and ‘as simple and summary as fairness permits … [h]earings should be measured in hours, and not in days or weeks … Judges … must be astute to control what threatens to become a new and costly form of satellite litigation’: Ridehalgh (at 238 - 239); ... Medcalf (at [24]).”

180. I respectfully adopt Her Honour’s summary (in [92]).

181. However, I have independently reviewed many of the cases to which McColl JA referred in Lemoto (at [92]), and/or in Yu v Cao, and upon which counsel relied in argument in the present case.

182. In Felicity, a case in which s 99 was invoked, Basten JA said (at [14] – [15], and [18]):

14   What can be derived from the case law is important, but needs no anxious analysis of authority. It is that to order costs against a lawyer requires a careful balancing of the public interest in maintaining and nurturing a legal profession which provides vigorous representation for litigants in court, uncompromised by a fear of personal sanctions for failure, against the need to maintain and nurture the obligation to provide independent advice to litigants and to give proper weight to the public interest in the efficient administration of justice. It is this latter element of the public interest which finds express recognition, in mandatory terms, in the overriding purpose provisions of the Civil Procedure Act.

15 The power invoked in the present case is that contained in s 99 of the Civil Procedure Act. It is a basic principle of statutory construction that that power must be read contextually, with explicit regard to ss 56-60 of the same Act and must be applied with explicit regard to those provisions in a specific factual context. Indeed, s 56(5) expressly empowers the court in exercising a discretion with respect to costs to take into account any failure to comply with the duty of a party or legal representative to assist the court to further the overriding purpose.

...

18 The absence of a basis in s 99 for an order that the solicitor pay the opposing parties directly, is not an end of the matter. There is a general power in this Court to make such orders in the supervisory jurisdiction with respect to legal practitioners admitted by the Court. ...

183. While Ridehalgh has been regarded since 1994 as a primary authority in this area of costs law, it has not been universally followed.

184. Pembroke J distinguished it in Ireland v Retallack (No 2) [2011] NSWSC 1096 (at [50] – [54]), but Pain J followed it in NA & J.

185. In Xabregas v The Owners - Strata Plan No. 79205; Moallem v Consumer, Trader and Tenancy Tribunal (No. 2) [2014] NSWSC 1027, White J noted (at [61]) that Pembroke J had apparently not been referred to the NSW Court of Appeal’s decision in Wentworth v Rogers [1999] NSWCA 403, in which the Court of Appeal considered rules of court similar in their terms to s 99(1), and said (at [41]):

It follows that the Australian cases do not suggest that the general approach taken in England ought not to be followed here. ... [I]t is clear that there is no difference of substance in the approach taken in the United Kingdom and the approach taken here. Accordingly, the English authorities provide guidance for courts here in a matter such as this.

186. White J noted ([62]) that the then current Legal Profession legislation “imposed a more demanding standard on lawyers than was applicable in cases whereby a costs order was sought against a party's lawyer on general law principles ... [which] included the principles under s 99 of the Civil Procedure Act”.

186. His Honour went on to conclude ([63]) that “it is not sufficient ... that the [relevant proceeding] ... had no reasonable prospects of success and was doomed to fail”, and then added ([64]):

These authorities do not distinguish between a case where the client acts on the advice of his solicitor or client and a case where the client is determined to proceed with a claim or defence that has no reasonable prospects of success contrary to legal advice. Given that there is a public policy in litigants having legal representation, there is less ground for making a solicitor or barrister liable for costs if he or she has advised the client against proceeding on a claim that is doomed to fail than if the client is acting on the lawyer's advice. But the reasoning in [Ridehalgh] is directed to whether the lack of reasonable prospects of success means that the claim or defence amounts to an abuse of process. As the Court of Appeal observed this is a question of degree. Acting for a client on a frivolous claim ... can expose the lawyers concerned to a personal costs order because the lawyers themselves could not have been satisfied that the points they raised were at least seriously arguable. ...

188. In Felicity, Basten JA found ([24]) that:

The preferable course is that adopted in [Ridehalgh], ... addressing the power of the court to order costs against a solicitor personally where such costs had been incurred by a party “as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative” ...

189. Emmett JA agreed with Basten JA, and Ward JA found (at [48]):

In the absence of any evidence that the legal practitioner had advised against raising the untenable arguments that were raised on this application, it can only be concluded that the costs of the proceedings have been incurred by the serious incompetence of the legal practitioner and it is appropriate that the legal practitioner bear the costs of the father and the Secretary in this Court.

190. I have earlier (at “(2)” in [127]) referred to Harrison v Schipp. In discussing the question of indemnity costs as a means of “restitution”, Giles JA said, in that case, that ([136] – my emphasis):

The unconscionable conduct or breach of fiduciary duty leads to compensatory or other relief and costs on the normal basis, and more must be established for a special order as to costs.

191. In many of the English and New South Wales cases I have mentioned already, there was:

1. a focus on not commencing cases with no reasonable prospects of success;

2. sensitivity to the need for care, discretion, caution, circumspection etc in deciding to invoke the “wasted costs” jurisdiction; and

3. the obligation to give the target of the proposed order a hearing.

192. However, there was also reliance on some evidence of neglect, incompetence, misconduct, impropriety, negligence, omission or unreasonableness, by way of “something more”. Ridehalgh notes (at 233) that there can be overlap among these descriptions of “failure” or “shortcoming” on the part of the lawyer. The Court said:

Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended.

193. This concept of “more” needing to be established, in order to win a special order, has also been discussed at length in several cases in the Federal Court.

194. I turn now, therefore, to some relevant Federal Court decisions.

195. In doing so, I am conscious that s 43 of the Federal Court of Australia Act 1976 creates a subtly different costs regime, but aware also that the general law principles analysed in Federal cases can be very useful in this Court. For example, see pars [152] to [163] of my judgment in Friends of King Edward Park Inc v Newcastle City Council (No 3) [2016] NSWLEC 74, where I discussed, in a State context, Rares J’s judgment in Probiotec Limited v The University of Melbourne [2008] FCAFC 5; 166 FCR 30; 244 ALR 96.

196. In White (“92(b)” in [179] above), Goldberg J found (p229) that a law firm had instituted a proceeding alleging fraud, “when there was no factual basis for that allegation and in respect of a cause of action which it believed could not be won”, and proceeded to decide the question of costs on the basis of s 43, and the court’s “ability ... to enforce duties owed by practitioners to the Court” when they “have acted with impropriety”.

197. Goldberg J said that the jurisdiction “is compensatory rather than punitive or disciplinary” (c.f., e.g., Pain J’s use of the word “penal” in NA & J at [131]), but His Honour agreed (p230) with Viscount Maugham in Myers v Elman [1940] AC 282 (at 292), and other like decisions, that the jurisdiction “ought only to be exercised where there has been a ‘serious dereliction of duty’”, likely involving (p230) gross negligence or misconduct. “Commencing or maintaining proceedings which have no or substantially no prospect of success” is not sufficient, and “something more must be added to the equation ...” (pp231 and 236). His Honour said (at pp236 – 237):

The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably. It is not clear what is encompassed by ``unreasonably'’ initiating or continuing proceedings if they have no or substantially no chance of success. It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceeding for an ulterior purpose or with a disregard of any proper consideration of the prospects of success.

Expressing the principle this way accommodates the competing principle that a party is entitled to have a practitioner act for him or her even in an unmeritorious case. This principle was expressed succinctly in [Ridehalgh] ...

... [A] solicitor does not act improperly or in breach of his or her duty to the court by acting for a party with a hopeless case.

198. Such pronouncements force the courts to address questions of “reasonableness” or “unreasonableness” of the circumstances generated by the behaviour complained of. Goldberg J then described at some length (pp231 – 239) the facts of many cases, questions of reasonableness, and the concept of “something more”.

199. His Honour found (pp248 – 249) that Flower & Hart had “unreasonably initiated” the proceedings, with the “ulterior purpose ... to postpone and delay an inevitable outcome ...”, and “not to vindicate a right of [their] client”. In so doing, the firm had “breached the duty it owed the court to conduct proceedings with propriety, not to be a party to an abuse of process, and not to obstruct or defeat the administration of justice”. The firm’s conduct was “oppressive”, and “enlivened” the jurisdiction (p250) to order it to pay the costs of the opposing party (White), on an indemnity basis (pp251 – 252).

200. His Honour noted in White (p251 – my emphasis) that:

The impetus for the institution of the proceedings came from the lawyers.

201. Essentially, that is what the present respondents allege in respect of Young’s costs claims against them.

202. White, and the related case of Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (“Caboolture”) (1993) 45 FCR 224, were discussed by the Full Federal Court in Levick (“194” in [171] above).

203. The Court approved White, applied Caboolture, and endorsed again (at [43]) “the emphasis on caution in making orders against solicitors”. The Court then said (at [44] – [45]) that:

44   ... it is equally important to uphold the right of a court to order a solicitor to pay costs wasted by the solicitor's unreasonable conduct of a case. What constitutes unreasonable conduct must depend upon the circumstances of the case; no comprehensive definition is possible. In the context of instituting or maintaining a proceeding or defence, we agree with Goldberg J that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to abuse of process; that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success.

45   ... This is a case where the lawyers themselves thought up the “legal” points and advanced them on behalf of the client. It is unreasonable, in the sense of a dereliction of duty (to both the client and the court), for any lawyer to take that course without first being satisfied that the points are, at least, seriously arguable. We agree it was not necessary in the present case that the lawyers be satisfied that the points would succeed; but it was necessary they be satisfied there was a rational basis upon which they might succeed.

204. In Kumar v Minister for Immigration & Multicultural & Indigenous Affairs (No 2) [2004] FCA 18, Mansfield J noted (at [13]) that he was “bound to follow” the Ridehalgh/White/Levick line of authority.

205. His Honour also noted (at [15]) a solicitor’s obligation to “conduct such investigations, and to give such advice, as is appropriate in the circumstances, before the institution of the proceedings. It is for the client whether to take that advice”. His Honour considered that, if the client decided to proceed when advised not to do so, there may be some public interest in continued legal representation, as the solicitor owes a duty to the court “not to incur costs improperly or without reasonable cause”, and the advocate has “duties of independence and frankness to the Court”. His Honour opined:

Proceedings, even hopeless proceedings, are likely to be conducted more efficiently by a solicitor for a party than by a litigant in person: ... The fact that instructions are given to pursue an apparently hopeless claim may demonstrate that, had the solicitor not acted in the matter, the litigant would have pursued the claim unrepresented. In such cases it may be difficult to discern that the conduct of the solicitor has in fact led to the other party incurring costs which otherwise would not have been incurred; generally the costs incurred are likely to have been less by reason of the representation.

206. All of these issues were raised throughout the submissions and argument in the present case, and I believe that I, like Mansfield J – but not Pembroke J ([184] above) – should follow the Ridehalgh/White/ Levick line of authority.

M: Conclusion

207. I am satisfied that a clear case has been established (1) for personal costs orders to be made against Young’s lawyers, (2) for those orders to be made on an indemnity basis, and (3) for interest to be paid on the costs ordered.

208. As I noted above (at [100] – [101]), counsel for the lawyers raised as an issue the impact/relevance of Young’s insistence on not waiving her privilege over the lawyers’ files on her litigation.

209. I can find no evidence whatsoever that the lawyers have been in any way precluded, hindered, or hampered in fully defending themselves by this circumstance (see Medcalf at [23], and Lemoto at [6]).

210. I find that Young’s lawyers behaved incompetently, unprofessionally, inappropriately, and against the true interests of their client, who was entitled to expect competent and reasonable representation.

211. They not only brought, on her behalf, a costs application which had no arguable basis; I am satisfied that they, and especially Newell, were the real authors of the folly which it became, so compounding his mounting of a conspiracy case, without a factual basis, in the substantive proceedings (see [87] above).

212. Having embarked on these futile courses, the lawyers continued to incur, on Young’s behalf, unnecessary liability for her own costs and the costs of those she unreasonably pursued, and they must be held responsible.

213. In terms of the need for “something more” than incompetence etc. ([192], [197], and [198] above), I am satisfied that that test is met – the lawyers were, indeed, “the impetus” for the costs applications (c.f. [200] above).

N: Orders

214. The Court, therefore, makes the following orders:

(A)   In respect of proceedings 2016/160767 and 2016/160933, Leonardo Carlo Muriniti is ordered to pay to the First and Second Respondents:

(1)   the amount of costs which the Applicant has been ordered to pay consequent upon the dismissal of her Notice of Motion dated 20 August 2015; and

(2)   the costs incurred by the First and Second Respondents in pursuing their amended Notices of Motion, filed 12 July 2016 seeking order (A)(1).

(B) Pursuant to the provisions of sections 98 and/or 99 of the Civil Procedure Act 2005, and/or relevant provisions of the Legal Profession Uniform Law Application Act 2014, Leonardo Carlo Muriniti solicitor, and/or Robert Duane Newell, solicitor, and/or the law firm/practice known as “L C Muriniti & Associates”, are jointly and severally ordered to pay, on an indemnity basis:

(1)   all costs incurred by the Fifth, Sixth, Seventh, Eighth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, and Seventeenth Respondents in resisting the Applicant’s Notice of Motion filed 20 August 2015; and

(2)   all costs incurred by those Respondents in their respective Notices of Motion seeking Orders along the lines of Order (B)(1).

(C) Pursuant to section 101(4) of the Civil Procedure Act 2005, Leonardo Carlo Muriniti, solicitor, and/or Robert Duane Newell, solicitor, and/or the law firm/practice known as “L C Muriniti & Associates”, are jointly and severally ordered, insofar as a specific order to this effect be necessary, to pay interest, at the prescribed rate, on the costs ordered to be paid to the First, Second, Fifth, Sixth, Seventh, Eighth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, and Seventeenth Respondents.

(D)   Any outstanding Notices of Motion, brought by the First and Second Respondents, seeking personal costs orders against any one or more of Leonardo Carlo Muriniti, Robert Duane Newell, and/or the law firm/practice known as “L C Muriniti & Associates”, are to be included in the Registrar’s list on Thursday 27 April 2017, for case management and the making of any necessary directions.

(E)   Subject to the retention by the Court of various Notices of Motion, and some submissions etc., which were included in various Court Books and Evidence Books, the following exhibits and other documents are returned, as nominated:

(1)   To the Applicant and her legal team:

Evidence Book folders numbered 2 to 5

Court Book “Folder 1”

Supplementary Court Book “Folder 7”

4-volume Court Book, 2 – 3 August 2016

“Exhibit folder” to affidavit of Young dated 29 April 2016

“Exhibit folder” to affidavit of Young dated 2 September 2014

“Exhibit folders” entitled MY1(2), MY2, MY3, MY4, MY5, MY6(3), and MY7

Authorities folder

Exhibits numbered “A4” and “A5”

Exhibits numbered “Y1” to “Y4”

Exhibit “RDN” to affidavit of Newell dated 10 November 2015

(2)   To the First and Second Respondents (per Stern Law):

Exhibit numbered “K1”

(3)   To the Fifth Respondent (per Moray & Agnew):

Authorities folder

Exhibits numbered “5R1” and “5R2”

(4)   To the Sixth and Seventh Respondents (per Kennedys Law):

2-volume Supplementary Court Book, filed 1 August 2016

Exhibit numbered “SP1”

(5)   To the Eighth Respondent (per Gilchrist Connell):

Authorities folders (2)

Exhibits numbered “WD1” and “8R1”

(6)   To the Thirteenth Respondent (per TressCox Lawyers):

Authorities folders (2)

The bundle of exhibits to Tony Tuxworth’s affidavit dated 15 October 2015

(7)   To the Fourteenth, Fifteenth and Sixteenth Respondents (per Walker Hedges & Co):

Exhibit numbered “BL1” (2 copies)

(8)   To Yeldham Price O’Brien Lusk:

Exhibit folder “BAY1” to Mr Yeldham’s affidavit dated 26 April 2016

**********

Decision last updated: 27 March 2017