Simone v Kola

1. [1]

   Today I granted an unconditional stay of orders made by Bradd LCM in November 2016, his Honour having concluded in June that Mr Simone had been unjustly enriched, having illegally withdrawn money from the trust account of Konstantin Kola, Mechelle Kola, Corema Pty Ltd, Triple Crowne Investments Pty Ltd and Kola Investments Pty Ltd to pay legal fees owed by Konstantin Kola and Oasis Developments Pty Ltd.

2. [2]

   Mr Simone has appealed the judgments. The appeal is listed for hearing in March 2017.

3. [3]

   In issue before this Court was not the applicable principles or whether a stay should be granted, the defendants conceding that they neither had assets exceeding the judgment sum, nor owned any real property. There was also no issue that the sum which Mr Simone has been ordered to pay the defendants is attracting interest and that in the event that the appeal fails, he is in a position to pay the defendants the judgment sum plus interest - both relevant considerations, as discussed in Woolworths Ltd v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72 at [68] - [69].

4. [4]

   Still the defendants contended that the Court would only grant a stay on condition that 50% of the judgment sum be paid into Court. That would have been of no apparent advantage to the defendants in the admitted circumstances and would have carried with it the obvious disadvantage that the money would not then be attracting interest, notwithstanding that Mr Simone would have to pay the defendants interest, in the event that the appeal failed.

5. [5]

   Despite the apparent prejudice of this result for Mr Simone, the defendants submitted such terms would be fair as between the parties, because prima facie, they were entitled to the benefit of the judgment; Mr Simone would continue to have the use of 50% of the judgment sum, while they would be entitled to payment of the other 50% forthwith, on dismissal of the appeal; and that it would pay proper regard to the fact that it had been concluded that Mr Simone had withdrawn money from a trust account to pay a bill, contrary to the “sacrosanct nature” of a solicitor’s trust account (see Barwick v Council of the Law Society of New South Wales [2004] NSWCA 32 at [117] - [118]).

6. [6]

   The problem with the latter submission was that in Barwick, the Court was dealing with numerous, serious, admitted transgressions which began with taking trust moneys without authority. By way of contrast, here in the Local Court there was a vehement dispute over whether there had been any such transgression. The judgment delivered by Bradd LCM, even on the defence case, involves errors of fact, which may be critical to the conclusion reached, that there had been a breach of trust and accordingly, to the outcome of the appeal.

7. [7]

   His Honour concluded at [31] that Mr Simone had illegally withdrawn money from the trust account of Konstantin Kola, Mecchelle Kola, Corema, Triple Crown and Kola Investments, to pay legal fees owed by Konstantin Kola and Oasis. That conclusion was inconsistent with the earlier finding that:

8. [8]

   In the result, consideration is now being given by the defendants as to whether a notice of contention has to be filed.

9. [9]

   It was in all of those circumstances that I concluded that a stay on the conditions proposed by the defendants would not be fair as between these parties and that an unconditional stay would. That flowed from what had been in issue in the Local Court; the common ground that there had been at least some error made at first instance; the parties’ respective financial circumstances; and that there was no question that if the appeal fails, the defendants will receive interest on the judgment sum, which Mr Simone is in a position to pay them.

Costs

1. [10]

   The usual order as to costs under the Uniform Civil Procedure Rules 2005 (NSW) is that they follow the event, in this case that is an order in favour of Mr Simone. The defendants urged that in the circumstances the Court would order that costs of the stay application would be costs in the cause.

2. [11]

   I refused that application, given the evidence that Bradd LCM had made orders in the proceedings below on 8 November 2016; that on 16 November the defendants served a letter of demand, threatening the commencement of bankruptcy proceedings if payment was not made within seven days; the proceedings were then commenced and, on 22 November, the defendants advised that they were not prepared to agree to a stay and that any application would be vigorously opposed, notwithstanding their financial position; and the obvious difficulty with the judgment.

3. [12]

   On the hearing of the motion, a stay was not opposed by the defendants, but conditions were urged which could not be accepted as fair in all of the circumstances.

4. [13]

   In the result, I concluded that there could not justly be any departure from the usual costs order and so ordered that the defendants must pay Mr Simone’s costs of the motion, as agreed or assessed.