Young v Hones (No.5)

1. [1]

   By Notice of Motion filed in Court on 7 June 2016, the applicant, Ms Young, sought, pursuant to s 67 of the Civil Procedure Act 2005 (“the Act”), that the Court stay costs orders made on 1 May 2014 against her in favour of the five defendants in these proceedings.

2. [2]

   Each of the five defendants are respondents to the Notice of Motion. The five respondents to the Motion are:

3. [3]

   It will also be convenient to refer to the solicitors and the barrister, jointly, as “the trial lawyers”. It is unnecessary for the purpose of this Motion to distinguish between the position of the fourth and fifth respondents.

4. [4]

   The Notice of Motion was listed and heard urgently by the Court on 9 June 2016. During the course of the hearing, Mr Newell, the solicitor appearing for Ms Young, sought to amend the Motion so that the claim for relief was expressed in the following way:

5. [5]

   The respondents did not object to that amendment. Accordingly, the Court proceeded to hear the Notice of Motion in its amended form.

6. [6]

   At the conclusion of argument, I dismissed the Notice of Motion, and indicated that I would publish reasons in due course. These are those reasons.

Factual Context

1. [7]

   In order to understand the basis of the restraining order being sought, it is necessary to set out some quite complex background.

2. [8]

   The background is to be found, first, in the judgment of McClellan CJ (as he then was) in the Land and Environment Court (“LEC”) in Young v King [2004] NSWLEC 93, then in the judgments of Sheahan J in the LEC in Young v King (No.2) [2009] NSWLEC 125, Young v King (No.3) [2012] NSWLEC 42, Young v King (No.4) [2012] NSWLEC 236 and, more recently, in Young v King (No.6) [2015] NSWLEC 111, Young v King (No.8) [2015] NSWLEC 187 and Young v King (No.9) [2015] NSWLEC 4. For the sake of convenience, in this judgment I will refer to these judgments by the prefix “LEC” together with their number.

3. [9]

   As well, the following judgments of this Court record the necessary background: Young v Hones [2013] NSWSC 580, Young v Hones (No.2) [2013] NSWSC 1429, Young v Hones (No.3) [2014] NSWSC 499 and Young v Hones (No.4) [2015] NSWSC 792. I will refer to these judgments by the prefix “SC” together with their number.

4. [10]

   In addition, relevant background is to be found in the judgments of the Court of Appeal in Young v Hones [2014] NSWCA 337 (“CA1”) and Young v Hones [2014] NSWCA 338 (“CA2”).

5. [11]

   As Ms Young has been represented at all times in the proceedings in the LEC, this Court and the Court of Appeal by Mr Muriniti, her solicitor, and Mr Newell (initially a member of the Bar but now a solicitor employed by Mr Muriniti), this Court can, not unfairly, have regard to the history of the proceedings, including a number of attempts to draft and file a proper pleading of Ms Young’s claim for damages in this Court.

6. [12]

   Ms Young’s neighbours, Mr and Mrs King, undertook some building work in mid-2001. Those works were the subject of a development consent granted by Warringah Council (“the Council”) in February 2002. Further work was undertaken in 2002, with which Ms Young was dissatisfied.

7. [13]

   On 14 April 2003, Ms Young commenced Class 4 proceedings in the LEC in which she sought, against Mr and Mrs King, but not against the Council, a series of declarations, injunctions and other relief, including an award of damages (“the original LEC proceedings”).

8. [14]

   In those proceedings, she retained the first two respondents to the Motion as her solicitors. She retained the third respondent as her barrister, and the fourth and fifth respondents as expert witnesses.

9. [15]

   In the first LEC proceedings, which came before Chief Judge McClellan on 16 February 2004, there were three principal issues. The first was the construction of a footing on the southern wall of Ms Young’s property; the second was the construction of a retaining wall on the southern boundary of her property; and the third was the underpinning of the footings of Mr and Mrs King’s house.

10. [16]

    Discussions took place during the course of the first day of the hearing between the parties and their experts. According to the judgment of McClellan J, by the end of that first day, the experts had met and come to an agreement about the works which needed to be done to address the three principal issues. There remained an outstanding issue as to costs. In order to resolve that issue, evidence was taken from the expert engineer for Mr and Mrs King, Mr Springett, and from the fifth respondent, Dr Perrens, the expert witness retained for Ms Young.

11. [17]

    McClellan J, in awarding the costs of the proceedings to Ms Young, concluded that Ms Young had succeeded in substance in the proceedings, although the proceedings were formally resolved upon the basis that Mr and Mrs King would undertake the work set out in an agreed document, Exhibit A, and that the proceedings would be dismissed.

12. [18]

    Since 2008, Ms Young has been engaged in further litigation in the LEC, with the aim to re-open the original LEC proceedings and to vacate or set aside the orders made in February 2004 by McClellan J.

13. [19]

    In the meantime, in February 2010, Ms Young, as plaintiff, commenced proceedings in this Court claiming damages from the five present respondents, or the defendants, by filing a Statement of Claim. Those proceedings were commenced only a few days before the expiry of the relevant limitation period for the causes of action then pleaded. After a delay in service of some months, Ms Young’s claim in this Court was brought back before the Court for various directions. A number of amendments were made to the original Statement of Claim.

14. [20]

    On 17 May 2013, I delivered a judgment in which I declined to grant leave to Ms Young to file a Further Amended Statement of Claim. As is apparent from my reasons in SC1, the proposed Amended Statement of Claim raised the following causes of action against the solicitors:

15. [21]

    The claim against the barrister involved an identical allegation of the causes of action against the solicitors, except that no claim for restitution was made against him.

16. [22]

    As against the expert witness, the proposed pleading including the following causes of action:

17. [23]

    For the reasons expressed in SC1, I concluded that the proposed Amended Statement of Claim did not constitute a pleading which the Court ought to allow to be filed. Accordingly, I refused Ms Young’s application for leave to amend her Statement of Claim. In the same judgment, I also refused to grant the Motions brought by the defendants seeking summary dismissal.

18. [24]

    A few months later in SC2, I determined a number of separate questions on the issue of liability. I held that in respect of the trial lawyers, the defence of advocate’s immunity was a complete answer to all of the causes of action upon which the plaintiff relied. In respect of the expert witness, I held that the defence of witness immunity was a complete answer to all of the causes of action upon which the plaintiff relied.

19. [25]

    At that point in time, as the reasons for judgment make plain, Ms Young was not proceeding with any cause of action in deceit, conspiracy or fraud, but was rather confining her action to claims in tort and for breach of the provisions of the Fair Trading Act.

20. [26]

    Subsequently, I heard a series of arguments as to the costs of those proceedings. In SC3, on 1 May 2014, I made the following costs orders:

    1. (1)

       Order the plaintiff to pay the costs of [the solicitors] … in the sum of $190,000;

    2. (2)

       Order the plaintiff to pay the costs of [the barrister] … in the sum of $200,000;

    3. (3)

       Order the plaintiff to pay the costs of [the expert witness] … in the sum of $110,000.

21. [27]

    Ms Young appealed against my substantive judgment in SC2. On 1 October 2014, in CA1, the Court of Appeal dismissed that appeal. On the same day, in CA2, the Court of Appeal refused to grant Ms Young leave to appeal against SC1, and a further interlocutory decision on an oral application.

22. [28]

    Although the appeal in CA1 challenged my original costs orders which were made in SC2 on the basis that costs followed the event, Ms Young did not appeal specifically against my judgment with respect to the gross sum costs order in SC3.

23. [29]

    Subsequent to the decision of the Court of Appeal, Ms Young sought special leave to appeal to the High Court of Australia. By order of 6 May 2015, the High Court, without hearing any oral submissions, dismissed Ms Young’s application for special leave to appeal.

24. [30]

    On 10 June 2015, the matter was restored before me to deal with a question as to whether a stay, which I made on 1 May 2014 with respect to the costs orders referred to in [26] above, pending the hearing of the appeal to the Court of Appeal from SC2, continued in existence. I expressed the view in SC4, on the basis which I then enunciated, that the stay had ceased to be operative by reason of the final determination of the proceedings by the orders of the Court of Appeal made on 1 October 2014.

25. [31]

    At the conclusion of my reasons in SC4, I said:

26. [32]

    This is the first time that the current proceedings, brought about 12 months after that judgment, have been back before this Court.

27. [33]

    In the meantime, the proceedings in the LEC have continued.

28. [34]

    After some earlier proceedings, the detail of which it is unnecessary to refer to, the proceedings brought by Ms Young seeking to re-open the original LEC proceedings were finally heard by Sheahan J. By a judgment, LEC6, delivered on 9 July 2015, Sheahan J dismissed Ms Young’s Notice of Motion seeking to have the original LEC proceedings re-opened. He also dismissed cognate proceedings. Sheahan J ordered Ms Young to pay Mr and Mrs King’s costs of the proceedings, and stayed that order in this way:

29. [35]

    LEC6 is the subject of an appeal which is listed to be heard in the Court of Appeal on 21 and 22 June 2016.

30. [36]

    In the meantime, pursuant to Sheahan J’s orders with respect to costs, Ms Young filed in the LEC a Motion seeking that her costs be paid on an indemnity basis by Mr and Mrs King, and also by 16 other respondents who were not parties to the proceedings before Sheahan J. She also sought an order that the 16 respondents indemnify her against any order for costs made in favour of Mr and Mrs King. In broad terms, the first five non-party respondents to Ms Young’s application for costs were the five defendants in the Supreme Court proceedings, who are the respondents to this Notice of Motion. The remaining respondents consisted of various experts, a solicitor who acted for Mr and Mrs King in 2003, and the Council.

31. [37]

    All 18 of the respondents (including Mr and Mrs King) resisted Ms Young’s application for costs.

32. [38]

    In two judgments, LEC8 delivered on 1 December 2015 and LEC9 delivered on 19 February 2016, Sheahan J dismissed Ms Young’s applications for costs against all of the respondents. Relevantly, in LEC9, Sheahan J dealt with the claims against the five respondents to the present proceedings.

33. [39]

    His Honour set out at length the history of proceedings and, in particular, addressed the basis upon which Ms Young claimed costs against the respondents. His Honour noted in [18] the following:

34. [40]

    His Honour reviewed the history of various allegations of this kind which had been made in the LEC, and the way in which the allegations had been described in various judgments. His Honour drew the following conclusion from those judgments:

35. [41]

    I have been informed from the Bar Table that applications for leave to appeal from each of LEC8 and LEC9 have been filed in the Court of Appeal. No hearing date has, as yet, been allocated.

Enforcement Proceedings

1. [42]

   In 2016, the expert witness respondents served a Bankruptcy Notice on Ms Young. The Bankruptcy Notice was based upon this Court’s costs order in favour of them against Ms Young in the sum of $110,000, as set out in SC3.

2. [43]

   Ms Young made an application to the Federal Circuit Court of Australia to set that Bankruptcy Notice aside upon the basis that she had “… a counterclaim, set off or cross demand …” which was equal to or exceeded the sum claimed in the Bankruptcy Notice: see s 40(1)(g) Bankruptcy Act 1966 (C’th).

3. [44]

   The Federal Circuit Court heard Ms Young’s application on 16 March 2016. On 29 April 2016, the application was dismissed: Young v Hughes Trueman Pty Ltd & Anor [2016] FCCA 989.

4. [45]

   It appears from that decision, that the counter-claim upon which Ms Young relied was the claim that she had made in LEC for her costs to be paid, and for her to receive an indemnity with respect to the costs of Mr and Mrs King from the large number of respondents, including the present respondents. It was said to the Federal Circuit Court that her costs were in the order of $3M.

5. [46]

   Judge Smith, in his reasons for dismissing Ms Young’s application, by reference to the submissions that she had a counter-claim of substance that would lead to the relief that she was seeking, said:

6. [47]

   I have been informed from the bar table, that an appeal against that decision has been filed, but as yet no hearing date has been fixed.

7. [48]

   I was also informed from the Bar Table that the expert witness respondents have issued a Creditor’s Petition based upon Ms Young’s act of bankruptcy in failing to comply with the Bankruptcy Notice. I was informed that the Creditor’s Petition had been sent to Ms Young’s solicitors, but personal service has not yet been effected.

8. [49]

   I was not provided with a date when it is anticipated that the Creditor’s Petition would come before the Federal Circuit Court.

The Present Application

1. [50]

   The present application before the Court was initially described as being an application pursuant to s 67 of the Act for a stay of the costs order. That approach was abandoned by Ms Young after hearing the submissions by the respondents. She sought, and was granted, leave to amend the orders sought in reliance on s 135(2)(c) of the Act, restraining the respondents from taking any steps to enforce the costs order.

2. [51]

   The basis of the application for the orders, as articulated orally by Mr Newell, the solicitor appearing for Ms Young, was that Ms Young proposed to agitate a claim for damages against a large number of defendants being, at least, the 18 respondents the subject of LEC8 and LEC9, including the present five respondents. The proceedings are intended to be commenced in the appropriate jurisdiction, which it is anticipated will either be the LEC or this Court. For purposes of the determination of this Motion, the selection of the Court is not material.

3. [52]

   The nature of the prospective proceedings was described by Mr Newell as a claim for damages in reliance on two principal causes of action, namely, deceit and conspiracy to injure.

4. [53]

   It was submitted from the Bar Table that the prospective proceedings would claim a sum of damages which well exceeded the outstanding sums of the costs orders which I had made in 2014 in SC3 and that, if enforcement of those costs orders was not restrained by the orders sought, the probability was that Ms Young would be made bankrupt and would thus be unable to commence and conduct the prospective proceedings.

5. [54]

   In support of the application, Ms Young also called in aid the recent decision of the High Court of Australia in Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16. The applicant pointed to the fact that this decision had limited the extent of advocate’s immunity (and by analogy, witness immunity) as it had been applied in this Court and the Court of Appeal, to the claim by Ms Young against the present five respondents. The relevance of this fact, and the recent decision of the High Court, particularly in light of the fact that Ms Young had been refused special leave to appeal to the High Court, was rather elusive. However, what Mr Newell, the solicitor for Ms Young, said was this:

Nature of the Court’s Power

1. [55]

   The application to this Court is for orders restraining the respondents from enforcing this Court’s orders for costs. It relies on s 135(2)(c) of the Act.

2. [56]

   The respondents submitted that this provision of the Act did not provide the Court with the power to make the orders sought. Section 135 is contained within Part 8 of the Act, which makes provision for various means by which judgments, or final orders, of the Court may be enforced by the processes of the Court identified in that Part. The divisions of the Part are addressed to specific processes: Writs for the Levy of Property (Div 2); Garnishee Orders (Div 3); and Charging Orders (Div 4).

3. [57]

   Section 135 is contained within Division 5 which contains a series of miscellaneous provisions. It provides:

4. [58]

   The provisions of s 138 of the Act, which also fall within Division 5 should be noted:

5. [59]

   The respondents argue that the power to give directions with respect to enforcement in s 135 of the Act is limited to the means of enforcement described in Part 8. They submit that the provisions of s 138 of the Act make it plain that the directions power in s 135 does not permit an order to be made restraining enforcement steps which do not fall under the Act. The respondents submit that the enforcement steps presently being undertaken fall under the Bankruptcy Act and, therefore, the directions power in s 135 cannot be relied upon by Ms Young for the orders she seeks.

6. [60]

   Ms Young submits that the power ought not to be read down in that way. The applicant submits that there is no warrant to read down the terms of s 135(2)(c) so as to restrict the prohibition order only to action taken in accordance with Part 8 of the Act. She points to the fact that the words do not expressly contain such a restriction and that, accordingly, the Court ought not to impose one.

7. [61]

   On the other hand, the respondents point to s 138 as being a sufficient basis for the existence of such a restriction.

8. [62]

   Were it necessary to decide this question finally, I would be inclined to the view that the power to give directions in s 135 is directed towards the enforcement provisions contained within Part 8 of the Act, and not to any other provisions for enforcement which are external to the Act such as those under the Bankruptcy Act.

9. [63]

   However, it is unnecessary to determine this question finally, because s 23 of the Supreme Court Act 1970 and the Court’s inherent powers are a more than adequate basis for the making of the orders, if otherwise appropriate: Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2014] NSWSC 344 at [14].

10. [64]

    The Court’s inherent power includes a power to take appropriate action to prevent injustice. That inherent power is confirmed by s 23, which provides that “[t]he Court shall have all jurisdiction which may be necessary for the administration of justice in NSW”. The power of the Court to control and supervise its process to prevent injustice is not restricted to defined and closed categories: see Hamilton v Oades [1989] HCA 21 at [8]; (1989) 166 CLR 486 at 502. The notion of injustice which needs to be prevented includes a consideration of the consequences of the proceedings for the person invoking the power. In considering whether to exercise the Court’s power to make the orders sought, the Court is obliged to consider, and act according to, the interests of justice.

11. [65]

    By analogy, when a stay of a final order is sought, pending an appeal, or the prosecution of a cross-claim, or the determination of some other cognate proceedings, the Court will ordinarily require proof, by acceptable means, of the following:

12. [66]

    These are appropriate principles of the consideration of the present application.

Prospective Proceedings

1. [67]

   The nature of the prospective proceedings was central to the application for the restraining orders in the Notice of Motion. In light of the past history of the matter, and in the absence of a draft pleading being provided to the Court, and having regard to the proposed causes of action being in deceit and conspiracy, Mr Newell was asked to articulate orally the nature of the prospective proceedings.

2. [68]

   At various times in the course of the submissions on this issue, Mr Newell described the proceedings in this way:

3. [69]

   Over four years ago, on 31 January 2012, this Court, in the proceedings against the current respondents, was presented by counsel for Ms Young with a document entitled “Applicant’s Nature of the Case Statement”. Although prepared for the LEC proceedings, which were then on foot between Ms Young and her neighbours, this document was described by her lawyer, Mr Newell, as providing “… a unified view of the claims against all the parties about whom we complain and the foundation of it … It is a set of particulars which explains our case”.

4. [70]

   Notwithstanding the length and detail of this document, it became apparent in the hearing before the Court in January 2012 that there was a need to further amend the proposed Statement of Claim. In the course of submissions on that day, Mr Newell informed the Court that he believed that he was then in a position to provide a proposed amended pleading to the other parties “… that will articulate our case as well as any case has been articulated on the basis of the known facts”.

5. [71]

   After further versions of a proposed pleading were served, on 3 April 2012, Mr Newell informed the Court that there were further matters of fact which had recently become apparent, which required a “… complete reframing of the conceptual foundation of how the plaintiff was misled and by what techniques”.

6. [72]

   As the history recounted in SC1 [19]-[57] demonstrates, Ms Young has had considerable difficulty in formulating her causes of action against the current five respondents in an acceptable pleading, where those causes of action were based upon allegations involving deceit and conspiracy to injure. There were many iterations of a Statement of Claim.

7. [73]

   The ultimate version upon which SC1 was based involved allegations of deceit and conspiracy to injure, which are the causes of action upon which, according to Mr Newell, the application for the restraining orders would be pursued.

8. [74]

   As SC1 shows, notwithstanding the statements of Mr Newell about the adequate state of knowledge about the causes of action and a good deal of time being allowed to draft an acceptable pleading, Ms Young was not in a position to formulate adequately those causes of action in an acceptable pleading. Leave was not granted to permit the amended Statement of Claim being propounded in those proceedings to be filed.

9. [75]

   After SC1, a Further Amended Statement of Claim was propounded in which the causes of action for fraud, deceit and conspiracy had been removed. During the course of the proceedings on 23 August 2013, Ms Young sought leave to file in court another proposed Amended Statement of Claim. The nature of the proposed amendments is contained in SC2 at [51]. What was there being asserted was a breach of fiduciary duty on the part of the trial lawyers and, at least indirectly, a failure to act in good faith. The proposed amended pleading was not permitted to be filed because I determined that its contents did not reveal a properly pleaded cause of action and were embarrassing.

10. [76]

    In the course of my reasons in SC2, I said:

11. [77]

    In LEC9, Sheahan J described at [18] the basis upon which Ms Young was seeking an order for costs against the 16 respondents other than Mr and Mrs King, as being a claim based on “… a broad-based ‘conspiracy’ to defeat or defraud her, a claim in which she has comprehensively failed”. Sheahan J, from [48] to [60], then traced in the proceedings in the LEC the various allegations which had been made from time to time by Ms Young with respect to allegations which had variously been described as fraud, bad faith, collusion, corruption, conspiracy and the like. This history led to the conclusion of Sheahan J to which I have earlier referred at [40].

12. [78]

    This historical context reveals a significant history of attempts by Ms Young or her lawyers to frame a properly pleaded cause of action against, at least, the five respondents to these proceedings by way of some form of fraud or conspiracy or deceit or the like. Each of those attempts to frame a properly pleaded cause of action has failed.

13. [79]

    The applicant has not produced, on this application, a pleaded cause of action which she contends adequately describes the prospective proceedings upon which she relies for the restraining orders.

14. [80]

    The oral outline given by Mr Newell, to which I have referred in [68] above, does not suggest a prospective cause of action in which the relevant facts have been clearly identified, the nature of the conduct of each of the current respondents has been identified and articulated, and does not permit a conclusion that the prospective proceedings could be reduced to a properly expressed written pleading. And this is after a period of time of at least six years in this Court, and eight years or so in the LEC. Numerous attempts have been made to identify and articulate the causes of action. None has been successful.

15. [81]

    I am not satisfied that on the material before me, and having regard to the history of the proceedings in the LEC and this Court, that Ms Young had demonstrated that she has an arguable case which could be brought and articulated at some point in time for damages against the present respondents by way of either deceit or conspiracy to injure.

16. [82]

    Nor am I satisfied that even if such a case could be pleaded, that Ms Young had identified, in a relevantly causal way, how the causes of action, which Mr Newell had described, would have a monetary result which would be of a sufficient value to equal or exceed the orders for costs in these proceedings.

Discretionary Considerations

1. [83]

   Even if I was satisfied that there was a prima facie case of a reasonable arguable kind that could have been articulated in a proper written pleading, and for the reasons indicated above I have not, then it would be necessary for Ms Young to demonstrate that she would suffer prejudice were the orders which she seeks not to be made, and also that the balance of convenience favoured the making of the orders.

2. [84]

   On the question of prejudice, no affidavit evidence or other material was put before the Court. As senior counsel for the barrister submitted, which submissions were adopted by the other respondents, Ms Young did not put before the Court any evidence at all as to her financial position. She did not adduce any evidence in which she offered any undertaking either with respect to the filing and prosecution of the claims for damages or any proposal with respect to her capacity to meet the costs orders if a restraining order was granted.

3. [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.

4. [86]

   The Court has also to consider the balance of convenience. The proceedings in this Court, by which Ms Young mounted a claim for damages against the five present respondents, are at an end. The judgment of the Court of Appeal was final. The High Court refused special leave to appeal against it. The orders for costs which the expert witness respondents seek to enforce reflect the final outcome of these proceedings. Those respondents, and the other respondents as well, each have a final order in their favour, which is the equivalent of a monetary judgment. There is no reason to think that those costs orders were not properly made. Restraining the present respondents from enforcing the costs orders whilst Ms Young is free to deal with her assets, the extent of which are unknown, in any way which she sees fit, would not meet the description of fairness or justice. It would not be in the interests of justice. The balance of convenience would not be served in those circumstances.

5. [87]

   On the contrary, the balance of convenience falls in favour of the respondents and against the restraining orders sought.

Conclusion

1. [88]

   For the foregoing reasons, I concluded that the application ought to be dismissed.

2. [89]

   Costs ought to follow the event. No submission was advanced to the contrary by Mr Newell.