Atanaskovic v Birketu Pty Ltd

1. [1]

   MITCHELMORE JA: The applicant, John Atanaskovic, seeks leave to appeal from the decision of Hammerschlag CJ in Eq (the primary judge) of 28 April 2025, to stay enforcement of two judgments that his Honour gave for the applicant in 2019 and 2020. Leave is required because his Honour’s decision was interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e).

2. [2]

   The application for leave was heard concurrently with the appeal. The applicant contended that the primary judge was under “a fundamental misapprehension as to the effect of the orders which he made” (ground 1), as a result of which his Honour erroneously concluded that the applicant had engaged in “sharp practice” (ground 2). The applicant also contended that in granting the stay, his Honour did not take into account a number of relevant considerations, including “any relevant principles” and their application to the particular proceedings, with which his Honour had been dealing for many years (ground 3).

3. [3]

   The applicant did not ultimately contend that the application for leave to appeal raised an issue of principle. He sought leave on the basis that there was a reasonably clear injustice going beyond what was merely arguable: see eg PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6]. For the reasons outlined briefly below, his Honour’s decision is marked by no injustice, let alone of the relevant kind. The application for leave to appeal must be dismissed.

Background to the application

1. [4]

   The applicant is now the sole principal of the law practice known as Atanaskovic Hartnell (AH). The former partners who remained parties to the proceedings below were named as the respondents on the application for leave to appeal but did not participate.

2. [5]

   AH provided legal services to the first respondent, Birketu Pty Ltd (Birketu) and the second respondent, WIN Corporation Pty Ltd (WIN). In 2017, AH commenced proceedings against the respondents seeking payment of professional fees and disbursements associated with six invoices and a further invoice that was referred to as the “investigation invoice”. The primary judge gave two principal judgments. In the first, delivered on 9 August 2019, his Honour gave judgment for AH in relation to the six invoices other than the investigation invoice, and ordered the respondents to pay $928,982.00: John Ljubomir Atanaskovic and the persons named in Schedule A trading as Atanaskovic Hartnell v Birketu Pty Ltd [2019] NSWSC 1006. On 16 September 2019, his Honour made orders that included, as orders 1 and 2, the total amount of the judgment debt and, as order 5, a stay of orders 1 and 2 pending further order.

3. [6]

   On 6 December 2019, the primary judge ordered the first and second respondents to pay into court, without admission, the amount of $1,175,812.36 as “security for the applicant’s claim for unpaid legal costs and interest” (emphasis added) pending the resolution of the full dispute. The amount ordered to be paid into court comprised the amount of the partial judgment in favour of the plaintiffs, along with the amount of the investigation invoice (which remained in dispute) and other smaller amounts.

4. [7]

   In the second judgment, delivered on 15 May 2020, his Honour gave judgment for the plaintiffs for the additional amount of $14,930.15, reflecting partial success in relation to the investigation invoice: John Ljubomir Atanaskovic and the persons named in Schedule A trading as Atanaskovic Hartnell v Birketu Pty Ltd – Supervisory Jurisdiction [2020] NSWSC 573.

5. [8]

   On 19 June 2020, his Honour delivered a decision on costs: John Ljubomir Atanaskovic and the persons named in Schedule A trading as Atanaskovic Hartnell v Birketu Pty Ltd – Costs [2020] NSWSC 779. His Honour considered that the principled exercise by the court of its discretion warranted an outcome whereby:

   1. (1)

      AH should have its costs attributable to the proceedings in relation to the six invoices (excluding the investigation invoice) on the ordinary basis, with those costs being “a matter for assessment”; and

   2. (2)

      Birketu should have its costs of the proceedings from the day after the first judgment on the indemnity basis, having been largely successful in resisting the claim arising out of the investigation invoice.

6. [9]

   His Honour then said the following:

7. [10]

   On 3 July 2020, the primary judge made an order setting aside the second judgment amount (order 1) and in its place ordered judgment in the amount of $16,142.76 plus interest (order 2). His Honour also stayed order 2 until further order of the Court. These orders were entered on 7 July 2020.

8. [11]

   The expedition that the primary judge anticipated in the costs judgment was not forthcoming. After both parties applied for and obtained an assessment of the other side’s costs, both parties applied for review of the respective assessments. Evidence filed on the application for leave to appeal indicates that both reviews were completed in October 2025. On 3 November 2025, Birketu commenced an appeal in the District Court in relation to the review panel’s determination of AH’s costs.

9. [12]

   On 12 September 2024, the applicant applied to relist the matter before the primary judge and sought orders for the payment out of funds that Birketu had paid into court. At that time, Birketu had an appeal on foot in the High Court on the issue of whether AH’s employed solicitor costs were recoverable. His Honour endeavoured to divide the funds in a manner consistent with the estimated amount that each party could potentially receive, subject to the High Court’s decision and any further costs assessment, so as to avoid a further application to release the funds following the finalisation of the assessments. His Honour made an order that of the money standing in court, $711,401.81 was forthwith to be paid to Birketu and the balance (approximately $465,000) was forthwith to be paid to AH in partial satisfaction of the judgments. The following exchange then occurred between Mr Hutton SC, who appeared for the applicant, Mr Vincent, who appeared for Birketu, and the primary judge:

10. [13]

    On 5 February 2025, the High Court dismissed Birketu’s appeal: Birketu Pty Ltd v Atanaskovic [2025] HCA 2; 99 ALJR 321. On 24 April 2025, the applicant served garnishee orders on Nine Entertainment Co Holdings Ltd for the purpose of enforcing the outstanding judgment debt, which stood at that time at $495,495.66. The garnishee orders sought to redirect payment of recently announced shareholder dividends from Birketu and WIN to the applicant.

11. [14]

    The respondents exercised the liberty that his Honour had granted on 12 September 2024. They applied for a stay of the judgments pending further order and to set aside the garnishee orders. In a written outline prepared in support of the application, the respondents referred to what his Honour said in the passage of the costs judgment that I have set out above, about the need for “all accounts” between the parties to be “brought to finality together”. Noting that the operation of the costs determinations was automatically stayed pursuant to s 86 of the Legal Profession Uniform Law Application Act 2014 (NSW) because of the review applications, the respondents submitted that there could be no finalisation of all accounts between the parties. Further, if AH were permitted to execute the judgments in its favour before completion of the costs assessment process, that would defeat any such finalisation.

12. [15]

    On 28 April 2025, the parties appeared before the primary judge. After hearing briefly from counsel for the present applicant, his Honour made the following orders:

13. [16]

    The primary judge’s ex tempore reasons comprised the following:

The application for leave to appeal

1. [17]

   As I noted above, the first two proposed grounds of appeal are interrelated. The first proposed ground contends that the primary judge proceeded on the basis that the stay was limited to costs orders rather than the whole of the judgments, and thus fundamentally misapprehended the effect of the orders his Honour made. The second proposed ground, which contends that the primary judge erred in characterising the applicant’s conduct as “sharp practice”, is contingent upon accepting that his Honour did fundamentally misapprehend what he was doing.

2. [18]

   The applicant submitted that the language the primary judge used in the reasons demonstrated that his Honour considered that his orders would be concerned with orders as to costs, pointing to the following parts of the reasons:

   1. (1)

      “The defendants seek a stay of the operation of orders for costs”: at [1].

   2. (2)

      “I made comments [that] … there should not be, enforcement by either party of any costs orders until finality on the amounts payable each way had been reached”: at [4].

   3. (3)

      “I consider that until such time as all costs orders have been resolved between them, there should be no enforcement of any judgment for costs between them”: at [9].

3. [19]

   The applicant submitted that in circumstances where it was clear that the judgments which he had sought to enforce by way of the garnishee orders were the principal judgment debts, rather than anything to do with costs, his Honour’s references to costs orders indicated that he was under a misapprehension in staying the principal judgments. The error was further evidenced by the catchwords to the published judgment, which repeated some of the language set out above. His Honour’s error was, the applicant submitted, properly characterised as falling within the principles in House v The King (1936) 55 CLR 499; [1936] HCA 40 and resulted in an injustice going beyond what was merely arguable. As the result was to stay judgment debts that were years old and had at no stage been the subject of an appeal, the applicant submitted that leave should be grated.

4. [20]

   My brief summary of the background to this matter indicates that the primary judge had been dealing with these parties for years. His Honour understood that there were ongoing challenges to the assessments associated with the costs orders, which meant that those orders had not been finalised: at [2]. Indeed, it is apparent from the following exchange from the hearing on 28 April 2025 that his Honour was in furious agreement with the applicant’s counsel that the costs orders were already stayed (consistently with the written outline that the respondents provided on the same date, to which I have referred above):

5. [21]

   It follows that the effect of the applicant’s argument on proposed ground 1 is that in the face of his Honour’s clear understanding that all of the costs orders were stayed pending review of the costs assessments, his Honour thought, wrongly, that he was staying those same orders. It need only be stated to be rejected. Additionally, however, the reasons support that his Honour well understood what he was being asked to do and why. Although the applicant sought to derive some assistance from the terms in which the catchwords were formulated (necessarily after the event, given his Honour gave his reasons ex tempore), the focus must be on the reasons, read fairly and as a whole.

6. [22]

   In [6] of the reasons, his Honour appreciated that what the applicant sought to enforce by way of the garnishee orders was the “full claim”, in circumstances where, as his Honour noted at [4], he had commented at the hearing on 12 September 2024 that there should not be enforcement by either party of any costs orders “until finality on the amounts payable each way had been reached” (emphasis added). The “amounts payable each way” necessarily included the amounts that the respondents were obliged to pay, pursuant to the judgments, on the various invoices for legal fees that the applicant’s firm had successfully sued on. It was against that background that his Honour described the applicant’s conduct, in [7], as “entirely unacceptable in the context of proceedings between a lawyer and his former client where all accounts between them should be brought to finality together” (emphasis added).

7. [23]

   Properly understood, and against the background of the long-running litigation with which his Honour was very familiar, the subject matter of which was unpaid invoices for legal fees, his Honour’s references to “costs” did not evidence a misapprehension on his Honour’s part as to which orders the applicant was seeking to enforce and which orders his Honour was intending to stay. Leave to appeal on ground 1 should be refused.

8. [24]

   It follows from the outcome on ground 1 that leave to appeal on ground 2 should also be refused. As counsel for the applicant submitted in the course of the hearing in this Court, the finding the subject of ground 2 “flowed from the misunderstanding as to what the applicant was trying to enforce”. Absent any such misunderstanding, there is no reviewable error, arguable or otherwise, in what was a finding of fact. As the respondents submitted, his Honour’s description was a product of the dim view he took of the applicant’s conduct in the face of statements his Honour had made to the effect that no enforcement should occur until all “accounts” had been “finalised”.

9. [25]

   The applicant did not substantively address proposed ground 3 orally. In writing, he alleged that the primary judge erred in granting a stay without referring to a series of considerations which the applicant must contend his Honour was bound to take into account in order to establish House error. The considerations that the applicant emphasised in writing were the relevant principles that apply when considering an application for a stay, whether the respondents would suffer any prejudice, and whether the balance of convenience favoured the grant of a stay, noting in particular the ordinary entitlement of the applicant as a judgment creditor to the fruits of victory and the time that the costs assessment and review processes had taken.

10. [26]

    There is no merit in this proposed ground. As the respondents submitted, the primary judge did not need to go into the principles in circumstances where those principles were well known to his Honour, as were the circumstances of the litigation, and where those principles were not the subject of submissions or argument by the parties. As senior counsel for the respondents submitted, taking the approach for which the applicant contended, in circumstances where the principles are so well known, and their application in the present case so clear as far as his Honour was concerned, would have been otiose.

11. [27]

    The applicant has not established any reasonably clear injustice going beyond something that is merely arguable. Even if he had done so, the interests of justice would tell against a grant of leave: see Mohareb v Local Court of New South Wales [2024] NSWCA 235 at [25]-[31]. True it is that the effect of the primary judge’s orders is to keep the applicant from outstanding judgments, given in his favour in 2019 and 2020, in the amount of nearly $500,000. However, as counsel for the applicant frankly accepted during the hearing, interest continues to accrue on the amount of those judgment debts pursuant to s 101(1) of the Civil Procedure Act 2005 (NSW) and r 36.7 of the Uniform Civil Procedure Rules 2005 (NSW).

12. [28]

    As the primary judge noted in his reasons at [3], both parties to the application for leave to appeal are well-resourced and sophisticated. That their resources allow them to manifest their mutual animus in ongoing disputation should be neither countenanced nor encouraged, having regard to the significant court resources that have already been expended.

Conclusion

1. [29]

   Leave to appeal should be refused. Costs should follow the event. Accordingly, I propose the following order:

   1. (1)

      The application for leave to appeal is dismissed with costs.

2. [30]

   KIRK JA: I agree with Mitchelmore JA.

3. [31]

   PRICE AJA: I agree with Mitchelmore JA.