Muriniti v Kalil

1. [1]

   MACFARLAN JA: I agree with the judgment of Brereton JA and also with the additional observations of Leeming JA supporting the orders proposed by Brereton JA.

2. [2]

   LEEMING JA: I have had the very considerable advantage of reading the reasons for judgment of Brereton JA in draft. I agree with his Honour that the appeal should be allowed and the personal costs order made on 24 July 2020 set aside. What follows presupposes familiarity with his Honour’s reasons.

3. [3]

   I start with apprehended bias, which was the 13th ground of appeal. Any claim of actual bias was expressly disavowed (transcript 25 August 2021, T46.25). Yet the appellants’ written submissions (including in reply) relied exclusively on matters contained in the reasons for judgment. It was said that the findings were unreasonable, or unfair, or lacked proportion, giving rise to an impression of “a judge determined to make a host of pejorative observations about the Appellants”. These submissions are contrary to what was said in Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [67]. A ground of apprehended bias cannot be grounded in the reasons for judgment alone. There may be cases where a link can be drawn between the reasons for judgment and the conduct of a hearing, as explained in Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76 at [54]-[56]. Those points were made by Mr Smark and not responded to until Mr Newell’s attention was drawn to them, just before the conclusion of Mr Newell’s oral submissions. Despite a belated attempt to connect the course of the hearing with the findings in the judgment, I do not consider that this ground is made out. It is understandable that it was not at the forefront of the appellants’ case, because its acceptance would have led to a rehearing.

4. [4]

   Turning to the application for a personal costs order itself, in Rahman v Al-Maharmeh (No 2) [2021] NSWCA 151 at [22], Brereton JA (with whom Meagher JA and I agreed) identified the applicable principles:

5. [5]

   I agree with what Brereton JA has written concerning the importance of what was said in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 at [192]-[196]. I agree with Brereton JA that the deficiencies, such as they were, in the defences and draft defences drafted by the appellants did not warrant a personal costs order. I also agree that it was wrong for the plaintiff’s solicitor Mr Goldsmith to have threatened to seek special costs orders, including orders that the appellants pay, personally, the costs of and occasioned by the amendment, some 15 days after receipt of the original defence and cross-claim. Ordinarily an application of this nature should be made at the conclusion, not the commencement, of proceedings. The present application was no exception to the general rule. I would rest my judgment on that point.

6. [6]

   I would refrain from expressing a view as to whether by having regard to matters outside the deficiencies of the pleadings, the primary judge had regard to irrelevant considerations. Her Honour’s analysis is framed around the particulars dated 3 April 2020, which appear to be the basis upon which the large majority of the hearing took place.

7. [7]

   I agree with the costs orders proposed by Brereton JA, while noting that in circumstances where Mr Muriniti’s own firm acted for itself, and Mr Newell, formerly a barrister but now Mr Muriniti’s employed solicitor, appeared for both himself and his employer, it may be (I express no view on the point) that neither is entitled to their professional costs, in accordance with what flows from Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29.

8. [8]

   BRERETON JA: It has previously been observed that the threat of an application under (NSW) Civil Procedure Act 2005 (“CPA”), s 99, for personal costs orders against opposing lawyers, should not lightly be made, and that such applications should not be permitted to become satellite litigation that dominates the substantive proceedings. In Lemoto v Able Technical Pty Ltd,1 McColl JA, with whom Hodgson and Ipp JJA agreed, observed:

9. [9]

   Later, her Honour added:

10. [10]

    As will appear, those observations might well have been made of the present case, in which, as they and their solicitors had threatened to do from the time when a defence was first filed, the plaintiffs in defamation proceedings in the District Court sought an order pursuant to CPA, s 99, that the solicitors who acted for the defendants in those proceedings personally pay their costs of and incidental to several applications for leave to amend the defence. After hearing the application for a personal costs order over six days, before the pleadings were closed, the District Court judge, in a judgment of some 109 pages and 488 paragraphs, made such an order, and also ordered the solicitors to pay the costs of the costs application, all on an indemnity basis. [1] The present appeal is brought, by leave granted on 17 May 2021, from those orders. [2]

Background

1. [11]

   On 11 February 2019, the respondents Mahmoud Kalil (a veterinary surgeon) and Kylie Eather (a veterinary nurse employed by Mr Kalil) (“the Plaintiffs”) commenced proceedings in the District Court against Ellie Rose Eppinga and Lisa Milham (“the Defendants”), claiming damages for defamation in respect of Facebook and other internet publications said to defame them in respect of their conduct of and related to a veterinary practice, in which Ms Eppinga had undertaken some work experience, during which she claimed to have made observations on which her publications complained of were based. After the proceedings had been referred for mediation, without resolution, the appellants Leonardo Carlo Muriniti and Robert Duane Newell, respectively the principal and an employed solicitor of the law firm LC Muriniti and Associates (“Murinitis”), on 27 June 2019 filed a defence and cross-claim on behalf of the Defendants.

2. [12]

   On 12 July 2019, the respondents’ solicitor, Mr Goldsmith of Goldsmiths Lawyers (“Goldsmiths”) sent a letter to Murinitis, taking objection, sometimes in unnecessarily demeaning terms, to the drafting of the defence and cross-claim, and threatening an application for a personal costs order against Murinitis, in the following terms (emphasis added):

3. [13]

   On 26 July 2019, Murinitis responded that they proposed to amend the pleadings in light of the objections taken. On 30 July 2019, Goldsmiths wrote that unless they received a more substantial response and draft amended pleadings by 1 August 2019, they intended to apply to have the matter relisted, if possible for 8 August. On 1 August, Murinitis sent an email stating that “Mr Newell of our office” was working on amending the pleadings and expected to be in a position to serve amended pleadings by the next day. This did not occur, and Goldsmiths applied to have the matter relisted. Murinitis wrote to them on 5 August, noting that the matter had been listed for 8 August, confirming their concession that the pleadings required amendment and that they were working on the preparation of amended documents, and complaining that the matter had been relisted peremptorily. On 6 August 2019, Goldsmiths sent an email to Murinitis:

4. [14]

   Murinitis replied on the same day, giving notice of their intention to make a complaint to the Law Society, drawing attention to the observations of McColl JA in Lemoto, and requesting particulars of the provision under which any such application was to be made.

5. [15]

   Still on 6 August, Goldsmiths lodged submissions in support of an application to strike out the pleadings, and an affidavit of Ms Andrews, an employed solicitor of Goldsmiths, “in support of the plaintiffs’ application for an order that the defence and cross-claim … be struck out”, which annexed the correspondence to which I have referred, and deposed (emphasis added):

6. [16]

   Ms Andrews then proceeded to depose that she was instructed by the Plaintiffs and believed, inter alia:

   1. (1)

      that they were extremely anxious for the defamation proceedings to be brought on for final hearing as soon and as economically as possible, to redress the reputational damage they had incurred;

   2. (2)

      that they were deeply concerned by the “seriously deficient pleadings”, the failure of the defendants “or more likely their lawyers” to have provided the proposed amended pleadings, and “the conduct of Mr Muriniti and Mr Newell in other cases …” which had led the Plaintiffs to believe that “their conduct, if they be permitted to do so, will likely lead to” ongoing delays in the proceedings being brought on for trial, and the plaintiffs incurring further significant costs which were unlikely to be recoverable from the defendants who had no funds or assets.

7. [17]

   Annexed to the affidavit were copies of part of the judgment in De Costi Seafoods (Franchises) Pty Ltd v Wachtenheim (No 3), [3] in which on the coversheet under “Representation” Mr Newell and Murinitis were recorded as representing the defendants/cross-claimants (but not described as “counsel”), in respect of which Ms Andrews observed that that case had occupied some 70 days and that the Plaintiffs were deeply concerned that Mr Muriniti and Mr Newell may unnecessarily prolong the defamation proceedings; and the judgment in King v Muriniti, [4] in which Mr Newell’s name appeared under the heading “Counsel” on the coversheet (but the judgment accurately recorded that Mr Newell was “a solicitor employed by Mr Muriniti” (at [54])), and Ms Andrews observed that a costs order had been made against Mr Muriniti personally.

8. [18]

   At Goldsmiths’ request the matter was relisted on 8 August 2019, when it came before Gibson DCJ. Mr Goldsmith said that it was his application to strike out the defence and cross-claim, and Mr Newell said that it was and had for some time been conceded that the pleadings needed to be amended, and that leave to replead would be sought. Her Honour said:

9. [19]

   After some further discussion, her Honour directed that a draft amended pleading be served by 15 August and adjourned the proceedings to 22 August 2019, adding:

10. [20]

    Murinitis served their proposed amended defence (“first draft”) and cross-claim on 15 August 2019. On 29 August 2019, Goldsmiths served written submissions containing objections to the first draft amended defence; no objection was taken to the proposed amended crossclaim.

11. [21]

    On 5 September 2019, the application for leave to amend was heard by Wass DCJ. The hearing occupied between one and two hours. Mr Newell, who appeared as advocate, conceded many of the objections. Leave to file the first draft amended defence was refused; directions were made for the service of a further proposed amended defence, and objections thereto; and the application was adjourned to 3 October 2019. When her Honour asked “Mr Newell, is there any reason why the plaintiff ought not to have the costs of today?”, Mr Goldsmith intervened:

12. [22]

    Mr Newell said that he was surprised that the application was being pressed in the light of the observations that had been made by Gibson DCJ. He submitted that it would be better to list the application after the question of leave to amend was resolved. When asked to state shortly the basis of the application, Mr Goldsmith said:

13. [23]

    Directions were subsequently made for the service of further evidence in support of the application for a personal costs order, and in response thereto, and that application was listed for hearing on 2 October 2019. Her Honour raised the prospect that for Mr Newell to appear on that application might involve a conflict of interest.

14. [24]

    On 6 September 2019, Goldsmiths wrote to the Bar Association, querying whether Mr Newell was falsely holding himself out to be a barrister, and foreshadowing instructions to make a complaint against both appellants and referring to “concerns” about their conduct.

15. [25]

    On 20 September 2019, Murinitis served a second draft amended defence (“second draft”). On the same date, Mr Goldsmith swore an affidavit “in support of the plaintiffs’ application that Leonardo C Muriniti, the solicitor for the defendants, pay the plaintiffs’ costs of and occasioned by the defendants’ application for leave to file a proposed amended defence …”, which included the following:

16. [26]

    On 26 September 2019, Goldsmiths served objections to the second draft. A third draft amended defence (“third draft”) was served the same day. The hearing appointed for 2 October 2019 (of the personal costs order application) was vacated, and 11 October 2019 was appointed instead; the application for leave to amend the defence remained listed for 3 October, before Levy DCJ. On 2 October, Murinitis served a fourth draft amended defence (“fourth draft”), and submissions in support of the application for leave to amend.

17. [27]

    On 3 October, Murinitis sought particulars of the allegation (in Ms Andrews’ affidavit) that Mr Newell had held himself out as a barrister, and inquired whether the respondents were responsible for suggesting to the Bar Association that he had.

18. [28]

    Levy DCJ declined to hear the application for leave to amend on 3 October, as his Honour considered that Wass DCJ was part-heard. The matter was adjourned to 11 October before Wass DCJ, when the application for a personal costs order had also been listed. Rather than hearing either application on 11 October, Wass DCJ adjourned both to 25 November 2019, making directions for service of further affidavit evidence and written submissions in respect of both applications.

19. [29]

    Meanwhile, on 9 October 2019, Mr Goldsmith made an affidavit, which he said he was authorised by the Plaintiffs to make, which inter alia deposed that:

20. [30]

    On 30 October 2019, Mr Muriniti swore an affidavit exhibiting waivers signed by his clients to the effect that, inter alia, they consent to his continuing to act for them.

21. [31]

    The proceedings were not reached on 25 November 2019. The application for leave to amend was heard on 4 December 2019. The hearing occupied about 4 hours. In the course of the hearing, Mr Newell again conceded a number of the objections. Leave to amend was refused, with leave to replead.

22. [32]

    On 11 December, the hearing of the personal costs order application commenced. Cross-examination of Mr Goldsmith commenced but was not completed. The hearing was adjourned part-heard to 20 March 2020. One factor that contributed to this was her Honour’s concern to be satisfied that the Defendants’ consent to Murinitis representing them in the context of the personal costs order application was truly informed.

23. [33]

    On 21 February 2019, the Defendants each swore affidavits confirming their consents to Murinitis continuing to act for them.

24. [34]

    On 18 March 2020, Murinitis served a fifth draft amended defence (“fifth draft”).

25. [35]

    The hearing resumed on 20 March 2020. In the course of the hearing, Mr Goldsmith announced that, subject to some unspecified undertakings and exclusions (which were never articulated), there would be no objection to the Defendants having leave to file a defence in the form of the fifth draft. Directions were made for the respondents to provide particulars of the personal costs order application.

26. [36]

    Those particulars were provided on 3 April 2020. [5] The hearing continued on 23 April 2020, and directions were made for written submissions. On 24 April, Goldsmiths provided an index of cases involving Murinitis on which they intended to rely. The hearing resumed on 29 April, and continued on 30 April and 1 May. Mr Goldsmith declined to indicate what were the “exclusions or undertakings” subject to which he consented to the filing of a defence in the form of the fifth draft. He also stated that “there’s a possibility that an application may be made for an injunction to restrain Mr Newell and Mr Muriniti from acting. Your Honour knows the Court has its own inherent jurisdiction to make that order, and it is up [sic, open] to an opposing party, also if thought fit, to make that application. What I’ve seen and what I’m aware of, I may well be inclined to advise the clients to make that application”. [6]

27. [37]

    On 24 July 2020, Wass DCJ, in a judgment of some 489 paragraphs and 109 pages, made orders as follows: [7]

28. [38]

    On 30 July 2020, Goldsmiths queried whether the Defendants pressed their application for leave to file the fifth draft, foreshadowed that they would ask that it be relisted for directions to enable it to be determined, and foreshadowed that a further personal costs order would be sought in respect of the costs of such application. However, no objection to the fifth draft was indicated, and this was in circumstances where they had previously indicated that leave to file such a defence would not be opposed. On 31 July, they indicated that their costs covered by the personal costs order were $164,517 and were instructed to proceed to assessment. On the same day, Murinitis reminded Goldsmiths that they were awaiting Goldsmiths’ indication of what were the “undertakings” to which their non-objection to the fifth draft was expressed to be subject.

29. [39]

    Murinitis served a notice of intention to appeal from the personal costs order on 17 August 2020. On the same day, Goldsmiths sent an email to Murinitis stating that they were instructed to apply for a gross sum order, and an order restraining Murinitis from continuing to act (as had been foreshadowed at the conclusion of the proceedings on 1 May 2020). On 25 August, Goldsmiths sent an email to the judge’s associate requesting that the matter be relisted for directions in respect of those matters. Also on 25 August 2020, in respect of the application that they be restrained from acting, Murinitis requested that Goldsmiths “advise as to what your grounds for seeking such an order from the court are?” By a letter of the same date, Murinitis again asked Goldsmiths to “inform us of the grounds immediately”, and again requested that they clarify the Plaintiffs’ position in respect of the fifth draft. Goldsmiths declined to provide a substantive response. On 2 September 2020, Goldsmiths served draft short minutes for directions in respect of their proposed applications for a gross sum costs order and an order restraining Murinitis from continuing to act. Murinitis pressed the request for information as to the grounds on which it was proposed to seek to restrain them from acting; Goldsmiths again declined to provide a substantive response. On 3 September, Wass DCJ made directions in respect of both applications, including that the Plaintiffs serve any evidence by 10 September, and a Statement of Grounds by 17 September 2020, and recused herself from hearing them.

30. [40]

    On 9 September 2020, Goldsmiths by email informed Murinitis that “the Plaintiffs seek to discontinue their claim” and sought consent to filing a notice of discontinuance, and that they would not be pursuing an application for a restraining order or a gross sum costs order, but would proceed to assessment of the extant personal costs order. On 13 September, they informed the associate to Gibson DCJ that they were instructed to discontinue, and sought a listing for the purpose of seeking leave to discontinue. On 15 September, they sent an email to Murinitis, stating that if the cross-claim were pursued, costs would be sought against them personally, on the indemnity basis.

31. [41]

    On 17 September, directions were made for the Plaintiffs to file any evidence in support of their application for leave to discontinue their application for an order that the costs reserved on 8 August be paid personally by Murinitis, and their opposition to the filing of the cross-claim (to which they had previously indicated there was no objection). On 18 September, Goldsmiths informed Murinitis that the Plaintiffs consented to an order that they pay the Defendants’ costs “as a consideration [sic] for the discontinuance of the claim”, and did not oppose the Defendants having leave to file the proposed cross-claim (which had been served in August 2019, and which had never been the subject of any objection). Leave to discontinue the Plaintiffs’ defamation claim was granted on 3 December 2020, “on the express basis that all costs issues are to remain on foot pending the hearing of the proceedings in the Court of Appeal”. A notice of discontinuance was filed on 4 December 2020. The question of costs consequent on the discontinuance remains outstanding, although, prima facie, it would seem very likely that the Plaintiffs would be required to pay the Defendants’ costs.

32. [42]

    Meanwhile, on 9 October 2020, Goldsmiths retained cost consultants to prepare a bill of the Plaintiffs’ costs. On 23 October 2020, Murinitis filed their summons for leave to appeal. On 30 November, the Plaintiffs served a draft application for costs assessment and, in the absence of objection thereto, on 22 December 2020 filed and served their application for costs assessment, which was duly referred to an assessor. The amount of costs claimed is in the order of $200,000. On 1 March 2021, on a stay application, I made orders that enforcement of any award made by a costs assessor or a review panel on the application for costs assessment currently pending under the orders of Wass DCJ made on 24 July 2020 be stayed pending the hearing of the application for leave to appeal. [8]

Personal costs orders

1. [43]

   CPA, s 99(1) (“Liability of legal practitioner for unnecessary costs”) applies “if it appears to the court that costs have been incurred by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.” Subsection (2) provides that, “[a]fter giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following”:

2. [44]

   Subsection (6)(b) provides that “[a] party’s legal practitioner is not entitled to demand, recover or accept, in the case of a solicitor, from the client, any part of the amount for which the legal practitioner is directed by the court to indemnify any party pursuant to an order referred to in subsection (2)(c).”

3. [45]

   The jurisdiction to make such orders is to be exercised “with care and discretion and only in clear cases”. [9] It is to be observed that the section speaks of “serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible”. This indicates that it is only engaged by egregious conduct: mere (as distinct from serious) neglect, incompetence or misconduct does not attract it. In considering whether to make such an order, courts apply a three‐stage approach, asking first, is the practitioner’s conduct such as to satisfy the test; secondly, if so, did that conduct cause the applicant to incur unnecessary costs; and thirdly, if so, is it in all the circumstances just to order the legal practitioner to compensate the applicant for the whole or any part of the relevant costs. [10]

4. [46]

   Courts have not infrequently deprecated the threatening or making of applications for personal costs orders during or prior to the final hearing. This is for multiple reasons. First, often it cannot be determined until the conclusion of the trial whether steps taken in the matter were warranted, or unreasonable. [11] Secondly, the lawyer’s independence may be compromised, and the client’s confidence undermined, by an opponent’s threats to apply for costs against the lawyer during the proceedings. Thirdly, such a threat or application will often if not usually place the lawyer in position of conflict, resulting in the lawyer deciding that he or she can no longer act, depriving the client of its chosen representation while the proceedings are still on foot.

5. [47]

   In this respect, in the passage from Lemoto cited earlier, [12] McColl JA, accepting that the most realistic time for any such application to be made was immediately after proceedings have concluded, warned of the “real risk” that even then there may be prejudice to the client, if the legal practitioner ceases to act because of a perceived conflict of interest, as the client may be unable to secure advice as to the prospects of a successful appeal from the person most familiar with the proceeding. The prejudice is all the greater if the application is made before the proceedings are concluded, because it may deprive the client of its preferred legal representation during the proceedings. The problem, and the appropriate response, was discussed by Austin J in Redowood Pty Ltd v Goldstein Technology Pty Ltd: [13]

6. [48]

   Similarly, in Saadat v Commonwealth of Australia (No 2), Stanley J said: [14]

7. [49]

   The prospect of compromising opposing lawyers and potentially depriving the opposing litigant of its chosen representation may incentivise opponents to make threats of this kind for tactical advantage. [15] These problems are obvious. They must have been obvious to the Plaintiffs, or at least to their solicitors.

The primary judgment

1. [50]

   In order to understand the scope and structure of the primary judgment, and how the course of the proceedings departed from that which the above-discussed authorities endorse, to become a general inquiry into the conduct of Murinitis with all the associated difficulties of which those authorities warn, it is helpful to set out a skeleton, using the headings and sub-headings used by her Honour, accompanied by a short summary of the subject-matter under each:

   1. (1)

      Background ([1] – [4]). Her Honour explained that the judgment dealt with whether a personal costs order should be made against either Mr Muriniti or Mr Newell, in circumstances where the matter had been before her on ten occasions to deal with various objections to iterations of the proposed amended defence, the application for a personal costs order, and the position of conflict affecting Mr Newell in continuing to represent both the defendants, and Mr Muriniti and himself, in respect of the application for a personal costs order;

   2. (2)

      Evidence Relied On ([5] – [6]). Her Honour listed the affidavit evidence relied on;

   3. (3)

      Legal Principles Regarding the Making of a Personal Costs Order and the Basis of the Application ([7] – [13]). Her Honour summarised CPA s 99, and made observations, more fully set out below, [16] as to the approach she adopted and considerations to which regard had been had;

   4. (4)

      The Basis of This Application ([14] – [15]). Her Honour summarised the basis of the application, and Murinitis’ response, as follows:

   5. (5)

      Mr Newell’s Alleged Past Incompetence and Mr Muriniti’s Support of Him ([16] – [20]). Her Honour referred to professional difficulties which Mr Newell had encountered in the past, not associated with the present case, and observed that Mr Muriniti continued to support him regardless;

   6. (6)

      The Current Arrangement Between Mr Muriniti and Mr Newell ([21] - [27]). Her Honour described the arrangements under which Mr Newell was employed by Mr Muriniti, including that he held a “supervised practising certificate”. Her Honour referred to Mr Muriniti having changed his evidence, from saying that Mr Newell “would” be remunerated at the end of the proceedings, to that he “might” be remunerated, as “inconsistent answers” which “have negatively impacted upon my willingness to accept Mr Muriniti as an honest and reliable witness”; [17]

   7. (7)

      The Conflict of Interest Arising from the Application for a Personal Costs Order and How it was Dealt With ([28] – [118]):

   8. (8)

      Unreasonable Delay Occasioned by Mr Newell and Mr Muriniti in Bringing Forward the Defendants’ Evidence on the Irrevocable Waiver ([119] – [133]). It is explained that her Honour had required that the Defendants provide an affidavit and be questioned in court about whether their consent was a truly informed one, and that her Honour concluded, having heard from them, that it was not. [24] The course by which the affidavits were obtained and provided, and the Defendants ultimately produced for examination, is recounted, culminating in the conclusion: [25]

   9. (9)

      The Admission Into Evidence of the Unrelated Cases ([134] – [160]). The manner in which the judgments in the “Unrelated Cases” were admitted into evidence is set out, including criticisms of Mr Newell’s not being prepared to argue the question of tendency evidence (although no tendency notice had been served), and that by cross-examining Mr Goldsmith about collateral purpose, he “cross-examined back into evidence the unrelated cases that I had only provisionally allowed”. Her Honour also characterised Mr Newell’s suggestion that Mr Goldsmith’s real purpose was a collateral one as one of “serious wrongdoing by a solicitor”, which her Honour found “entirely without foundation”. Her Honour commented:

   10. (10)

       Did Mr Goldsmith Honestly and Reasonably Believe that Mr Newell Had held Himself Out to be a Barrister, to Add to His Concerns, So As To Justify the Seeking of a Personal Costs Order ([161] – [186]). With an initial further remark about Mr Newell’s “lack of preparation and consideration of the relevant issues”, [26] her Honour accepted that “by 6 September 2019 Mr Goldsmith had formed the view that Mr Newell was holding himself out to be a barrister and that he later found confirmation from that in a LinkedIn website, although that was not information Mr Goldsmith had when he sent the email on 6 August 2019”. [27] Mr Goldsmith’s belief was based in part on a number of published judgments which described Mr Newell as “counsel”. Her Honour concluded:

   11. (11)

       The Notice to Produce ([187] – [194]). This section deals with an application to set aside a notice to produce served on Murinitis for production of documents relevant to the “irrevocable waiver” and their timesheets, and contains further references to Mr Newell’s “lack of preparation”.

   12. (12)

       The Conduct of Mr Newell and Mr Muriniti Whilst Mr Muriniti was Under Cross-Examination ([195] – [219]). In this part, her Honour concluded that both Mr Newell and Mr Muriniti had breached their ethical obligations while Mr Muriniti was under cross-examination, in conferring with each other, in giving instructions and taking advice, and, in the case of Mr Muriniti, in approaching the Court with correspondence and providing advice to the Defendants. Her Honour characterised this as “an extremely serious breach of their obligations as both Mr Muriniti and Mr Newell understood them, and I propose as a result to also refer that matter to the Legal Services Commission for investigation as to whether or not Mr Newell and/or Mr Muriniti ought be dealt with for unsatisfactory professional conduct or professional misconduct”. [28]

   13. (13)

       Mr Newell’s Performance During This Motion Increasing Costs ([219] – [226]). Commencing with the observation that “Overall Mr Newell’s performance in Court was poor”, with the consequence that the proceedings “were unduly protracted and it led directly to the incurring of unnecessary costs and delay”, this section includes observations that “at times when Mr Newell was addressing the Court in person … he did not stand, where given his experience, he knew that this was appropriate Court etiquette. Apart from it being a discourtesy to the Court, it made it difficult to know if he was addressing me, obtaining instructions or speaking to Mr Goldsmith, adding to the delay”, and that “On one occasion Mr Newell was eating a muffin whilst in Mr Muriniti’s office and appearing in Court via the AVL. His response to that was most unsatisfactory. I formed the view overall, that Mr Newell was either not aware of, or not overly concerned with, the normal Court protocols”. Her Honour continued to the effect that there were many instances in which it appeared that Mr Newell was incompetent in defending the application and in conducting the defamation action more generally, by reason of either a lack of understanding and experience or a lack of preparation, or both; that his advocacy was at times rudimentary; and that these deficiencies prolonged the proceedings;

   14. (14)

       Who Prepared the Pleadings ([227] – [232]). Reference is made to Mr Muriniti’s acceptance of responsibility for the pleadings while maintaining that it was Mr Newell who drafted them, and an apparent inconsistency with the timesheets which attributed time spent in drafting to Mr Muriniti, concluding:

   15. (15)

       The Proposed Amended Defences ([233] – [371]):

   16. (16)

       The Position Taken By Mr Newell in Submissions in the Course of the Personal Costs Application Regarding the Proposed Pleadings ([372] – [376]). Reference is made to Mr Newell’s attempt to justify parts of the earlier pleadings, deficiencies in which he had previously conceded. Her Honour observed that although there might only have been two arguments concerning leave to amend before the Court, the other iterations of the draft amended pleadings also caused the Plaintiffs to incur costs;

   17. (17)

       The Position Taken By Mr Muriniti Regarding the Proposed Pleadings in the Course of the Personal Costs Application ([377] – [398]). Reference is made to Mr Muriniti’s acceptance that the first draft was “problematic”, his assertion that Mr Goldsmith kept “moving the goalposts” with new objections, his acceptance that he and Mr Newell had minimal experience in defamation but took on the defendants on a “compassionate basis” (about which he was questioned by her Honour, suggesting that they ought to have been referred to the pro bono scheme), his failure to seek assistance from any defamation barrister, and to a suggestion by her Honour that “an inexperienced defamation lawyer whilst wanting to do the best by a client is not necessarily fulfilling his obligations to the Court. Mr Muriniti accepted that this might be a possibility, but that had not occurred in this case”. Her Honour concluded:

   18. (18)

       Breach of s 56 ([399] – [410]). Her Honour found that both Mr Muriniti and Mr Newell had breached their obligations under s 56 of the Civil Procedure Act “in many respects”;

   19. (19)

       The Unrelated Cases – Tendency ([411] – [474]):

   20. (20)

       The Respondents’ Lack of Candour and the Most Recent Case ([475] – [483]). Reference is made to another “unrelated case”, to which her Honour had not been referred, in which a personal costs order was made against Mr Newell and Mr Muriniti, namely Muriniti v King, [47] in which this Court referred to their having behaved “incompetently, unprofessionally, inappropriately and against the true interests of their client” by having “embarked on futile litigious activities and incurred considerable unnecessary costs liabilities”. Her Honour concluded:

   21. (21)

       Legal Principles – Indemnity Costs ([484] – [486]). Her Honour referred to the discretion to award costs on an indemnity basis and referred to the “many and varied acts of delinquency” on the part of the Murinitis which her Honour considered to justify such an award;

   22. (22)

       Finding In Respect of Personal Costs Orders Against Mr Newell and Mr Muriniti ([487]). Her Honour expressed the conclusion that the orders sought by the Plaintiffs would be made;

   23. (23)

       Orders ([488]). Her Honour made the orders which have been set out above. [48]

The appeal

1. [51]

   It is not necessary to address all of the thirteen grounds contained in the draft notice of appeal. Ground (i) was as follows:

2. [52]

   The essential question for the primary judge was whether, within the meaning of CPA s 99, “costs have been incurred by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible”. From the outset, the application was founded on the defective pleadings. This is reflected in her Honour’s summary of the case, which has been more fully set out above, [49] but in particular that “wholesale and basic deficiencies were exhibited, for example to plead the facts. Such deficiencies were as a result of a demonstrated lack of knowledge and experience on the part of Mr Muriniti and Mr Newell”.

3. [53]

   In the particulars provided on 3 April 2020, Goldsmiths, for the Plaintiffs, relied upon “serious neglect” and “serious incompetence”, “incurring of costs without reasonable cause”, and “breach of the obligations imposed by section 56”, and “in support of each of the grounds, the plaintiffs also rely upon the tendency conduct of both Mr Muriniti and Mr Newell”. In summary, the “serious neglect and serious misconduct” was said to be in the preparation of the first four iterations of the draft amended defence. Aside from annexing the objections which had been taken to the 1st and 4th drafts, it was said that provision of four drafts, two of which were abandoned and two of which were rejected by the Court, “is not consistent with the competence reasonably expected of ordinary members of the profession and/or Mr Muriniti and Mr Newell were seriously incompetent in the preparation of them”. In addition, it was said that costs had been incurred without reasonable cause relating to the need to consider and address the various drafts, the “informed consent issue”, and inappropriate cross-examination of Mr Goldsmith; in the latter two respects, this confused costs associated with the conduct of the application, with the costs the subject of the application. Further, “the plaintiffs rely upon 6 judgments in which personal costs orders have been made against Mr Muriniti and/or Mr Newell as evidence of their tendency to engage in conduct that infringes section 99(1) and/or causes a breach of section 56(1)”.

4. [54]

   In explaining the approach she adopted, her Honour said:

5. [55]

   That passage, in particular at [13], is an explicit statement that, as well as considering the various iterations of the amended defences, and the responses to the various objections to them – matters which were central to the application – her Honour did indeed have regard to (1) the “conduct and attitude” of Mr Muriniti and Mr Newell in the proceedings and during the hearing of the motion, (2) their conduct as illustrated in the “unrelated cases”, and (3) conclusions drawn from their timesheets. The headings and structure of the primary’s judge’s reasons, as reflected in the above skeleton, confirms that her Honour did so. In my judgment, for the reasons that follow, her Honour erred in having regard to those matters, which were not only irrelevant but prejudicial. The suggestion that her Honour was driven to rely on these matters by Murinitis reliance on their clients’ privilege to decline to inform the Court as to the background behind the amendments is inapt: the amendments reflected technical objections to the pleadings, not changes in instructions; they were not of a kind that might be explained by instructions; and even if they were, that would not render recourse to irrelevant and prejudicial considerations permissible.

6. [56]

   Below, I address first, the use of Murinitis’ conduct in the hearing, including the “informed consent issue”; secondly, the use of the “unrelated cases”; and finally, the use of the timesheets.

7. [57]

   As has been foreshadowed, her Honour was critical of Mr Newell’s conduct of the proceedings on the personal costs order application:

8. [58]

   The above observations did not relate, at least directly, to the defective pleadings which were the foundation of the application. In Smith v NSW Bar Association, [50] the High Court explained that if it was intended to rely on the conduct of a practitioner in the course of the defence of a disciplinary proceeding as an additional element of misconduct, it is necessary at the least that it be explicitly drawn to the practitioner’s attention, if not made the subject of an additional charge. Deane J said: [51]

9. [59]

   To like effect, Brennan, Dawson, Toohey and Gaudron JJ observed: [52]

10. [60]

    The present are not disciplinary proceedings, but not dissimilar considerations apply. Moreover, while misconduct in the course of a disciplinary hearing might inform the ultimate question of fitness, in an application for a personal costs order it is difficult to see how conduct during the hearing of that application could inform the question of whether the costs the subject of the application have been occasioned by serious neglect or incompetence.

11. [61]

    Mr Newell’s lack of proficiency in the conduct of the proceedings might have been relevant to the costs of the application itself, but it was not relevant to the question whether the deficiencies in the pleadings were such as to warrant a personal costs order. His general proficiency in defamation law and practice was not relevant on either basis. Nor was his supposed knowledge of or attitude to courtroom protocols. His failure on occasion to stand when addressing the Court, and that he was eating a muffin in Mr Muriniti’s office when an AVL commenced, while they may have been indecorous, did not warrant the attention they received, and were entirely irrelevant to whether the pleadings were the result of such incompetence as to warrant a personal costs order.

12. [62]

    A substantial part of the judgment ([28] – [133]) dealt with “The Conflict of Interest Arising From the Application for a Personal Costs Order and How it was Dealt With”. The Plaintiffs say that this issue was raised by her Honour and not by them. Murinitis submit that the intended result of the application was to separate them from their clients.

13. [63]

    Her Honour was “concerned that the only advice that the defendants had received (on either the issue of conflict of interest or as to any decision to waive privilege as to how the various iterations of the proposed Amended Defence were prepared) was from either Mr Newell or Mr Muriniti”. [53] Her Honour was dissatisfied with Mr Newell’s assurance that the defendants had consented to his continuing to act, and in particular that:

14. [64]

    As has been recorded, on 11 December 2019, “irrevocable waivers” signed by the clients were produced, exhibited to an affidavit by Mr Muriniti. The evidence of Mr Goldsmith, who was then under cross-examination, was postponed, so that her Honour could question each Defendant personally. Her Honour plainly considered that the AVL was manipulated by Murinitis, to permit them to “coach” their clients, but ultimately accepted that:

15. [65]

    The costs of that exercise are part of the costs of the motion, which were included in the personal costs order. The exercise also appears to have formed part of “the conduct and attitude that Mr Newell and Mr Muriniti have exhibited in the proceedings” to which her Honour had regard on the personal costs order application.

16. [66]

    The conflict arose because of the timing of the application for a personal costs order. By raising the spectre of such an application at the outset of the proceedings, the Plaintiffs – or their lawyers Goldsmiths – created the potential conflict. Had they, in accordance with the guidance of the authorities referred to early in this judgment, awaited the outcome of the proceedings, it would not have arisen. Whether or not intended, making the application was calculated to create a conflict and the Plaintiffs, or their lawyers, ought to have realised this.

17. [67]

    This conflict, Murinitis’ response to it, and its resolution at her Honour’s instigation, were not relevant to the essential question, namely whether the deficiencies in the pleadings were a manifestation of such incompetence as to warrant a personal costs order.

18. [68]

    From the outset, the Plaintiffs sought to deploy in support of their claim for a personal costs order the fact that personal costs orders had been made against Murinitis in other unrelated proceedings. This is apparent, for example, in the initial affidavit of Ms Andrews of 6 August 2019, which referred to and annexed some of those cases. In submissions on 11 December 2019, when Mr Goldsmith moved on the application for a personal costs order, he submitted that the original defence was absolutely hopeless; the proposed amended defence was equally hopeless; the pleadings were simply taken from a book of forms and precedents without any real regard or consideration as to what an appropriate defence required; and Mr Muriniti and Mr Newell have a tendency to file pleadings that are lacking in merit, knowingly in this case subjecting the Plaintiffs to increasingly significant and unnecessary costs, and where he and the Plaintiffs were rightly concerned that the Defendants did not have any funds or assets to meet any costs order. [54]

19. [69]

    In respect of the judgments in the ‘unrelated cases”, her Honour stated that “the evidence ordinarily could not, without consent, be used as tendency evidence in this case”. [55] However, her Honour proceeded:

20. [70]

    It is not at all clear on what basis the judgments of other judges in other cases were admissible as evidence of any decision or finding of fact made in them. Her Honour referred to King v Muriniti, in which Basten JA, with whom Gleeson JA agreed, concluded that Evidence Act, s 91, does not preclude the use of evidence of a decision or finding of fact in exercising jurisdiction under Civil Procedure Act, s 99; [56] but that related to the use of findings made at an earlier stage in the same proceedings, not to judgments by other judges in completely unrelated proceedings – as her Honour appears to have appreciated. [57]

21. [71]

    But putting that to one side, it is quite unclear what the relevant tendency was said to be. The particulars provided by the Plaintiffs referred to “their tendency to engage in conduct that infringes section 99(1) and/or causes a breach of section 56(1)”. The primary judge referred to “Their cavalier approach to: court procedure; the rules of evidence; their duty to their clients in the context of their undoubted conflict of interest; their duty to their opponent and to the Court to be candid; and to conduct the proceedings consistent with their obligations under s 56 of the CPA”. When asked to formulate the relevant tendency, Mr Smark SC referred to the Plaintiffs’ submissions to the primary judge, which referred to “a tendency to be indifferent to their obligations to the Court”, “a tendency to make submissions that do not grapple with the point”, “a tendency to be unable to accept or act on criticism”, “a tendency to make unsubstantiated allegations”, and “a tendency to prolong hearings”.

22. [72]

    It is not apparent just what was the fact in issue in the present case the assessment of which could have been affected by the establishment of any such tendency. [58] Whether the pleadings were grossly defective, and whether such defects amounted to serious incompetence, was simply not informed by how Murinitis had conducted other litigation. All the “unrelated cases” really demonstrated was that Murinitis had suffered personal costs orders and judicial criticism in other cases with uncommon frequency. That was of no probative value on the issues in the particular case, just as a tendency no more particular than one to commit crimes of the kind charged is ordinarily insufficiently probative to permit the reception of tendency evidence. [59]

23. [73]

    There was no contested question of fact in the present case, the resolution of which could be aided by establishing any such tendency. The “unrelated” cases did not have significant probative value such as to authorise their admission as “tendency evidence”. It was, therefore, impermissible to have regard to the “findings of fact in the unrelated cases”, let alone to regard them as having significant probative value in the instant case. To the contrary, they were not only irrelevant and inadmissible, but highly prejudicial.

24. [74]

    Before us, Mr Smark SC sought only faintly to support the admissibility of the so-called tendency evidence, but emphasised her Honour’s statement that it was not decisive, merely confirming “my view of Mr Newell’s and Mr Muriniti’s utter disregard for their professional obligations in respect of the issues I have identified”. However, while her Honour stated that the “tendency evidence” did not change her mind, her Honour expressly took it into account. Once it was taken into account, error in having regard to it cannot be immunised by a statement that it was not decisive. Here, the “tendency evidence” played such a role in the formulation and conduct of the case, from the outset, and was so prejudicial, that it cannot be passed off as having had no impact on the mind of a judge who expressly took it into account. Moreover, its use significantly contributed to the miscarriage of the proceedings into a general inquiry into Murinitis’ “conduct and attitude”.

25. [75]

    In one section of the primary judgment, her Honour said:

26. [76]

    The “different account” was that according to the timesheets, Mr Muriniti was engaged rather more extensively in the drafting of the pleadings than his oral evidence suggested. It may be that such an inconsistency was relevant on questions of credit. The timesheets may also have been relevant to show the time incurred by Murinitis in drafting pleadings and responding to objections. However, they and this discrepancy had nothing to do with costs incurred by the Plaintiffs and whether they were unreasonably inflicted, or whether they were a manifestation of serious incompetence: it is not apparent how Murinitis taking less time, or more time, in drafting the pleadings, or the extent to which Mr Muriniti as distinct from Mr Newell was involved, would have made any difference at all to whether by incompetence they inflicted unnecessary costs on the plaintiffs.

27. [77]

    The passage extracted above [60] explicitly states that these irrelevant matters were expressly taken into account by the primary judge on the substantive application for a personal costs order. For the reasons stated above, her Honour erred in having regard to the conduct and attitude that Mr Newell and Mr Muriniti have exhibited in the proceedings (and as informed by unrelated cases); their conduct during the hearing of the motion; and what has been identified in various timesheets. [61] Those considerations were irrelevant, and prejudicial. The discretion to make a personal costs order miscarried.

Redetermination

1. [78]

   As the discretion miscarried, it may be exercised afresh by this Court, having regard to the circumstances now prevailing. Those circumstances notably include one development since the hearing before the primary judge, namely the Plaintiffs’ discontinuance of their substantive defamation claim.

2. [79]

   Her Honour dealt with the pleadings, which were the essence of the application, under the heading “The Proposed Amended Defences”. [62]

3. [80]

   It is to be borne in mind that, although there were five versions of the draft amended pleading, only two contested applications for leave to amend were dealt, one of which, on 5 September 2019, concerning the first draft of 15 August 2019, occupied about 90 minutes, and the other, on 4 December 2019, concerning the fourth draft of 2 October 2019, about four hours. The second draft of 20 September 2019 was quickly superseded by the third draft of 26 September 2019, and in turn by the fourth draft of 2 October 2019; the three versions reflected a process of evolution over a period of less than two weeks. Ultimately, the fifth draft of 18 March 2020 was uncontested, although at times that position was said to be subject to conditions, which were never specified. It is also to be borne in mind that no objection was ever articulated to the cross-claim.

4. [81]

   It is also worth noting that this was a relatively small defamation claim, in respect of Facebook and other internet posts by a work experience student who apparently was unsurprisingly not financially well-resourced and for whom Murinitis were acting on a “compassionate” basis. A practitioner acting for a defendant in a small defamation claim in the District Court is not to be judged by the standard of an experience specialist defamation lawyer.

5. [82]

   As explained above, mere negligence, incompetence or misconduct is insufficient to satisfy the test in s 99; the section is enlivened only by serious negligence, incompetence or misconduct. A conclusion of serious incompetence does not follow from two unsuccessful attempts to obtain leave to amend a pleading, together with two intermediate drafts that were promptly superseded.

6. [83]

   I have reviewed each iteration of the defence, and the transcript of the hearings before her Honour on 5 September 2019 and 4 December 2019. The earlier drafts were far from perfect, at least from a technical defamation lawyer’s perspective. But from the first draft, the Plaintiffs – or at least their lawyers – could have been under no serious misapprehension as to the substance of the defence. Many of the objections which prevailed at the hearing on 4 December 2019 were highly technical, if not pedantic. For example, complaints that the Plaintiffs could not know what to make of an allegation that the first defendant was given a cleaning cloth that was “filthy”, in the absence of an articulation of the relevant professional standard; that a cat was left with nothing but newspaper and litter in its cage and was distressed, in the absence of further particulars of the cat’s distress; or that two boarding dogs did not have a water bowl, in the absence of detail as to when and for how long and whether surgery was imminent; have an air of unreality. Likewise, an objection that a pleading that certain matters complained of were an expression of opinion of the first defendant failed to plead that they were her “honest” opinion.

7. [84]

   Some of Mr Newell’s “concessions” in the course of the hearing on 4 December 2019 were plainly to the effect that further argument could be avoided if the pleading were amplified by further particulars, and savour of cooperative compromise rather than of concession. That such matters were “conceded” in the context and atmosphere of the hearing, especially once it was established that there would to any extent have to be a further pleading, despite having been pressed in written submissions, is not evidence of serious incompetence.

8. [85]

   To the extent that the objections were technically correct, the defects identified, taken as a whole, did not in my opinion manifest “serious incompetence” as referred to in s 99 such as to warrant a personal costs order.

9. [86]

   Moreover, the objections, even if technically correct, were in large part unnecessary for the Plaintiffs, in the context of a small claim of this kind, to understand in substance the case they had to meet, and in that sense disproportionate. That is an additional reason for concluding that, as a matter of discretion, it was and is not appropriate to make a personal costs order.

10. [87]

    Before us Mr Newell submitted, as he had at first instance, that the application ought to have been dismissed on the basis that it was an abuse of process, being brought for the collateral purpose of forcing Murinitis to cease to act for the Defendants. The primary judge viewed this as a grave allegation made against Goldsmiths on insubstantial grounds.

11. [88]

    The following circumstances must be viewed in light of the notorious fact that an application for a personal costs order almost inevitably and inherently creates at least the potential for a conflict between the interests of the solicitor and the client, and is calculated to undermine clients’ confidence in their solicitor. Goldsmiths must be taken to have been aware of these inherent characteristics of such applications.

12. [89]

    First, there was the quite remarkable threat in the very first letter of 12 July 2019 taking objection to the original defence, to seek such an order, at a time when, as Mr Newell rightly points out, there were, at least not yet, any “wasted costs” at all. There was no need to threaten such an application at that stage, which begs the question why it was raised so prematurely, and thereafter pressed so persistently and ardently.

13. [90]

    Secondly, there was Goldsmiths’ email of 6 August 2019, in which – before any amended pleading had been served, and still before there were any “wasted costs” – the threat to apply for a personal costs order was repeated.

14. [91]

    Thirdly, there was Ms Andrews’ affidavit of 6 August 2019, the purport and I would infer purpose of which was to impugn Mr Newell as falsely holding himself out as counsel, to impugn Murinitis in the face of the Court and their clients and create an environment prejudicial to them by showing (irrelevantly) that they had previously been associated with protracted litigation and incurred personal costs orders. Again, this was at a stage when the first draft amended pleading had not yet been proffered. Significantly, the “concerns” attributed to the Plaintiffs by Ms Andrews concerning the tendency of Murinitis to prolong and protract proceedings would not be resolved by making a personal costs order against them; indeed, pursuing such an order at the interlocutory stage was itself likely to protract and delay the substantive proceedings. However, such concerns would be resolved if Murinitis were separated from their clients and forced out of the proceedings.

15. [92]

    Fourthly, there was the disregard of the wise cautionary words of Gibson DCJ at the directions hearing on 8 August 2019. Instead, the application was relentlessly pursued, long before the pleadings were finalised.

16. [93]

    Fifthly, at the outset of the hearing on 4 December 2019, when asked by the primary judge whether the Plaintiffs were content that “despite four attempts at a defence, that the defendants have another go at the fifth one”, Mr Goldsmith delphically replied (emphasis added):

17. [94]

    Plainly, Mr Goldsmith recognised the potential impact of such an order on the Defendants’ confidence in their solicitors.

18. [95]

    Sixthly, there was the so-called “Barrister issue”. Her Honour accepted Mr Goldsmith’s evidence that “he genuinely believed that Mr Newell had held himself out to be a barrister and I find that whatever was said by Mr Newell, both Mr Goldsmith and Ms Andrews were left with the impression that Mr Newell was a barrister”. However, no finding was made as to what Mr Newell said, and indeed no satisfactory evidence was ever given of what Mr Newell allegedly said to create that impression: Mr Goldsmith could not recall precisely what Mr Newell had said, but that he had said something which gave him and, he believed, Ms Andrews, the impression that he was a barrister. [63] Mr Goldsmith placed reliance on how Mr Newell was described in other judgments. However, as has been noted, of the two judgments which were annexed to Ms Andrews’ affidavit:

    1. (1)

       in De Costi Seafoods (Franchises) Pty Ltd v Wachtenheim (No 3), [64] Mr Newell and Murinitis were recorded on the coversheet under “Representation” as representing the defendants/cross-claimants (but not described as “counsel”); and

    2. (2)

       in King v Muriniti, [65] Mr Newell’s name appeared under the heading “Counsel” on the coversheet, but the judgment accurately recorded that Mr Newell was “a solicitor employed by Mr Muriniti” (at [54])).

19. [96]

    In Muriniti v King, [66] to which Mr Goldsmith and her Honour specifically referred, [67] the coversheet records, under “Representation”: “Counsel: R Newell (Applicants). However, although the judgment does not specifically refer to the status of Mr Newell, it is obvious to an intelligent reader familiar with the profession, from the repeated references to his and Mr Muriniti’s standing with LawCover, that he was known to be a solicitor. This would also have been obvious to the Court from the fact that he presumably did not appear robed.

20. [97]

    It is not at all uncommon, where a solicitor appears as an advocate, for his or her name to appear under the heading “counsel” on the Caselaw coversheet, albeit often followed by the designation ‘(Sol)’. To infer from that that he held himself out as counsel is not reasonable. But the issue was pursued with vigour. On 6 September 2019, Mr Goldsmith inquired of the Bar Association whether Mr Newell was a barrister, by reference to an old LinkedIn account which described him as “Owner Wentworth Chambers”. As correspondence from Murinitis referred to Mr Newell “of our office”, [68] and in the course of the hearing on 5 September 2019 Mr Goldsmith referred to “Mr Muriniti who is the principal of the firm of solicitors for which Mr Newell apparently works”, [69] it is difficult to accept that this was motivated by anything other than a desire to cause trouble for Mr Newell, a view which might be confirmed by Ms Andrews having deposed on 6 August 2019 that by search conducted that day she had established that he was not a barrister but an employed solicitor of Mr Muriniti. In any event, the resolute pursuit of the issue begs the question, to what end? The issue was entirely irrelevant to the “wasted costs” application. It is an available inference that it was for the collateral purpose of embarrassing Mr Newell in the conduct of the proceedings.

21. [98]

    Seventhly, when the application was articulated on 11 December 2019, it was again infected by the “tendency” argument, and the “barrister” issue. As her Honour recorded: [70]

22. [99]

    Eighthly, there was the foreshadowed application for an injunction to restrain Murinitis from continuing to act. This was first raised on 1 May 2020. Although the threat of the application was repeated, on 17 August, 25 August and 2 September 2020, there was a conspicuous failure to articulate the grounds to be relied upon when they were requested – an entirely reasonable request – and when they were ultimately directed by the Court, the threatened application was abandoned.

23. [100]

    And finally, there was the discontinuance of the substantive proceedings, when Murinitis continued to act after the wasted costs order was made, such that the proceedings resulted in no benefit for anyone but Goldsmiths.

24. [101]

    The application was plainly motivated in substantial part by the fact that such orders had been made against Murinitis in other unrelated cases. From the outset, that fact was relied on in support of the application. However, that fact was quite irrelevant to whether such an order should be sought or made in the current proceedings, and was an inappropriate consideration in deciding to make the application. There was no need for this application to be made, let alone determined, when it was. It could at least have awaited the outcome of the applications for leave to amend the statement of claim, and should probably have awaited the outcome of the substantive proceedings. In that way, the risk of embarrassment, conflict of interest, and satellite proceedings, could have been avoided, and the court would have been better positioned to determine whether the appellants’ conduct warranted the making of the order. The timing is eloquent of a collateral purpose.

25. [102]

    For the above reasons, a view that the constellation of factors to which I have referred is to be explained by a collateral purpose of separating the Defendants from their solicitors is not a paranoid delusion, but one that is well open. However, it is unnecessary to go so far to resolve this appeal. In my view, if the proceedings stood as they did when the application came before her Honour, I would not embark on hearing it, but would defer it until the finalisation of the substantive proceedings.

26. [103]

    However, the proceedings do not stand as they then did; the substantive claim has since been discontinued. The practical consequence of the orders made, in the light of the discontinuance of the substantive proceedings, is that the only beneficiary of the proceedings is the Plaintiffs’ solicitors Goldsmiths, who will have the indirect benefit of the personal costs order against Murinitis. Their clients the Plaintiffs will derive no benefit from the proceedings at all.

27. [104]

    In my opinion, in the context of this case, the drafting of the impugned pleadings was not so defective as to justify a personal costs order. In any event, the application for such an order was prematurely made and prematurely heard. In circumstances where the Plaintiffs have since abandoned their claim, it is in my opinion now entirely inappropriate to make a personal costs order against Murinitis in respect of the interlocutory applications for leave to amend the defence.

Referrals to Legal Services Commissioner

1. [105]

   As has been noted, at various points of her Honour’s reasons, the primary judge made observations about various aspects of the professional conduct of Mr Muriniti and Mr Newell, and foreshadowed that the matter would be the subject of a referral to the Legal Services Commissioner. Her Honour’s formal orders included the following: [71]

2. [106]

   It is conventional that when a judge has in mind referring a legal practitioner to a professional regulator for disciplinary investigation, the practitioner is afforded an opportunity to show cause why there should not be a referral. This practice was not followed in this case. This was not a private complaint to the Legal Services Commissioner, nor a decision to institute disciplinary proceedings, in respect of which at common law there might be no right to be heard, [72] but a formal decision recorded in a published judgment to refer a practitioner to a regulatory authority for disciplinary investigation, which of itself has serious potential reputational consequences for a practitioner, such as to attract the principles enunciated in cases such as Mahon v Air New Zealand, [73] Annetts v McCann, [74] and Ainsworth v Criminal Justice Commission. [75]

3. [107]

   In my view, the direction that the Registrar send her Honour’s reasons to the Legal Services Commissioner to determine whether or not Mr Muriniti and/or Mr Newell had engaged in unsatisfactory professional conduct or professional misconduct involved a denial of procedural fairness. There was no stay of that direction pending appeal, and the papers have presumably long since been sent. The receipt by the Legal Services Commissioner of the District Court’s reasons does not of itself have any legal consequence, although it may well have a practical consequence. In those circumstances, the appropriate course is to make a declaration to the effect that that in sending the papers to the Legal Services Commissioner the District Court failed to observe the requirements of procedural fairness: cf Ainsworth v Criminal Justice Commission. [76]

Conclusion

1. [108]

   I propose the following orders.

   1. (1)

      Allow the appeal, with costs;

   2. (2)

      Set aside the orders made in the District Court on 24 July 2020;

   3. (3)

      In lieu thereof, dismiss the application for a personal costs order, with costs.

   4. (4)

      Declare that in sending the papers to the Legal Services Commissioner the District Court failed to observe the requirements of procedural fairness.