Hermes Far Eastern Shining Pty Ltd v Potable Gold Strike Pty Ltd

By a notice of motion filed on 7 April 2025, the defendant/applicant (Potable Gold) seeks personal cost orders against Mr Jon Cronin and Ms Stacy Miller, the first and second respondent solicitors. The motion relates to Potable Gold’s costs of these proceedings, including on the indemnity basis as from 2 July 2024 to 25 March 2025.

The solicitors are the members of an unincorporated partnership trading as Cronin Miller Litigation and located in Queensland. While I shall refer to them as the “solicitors”, I do so as a matter of convenience because they are both respondents to the motion. There is no suggestion Ms Miller played any part in the conduct of these proceedings.

The solicitors acted for the plaintiff (Hermes Far Eastern Shining Pty Limited) in these proceedings, which were commenced in 2022 in the Supreme Court of Tasmania, were transferred to this Court in 2024 and dismissed by consent on 14 March 2025. In a costs judgment on 25 March 2025, Brereton J held that “[Hermes’] case never had any prospects of success”: Hermes Far Eastern Shining Pty Limited v Potable Gold Strike Pty Limited [2025] NSWSC 263 at [40]. So much had been conceded by Ms M Painter of Senior Counsel, who was then appearing for Hermes.

Brereton J ordered Hermes to pay Potable Gold’s costs of the proceedings, with those costs to be assessed on the indemnity basis from 2 July 2024. Hermes contends Potable Gold is not able to pay those costs. Given the outcome on the motion, it is not necessary for the Court to make a finding about this issue, even assuming it was otherwise relevant to the exercise of the Court’s discretion.

Potable Gold advanced its application against the solicitors on two bases: the Court’s inherent jurisdiction and under s 99(2)(b)(ii) of the Civil Procedure Act 2005 (NSW) (CP Act).

For the reasons which follow, the Court has determined that the motion should be dismissed with costs. Those reasons may be summarised as:

Mr M Condon of Senior Counsel appeared with Mr D Smith of Counsel for Potable Gold. Mr M F Newton of Counsel appeared for the solicitors.

Hermes was the third respondent to the motion. It did not appear. However, the day before the hearing, my Associate received this email (privilege objection) from Hermes’ solicitors:

The facts, which essentially concerned the conduct of the proceedings, were not in dispute. None of the deponents of the affidavits that were read were required for cross-examination. Neither of the solicitors provided an affidavit. The evidence upon which they relied was from their then employed partner, Ms Alana Ryzner, who had the day-to-day carriage of the proceedings on behalf of Hermes.

Potable Gold owned a property in Tasmania. The sole director and shareholder of Potable Gold is Rosette Communitas. Hermes was connected with a group in northern New South Wales of which Ms Communitas was a member.

Hermes was Potable Gold’s tenant at the property under a residential tenancy agreement. On 13 July 2021, Potable Gold commenced proceedings in the Magistrates Court of Tasmania to evict Hermes.

Hermes’ response was to commence these proceedings by filing a writ in the Supreme Court of Tasmania on 28 February 2022. The solicitors were not acting for Hermes at the time the writ was filed. Hermes claimed a declaration that Potable Gold’s interest in the property was held for Hermes:

A statement of claim was filed on 14 June 2022, which included:

In these reasons I shall refer to prayer (a) for relief as the trust claim. I shall refer to prayer (c) for “damages or compensation and an order that the Property is charged to the extent of the amount ordered” as the damages claim. The significance of the damages claim was in contest on the hearing of the motion before me.

On 14 July 2022, Potable Gold filed its defence.

On 2 November 2022, the first respondent, Mr Cronin, went on the record as the solicitor for Hermes.

By further and better particulars dated 14 November 2022, Hermes particularised payments referred to in paragraph 25(b) of the claim as totalling $82,595 (mortgage payments claim), and the expenditure on works referred to in paragraph 25(c) of the claim as $891.03 (improvements claim).

From about January 2023, Ms Ryzner had the day-to-day conduct of the proceedings for Hermes. She became aware that Hermes’ previous solicitors had briefed Mr D Hand of Counsel, of the New South Wales bar. Shortly after Mr Cronin went on the record for Hermes, the solicitors briefed Mr B McTaggart of Senior Counsel and Ms C Sluiter of Counsel, both of the Tasmanian bar, in connection with the proceedings.

On 5 June 2023, the solicitors also briefed Mr M Cobb-Clark of Counsel, of the New South Wales bar, in connection with these proceedings.

On 14 December 2023, a registrar of the Supreme Court of Tasmania listed the proceedings for a trial to commence on 5 August 2024. No orders had then been made for service of affidavits or witness statements to be relied on at a trial of the proceedings, the Tasmanian practice being for evidence to be given orally.

On 21 February 2024, Hermes filed an interlocutory application by which it applied to have the proceedings cross-vested to this Court.

By letter dated 24 April 2024 and addressed to the Supreme Court of Tasmania, Potable Gold’s solicitors attached a proposed amended defence. This included a new plea relying on s 60(2)(b) of the Conveyancing and Law of Property Act 1884 (Tas), the Tasmanian enactment of the Statute of Frauds (special defence). This was not a defence which had been previously raised by Potable Gold and it was the first occasion that it had communicated any intention to amend its defence. The letter was treated as an application to amend the defence.

Section 60 of the Tasmanian enactment includes:

Ms Ryzner received oral advice from Mr McTaggart SC and Mr Cobb-Clark relating to the proposed amended defence and concerning the position should leave be granted to Potable Gold to file that document.

The respective parties’ applications did not come on for hearing until 24 June 2024, when they were heard by Porter AJ. Mr McTaggart SC appeared for Hermes. Porter AJ reserved his decision at the conclusion of the argument. During the argument, Mr McTaggart SC submitted “There will need to be a substantial reply. It raises further issues as to discovery and the need for additional witnesses”.

On 2 July 2024, the Supreme Court of Tasmania granted Potable Gold leave to file its amended defence (which included the special defence) and transferred the proceedings to this Court.

Also on 2 July 2024, Potable Gold’s Tasmanian solicitors wrote to the solicitors making a Calderbank offer and contending that Hermes’ entire claim was untenable, among other things, by reason of the special defence. The letter expressly traverses the claim for improvements but does not expressly refer to the mortgage payments claim.

On 8 July 2024, Ms Ryzner wrote to Potable Gold’s solicitors stating that Hermes intended to file a reply to the amended defence once the proceedings had been transferred to this Court.

On 15 August 2024, Potable Gold’s newly appointed NSW solicitors wrote to the solicitors again stating that Hermes’ claim was certain to fail because of the special defence. It also referred to the improvements claim as an “additional claim … [providing] no basis for equitable intervention”, but made no specific reference to the mortgage payments claim.

On 21 August 2024, an employee of the solicitors’ firm wrote to Potable Gold’s solicitors that the matters raised by their letter of 15 August 2024 were being considered with Hermes and its counsel. No substantive reply was ever sent on behalf of Hermes to Potable Gold’s solicitors’ letter of 15 August 2024.

On 27 August 2024, Ms Ryzner obtained oral advice from Mr Cobb-Clark.

On 29 August 2024, Potable Gold filed a notice of motion seeking the summary dismissal or striking out of Hermes’ claim, or security for costs in the alternative (dismissal motion). That application was resisted. Notices to produce were issued by Potable Gold. Hermes applied to set these aside, which resulted in a contested hearing before me on 22 November 2024.

As of 4 September 2024, Ms Ryzner expected that Hermes would be filing a reply to the amended defence. On that day, Hermes proposed that when the proceedings came before the Court on 11 September 2024, there be an order for the filing of a reply.

On 5 September 2024, the solicitors briefed Ms Painter SC to provide advice regarding the proceedings.

On 11 September 2024, directions were made which included under the heading “Plaintiff’s Proposed Motion”:

No motion for leave to file and serve a reply was ever filed. Nor was a draft form of reply ever provided to Potable Gold’s legal representatives.

On 3 October 2024, Ms Ryzner received a memorandum of advice from Ms Painter SC and Mr Cobb-Clark. She read and reviewed that memorandum on or about that day. The memorandum was expressly identified by Hermes as part of its privilege objection (see [8] above).

On 4 October 2024, Mr Cronin and Ms Ryzner had a video-conference with Ms Painter SC and Mr Cobb-Clark and obtained further oral advice from them.

On 9 October 2024, the memorandum of advice of Ms Painter SC and Mr Cobb-Clark was sent to Hermes.

On 11 October 2024, Ms Ryzner had a conference with two representatives of Hermes (Ms Salsa Junior and Ms Haniel Medinet) and received instructions on behalf of Hermes.

On 16 October and 17 October 2024, Ms Ryzner was copied into emails between an employed solicitor and Ms Junior regarding the proceedings.

On 22 October 2024, Ms Ryzner had a telephone call with Ms Junior regarding the proceedings.

On 25 October 2024, Ms Ryzner affirmed an affidavit in these proceedings in answer to the dismissal motion. Among other things in that affidavit, Ms Ryzner set out her instructions as to various factual matters relied on by Hermes for its claims.

On 20 November 2024, Ms Ryzner received an email from Ms Junior regarding the proceedings. This email was expressly identified by Hermes as part of its privilege objection (see [8] above).

On 25 November 2024, Ms Ryzner attended a conference regarding the proceedings with Ms Drew Porter, a director of Hermes, and Ms Junior. She also had a conference with Mr Cobb-Clark.

On 6 December 2024, Ms Ryzner wrote a without prejudice letter to Potable Gold’s solicitors in relation to the proceedings. No response was ever received.

On 14 February 2025, I listed the dismissal motion for hearing on 14 March 2025.

On 17 February 2025, Ms Ryzner obtained further oral advice from Ms Painter SC and Mr Cobb-Clark.

Between 21 February 2025 and 3 March 2025, further without prejudice correspondence was exchanged between the parties’ solicitors about the proceedings.

On 3 March 2025, Ms Ryzner wrote to Hermes’ solicitors enclosing short minutes of order “that our client will be seeking be made at the hearing of your client’s motion on 14 March 2025”:

The parties were unable to agree upon the precise form of orders for disposal of the proceedings, including costs, and the matter came before Brereton J on 14 March 2025. The hearing on that day was devoted to resolving issues about the appropriate form of final orders, and to hear Potable Gold’s application that Hermes should pay costs on the indemnity basis.

The argument before Brereton J on 14 March 2025 took place with solicitors from the solicitors’ firm observing proceedings by audio-visual link. No evidence was read or tendered for Hermes. Ms Painter SC appeared with Mr Cobb-Clark of Counsel for Hermes. Potable Gold was represented by Mr Condon SC with Mr Smith of Counsel.

The submissions put to Brereton J for Potable Gold included that the special defence was a “complete defence” and was “dispositive”. Ms Painter SC submitted that the special defence raised complex issues that required careful analysis. When asked by Brereton J about the special defence, she said (Tcpt, 14 March 2025, p 21(49)):

The transcript (Tcpt, 14 March 2025, p 22(1)) indicates that Brereton J said in response, “I understand there’s a broader dispute, but Mr Condon’s obviously focused today on the power, as he submitted, of the statute of frauds defence and said his submission is that it should’ve been obvious from no later than April or July 2024 that this presented a complete defence”. Later in the argument, Ms Painter SC described the “case” as “poorly conceived” and otherwise submitted that Hermes’ agreement to a dismissal of the proceedings had been a “commercial decision” and a “pragmatic decision” (Tcpt, 14 March 2025, p 24(19)). It was submitted that “…my client ought not be penalised by properly abandoning what it came to accept was an unwinnable point” (Tcpt, 14 March 2025, p 26(42)) and “I think in fairness I have to concede that the Statute of Frauds point is a good one” (Tcpt, 14 March 2025, p 27(39)). Finally, Ms Painter SC also referred to the possibility of Hermes re-pleading its case had the proceedings continued (Tcpt, 14 March 2025, p 27(38)).

On 25 March 2025, Brereton J ordered Hermes to pay Potable Gold’s costs of the proceedings, with costs to be assessed on the indemnity basis from 2 July 2024, and published the costs judgment.

Brereton J held that Hermes’ case had no prospect of success. His Honour observed:

The motion was filed on 7 April 2025 and seeks relief including:

Section 99 of the CP Act includes:

In Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153, the Court of Appeal was considering the jurisdiction to make a costs order against a legal practitioner under Div 5C of the Legal Profession Act 1987 (NSW). However, in a detailed judgment, McColl JA (with whom Hodgson and Ipp JJA agreed) considered the general principles that had been developed in relation to such applications. Her Honour explained the origins of the jurisdiction:

Her Honour went on to summarise the principles to be derived from authorities about the Court’s power to make costs orders against legal practitioners. In my respectful opinion, these principles apply to the case at bar both as to the Court’s inherent jurisdiction and in relation to s 99 insofar as the express words of the legislation are not inconsistent with these principles:

Finally, her Honour considered what she described (at [103]) as a “tension between decisions of the Federal Court and decisions of State appellate courts concerning the propriety of legal practitioners acting for litigants with hopeless cases”. Her Honour’s analysis included:

In Medcalf v Mardell [2003] 1 AC 120; [2002] UKHL 27 (referred to in Lemoto) Lord Bingham of Cornhill said (at [23]) (Lord Steyn, Lord Hoffmann and Lord Rodger of Earlsferry agreeing):

In Muriniti v Kalil [2022] NSWCA 109, a case concerning s 99 of the CP Act, Brereton JA (Macfarlan and Leeming JJA agreeing) identified the need for “egregious conduct” by the solicitor to engage the jurisdiction:

As to the relevance of the role of counsel, the decision of the Court of Appeal in Gokani v Visvalingam Pty Ltd [2023] NSWCA 80 was drawn to attention for the solicitors, in which Basten AJA said (Leeming JA and Griffiths AJA agreeing):

The following additional principles were referred to:

Mr Newton also sought to rely on these passages from the decision of the Privy Council in the New Zealand case of Harley v McDonald [2001] 2 AC 678; [2001] UKPC 18 (a case applied by Peden J in Kalloghlian v Mitry Lawyers Pty Ltd (No 2) [2022] NSWSC 1071):

Mr Condon SC’s submissions may be summarised as focussing on two things:

Mr Condon SC’s basal submission is encapsulated in this exchange:

Mr Newton’s submissions may be summarised as:

The simplicity of Potable Gold’s approach was initially attractive. However, it is insufficient both as a matter of fact and law, to visit the serious consequences of a costs order on the solicitors. For the reasons which follow, the Court accepts Mr Newton’s submissions as to why the motion should be dismissed.

I interpolate by way of preamble that I accept Mr Newton’s submissions (see [69(1)] above) as to why, on no view, can Potable Gold obtain an order against Ms Miller.

As against Mr Cronin, the starting point must be the caution with which the wasted costs jurisdiction against solicitors must be exercised, whether in the inherent jurisdiction or under s 99. The statutory preconditions under s 99 are serious, requiring egregious conduct, of which the Court must be satisfied to the Briginshaw standard (now s 140(2) of the Evidence Act 1995 (NSW)).

Before turning to examine what conduct has been proven in this case, it should be emphasised that the references to caution in the authorities, and s 99 requiring egregious conduct, is not the product of either a legislative or judicial tenderness to the legal profession. There are at least two substantial policy reasons which support this approach.

First, citizens are entitled to have their “day in court”, which day will almost always be more efficiently conducted if the citizen is legally represented. Lawyers are not be discouraged from acting in what may appear to be even very weak cases out of concern that that they may be met with a personal costs order.

Second, the efficient administration of justice requires “satellite litigation” – disputes born out of disputes – to be discouraged. The setting of a high bar for a personal costs order against a legal practitioner is an example of that policy.

The issue of the solicitors’ conduct invites close attention to the facts.

Potable Gold articulated its case by reference to amended points of claim (APC). The APC was drawn solely by reference to the trust claim, a point traversed by the defendants in their points of defence by referring also to the damages claim. The central allegations were:

The particulars to paragraph 16 of the APC make clear that Potable Gold’s case requires the Court to reason in this way:

Even on the balance of probabilities without the Briginshaw standard, the step from [78(4)] to [78(5)] is a bridge too far. That conclusion is even clearer where the relevant defaulting conduct must be established to the Briginshaw standard. The fact that the litigation continued gives the Court no, or no sufficient, basis to conclude that any of the Solicitor’s Duties was not fulfilled.

Putting it another way, at its highest, what Potable Gold has proven is that between 2 July 2024 and 3 March 2025, Hermes persisted, and the solicitors continued to act, in the unwinnable trust claim. That, on the authorities and in my respectful opinion, is insufficient to engage either s 99 or the inherent wasted costs jurisdiction. Potable Gold has failed to prove the “something more” in the solicitors’ conduct that is required to engage that jurisdiction. Continuing to act on the unwinnable trust claim, without more, is not egregious conduct of the kind which engages the wasted costs jurisdiction.

The facts that have been proven do not permit an inference of the kind which Potable Gold requires the Court to draw to satisfy any of the serious prerequisites under s 99 or the inherent jurisdiction. In terms of s 99, the first stage of the three-part inquiry is therefore answered in the negative.

The Court also accepts, given the involvement of senior and junior counsel, that the solicitors are entitled to the benefit of the doubt. In doing so, the Court draws an inference of the kind referred to in Gokani, being that at no point did counsel see a basis to refuse to act. That inference is consistent with, and fortified by, the fact that experienced senior counsel (Ms Painter SC) dealt with the indemnity costs application on the basis of the concession in relation to the viability of the trust claim. Counsel would presumably have refused to act if instructed to argue for the viability of a claim which counsel was of the view was hopeless.

Mindful of what was said in Medcalf, this being a case where the solicitors were unable to deploy privileged material, I am also not satisfied either that there is nothing the solicitors could have said, if unconstrained, to resist the order or that there is any other circumstance (including any proven conduct) which would make it fair to find the solicitors in this case to be liable notwithstanding that inability. For example, as to the first, given the number of conferences with counsel, experience of litigation suggests that a full exploration of the facts and possible defences (such as part performance) may well have occurred, together with advice on strategies to bring the proceedings to an end as advantageously as possible for Hermes in the circumstances. As to the second element, a relevant circumstance may be egregious conduct directly known to the Court in the conduct of the proceedings. There is no such, or any other, conduct in this case.

However, it is important to note that the Court’s conclusions in this case do not mean that the threshold to engage either s 99 or the inherent jurisdiction can never be met when a solicitor is unable to deploy privileged material in their defence. The relevant degree of delinquency may be inferred from other matters or be apparent from, for example, conduct which the judge has seen for herself or himself in court. In relation to this last possibility, there is much force in the observation in Harley (see [67] above) referring to the wasted costs jurisdiction as a summary one which depends on facts known to the judge from observation or are otherwise incontrovertible. While accepting that such cases will provide straightforward examples, the jurisdiction is nevertheless not so confined.

The Court would have reached the conclusion which it has even if it was clear that the only claim in the proceedings was the trust claim. However, that conclusion is easier for the Court to draw where, as the Court finds, the damages claim was a part of the proceedings. While the improvements claim may be dismissed as de minimis because of the quantum particularised ($891.03), the mortgage payments claim was not. Without expressing any view as to whether it would ultimately have succeeded, the mortgage payments claim, at least prima facie, could engage the principles in Morris for the ordering of an equitable charge over the property.

It is not uncommon for an alternative claim in damages or other relief to be little mentioned until a hearing on the merits (and, even then, only towards the end of such a hearing). In this case, the mortgage payments claim had been particularised. No attempt was made by Potable Gold on the hearing of the motion before me to demonstrate why it was hopeless. The special defence was no answer to it. The mortgage payments claim was alleged to involve $82,595 contended to be the possible object of a charge over the property. Given the acknowledged deficiency of the trust claim, and faced with the dismissal motion, it is entirely plausible that, as was put to Brereton J, a “commercial decision” was taken not to press the damages claim given its quantum, thereby prompting Hermes to propound the orders that its proceedings be dismissed.

In coming to the view expressed in the previous paragraph, I accept Mr Newton’s submission that Ms Painter SC’s concession about the trust claim could not, when fairly considered, be understood as extending to the damages claim. The special defence could not be a defence to such a claim. I understand Brereton J’s reference (at [28] of the costs judgment) to no attempt being made to demonstrate how the case could be repleaded to be a reference to the trust claim, his Honour having acknowledged in the course of argument that there were broader matters in dispute (see [54] above). The fact that the damages claim was not referred to expressly before Brereton J does not mean it was not there. That lack of reference may be explained by recalling that the focus of argument before his Honour was both a Calderbank letter (see [27] above) and Mr Condon SC’s argument (see [54] above) which understandably concentrated on the effect of the Statute of Frauds defence.

I have also taken into account Ms Ryzner’s evidence that she considered there were reasonable grounds to advance the damages claim. I have not overlooked that she proffers no specific evidence as to why she held that view. I consider it very likely that she could have given evidence of the reasons for her view without disclosing privileged material. However, her evidence was admitted without objection and she was not cross-examined. It was not suggested (by reference to the facts alleged in the claim or otherwise) that her view was inherently unsustainable. I have therefore accepted her evidence and find, by inference from her evidence and the fact of the particulars having been provided, and insofar as it may be necessary, that the mortgage payments claim was not hopeless.

The orders of the Court are: