Supreme Court New South Wales Medium Neutral Citation: Smith v Autore t/as Autore & Associates Solicitors & Barristers (No 2) [2022] NSWSC 995 Hearing dates: 11-12 May 2022 Date of orders: 26 July 2022 Decision date: 26 July 2022 Jurisdiction: Common Law Before: Schmidt AJ Decision: 1. The claims brought against Mrs Autore be dismissed. 2. Mr and Mrs Smith pay Mrs Autore's costs, as agreed or assessed. 3. Mr Autore pay Mr and Mrs Smith's costs of the proceedings brought against him, as agreed or assessed. Catchwords: COSTS — indemnity order —Civil Procedure Act 2005 (NSW), s 98 — forensic decision to pursue second defendant and failure of case pressed against that party rests with the plaintiff — order not made Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Uniform Civil Procedure Rules 2005 (NSW), r 42.1 Cases Cited: Smith v Autore t/as Autore & Associates Solicitors & Barristers [2022] NSWSC 656 Category: Costs Parties: Neville Smith (First Plaintiff) Helen Smith (Second Plaintiff) Anthony Autore (First Defendant) Regina Autore (Second Defendant) Representation: Counsel: D Allen (Plaintiffs) M Young SC (Second Defendant) Anthony Autore (First Defendant, self-represented) Solicitors: Stewart & Associates (Plaintiffs) Bransgrove Lawyers (Second Defendant) File Number(s): 2020/61112 Judgment 1. At the hearing consent orders were made against Mr Autore, except as to costs. I later concluded that the case pressed against Mrs Autore had not been made out on the evidence: Smith v Autore t/as Autore & Associates Solicitors & Barristers [2022] NSWSC 656. Final orders still remain to be made. 2. The orders sought by Mr and Mrs Smith were: "1. The Plaintiffs pay the Second Defendant's costs of the proceedings as agreed or assessed. 2. The First Defendant pay the Plaintiffs' costs of the proceedings as agreed or assessed. 3. The First Defendant is to indemnify the Plaintiffs for the costs payable by them to the Second Defendant." 1. The orders were not agreed. The parties' cases 1. Mr and Mrs Smith's case was that the orders sought would all be made, given Mr Autore's breach of his fiduciary duty and his liability to pay equitable compensation for the loss which flowed from that breach. 2. They argued that in the circumstances established on the evidence, it had not been unreasonable for them to have sued Mrs Autore as they did. But for Mr Autore's conduct in removing their funds from his trust account and using them to make payments to Mrs Autore, proceedings against her would not have been brought. It was accordingly reasonable for him to indemnify them for the costs which they had incurred in unsuccessfully pursuing Mrs Autore. 3. Mrs Autore neither opposed nor consented to the indemnity order, so long as Mr and Mrs Smith paid her costs, irrespective of whether or not they were ultimately able to recover those costs from Mr Autore. 4. Mr Autore opposed the indemnity order, submitting that the usual costs order under the Uniform Civil Procedure Rules 2005 (NSW) that costs following the event would be made: r 42.1. 5. His case was that there had been no need for Mrs Autore to have been joined as she was and that the reasons for the dismissal of the claim pursued against her had to be taken into account. It was thus relevant that I had concluded that despite the reservations which I had about both Mr and Mrs Autore's evidence, Mr and Mrs Smith's case against Mrs Autore had not been established: at [97]. That had to be reflected in the orders made. What orders should justly be made against Mr Autore? 1. I am satisfied that the claimed indemnity order should not be made, even though there is no question as to the Court's power to make such an order: Civil Procedure Act 2005 (NSW), s 98. Further, that the costs order made against Mr Autore, should be confined to the case Mr and Mrs Smith successfully pursued against him. 2. The basic principle is that costs are awarded to a successful party for the costs incurred in the conduct of the proceedings. That entitles Mr and Mrs Smith to an order against Mr Autore, for their successful pursuit of the case brought against him, resolved as it was by the consent orders. 3. Mr and Mrs Smith did not succeed in the case which they pressed against Mrs Autore, yet not only seek to be indemnified by Mr Autore, for the consequences of that failure, but to have him ordered to pay their costs of their unsuccessful pursuit of Mrs Autore. 4. Undoubtedly, if Mr Autore had not breached his fiduciary duties these proceedings would never have been brought. Still, it was as the result of decisions made by Mr and Mrs Smith that the proceedings were brought against Mrs Autore, even though there was no issue that she had repaid the funds which Mr Autore had arranged to have paid into her account. The result was the costs that she incurred in successfully defending the claims which they pressed against her. 5. At the hearing the onus fell on Mr and Mrs Smith to make out their case that Mrs Autore had the necessary knowledge of what Mr Autore had done in breach of the duty which he owed them as their solicitor, as he admitted, to permit the orders which they sought to be made against Mrs Autore in respect of all of the funds Mr Autore had wrongly taken out of the trust account. They did not meet that onus, despite having cross examined both Mr and Mrs Autore. 6. The responsibility for the decisions to bring and continue to pursue their claims against Mrs Autore as Mr and Mrs Smith did, despite repayment of the funds paid into Mrs Autore's account and Mr Autore consenting to orders being made against him, does not lie with Mr Autore. Nor does the failure of the case finally pursued at the hearing against Mrs Autore. 7. The reason the claim pressed against Mrs Autore was dismissed was because the necessary knowledge, on which Mr and Mrs Smith's case depended, was not made out on the evidence: judgment at [98]-[100] and [107]-[113]. 8. In the result I am satisfied that justice does not permit the indemnity order sought to be made against Mr Autore, nor an order that he pay Mr and Mrs Smith's costs of unsuccessfully pursuing their claims against Mrs Autore. 9. It was not he who was responsible for either the forensic decisions made to pursue Mrs Autore as Mr and Mrs Smith did, or the failure of the case which they finally pressed against her. Accordingly, Mr Autore ought not to be made responsible for payment of the costs which they incurred in pursuit of their unsuccessful case. Orders 1. For these reasons I order that: 1. The claims brought against Mrs Autore be dismissed. 2. Mr and Mrs Smith pay Mrs Autore's costs, as agreed or assessed. 3. Mr Autore pay Mr and Mrs Smith's costs of the proceedings brought against him, as agreed or assessed. ******** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 July 2022