Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Rodi v Gelonesi [2016] NSWCA 348 Hearing dates: On the papers Date of orders: 13 December 2016 Decision date: 13 December 2016 Before: Meagher JA at [1]; Gleeson JA at [2]; Payne JA at [3]. Decision: Dismiss the amended notice of motion filed on 8 November 2016 with costs. Catchwords: PRACTICE AND PROCEDURE – variation of costs order – application for leave to appeal in 2012 – leave refused with costs – application in 2016 under Uniform Civil Procedure Rules 2005 (NSW) r 36.16 for personal costs order against solicitor who acted for unsuccessful party – whether 14-day time limit in sub-r (3A) precluded application – whether application for variation of orders COSTS – whether to make personal costs order under ss 98 or 99 of the Civil Procedure Act 2005 (NSW) – discretionary factors – delay Legislation Cited: Civil Procedure Act 2005 (NSW) ss 98, 99 Evidence Act 1995 (NSW) s 135 Legal Profession Act 2004 (NSW) Uniform Civil Procedure Rules 2005 (NSW) rr 36.11, 36.16 Cases Cited: Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104 Bartlett v Australia & New Zealand Banking Group Ltd (No 2) [2016] NSWCA 142 Caboolture Park Shopping Centre P/L (In Liquidation) and White Industries (QLD) P/L v Flower & Hart (A Firm) (1993) 117 ALR 253 Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 Road and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140 Rodi v Gelonesi [2012] NSWCA 424 Short v Crawley (No 45) [2013] NSWSC 1541 Xabregas v The Owners – Strata Plan No. 79205; Moallem v Consumer, Trader and Tenancy Tribunal & Ors (No 2) [2014] NSWSC 1027 Category: Procedural and other rulings Parties: Dominic Rodi (first appellant) Forest Way Fruit Stall Pty Ltd (second appellant) Bruno Gelonesi (first respondent / applicant on the motion) Leonardo Carlo Muriniti (respondent on the motion) Representation: Counsel: - Appellants not participating - R M Jefferis (16 June 2016 submissions) / M Wright (8 November and 1 December 2016 submissions) (applicant on the motion) - D A Lloyd (respondent on the motion) Solicitors: - Appellants not participating - GP Legal (applicant on the motion) - Yeldham Price O'Brien Lusk (respondent on the motion) File Number(s): 2012/176970 Decision under appeal Court or tribunal: District Court of NSW Jurisdiction: Civil Date of Decision: 11 May 2012 Before: Olsson SC DCJ File Number(s): 08/317684 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. MEAGHER JA: I agree with Payne JA. 2. GLEESON JA: It may be assumed without deciding that the power in Uniform Civil Procedure Rules 2005 (NSW), r 36.16(3) can be relied upon by the respondent, Mr Gelonesi, to seek a personal costs order against the applicant's solicitor, Mr Muriniti, more than three years after the making of orders by this Court disposing of the summons seeking leave to appeal to this Court. Nonetheless, for the reasons given by Payne JA, there are good discretionary reasons why this Court should refuse to make a personal costs order against Mr Muriniti in the present case. I agree with the orders proposed by Payne JA. 3. PAYNE JA: In 2011 Mr Rodi and Forest Way Fruit Stall Pty Ltd (a company of which Mr Rodi was a director) conducted proceedings in the District Court before Olsson DCJ against Mr Gelonesi and Northside Deli Pty Ltd, over the sale of a business. The proceedings were dismissed. 4. In 2012 the Rodi parties filed a summons seeking leave to appeal to the Court of Appeal [CA 2012/176970]. 5. On 22 November 2012, consent gross sum costs orders in an amount of $200,000 were made by Olsson DCJ against Mr Rodi and Forest Way Fruit Stall Pty Ltd in favour of Mr Gelonesi and Northside Deli Pty Ltd. It was a term of those consent orders that enforcement be stayed until determination of Mr Rodi and Forest Way Fruit Stall Pty Ltd's appeal to the Court of Appeal. 6. On 5 December 2012 the summons for leave to appeal to this Court was refused with costs by Beazley and Ward JJA: [2012] NSWCA 424. 7. In March 2016, more than three years after that order for costs had been made in the this Court in his favour, the applicant, Mr Gelonesi, filed motions in both the District Court and in this Court with a view to obtaining orders for costs against the solicitor for the Rodi parties – Mr Muriniti – in the litigation in 2011 and 2012. 8. The motion in this Court filed 18 March 2016 sought the following orders: Order seeking transfer of proceedings 1 An Order pursuant to section 146 of the Civil Procedure Act 2005 that this proceeding be transferred to the District Court of New South Wales, for the purpose of determining the costs of the Appeal heard in this Court on 5 December 2012. Substantive orders 2 An Order pursuant to Section 14 of the Civil Procedure Act 2005 that the Court dispense with any rules of Court. 3 An order pursuant to Section 98(1)(b) of the Civil Procedure Act 2005 that Leonardo C Muriniti pay or indemnify the First Respondent for legal costs which they have incurred in these appeal proceedings CA 2012/176970. 4 In the alternative to 3 above, an order pursuant to Section 99(2)(c) of the Civil Procedure Act 2005 that the First Respondent be indemnified by Leonardo C Muriniti for legal costs which they incurred in these appeal proceedings CA 2012/176970. 5 The First Respondent seeks an order pursuant to Section 348 of the Legal Profession Act 2004 (NSW) that the Appellants indemnify the First Respondent with regards to costs incurred by the Appellants in these appeal proceedings CA 2012/176970. 6 The First Respondent seeks an award of damages and wasted costs from Leonardo C Muriniti arising from his abuse of court process. 7 An order pursuant to Rule 28.5 of the Uniform Civil Procedure Rules 2005 that these proceedings be consolidated with the District Court Proceedings 2008/317684. 8 An Order that this motion be heard in conjunction with the First Respondent's Notice of Motion in District Court proceedings 2008/317684 seeking an Order that Leonardo Muriniti pay the costs of the Respondents costs in the trial in the District Court. 9 An order that any the Respondent be granted any necessary extension of time for the hearing of this motion. 10 An order that Leonardo C Muriniti pay the costs of this motion. 1. On 12 April 2016 an amended motion was filed in this Court in the following terms: Order seeking transfer of proceedings 1 An Order pursuant to section 146 of the Civil Procedure Act 2005 that this proceeding be transferred to the District Court of New South Wales, for the purpose of determining the costs of the Appeal heard in this Court on 5 December 2012. 2 An Order pursuant to section 140 of the Civil Procedure Act 2005 that the proceedings in the District Court (2008/317684) be transferred to the Court of Appeal of New South Wales, for the purpose of determining the Amended Notice of Motion filed in the District Court on 10 March 2016 and this motion concurrently. Substantive orders 3 An Order pursuant to Section 14 of the Civil Procedure Act 2005 that the Court dispense with any rules of Court. 4 An order pursuant to Section 98(1)(b) of the Civil Procedure Act 2005 that Leonardo C Muriniti pay or indemnify the First Respondent for legal costs which they have incurred in these appeal proceedings CA 2012/176970. 5 In the alternative to 3 above, an order pursuant to Section 99(2)(c) of the Civil Procedure Act 2005 that the First Respondent be indemnified by Leonardo C Muriniti for legal costs which they incurred in these appeal proceedings CA 2012/176970. 6 The First Respondent seeks an order pursuant to Section 348 of the Legal Profession Act 2004 (NSW) that the Appellants indemnify the First Respondent with regards to costs incurred by the Appellants in these appeal proceedings CA 2012/176970. 7 The First Respondent seeks an award of damages and wasted costs from Leonardo C Muriniti arising from his abuse of court process. 8 An order pursuant to Rule 28.5 of the Uniform Civil Procedure Rules 2005 that these proceedings be consolidated with the District Court Proceedings 2008/317684. 9 An Order that this motion be heard in conjunction with the First Respondent's Notice of Motion in District Court proceedings 2008/317684 seeking an Order that Leonardo Muriniti pay the costs of the Respondents costs in the trial in the District Court. 10 An order that any the Respondent be granted any necessary extension of time for the hearing of this motion. 11 An order that Leonardo C Muriniti pay the costs of this motion. 12 Such other directions as may be required in the circumstances in respect of the proceedings, pursuant to section 16(1) of the Civil Procedure Act 2005. 1. Mr Gelonesi filed initial submissions about the motion on 16 June 2016. Mr Muriniti filed initial submissions about the motion on 1 July 2016. 2. On 12 October 2016 the Registrar made orders inviting the parties to file and serve any additional submissions and evidence upon which they wish to rely. By correspondence the Registrar indicated that the evidence and submissions to be filed should address the question of whether the Court had jurisdiction with respect to the motion and whether the Court should exercise its discretion to grant the relief sought, given the applicant's delay in seeking the orders. 3. On 8 November 2016 Mr Gelonesi filed an amended notice of motion in this Court. The motion sought only the following relief: 1. an order pursuant to s 98(1)(b) of the Civil Procedure Act 2005 (NSW) that Mr Muriniti pay or indemnify Mr Gelonesi for legal costs which he incurred in the appeal proceedings CA 2012/176970; 2. in the alternative, an order pursuant to s 99(2)(c) of the Civil Procedure Act that Mr Muriniti pay Mr Gelonesi the amount of costs which his client Mr Rodi has been ordered to pay consequent upon the dismissal of his application for leave to appeal in 2012, namely, the costs incurred in the appeal proceedings CA 2012/176970; and 3. an order that Mr Muriniti pay the costs of the motion. Relevant legislation 1. The sections of the Civil Procedure Act upon which Mr Gelonesi's application is based provide as follows: 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. (5) The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996. (6) In this section, costs include: (a) the costs of the administration of any estate or trust, and (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and (c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed. 99 Liability of legal practitioner for unnecessary costs (1) This section applies if it appears to the court that costs have been incurred: (a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or (b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible. (2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following: (a) it may, by order, disallow the whole or any part of the costs in the proceedings: (i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or (ii) in the case of a solicitor, as between the solicitor and the client, (b) it may, by order, direct the legal practitioner: (i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or (ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs, (c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party. (3) Before making such an order, the court may refer the matter to a costs assessor (within the meaning of Part 7 of the Legal Profession Uniform Law Application Act 2014) for inquiry and report. (4) The court may direct that notice of any proceedings or order under this section with respect to a legal practitioner be given: (a) in the case of a barrister, to the instructing solicitor or client, or both, as the court may direct, or (b) in the case of a solicitor, to the client. (5) The court may give ancillary directions to give full effect to an order under this section, including directions to a legal practitioner to provide a bill of costs in assessable form: (a) to the court, or (b) to a party to the proceedings, or (c) in the case of a barrister, to the instructing solicitor or client, or both, or (d) in the case of a solicitor, to the client. (6) A party's legal practitioner is not entitled to demand, recover or accept: (a) in the case of a barrister, from the instructing solicitor or client, or (b) 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). (7) In this section, client includes former client. 1. The Court's power to make the order here sought requires consideration of the terms of Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) which provides: 36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order. Evidence on the application 1. The applicant is a solicitor. He relies upon an affidavit of Ms Carter, a solicitor with his firm (which acted for him on the appeal), dated 7 November 2016. The affidavit purports to explain the long delay between December 2012 and the filing of the first motion seeking costs orders against Mr Muriniti in this Court (March 2016). So far as is relevant the affidavit establishes that: 1. Ms Carter asserts, essentially by way of submission by reference to a selection of transcript references from the District Court proceedings, that counsel appearing for the Rodi parties' conduct in the underlying proceedings in the District Court caused delays and unnecessary expense insofar as the proceedings "were run in an unnecessarily protracted manner" and "there were repeated breaches of pre-trial directions" (it will be recalled that Mr Gelonesi originally sought, and subsequently abandoned, an application for a personal costs order relating to the District Court proceedings against Mr Muriniti in this Court). 2. the Rodi parties "failed to provide" the Court of Appeal with the transcript of the District Court proceedings or unidentified "important" exhibits. Paragraph 60 of Ms Carter's affidavit states (material in bold contained in the original filed with the Court): [60] The applicants for leave failed to provide the Court of Appeal with the transcript of the Court below and failed to provide exhibits from the Court below critical to their arguments for leave including a letter who wrote the letter? dated 6 November 2007. 1. on 12 December 2012 Mr Gelonesi was informed that Mr Rodi was filing for voluntary bankruptcy. On 2 May 2014 Mr Rodi was declared bankrupt. There is no evidence about distributions, if any, to unsecured creditors. 2. on 31 January 2013 garnishee orders were made directed to bank accounts, which accounts were presumably conducted by Mr Rodi although Ms Carter's affidavit does not identify the accounts or the results of those orders. 3. on 15 March 2013, three months after the decision of Beazley and Ward JJA in this Court Mr Gelonesi sent Mr Muriniti a letter threatening to seek a personal costs order. 4. on 15 May 2013 the Workers Compensation Nominal Insurer made an application to wind up Forest Way Fruit Stall Pty Ltd. Mr Gelonesi retained counsel to appear in those proceedings. On a date not revealed by Ms Carter, an order was made for the winding up Forest Way Fruit Stall Pty Ltd. There is no evidence about distributions, if any, to unsecured creditors. 5. on 20 December 2013, over one year after the decision of Beazley and Ward JJA in this Court, Ms Carter first contacted counsel to discuss a possible application for a personal costs order against Mr Muriniti. 6. on 14 March 2014, 15 months after the decision of Beazley and Ward JJA in this Court, Ms Carter sent an initial brief to counsel (Mr Stanton) seeking advice about a possible application for a personal costs order against Mr Muriniti. 7. on 26 February 2015, over two years and two months after the decision of Beazley and Ward JJA in this Court and almost one year after having been sent the brief, Mr Stanton returned the brief without, on the evidence, providing any advice. The evidence is silent about any attempt made by Ms Carter between March 2014 and February 2015 to contact counsel or attempt to secure alternative counsel. 8. on 20 August 2015, almost three years after the decision of Beazley and Ward JJA in this Court, Ms Carter received advice, presumably about an application to this Court although the evidence is silent about its content, from Mr Jefferis of counsel. The evidence does not reveal when Mr Jefferis was briefed. 9. on 18 March 2016, three years and three months after the decision of Beazley and Ward JJA in this Court and almost seven months after Mr Jefferis' advice was received, a motion was first filed in this Court seeking a personal costs order against Mr Muriniti. The evidence is silent about why there was a delay of seven months from receiving counsel's advice to taking this step. 1. Mr Muriniti objects to paragraph 94 of Ms Carter's affidavit which asserts that she relied on advice from "several counsel" that the claim against Mr Muriniti "was in the nature of a claim for damages" and was therefore subject to a six-year limitation period. The paragraph is bad in form, obvious hearsay and almost so vague as to be meaningless. Under s 135 of the Evidence Act 1995 (NSW) it should be admitted only to prove Ms Carter's state of mind and not for the truth of the representations contained in it. 2. The respondent relied upon an affidavit of Mr Yeldham sworn 24 November 2016. Mr Yeldham is the solicitor for Mr Muriniti. In his affidavit Mr Yeldham noted that Mr Rodi and Forest Way Fruit Stall Pty Ltd have the benefit of legal professional privilege in respect of Mr Muriniti's file concerning the District Court litigation, and that as far as he is aware such privilege has not been waived. The affidavit annexed correspondence in which Mr Yeldham requested that Mr Rodi waive privilege in order to enable Mr Muriniti to prepare the evidence he wishes to rely upon in resisting the motion. The first request was made on 3 May 2016; subsequent requests were made on 12 May and 8 October 2016. Mr Yeldham had not received any response to these requests. Applicant's submissions 1. The applicant filed supplementary written submissions dated 8 November 2016 and submissions in reply dated 1 December 2016. He submitted that the Court has jurisdiction to determine the motion notwithstanding that it was filed more than three years after the Court made orders refusing leave to appeal and making costs orders. 2. The applicant submitted that there was a tension in this Court between the decisions in Road and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140 (which the Court in Bartlett v Australia & New Zealand Banking Group Ltd (No 2) [2016] NSWCA 142 said is supported by the weight of authority) and Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19. The applicant submitted that the reasoning in Hancock should be preferred. 3. The applicant also relied upon a line of authority commencing with Caboolture Park Shopping Centre P/L (In Liquidation) and White Industries (QLD) P/L v Flower & Hart (A Firm) (1993) 117 ALR 253, where the Full Court of the Federal Court held that a personal costs order sought against a legal practitioner under the rules then applicable in that court did not seek to vary or alter the original costs orders, but was an order "supplemental" to those orders already entered: 264-265. 4. The concept of "supplemental" orders in Caboolture v Flower & Hart was adopted by White J in Short v Crawley (No 45) [2013] NSWSC 1541, which addressed the question of whether the court had power to make a gross sum costs order under s 98 of the Civil Procedure Act in circumstances where the notice of motion seeking those orders was filed more than 14 days after the entry of final costs orders. The application was made under UCPR r 36.16. At [27] his Honour distinguished the position in relation to an application for a gross sum costs order (which was the application before him) because: ... the variation would not be as to the substance of the order, that is, as to the extent of the defendants' liability to pay costs. The variation would only be as to the mode of quantifying what sum of money was payable pursuant to the costs orders. 1. Accordingly, his Honour held that the court did have power to make a gross sum costs order where the notice of motion seeking the order was filed outside the 14 day period. 2. In Xabregas v The Owners – Strata Plan No. 79205; Moallem v Consumer, Trader and Tenancy Tribunal & Ors (No 2) [2014] NSWSC 1027 at [31] White J held that the same principles applied to an application under s 99 of the Civil Procedure Act. In the present case the applicant submitted that White J's reasoning in Short v Crawley and Xabregas accords with the view expressed by this Court in Hancock at [10] (quoted at [34] below). 3. On the basis of these authorities the applicant submitted that the power to make orders requiring Mr Muriniti pay costs are "supplemental" to those already made in 2012 and thus the 14 day time limit in UCPR r 36.16(3A) did not apply. 4. The applicant submitted that the power in UCPR r 36.16(3) is expressed to be "in addition to" the power under sub-rules (1) and (2), and that these words "suggest that the power is supplemental". The applicant submitted: A costs order is not substantive relief but rather ancillary or consequential relief. A determination in relation to costs, certainly when considered after the conclusion of proceedings, is necessarily a discretionary consequence of the determination of the substantive issues between the parties. In the case of an order against a practitioner under s 99 of the Civil Procedure Act, the existing order against the practitioner's client provides the foundation for the making of a further or supplemental order. Whether such an order should be sought and made in a particular case will often, if not invariably, depend upon a close consideration of the reasons for the judgment by which the substantive issues in the proceedings have been determined. 1. On the question of whether the Court should exercise the discretion to make a personal costs order, the applicant submitted that his lengthy delay should not be fatal to his application. The applicant submitted that Mr Muriniti had not demonstrated that he was prejudiced by the delay in making the application. The applicant submitted that the Court's jurisdiction under ss 98 and 99 of the Civil Procedure Act is supervisory and that: In circumstances where the conduct of practitioners has caused costs to be incurred unnecessarily, the Court should entertain the application even where there has been delay. It remains necessary to ensure that practitioners are made responsible for causing wasted costs to be incurred by pursuing proceedings with no reasonable prospects of successor otherwise causing costs to be incurred by conducting the proceedings in a manner contrary to their duty to the Court to advance the overriding purpose. 1. The applicant submitted that he cannot now recover costs from Mr Rodi (because he is bankrupt) or from Forest Way Fruit Stall Pty Ltd (because it is deregistered). 2. The applicant pointed to the fact that in the judgment delivered on 5 December 2012, Beazley and Ward JJA noted that their consideration of the proposed grounds was hampered by the Rodi parties' failure to provide the Court with the transcript from the court below or important exhibits. 3. The applicant submitted that although the Court is not determining the question of costs in the District Court proceedings, the way in which those proceedings were conducted and ultimately resolved before the primary judge clearly indicated they had no prospects of success; and that an application for leave to appeal would be similarly without merit. In that context the applicant made various submissions concerning the conduct of the proceedings in the District Court. 4. Ultimately, the applicant submitted that the bringing of an application for leave to appeal in circumstances where the amount in issue was $89,000, the appeal grounds raised no substantial issue of principle and the claim in the Court below failed on the plaintiff's own evidence justifies the making of the personal costs order sought. Respondent's submissions 1. Mr Muriniti filed supplementary written submissions dated 25 November 2016. Mr Muriniti submitted that the motion seeks a variation of the costs order made in this Court on 5 December 2012. That is because those orders were made on the basis that they were the final orders disposing of the proceedings, and if the orders sought are made this would involve a party other than the respondent bearing the costs of the leave application. 2. If the Court determines that it does have jurisdiction to make the orders sought, Mr Muriniti submitted that the Court should dismiss the motion in the exercise of its discretion, for the following reasons: 1. the applicant has not adequately explained the delay in bringing the application. 2. Ms Carter's assertion that she was under the impression the application had a six-year limitation period provides an unsatisfactory explanation for the delay. 3. the applicant's conduct of this motion has itself been the cause of significant delay. Numerous arguments have been proffered and then abandoned; and the Court's timetables have not been complied with, with the result that it has taken over eight months to reach the current stage. 4. to the extent that the conduct of the proceedings in the District Court was relevant, the primary judge there did not find there was no evidence to support reliance; rather, she simply rejected Mr Rodi's evidence. 5. the failure to include certain documents in the white folder on the application for leave to appeal did not cause costs to be wasted. 6. acting on instructions in pursuit of a leave application which is rejected is, without more, insufficient to justify a personal costs order under s 99. 7. the fact that Mr Gelonesi has not sought an order against counsel who conducted the leave application militates against the conclusion that there were not provable facts in support of the claim. Consideration 1. Well over three years after the Court's judgment refusing leave to appeal Mr Gelonesi filed a notice of motion in this Court seeking personal costs orders against his opponent's solicitor. The first issue to be determined is whether the 14-day time limit provided by UCPR r 36.16(3A) precludes the current application. Fourteen days after this Court refused leave to appeal would have been 19 December 2012; the current motion was first filed on 18 March 2016. 2. In Bartlett the Court said at [21]-[23]: [21] The different views earlier expressed by members of this Court in relation to UCPR r 36.16(3) are referred to in Habib v Nationwide News Pty Ltd (No 2) [2010] NSWCA 291 at [34]-[39]. In Road and Traffic Authority of NSW v Palmer (No 2) [2005] NSWCA 140, the Court (Giles JA, Spigelman CJ and Handley JA agreeing) found that a costs order determines a claim "for relief, the relief claim being orders disposing of the costs of the trial and of the appeals": [21]. However, in Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, the Court (Ipp, McColl and Basten JJA), observed of UCPR, r 36.16(3) at [10]: The precise scope of this provision is unclear. Read literally, it might be thought to operate only in respect of orders which were not sought by any party. That reading seems implausible. Given its context, it is more likely that the distinction intended to be drawn is between substantive relief, to which the power does not extend, and ancillary or consequential relief, to which it does extend. On that understanding, a costs order would clearly fall within the latter category. Such a distinction would make practical sense because appropriate orders as to costs frequently depend upon the existence of offers of compromise which are properly not known to the Court until after substantive relief has been determined. On that basis, a party seeking to vary a costs order would not need to rely upon sub-r (3A). [22] Notwithstanding the statement in Hancock, the weight of authority appears to support the position taken by Giles JA in Palmer: see AT v Commissioner of Police (NSW) (No 2) [2010] NSWCA 337 at [7]-[13] (per Basten JA, Beazley and Macfarlan JJA agreeing); Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133; 75 NSWLR 462; Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336 at [8], [10] (per Campbell JA, McColl JA and Sackville AJA agreeing); Short v Crawley (No 45) [2013] NSWSC 1541 at [21] (per White J). The effect of this line of authority is that the Court does not have power under r 36.16(3) to vary a costs order which determined a claim for relief where no issue as to that variation was raised within 14 days of the judgment having been entered. [23] It is unnecessary for this Court to express a final view as to the meaning of r 36.16(3) because no reason has been established to support a variation of the order in question. 1. In my view it is arguable that the application for an order pursuant to ss 98(1)(b) or 99 of the Civil Procedure Act that Mr Muriniti pay or indemnify Mr Gelonesi for legal costs which he incurred in the appeal proceedings CA 2012/176970 involves a variation of the orders made by Beazley and Ward JJA, and is subject to the time limit of 14 days in UCPR r 36.16(3A). 2. This is because the order for costs was a final order, entered as soon as it was made in the Court's computer system in 2012: UCPR r 36.11(2). The effect of that order was that Mr Rodi and Forest Way Fruit Stall Pty Ltd were liable to pay the costs incurred by Mr Gelonesi and Northside Deli Pty Ltd as agreed or assessed. Mr Gelonesi was entitled to rely on that final order to pursue Mr Rodi and Forest Way Fruit Stall Pty Ltd for payment, as apparently he did in the bankruptcy and liquidation proceedings described above. What Mr Gelonesi now seeks is an order that a third party, Mr Muriniti also be liable for his costs either directly or by way of indemnity. That is an order which could have been sought within 14 days of the delivery of judgment in the application for leave to appeal. The order now sought is not akin to an order exercising a liberty to apply in the case of the working out of the details of the implementation of an order which is otherwise final, such as an order for specific performance: Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104. This view of the order sought in the present case accords with the view expressed in Palmer (No 2), that a costs order of the kind made by Beazley and Ward JJA in December 2012 determines a claim "for relief, the relief claim being orders disposing of the costs of the trial and of the appeals". This view reflects the preponderance of authority in this Court. 3. Whilst I acknowledge that in Caboolture v Flower & Hart the Full Federal Court described the third party costs order there in issue as "supplemental" and rejected the suggestion that it varied or altered the order for costs which had already been made, the authorities relied upon were principally those involved in aid of enforcement and working out of original orders which had been made [at 265]. I also accept that in Xabregas White J held personal costs orders made under s 99 of the Civil Procedure Act against legal representatives were properly to be characterised as "supplemental" and thus not constrained by the time limit in UCPR r 36.16(3A). It seems to me that the order sought here, that a different person pay the costs ordered to be paid by Beazley and Ward JJA by way of indemnity, is more accurately to be described as a variation of the order already made that those costs be paid by Mr Rodi and Forest Way Fruit Stall Pty Ltd. 4. As in Bartlett, however, it is unnecessary to express a final view about this question because no reason has been established to support the making of a personal costs order against Mr Muriniti. This is for the following reasons. 5. First, the delay in bringing the application is egregious and almost wholly unexplained. That delay is over three years. The evidence in support of the application is wholly inadequate to justify that delay. In particular: 1. the one year delay after the decision of Beazley and Ward JJA in this Court before first contacting counsel to discuss a possible application for a costs order against Mr Muriniti. 2. the one year and three month delay after the decision of Beazley and Ward JJA in this Court before sending an initial brief to counsel seeking advice about a possible application for a personal costs order against Mr Muriniti. 3. the almost one year delay after having sent the brief, and before counsel returned the brief without, on the evidence, attempting to contact counsel or seeking to secure alternative counsel. 4. the six month delay, after Mr Stanton returned his brief, in obtaining advice from Mr Jefferis of counsel. 5. the delay of almost seven months after Mr Jefferis' advice was received before a motion was first filed in this Court seeking a personal costs order against Mr Muriniti. 6. the delay of six months in the various iterations of the relief sought (including seeking a costs order in respect of the District Court proceedings) before limiting the relief sought by the amended notice of motion to a personal costs order in relation to the application for leave to appeal to this Court. 1. This Court's observations in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 and the need for expedition in pursuing personal costs orders against legal practitioners should be steadily borne in mind. Those observations are not to be distinguished, as Mr Gelonesi submitted they should be, as relating only to orders sought under the (now repealed) Legal Profession Act 2004 (NSW). Orders for personal costs against legal representatives under ss 98 or 99 of the Civil Procedure Act, if they are to be sought, must be sought in a timely fashion and supported by cogent evidence. The present application fails both tests. Ms Carter's legally erroneous belief that the claim was one for "damages" and was therefore subject to a six-year limitation period provides no basis for making the order the applicant seeks. Mr Gelonesi's submission that Mr Muriniti has failed to establish that he has suffered prejudice by the lengthy and unexplained delay should be rejected. That submission effectively reverses the onus Mr Gelonesi must meet. Further, it will not generally be relevant to the making of a personal costs order against a solicitor (at least in a case where the solicitor is not a "real party" to the litigation) that the party against whom an order for costs was originally made is subsequently declared bankrupt or placed into liquidation. These facts, in the present case, provide no support for the applicant's claim. 2. Secondly, it has not been demonstrated that any costs were incurred in the original application in this court: (a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or (b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible. 1. This is not an appropriate occasion to discuss all of the circumstances in which the power in s 99 is enlivened, save to say that the remarks of Beazley and Ward JJA about the failure to provide a transcript do not establish any of the matters required to enliven s 99. The failure to include certain documents in the white folder on the application for leave to appeal did not cause costs to be incurred for any of the reasons identified in s 98 and 99. 2. Thirdly, the attempt to show that the proceedings before the District Court had no reasonable prospect of success fails. Olsson DCJ did not find there was no evidence of reliance on alleged misrepresentations which was available; rather, her Honour simply found that after his cross-examination, Mr Rodi's evidence did not demonstrate reliance. That this was the way her Honour approached the matter was the holding of the Court of Appeal at [26]. Legal practitioners are not generally required to assume that their client's credibility will be accepted before forming the view that the case has reasonable prospects of success: Lemoto at [92](c). Mr Gelonesi's submission that Mr Muriniti failed to take unidentified "proper steps" to ascertain from Mr Rodi whether he had relied on the alleged misleading conduct should be rejected as mere assertion. 3. Fourthly, it does not necessarily follow that if there were no reasonable prospects of success in the District Court proceedings then there should be a personal costs order in respect of an application for leave to appeal. In this regard it is significant that it was a term of gross sum costs orders made by consent in the District Court that enforcement be stayed until determination of Mr Rodi and Forest Way Fruit Stall Pty Ltd's appeal to the Court of Appeal. If the application for leave to appeal was doomed to fail such that s 99 was enlivened, as Mr Gelonesi now contends, it is surprising that in 2012 he was prepared to consent to such a stay. Conclusion and orders 1. The amended notice of motion filed on 8 November 2016 must be dismissed with costs. ********** 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: 22 March 2018