Riva NSW Pty Limited v Mark A Fraser; Fraser v Riva (NSW) (No. 4) [2022] NSWSC 1624 (28 November 2022)
Intro: Riva is a corporate entity and a client of the solicitors. A dispute arose between Riva and the solicitors as to the quantum of costs to which the solicitors were entitled for acting in the earlier litigation. However, Riva filed an application to appeal against the costs assessment.
Facts:
Riva was once a client of the solicitors in unrelated litigation. Riva is a corporate entity associated with the interests of Mr. Angelo Ferella, who was banned for five years from October 2006 from acting as a company director and in November 2006 given a suspended jail sentence for failing to comply with ASIC notices. Mr. Ferella is Riva’s manager. Mr. Ferella’s sister, Tiziana, acted as Riva’s director.
A dispute arose between Riva and the solicitors as to the quantum of costs to which the solicitors were entitled for acting in the earlier litigation. The costs were assessed, and the assessment was confirmed on review by the Costs Review Panel. Riva then commenced proceedings against the solicitors in the District Court appealing against the costs assessment.
On 10 August 2012, Curtis DCJ determined that $38,118.57 was the fair and reasonable amount of the legal costs for the solicitors’ legal work in the litigation for Riva. Curtis DCJ noted the parties had agreed that Riva had paid $3,268.02 on account of those costs, leaving a balance owing of $34,850.55. Curtis DCJ entered judgment for the solicitors against Riva for $38,867.02, including interest of $4,016.47. But Curtis DCJ did not make orders for the costs of the District Court proceedings appealing against the costs assessment.
On 20 December 2013, Curtis DCJ d ordered that the costs in the District Court and Local Court proceedings be paid by Riva on an indemnity basis. Curtis DCJ fixed costs in both proceedings at $78,256 and ordered Riva to pay that sum to the solicitors.
On 11 April 2014, the solicitors sought interlocutory relief in aid of the 20 December 2013 judgment in their favour, including an injunction preventing Riva from dealing with the credit balance of a bank account at Macquarie Bank, that was held in Riva’s name as trustee of the Cavallino Unit Trust (“the Trust”). On 11 April 2014, Curtis DCJ made freezing orders ex parte restraining Riva from transferring or otherwise dealing with the moneys in the Macquarie Bank Account to the extent of $106,325.81, until further order of the District Court.
On 16 September 2014, Riva filed a summons seeking judicial review under s 69 of the Supreme Court Act 1970 of the orders made by the District Court (“the 2014 Judicial Review Proceedings”) and relief quashing the 20 December 2013 orders, setting aside the freezing orders, and seeking an order that the solicitors pay Riva damages. This summons fell within the jurisdiction of the Court of Appeal.
On 14 October 2014, the solicitors moved the Court of Appeal for summary dismissal of the 2014 Judicial Review Proceedings. On 29 October 2014, the Court of Appeal dismissed the 2014 Judicial Review Proceedings and ordered Riva to pay the solicitors’ costs of the 2014 Judicial Review Proceedings and Riva’s motion for dismissal on an indemnity basis.
Riva soon made another attempt to challenge the freezing orders. On 7 November 2016, Riva filed a motion in the District Court seeking to have the freezing order set aside. On 3 August 2017, the District Court made orders, which were varied on 4 August 2017 (the 2017 Orders), that Riva’s motion of 7 November 2016 be dismissed. By summons filed in the Court of Appeal on 5 September 2017, Riva commenced further proceedings in the Court of Appeal seeking orders that the 2017 Orders be set aside and that, in lieu thereof, the freezing order be set aside (“the 2017 Judicial Review Proceedings”).
In 2017 the parties commenced two sets of proceedings in the Equity Division, the costs of which comprise the present dispute before the Court. On 24 February 2017, Riva commenced the Riva damages proceedings, alleging that the solicitors had engaged in misleading or deceptive conduct and unconscionable conduct in seeking to enforce the judgment for costs against Riva and in applying for the freezing orders. And on 2 June 2017, the solicitors commenced the receiver proceedings, seeking relief including the appointment of a receiver to Riva so as to enforce judgments against Riva in its role as trustee.
Issue:
Whether or not the solicitors can recover indemnity cost.
Ruling:
Yes.
Indemnity costs should also be awarded against Riva in the receiver proceedings.
Aspects of Riva’s actual conduct of the receiver proceedings warrant an indemnity costs order against it in those proceedings. Riva resisted the receiver proceedings without ever articulating any reasoned discretionary consideration against the appointment of a receiver to enforce debts against the Trust in respect of judgments against it that had never been stayed. Riva used the Riva damages proceedings, an action of no demonstrable substance, in a manner calculated to defer the resolution of receiver proceedings across several adjournments. This conduct is sufficient to warrant an order for indemnity costs in favour of the solicitors in the receiver proceedings.
The Court will amend the costs orders in the receiver proceedings so that Riva pay the solicitors’ costs on the indemnity basis up to and including the date that it made final orders in the proceedings on 11 April 2018. These costs would have commenced to be incurred on or shortly before 2 June 2017. But for the reasons given later in this judgment, the Court will not make any costs orders beyond that date in the receiver proceedings.
Conclusions and orders
For these reasons the Court will make the following orders and directions in both the Riva damages proceedings and the receiver proceedings:
(1) In these orders the defendant in the Riva damages proceedings and the plaintiffs in the receiver proceedings will be referred to as “the FCL parties” and the plaintiff in the Riva damages proceedings and the defendant in the receiver proceedings will be referred to as “Riva”;
(2) Order that Riva pay indemnity costs to the FCL parties in both the Riva damages proceedings and the receiver proceedings but that such indemnity costs are limited to the recovery of professional costs, counsel’s fees and disbursements incurred by the FCL parties to their associated incorporated legal practices in conducting the Riva damages proceedings up to 30 November 2019 and in conducting the receiver proceedings up to 11 April 2018 and is limited to counsel’s fees and disbursements only before the incorporation of their associated incorporated legal practices;
(3) Note that in respect of the indemnity costs orders in favour of the FCL parties the Court is prepared to fix a specified gross sum instead of assessed costs in the sum of $14,168.30 under Civil Procedure Act s 98(4)(c) (“the Court’s proposed costs quantification”) based on the materials relating to costs identified by the Court in evidence and will do so in chambers if no further material is brought to the Court’s attention;
(4) Direct the FCL parties to provide to the Riva parties and to the Court by Friday, 2 December 2022 a schedule identifying with precision the exact additional professional costs, counsel’s fees and disbursements that the FCL parties claim in conformity with order (2) in addition to the Court’s proposed costs quantification, cross-referenced to where in the Court Book the Court can identify evidence supporting that claim (“the FCL parties’ final costs claim”) together with submissions of no more than 4 pages explaining the basis of the calculation of the FCL parties’ final costs claim;
(5) Direct the Riva parties file any submissions in reply to the FCL parties’ final costs claim of no more than 4 pages together with a reply schedule to the FCL parties’ schedule by Wednesday, 7 December 2022, indicating with precision which of the FCL parties’ claimed disbursements and counsel’s fees are conceded as proven and within the Court’s present orders and which are in dispute is not proven or outside the Court’s present orders;
(6) At the same time as they comply with directions (4) and (5) the parties are at liberty to provide submissions of no more than three pages in addition to the page limits provided for in directions (4) and (5), concerning what costs orders that should be made in the Riva damages proceedings after 30 November 2019 and in the receiver proceedings after 11 April 2018.
(7) Upon receipt of the schedule and submissions in accordance with directions (4) and (5) the Court will make any supplementary orders in chambers without a further oral hearing.
Decision:
Order for indemnity costs made. Solicitors cannot recover costs for any period when the solicitor was self-represented. Solicitors permitted to recover professional costs for period when they were clients of the incorporated legal practice acting on their behalf providing legal services to them in the litigation. Some professional costs and some disbursements recoverable. Defer the making of a specified gross sum costs order instead of assessed costs until the parties have had an opportunity to put final submissions based on these reasons.
